Document:

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                                                                  EXECUTION COPY

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                       MILLAR WESTERN FOREST PRODUCTS LTD.

                               7.75% SENIOR NOTES

                              DUE NOVEMBER 15, 2013

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

                                    INDENTURE

                          Dated as of November 25, 2003

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

                              The Bank of New York

                                     Trustee

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                              CROSS-REFERENCE TABLE

Trust Indenture
Act Section                                                    Indenture Section
310(a)(1) ................................................       7.10
   (a)(2) ................................................       7.10
   (a)(3) ................................................       N.A.
   (a)(4) ................................................       N.A.
   (a)(5) ................................................       7.10
   (b) ...................................................       7.10
   (c) ...................................................       N.A.
311(a) ...................................................       7.11
   (b) ...................................................       7.11
   (c) ...................................................       N.A.
312(a) ...................................................       2.05
   (b) ...................................................      12.03
   (c) ...................................................      12.03
313(a) ...................................................       7.06
   (b)(1) ................................................       N.A.
   (b)(2) ................................................       7.07
   (c) ...................................................    7.06;12.02
   (d) ...................................................       7.06
314(a) ...................................................    4.03;12.02
   (b) ...................................................       N.A.
   (c)(1) ................................................      12.04
   (c)(2) ................................................      12.04
   (c)(3) ................................................       N.A.
   (d) ...................................................       N.A.
   (e) ...................................................      12.05
   (f) ...................................................       N.A.
315(a) ...................................................       7.01
   (b) ...................................................    7.05;12.02
   (c) ...................................................       7.01
   (d) ...................................................       7.01
   (e) ...................................................       6.14
316(a)(last sentence) ....................................       2.09
   (a)(1)(A) .............................................       6.05
   (a)(1)(B) .............................................       6.04
   (a)(2) ................................................       N.A.
   (b) ...................................................       6.07
   (c) ...................................................    2.12; 9.04
317(a)(1) ................................................       6.08
   (a)(2) ................................................       6.12
   (b) ...................................................       2.04
318(a) ...................................................      12.01
   (b) ...................................................       N.A.
   (c) ...................................................      12.01
N.A. means not applicable.
* This Cross Reference Table is not part of the Indenture.

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         INDENTURE dated as of November 25, 2003 between Millar Western Forest
Products Ltd., a corporation existing under the laws of the Province of Alberta
(the "Company") and The Bank of New York, a New York banking corporation, as
Trustee.

         The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the 7.75% Senior
Notes due 2013 (the "Notes"):

                                   ARTICLE 1.
                          DEFINITIONS AND INCORPORATION
                                  BY REFERENCE

Section 1.01     Definitions.

         "144A Global Note" means a Global Note substantially in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold in reliance on Rule 144A.

         "Acquired Indebtedness" means Indebtedness of a Person (including an
Unrestricted Subsidiary) or any of its Subsidiaries existing at the time such
Person becomes a Restricted Subsidiary or is merged into or consolidated with
the Company or a Restricted Subsidiary or which is assumed in connection with
the acquisition of assets from such Person and, in each case, not incurred by
such Person in connection with, or in anticipation or contemplation of, such
Person becoming a Restricted Subsidiary or such merger, consolidation or
acquisition.

         "Additional Notes" means Notes other than the Initial Notes issued
under this Indenture in accordance with Sections 2.02 and 4.09 hereof, as part
of the same class as the Initial Notes.

         "Affiliate" means, with respect to any specific Person, any other
Person (including, without limitation, such Person's issue, siblings and spouse)
that directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling," "controlled by," and "under common control with"), as
used with respect to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by agreement or
otherwise; provided that, for purposes of Section 4.11, beneficial ownership of
at least 10% of the voting securities of a Person, either directly or
indirectly, shall be deemed to be control.

         "Agent" means any Registrar, Paying Agent or co-registrar.

         "Applicable Procedures" means, with respect to any transfer or exchange
of or for beneficial interests in any Global Note, the rules and procedures of
the Depositary, Euroclear and Clearstream that apply to such transfer or
exchange.

         "Asset Acquisition" means (a) an Investment by the Company or any
Restricted Subsidiary in any other Person pursuant to which such Person becomes
a Restricted Subsidiary,

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or shall be merged with or into the Company or any Restricted Subsidiary or (b)
the acquisition by the Company or any Restricted Subsidiary of the assets of any
Person (other than a Restricted Subsidiary) which constitute all or
substantially all of the assets of such Person or comprise any division or line
of business of such Person or any other properties or assets of such Person
other than in the ordinary course of business.

         "Asset Sale" means any direct or indirect sale, issuance, conveyance,
assignment, transfer, lease (other than operating leases entered into in the
ordinary course of business) or other disposition (including pursuant to any
Sale and Lease-Back Transaction), other than to the Company or any of its
Wholly-Owned Restricted Subsidiaries, in any single transaction or series of
related transactions of:

         (1)      any Capital Stock of any Restricted Subsidiary; or

         (2)      any other property or assets (including any interest therein,
                  but excluding the Capital Stock of, or other Investment in,
                  Unrestricted Subsidiaries) of the Company or of any Restricted
                  Subsidiary thereof outside of the ordinary course of business;

         provided that Asset Sales shall not include:

         (1)      a transaction or series of related transactions for which the
                  Company or its Restricted Subsidiaries receive aggregate
                  consideration of less than $1.0 million (provided that the
                  Company or such Restricted Subsidiary received consideration
                  equal to the Fair Market Value of any such property or assets
                  so sold, conveyed, assigned, transferred, leased or otherwise
                  disposed of);

         (2)      the sale, lease, conveyance, disposition or other transfer of
                  all or substantially all of the assets of the Company as
                  permitted under Section 5.01;

         (3)      sales of property or equipment that has become worn out,
                  obsolete or damaged or otherwise unsuitable for use in
                  connection with the business of the Company or any Restricted
                  Subsidiary, as the case may be;

         (4)      the sale of inventory in the ordinary course of business;

         (5)      any Permitted Investment or Restricted Payment made in
                  compliance with Section 4.07;

         (6)      the sale or other disposition of cash or Cash Equivalents, or
                  the sale of accounts receivable in the ordinary course of
                  business or in connection with the compromise, settlement or
                  collection thereof; and

         (7)      any sale or other disposition deemed to occur with creating or
                  granting a Lien not otherwise prohibited by this Indenture.

         "Attributable Indebtedness" in respect of a Sale and Lease-Back
Transaction means, as at the time of determination, the greater of (i) the Fair
Market Value of the property subject to such

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arrangement and (ii) the present value (discounted according to GAAP at the cost
of indebtedness implied in the Sale and Lease-Back Transaction) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale and Lease-Back transaction (including any period for
which such lease has been extended).

         "Bankruptcy Law" means Title 11, U.S. Code, the Bankruptcy and
Insolvency Act (Canada) or any similar United States federal or state law or
Canadian federal or provincial law for the relief of debtors.

         "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" have a corresponding meaning.

         "Board of Directors" means, as to any Person, the board of directors of
such Person and any duly authorized committee thereof.

          "Broker-Dealer" has the meaning set forth in the Registration Rights
Agreement.

         "Business Day" means any day other than a Legal Holiday.

         "Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated and whether
or not voting) of corporate stock, partnership interests or any other
participation, right or other interest in the nature of an equity interest in
such Person including, without limitation, Common Stock and Preferred Stock of
such Person, or any option, warrant or other security convertible into any of
the foregoing.

         "Capitalized Lease Obligations" means with respect to any Person,
Indebtedness represented by obligations under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP, and the
amount of such Indebtedness shall be the capitalized amount of such obligations
determined in accordance with GAAP.

         "Cash Equivalents" means:

         (1)      marketable direct obligations issued by, or unconditionally
                  guaranteed by, the United States or Canadian Government or
                  issued by any agency thereof and backed by the full faith and
                  credit of the United States or Canada, in each case maturing
                  within one year from the date of acquisition thereof;

         (2)      marketable direct obligations issued by any state of the
                  United States of America or any province of Canada or any
                  political subdivision of any such state or province, as the
                  case may be, or any public instrumentality thereof maturing
                  within one year from the date of acquisition thereof and, at
                  the time of acquisition, having one of the two highest ratings
                  obtainable from either Standard & Poor's Ratings Group ("S&P")
                  or Moody's Investors Service, Inc. ("Moody's"); provided

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                  that, in the event that any such obligation is not rated by
                  S&P or Moody's, such obligation shall have the highest rating
                  from Dominion Bond Rating Service Limited ("DBRS");

         (3)      commercial paper maturing no more than one year from the date
                  of creation thereof and, at the time of acquisition, having a
                  rating of at least R-1 (low) from DBRS or A-2 from S&P or at
                  least P-2 from Moody's;

         (4)      certificates of deposit or bankers' acceptances maturing
                  within one year from the date of acquisition thereof issued by
                  any bank organized under the laws of the United States of
                  America or Canada or any state or province, as the case may
                  be, thereof or the District of Columbia or any U.S. or
                  Canadian branch of a foreign bank having at the date of
                  acquisition thereof combined capital and surplus of not less
                  than US$250,000,000;

         (5)      repurchase obligations with a term of not more than seven days
                  for underlying securities of the types described in clause (1)
                  above entered into with any bank meeting the qualifications
                  specified in clause (4) above; and

         (6)      investments in money market funds which invest substantially
                  all their assets in securities of the types described in
                  clauses (1) through (5) above.

         A "Change of Control" means the occurrence of any of the following:

         (1)      the direct or indirect sale, lease, transfer, conveyance or
                  other disposition (other than by way of merger, amalgamation
                  or consolidation), in one or a series of related transactions,
                  of all or substantially all of the properties or assets of the
                  Company and its Restricted Subsidiaries taken as a whole to
                  any "person" (as that term is used in Section 13(d)(3) of the
                  Exchange Act) other than the Permitted Holders;

         (2)      the adoption of a plan relating to the liquidation or
                  dissolution of the Company;

         (3)      any Person or group of related Persons for purposes of Section
                  13(d) of the Exchange Act ("Group"), other than Permitted
                  Holders, becomes the beneficial owner (as defined under Rule
                  13d-3 or any successor rule or regulation promulgated under
                  the Exchange Act), directly or indirectly, of 50% or more of
                  the total voting power of the Common Stock of the Company;

         (4)      any Person or Group, other than Permitted Holders, becomes the
                  beneficial owner, directly or indirectly, of more than 30% of
                  the total voting power of the Common Stock of the Company, and
                  the Permitted Holders beneficially own, directly or indirectly
                  in the aggregate, a lesser percentage of the total voting
                  power of the Common Stock of the Company than such Person or
                  Group and do not have the right or ability by voting power,
                  contract or otherwise to elect or designate for election a
                  majority of the Board of Directors of the Company;

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         (5)      there shall be consummated any amalgamation, consolidation or
                  merger of the Company in which the Company is not the
                  continuing or surviving corporation or pursuant to which the
                  Common Stock of the Company would be converted into cash,
                  securities or other property, other than an amalgamation,
                  consolidation or merger of the Company in which the holders of
                  the Common Stock of the Company outstanding immediately prior
                  to the consolidation or merger hold, directly or indirectly,
                  at least a majority of the Common Stock of the surviving
                  corporation immediately after such amalgamation, consolidation
                  or merger; or

         (6)      during any period of two consecutive years commencing after
                  the Company's initial public offering of Common Stock,
                  individuals who at the beginning of such period constituted
                  the Board of Directors of the Company (together with any new
                  directors whose election by such Board of Directors or whose
                  nomination for election by the shareholders of the Company has
                  been approved by 66 2/3% of the directors then still in office
                  who either were directors at the beginning of such period or
                  whose election or recommendation for election was previously
                  so approved) cease to constitute a majority of the Board of
                  Directors of the Company.

         "Clearstream" means Clearstream Banking S.A.

         "Commission" means the United States Securities and Exchange
Commission.

         "Commodity Agreement" means, in respect of a Person, any forward
contract, commodity swap agreement, commodity option agreement or other similar
agreement or arrangement designed to protect such Person against fluctuations in
commodity prices and not for speculative purposes.

         "Common Stock" of any Person means all Capital Stock of such Person
that is generally entitled to (i) vote in the election of directors of such
Person or (ii) if such Person is not a corporation, vote or otherwise
participate in the selection of the governing body, partners, managers or others
that will control the management and policies of such Person.

         "Company" means Millar Western Forest Products Ltd., and any and all
successors thereto.

         "Company Request" or "Company Order" means a written request or order
signed in the name of the Company by one or more of its Chairman, Chief
Executive Officer, President, Chief Financial Officer, any Vice President, its
Treasurer or its Secretary, and delivered to the Trustee.

         "Consolidated Fixed Charge Coverage Ratio" means, with respect to any
Person, the ratio of EBITDA of such Person for the four most recent consecutive
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
determination to Consolidated Fixed Charges of such Person for such Four Quarter
Period. In addition to and without limitation of the foregoing, for purposes of
this definition, "EBITDA" and "Consolidated Fixed Charges" shall be calculated
after giving effect on a pro forma basis to:

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         (1) the incurrence or repayment of any Indebtedness of such Person or
any of its Restricted Subsidiaries (and the application of the proceeds thereof)
giving rise to the need to make such calculation, as if such incurrence or
repayment, as the case may be (and the application of the proceeds thereof),
occurred on the first day of such Four Quarter Period;

         (2) any incurrence or repayment of other Indebtedness (and the
application of the proceeds thereof), occurring on or after the first day of the
Four Quarter Period and on or prior to the date of determination, as if such
incurrence or repayment, as the case may be (and the application of the proceeds
thereof), occurred on the first day of such Four Quarter Period; and

         (3) any Asset Sales or Asset Acquisitions (including, without
limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of the Company or one of its Restricted Subsidiaries
(including any Person who becomes a Restricted Subsidiary as a result of the
Asset Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any EBITDA attributable to the assets which are
the subject of the Asset Sale or Asset Acquisition during the Four Quarter
Period) occurring on or after the first day of the Four Quarter Period and on or
prior to the date of determination, as if such Asset Sale or Asset Acquisition
(including the incurrence, assumption or liability for any such Acquired
Indebtedness) occurred on the first day of such Four Quarter Period.

         "Consolidated Fixed Charges" means, with respect to any Person, for any
period, the sum, without duplication, of:

         (1) Consolidated Interest Expense; plus

         (2) the product of (x) the amount of all dividend payments (to any
Person other than the Company or a Restricted Subsidiary) on any series of
Disqualified Capital Stock of such Person (other than dividends paid in Capital
Stock (other than Disqualified Capital Stock)) paid, accrued or scheduled to be
paid or accrued during such period times (y) a fraction, the numerator of which
is one and the denominator of which is one minus the then current effective
consolidated federal, state, provincial and local tax rate of such Person,
expressed as a decimal.

         "Consolidated Interest Expense" means, with respect to any Person, for
any period, the sum, without duplication, of:

         (1) the aggregate amount of interest charges (excluding fees and
expenses incurred in connection with the Offering), whether expensed or
capitalized, incurred or accrued by such Person and its Restricted Subsidiaries,
determined on a consolidated basis in accordance with GAAP for such period
(including non cash interest payments); plus

         (2) to the extent not included in clause (1) above, an amount equal to
the sum of:

                  (a)      imputed interest included in Capitalized Lease
                           Obligations;

                  (b)      all commissions, discounts and other fees and charges
                           owed with respect to letters of credit and bankers'
                           acceptance financing;

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                  (c)      the net costs associated with Interest Rate
                           Agreements, Currency Agreements, Commodity Agreements
                           and other hedging obligations;

                  (d)      amortization of deferred financing costs and
                           expenses;

                  (e)      the interest portion of any deferred payment
                           obligations;

                  (f)      amortization of discount or premium on Indebtedness,
                           if any;

                  (g)      all capitalized interest and all accrued interest;

                  (h)      all other non cash interest expense;

                  (i)      all interest incurred or paid under any guarantee of
                           Indebtedness (including a guarantee of principal,
                           interest or any combination thereof) of any Person;
                           and

                  (j)      the amount of all payments charged to shareholder's
                           equity on any "compound financial instrument" (as
                           described under GAAP) paid, accrued or scheduled to
                           be paid or accrued during such period.

         For purposes of calculating Consolidated Interest Expense on a pro
forma basis:

         (1) interest on Indebtedness bearing a floating rate of interest shall
be calculated using the interest rate in effect at the time of determination,
taking into account on a pro forma basis any Interest Rate Agreement applicable
to such Indebtedness if such Interest Rate Agreement has a remaining term at the
date of determination of at least 12 months; and

         (2) if Indebtedness was incurred under a revolving credit facility, the
interest expense on such Indebtedness shall be calculated based upon the average
daily balance of such Indebtedness during the applicable period.

         "Consolidated Net Income" with respect to any Person, for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that:

         (1)      the Net Income of any Person, other than the referent Person
                  or a Restricted Subsidiary of the referent Person, shall be
                  excluded, except to the extent of the amount of cash dividends
                  or distributions actually received by the referent Person or a
                  Restricted Subsidiary of the referent Person;

         (2)      the Net Income (but not loss) of any Restricted Subsidiary of
                  the Person in question that is subject to any restriction or
                  limitation on the payment of dividends or the making of other
                  distributions (other than pursuant to the Notes or this
                  Indenture) shall be excluded to the extent of such restriction
                  or limitation;

         (3)      (a) the Net Income of any Person acquired in a "pooling of
                  interests" transaction for any period prior to the date of
                  such acquisition shall be excluded and (b) any

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                  net after-tax gain (but not loss) resulting from an Asset Sale
                  by the Person in question or any of its Restricted
                  Subsidiaries other than in the ordinary course of business
                  shall be excluded;

         (4)      after-tax items classified as extraordinary or unusual gains
                  or losses and any foreign exchange gains and losses shall be
                  excluded;

         (5)      income or loss attributable to discontinued operations
                  (including, without limitation, operations disposed of during
                  such period whether or not such operations were classified as
                  discontinued) shall be excluded;

         (6)      the cumulative effect of a change in accounting principles
                  after the Issue Date shall be excluded;

         (7)      any restoration to income or any contingency reserve of an
                  extraordinary, non- recurring or unusual nature shall be
                  excluded, except to the extent that provision for such reserve
                  was made out of Consolidated Net Income accrued at any time
                  subsequent to the Issue Date; and

         (8)      in the case of a successor to the referent Person by
                  consolidation or merger or as a transferee of the referent
                  Person's assets, any earnings of the successor corporation
                  prior to such consolidation, merger or transfer of assets
                  shall be excluded.

         "Corporate Services Agreements" means (i) the Corporate Services
Agreement, dated as of May 13, 1998, between the Company and Industries, as in
effect on the Issue Date, and (ii) the Trademark Licensing Agreement, dated as
of May 13, 1998, between the Company and Industries, as in effect on the Issue
Date, and, in the case of each of clause (i) and (ii), any amendment thereto so
long as any such amendment does not materially alter the character or extent of
the financial and economic risks and obligations of the Company from those
existing on the Issue Date.

         "Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.02 hereof or such other address as to which the
Trustee may give notice to the Company.

         "Credit Facilities" means one or more debt facilities or commercial
paper facilities, in each case with banks or other institutional lenders
providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables) or letters
of credit, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time.

         "Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any Restricted Subsidiary against fluctuations in currency values.

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         "Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.

         "Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.

         "Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof,
substantially in the form of Exhibit A hereto, except that such Note shall not
bear the Global Note Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Note" attached thereto.

         "Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as Depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.

         "Disqualified Capital Stock" means any Capital Stock of a Person or a
Restricted Subsidiary thereof which, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable at the
option of the holder), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof (except, in each case, in
accordance with a change of control provision, which provision has substantially
the same effect as under Section 4.15 hereof), in whole or in part, or is
exchangeable into Indebtedness on or prior to the final maturity date of the
Notes.

         "EBITDA" means, with respect to any Person and its Restricted
Subsidiaries, for any period, an amount equal to:

         (1) the sum, without duplication; of:

                  (a) Consolidated Net Income for such period; plus

                  (b) the provision for taxes for such period based on income or
         profits to the extent such income or profits were included in computing
         Consolidated Net Income (minus any provision for taxes utilized in
         computing net loss under clause (a) hereof to the extent such provision
         reduced net loss); plus

                  (c) Consolidated Interest Expense for such period; plus

                  (d) depreciation for such period on a consolidated basis, to
         the extent reducing Consolidated Net Income; plus

                  (e) amortization of intangibles for such period on a
         consolidated basis, to the extent reducing Consolidated Net Income;
         plus

                  (f) any other non cash items reducing Consolidated Net Income
         for such period; minus

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         (2) all non-cash items increasing Consolidated Net Income for such
period; minus

         (3) all cash payments during such period relating to non-cash charges
that were added back in determining EBITDA in any prior period, determined on a
consolidated basis with respect to the Company and its Restricted Subsidiaries.

         "Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).

         "Euroclear" means Euroclear S.A./N.V., as operator of the Euroclear
system.

         "Exchange Act" means the U.S. Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.

         "Exchange Notes" means the Notes issued in the Exchange Offer pursuant
to Section 2.06(f) hereof.

         "Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.

         "Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.

         "Fair Market Value" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction. Fair Market
Value shall be determined by the Board of Directors of the Company acting
reasonably and in good faith and, in the case of determination involving assets
or property in excess of $1.0 million shall be evidenced by a resolution of the
Board of Directors of the Company delivered to the Trustee.

         "GAAP" means generally accepted accounting principles consistently
applied as in effect in Canada from time to time.

         "Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, substantially in the
form of Exhibit A hereto, issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.

         "Global Note Legend" means the legend set forth in Section 2.06(g)(ii),
which is required to be placed on all Global Notes issued under this Indenture.

         "Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.

         "Guarantee" means a guarantee of the Notes or Exchange Notes by a
Guarantor issued pursuant to the terms of this Indenture.

                                       10
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         "Guarantors" means each Restricted Subsidiary that hereafter becomes a
Guarantor pursuant to this Indenture.

         "Holder" means a Person in whose name a Note is registered in the Note
Register.

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

         "Indebtedness" means (without duplication), with respect to any Person,
any indebtedness at any time outstanding, secured or unsecured, contingent or
otherwise, which is for borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof), or evidenced by bonds, notes, debentures or similar instruments or
representing the balance deferred and unpaid of the purchase price of any
property (excluding, without limitation, any balances that constitute accounts
payable or trade payables, and other accrued liabilities arising in the ordinary
course of business) if and to the extent any of the foregoing indebtedness would
appear as a liability upon a balance sheet of such Person prepared in accordance
with GAAP, and shall also include, to the extent not otherwise included:

         (1)      any Capitalized Lease Obligations of such Person;

         (2)      obligations secured by a Lien to which any property or assets
                  owned or held by such Person are subject, whether or not the
                  obligation or obligations secured thereby shall have been
                  assumed, provided that, for the purposes of determining the
                  amount of Indebtedness described in this clause, if recourse
                  with respect to such Indebtedness is limited to such property
                  or assets, the amount of such Indebtedness shall be deemed to
                  be the lesser of (A) the Fair Market Value of such property or
                  assets and (B) the amount of such Indebtedness;

         (3)      guarantees of items of other Persons which would be included
                  within this definition for such other Persons (whether or not
                  such items would appear upon the balance sheet of the
                  guarantor);

         (4)      all obligations for the reimbursement of any obligor on any
                  letter of credit, banker's acceptance or similar credit
                  transaction;

         (5)      all Disqualified Capital Stock issued by such Person with the
                  amount of Indebtedness represented by such Disqualified
                  Capital Stock being equal to the greater of its voluntary or
                  involuntary liquidation preference and its maximum fixed
                  repurchase price (for the purposes hereof, "maximum fixed
                  repurchase price" of any Disqualified Capital Stock which does
                  not have a fixed repurchase price shall be calculated in
                  accordance with the terms of such Disqualified Capital Stock
                  as if such Disqualified Capital Stock were repurchased on any
                  date on

                                       11
<PAGE>

                  which Indebtedness shall be required to be determined pursuant
                  to this Indenture and if such price is based upon, or measured
                  by, the fair market value of such Disqualified Capital Stock,
                  such price shall be the Fair Market Value of such Disqualified
                  Capital Stock);

         (6)      obligations of any such Person under any Currency Agreement or
                  any Interest Rate Agreement applicable to any of the foregoing
                  or Commodity Agreement (if and to the extent such Currency
                  Agreement, Interest Rate Agreement or Commodity Agreement
                  obligations would appear as a liability upon a balance sheet
                  of such Person prepared in accordance with GAAP); and

         (7)      Attributable Indebtedness of such Person,

         The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and, with respect to contingent obligations, the maximum liability upon
the occurrence of the contingency giving rise to the obligation; provided that:

         (1) the amount outstanding at any time of any Indebtedness issued with
original issue discount is the accreted value of such Indebtedness at such time
as determined in conformity with GAAP; and

         (2) Indebtedness shall not include any liability for federal,
provincial, state, local or other taxes.

         Notwithstanding any other provision of the foregoing definition, any
trade payable arising from the purchase of goods or materials or for services
obtained in the ordinary course of business shall not be deemed to be
Indebtedness of the Company or any of its Restricted Subsidiaries for purposes
of this definition. Furthermore, guarantees of (or obligations with respect to
letters of credit supporting) Indebtedness otherwise included in the
determination of such amount shall also not be included.

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

         "Independent Financial Advisor" means an investment banking firm of
national reputation in the United States or Canada (i) which does not, and whose
directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company or any of its Affiliates and (ii)
which, in the judgment of the Board of Directors of the Company, is otherwise
independent and qualified to perform the task for which it is to be engaged.

         "Industries" means Millar Western Industries Ltd.

         "Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.

         "Initial Notes" means the US$190,000,000 aggregate principal amount of
Notes issued under this Indenture on the date hereof.

                                       12
<PAGE>

         "Institutional Accredited Investor" means an institution that is an
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act, who is not also a QIB.

         "Interest Payment Date" means May 15th and November 15th of each year
to Stated Maturity.

         "Interest Rate Agreement" means, with respect to any Person, any
interest rate swap agreement, interest rate cap agreement, interest rate collar
agreement or other similar agreement designed to protect the party indicated
therein against fluctuations in interest rates.

         "Investments" means, with respect to any Person, directly or
indirectly, any advance (or other extension of credit), account receivable
(other than an account receivable arising in the ordinary course of business of
such Person), loan or capital contribution to (by means of transfers of cash or
other Property to others, payments for Property or services for the account or
use of others or otherwise), any guarantee of any obligations or Indebtedness of
any other Person, the purchase of any Capital Stock, bonds, notes, debentures,
partnership or joint venture interests or other securities of, the acquisition,
by purchase or otherwise, of all or substantially all of the business or assets
or stock or other evidence of beneficial ownership of, or interest in any Person
or the making of any investment in any Person. Investments shall exclude (i)
extensions of trade credit on commercially reasonable terms in accordance with
normal trade practices of such Person and (ii) the repurchase by a Person of
securities of its own issue. For the purposes of Section 4.07, the amount of any
Investment shall be the original cost of such Investment plus the cost of all
additional Investments by the Company or any of its Restricted Subsidiaries,
without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment, reduced by the
payment of dividends or distributions in connection with such Investment or any
other amounts received in respect of such Investment; provided that no such
payment of dividends or distributions or receipt of any such other amounts shall
reduce the amount of any Investment if such payment of dividends or
distributions or receipt of any such amounts would be included in Consolidated
Net Income. In determining the amount of any Investment involving the transfer
of any property or assets other than cash, such property or assets shall be
valued at its or their Fair Market Value at the time of such transfer, as
determined in good faith by the Board of Directors of the Person making such
transfer.

         "Issue Date" means the date the Notes are first issued by the Company
and authenticated by the Trustee under this Indenture.

         "Legal Holiday" means a Saturday, a Sunday or a day on which commercial
banking institutions in the City of New York, the City of Toronto, the City of
Edmonton, or in the City of the Corporate Trust Office of the Trustee are
authorized by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue on such payment for the intervening period.

         "Letter of Transmittal" means the letter of transmittal to be prepared
by the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.

                                       13
<PAGE>

         "Lien" means, with respect to any property or assets of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement, encumbrance, preference,
priority, or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including
without limitation, any Capitalized Lease Obligation, conditional sales, or
other title retention agreement having substantially the same economic effect as
any of the foregoing).

         "Magnesium Sulphate Supply Agreement" means the Magnesium Sulphate
Supply Agreement, dated August 15, 1988, between Industries and Millar Western
Pulp Ltd. (a predecessor of Industries), as in effect on the Issue Date, and any
amendment thereto so long as any such amendment does not materially alter the
character or extent of the financial and economic risks and obligations of the
Company from those existing on the Issue Date.

         "Material Subsidiary" means, at any date of determination:

         (1) any Restricted Subsidiary that, together with its Subsidiaries that
constitute Restricted Subsidiaries:

         (a) for the most recent fiscal year of the Company, accounted for more
than 5.0% of the consolidated revenues of the Company and the Restricted
Subsidiaries; or

         (b) as of the end of such fiscal year, owned more than 5.0% of the
consolidated assets of the Company and the Restricted Subsidiaries, all as set
forth on the consolidated financial statements of the Company and the Restricted
Subsidiaries for such year prepared in conformity with GAAP; and

         (2) any Restricted Subsidiary which, when aggregated with all other
Restricted Subsidiaries that are not otherwise Material Restricted Subsidiaries
and as to which any event described in clause (h) of Section 6.01 has occurred,
would constitute a Material Restricted Subsidiary under clause (1) of this
definition.

         "Meadow Lake Services Agreement" means each of (i) the Administrative
Services Agreement, dated as of October 31, 1990, among Millar Western
Management Ltd., Millar Western Pulp (Meadow Lake) Ltd. and Meadow Lake Pulp
Limited Partnership, as in effect on the Issue Date, and (ii) the Marketing
Agreement, dated as of November 1, 1990, between Millar Western Management Ltd.
and Meadow Lake Pulp Limited Partnership, as in effect on the Issue Date, and,
in the case of each of clause (i) and (ii), any amendment thereto so long as any
such amendment does not materially alter the character or extent of the
financial and economic risks and obligations of the Company from those existing
on the Issue Date.

         "Net Income" means, with respect to any Person, for any period, the net
income (loss) of such Person determined in accordance with GAAP.

         "Net Proceeds" means, with respect to any Asset Sale:

         (1) cash received by the Company or any Restricted Subsidiary from such
Asset Sale, after:

                                       14
<PAGE>

                  (a) provision for all income or other taxes measured by or
         resulting from such Asset Sale;

                  (b) payment of all brokerage commissions, underwriting and
         other fees and expenses, including without limitation, legal,
         accounting and appraisal fees, related to such Asset Sale;

                  (c) provision for minority interest holders in any Restricted
         Subsidiary as a result of such Asset Sale;

                  (d) deduction of appropriate amounts to be provided by the
         Company or a Restricted Subsidiary as a reserve, in accordance with
         GAAP, against any liabilities associated with the assets sold or
         disposed of in such Asset Sale and retained by the Company or a
         Restricted Subsidiary after such Asset Sale, including, without
         limitation, pension and other post employment benefit liabilities and
         liabilities related to environmental matters or against any
         indemnification obligations associated with the assets sold or disposed
         of in such Asset Sale; provided, however, that at such time as such
         amounts are no longer reserved or such reserve is no longer necessary,
         any remaining amounts shall become Net Proceeds to be allocated in
         accordance with Section 4.10; and

                  (e) deduction of amounts required to be applied to the
         repayment of Indebtedness secured by a Lien on the asset or assets that
         were subject to such Asset Sale; and

         (2) promissory notes and other non-cash consideration received by the
Company or any Restricted Subsidiary from such Asset Sale or other disposition
upon the liquidation or conversion of such notes or non cash consideration into
cash.

         "Non-U.S. Person" means a Person who is not a U.S. Person as defined in
Rule 902(k) under the Securities Act.

         "Note Guarantee" means the Guarantee by each Guarantor of the Company's
payment obligations under this Indenture and on the Notes, executed pursuant to
the provisions of this Indenture.

         "Notes" has the meaning assigned to it in the preamble to this
Indenture and more particularly means any Note authenticated and delivered under
this Indenture. For all purposes of this Indenture, the term "Notes" shall
include any Additional Notes that may be issued under a supplemental indenture
and, for all purposes under this Indenture, both the Initial Notes and the
Additional Notes shall be treated as a single class.

         "Offering Circular" means the offering circular of the Company dated
November 20, 2003 relating to the sale of the Initial Notes.

         "Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, any Vice President, the Treasurer, any Assistant
Treasurer, the Controller, the Secretary or any Vice-President of such Person.

                                       15
<PAGE>

         "Officers' Certificate" means a certificate signed on behalf of a
Person by two Officers of such Person, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of such Person that meets the requirements of
Section 12.05 hereof.

         "Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
12.05 hereof. The counsel may be an employee of or counsel to the Company, or
any Restricted Subsidiary.

         "Participant" means, with respect to the Depositary, Euroclear or
Clearstream, a Person who has an account with the Depositary, Euroclear or
Clearstream, respectively (and, with respect to DTC, shall include Euroclear and
Clearstream).

         "Permitted Holders" means:

         (1)      James B. Millar and H. MacKenzie Millar;

         (2)      the spouses, children and other lineal descendants of either
                  of the persons referred to in clause (1) above;

         (3)      the undistributed estate of any of the persons referred to in
                  clauses (1) and (2) above;

         (4)      any trust so long as one or more of the persons referred to in
                  clause (2) above retains all of the beneficial interest
                  thereunder; and

         (5)      any Person at least 80% of the voting power of the outstanding
                  Capital Stock of which is owned by any of the persons referred
                  to in clauses (1), (2), (3) or (4) above.

         "Permitted Investments" means Investments made on or after the Issue
Date consisting of:

         (1)      Investments by the Company, or by a Restricted Subsidiary
                  thereof, in the Company or a Restricted Subsidiary;

         (2)      Investments by the Company, or by a Restricted Subsidiary
                  thereof, in a Person, if as a result of such Investment (a)
                  such Person becomes a Restricted Subsidiary or (b) such Person
                  is merged, consolidated or amalgamated with or into, or
                  transfers or conveys substantially all of its assets to, or is
                  liquidated into, the Company or a Restricted Subsidiary
                  thereof;

         (3)      Investments in Cash Equivalents;

         (4)      reasonable and customary loans and advances made to employees
                  in connection with their relocation not to exceed $1.0 million
                  in the aggregate at any one time outstanding;

                                       16
<PAGE>

         (5)      an Investment that is made by the Company or a Restricted
                  Subsidiary thereof in the form of any Capital Stock, bonds,
                  notes, debentures or other securities that are issued by a
                  third party to the Company or such Restricted Subsidiary
                  solely as partial consideration for the consummation of an
                  Asset Sale that is permitted under Section 4.10 hereof;

         (6)      other Investments in an amount not to exceed, together with
                  the amount of all other Investments outstanding under this
                  clause (6), at the time of such Investment and after giving
                  pro forma effect thereto, 5.0% of the consolidated tangible
                  assets of the Company and its Restricted Subsidiaries as of
                  the end of the most recent fiscal quarter for which
                  consolidated financial statements are available ending on or
                  prior to the date of determination (with the amount of each
                  Investment being measured at the time made and without giving
                  effect to subsequent changes in value);

         (7)      any Investments by the Company or a Restricted Subsidiary
                  received in compromise of claims, settlement of debts or
                  disputes or satisfaction of judgments relating to obligations
                  payable to the Company or such Restricted Subsidiary, as the
                  case may be, in its capacity as trade creditor or from
                  customers, which obligations were incurred in the ordinary
                  course of business, including pursuant to any plan of
                  reorganization or similar arrangement upon the bankruptcy or
                  insolvency of any trade creditor or customer; and

         (8)      Currency Agreements, Interest Rate Agreements and Commodity
                  Agreements.

         "Permitted Liens" means:

         (1)      Liens on Property or assets of, or any Capital Stock of, any
                  corporation existing at the time such Property, assets or
                  Capital Stock are acquired by the Company or any of its
                  Restricted Subsidiaries, whether by merger, amalgamation,
                  consolidation, purchase of assets or otherwise; provided (x)
                  that such liens are not created, incurred or assumed in
                  connection with, or in contemplation of, such assets being
                  acquired by the Company or its Restricted Subsidiaries and (y)
                  that any such Lien does not extend to or cover any Property,
                  Capital Stock or Indebtedness other than the Property, Capital
                  Stock or Indebtedness of such corporation;

         (2)      Liens securing Refinancing Indebtedness; provided that any
                  such Lien does not extend to or cover any Property, Capital
                  Stock or Indebtedness other than the Property, Capital Stock
                  or Indebtedness securing the Indebtedness so refunded,
                  refinanced or extended;

         (3)      Liens in favor of the Company or any Guarantor;

         (4)      Liens to secure Purchase Money Indebtedness that is otherwise
                  permitted to be incurred under this Indenture; provided that
                  (a) any such Lien is created solely for the purpose of
                  securing Indebtedness representing, or incurred to finance,
                  refinance or refund, the cost (including sales and excise
                  taxes, installation and

                                       17
<PAGE>

                  delivery charges and other direct costs of, and other direct
                  expenses paid or charged in connection with, such purchase or
                  construction) of such Property, (b) the principal amount of
                  the Indebtedness secured by such Lien does not exceed 100% of
                  such costs and expenses, and (c) such Lien does not extend to
                  or cover any Property other than such item of Property and any
                  improvements on such item;

         (5)      statutory liens or landlords', carriers', warehousemen's,
                  unemployment insurance, surety or appeal bonds, mechanics',
                  suppliers', materialmen's, repairmen's or other like Liens
                  imposed by law arising in the ordinary course of business and
                  with respect to amounts not yet delinquent or being contested
                  in good faith by appropriate proceedings, if a reserve or
                  other appropriate provision, if any, as shall be required in
                  conformity with GAAP shall have been made therefor;

         (6)      Liens existing on the Issue Date;

         (7)      Liens securing only the Notes or the Guarantees;

         (8)      easements, reservation of rights of way, restrictions
                  (including, but not limited to, zoning and building
                  restrictions) and other similar easements, licenses,
                  restrictions on the use of Properties, or minor imperfections
                  of title that in the aggregate are not material in amount and
                  do not in any case materially detract from the Properties
                  subject thereto or interfere with the ordinary conduct of the
                  business of the Company and its Restricted Subsidiaries;

         (9)      Liens for taxes, assessments or governmental charges that are
                  being contested in good faith by appropriate proceedings;
                  provided that any reserve or other appropriate provision as
                  shall be required in conformity with GAAP shall have been made
                  therefor;

         (10)     Liens securing Capitalized Lease Obligations permitted to be
                  incurred under clause (v) of the second paragraph of Section
                  4.09 hereof; provided that such Lien does not extend to any
                  Property other than that subject to the underlying lease;

         (11)     Liens on inventory and receivables securing Indebtedness under
                  a Credit Facility;

         (12)     Liens securing obligations under Interest Rate Agreements,
                  Currency Agreements and Commodity Agreements, in each case
                  permitted to be incurred under this Indenture;

         (13)     Liens created or deposits made to secure the performance of
                  tenders, bids, leases, statutory obligations, government
                  contracts, performance bonds and other obligations of a like
                  nature incurred in the ordinary course of business;

         (14)     Liens in favor of customs and revenue authorities arising as a
                  matter of law to secure payment of customs duties in
                  connection with the importation of goods;

                                       18
<PAGE>

         (15)     other Liens securing obligations incurred in the ordinary
                  course of business, which obligations do not exceed $1.0
                  million in the aggregate at any one time outstanding;

         (16)     Liens arising pursuant to Sale and Lease-Back transactions
                  entered into in compliance with this Indenture;

         (17)     Liens securing Indebtedness permitted to be incurred under
                  clause (x) of the second paragraph of Section 4.09 hereof;
                  provided that such Liens, together with all other Liens
                  existing under this clause (17), shall not, at the time of
                  such incurrence and after giving pro forma effect thereto,
                  extend to Property of the Company and its Restricted
                  Subsidiaries with a Fair Market Value in excess of $50.0
                  million; provided, further, that, in the case of Property with
                  a Fair Market Value of in excess of approximately $25.0
                  million, such Fair Market Value shall be determined by an
                  Independent Financial Advisor; and

         (18)     any extension, renewal or replacement, in whole or in part, of
                  any Lien described in the foregoing clauses (1) through (17);
                  provided that any such extension, renewal or replacement shall
                  be no more restrictive in any material respect than the Lien
                  so extended, renewed or replaced and shall not extend to any
                  other Property of the Company or its Subsidiaries other than
                  such item of Property originally covered by such Lien or by
                  improvement thereon or additions or accessions thereto.

          "Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization or government (including any agency or political
subdivision thereof).

         "Preferred Stock" means any Capital Stock of a Person, however
designated, which entitles the holder thereof to a preference with respect to
dividends, distributions or liquidation proceeds of such Person over the holders
of other Capital Stock issued by such Person.

          "Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture, except where
otherwise permitted by the provisions of this Indenture.

         "Property" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in the
most recent consolidated balance sheet of such Person and its Subsidiaries under
GAAP.

         "Purchase Money Indebtedness" means any Indebtedness incurred by a
Person to finance the cost (including the cost of construction, installation or
improvement) of an item of property, the principal amount of which Indebtedness
does not exceed the sum of (i) the lesser of (A) the Fair Market Value of such
property or (B) 100% of such cost and (ii) reasonable fees and expenses of such
Person incurred in connection therewith.

         "QIB" means a "qualified institutional buyer" as defined in Rule 144A.

                                       19
<PAGE>

         "Record Date" for the interest or Special Interest, if any, payable on
any Interest Payment Date means May 1st or November 1st (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.

         "Refinancing Indebtedness" means Indebtedness that replaces, refunds,
renews, refinances or extends any Indebtedness of the Company or a Restricted
Subsidiary permitted to be incurred by the Company or its Restricted
Subsidiaries pursuant to Section 4.09 hereof (other than pursuant to clauses
(i), (iv), (v), (vi), (vii), (viii), (ix), (x), (xii), (xiii), (xiv) and (xv) of
the definition of Permitted Indebtedness), but only to the extent that:

         (1)      the Refinancing Indebtedness is subordinated to the Notes to
                  at least the same extent as the Indebtedness being replaced,
                  refunded, renewed, refinanced or extended, if at all;

         (2)      the Refinancing Indebtedness is scheduled to mature either (a)
                  no earlier than the Indebtedness being replaced, refunded,
                  renewed, refinanced or extended, or (b) after the maturity
                  date of the Notes;

         (3)      the portion, if any, of the Refinancing Indebtedness that is
                  scheduled to mature on or prior to the maturity date of the
                  Notes has a weighted average life to maturity at the time such
                  Refinancing Indebtedness is incurred that is equal to or
                  greater than the weighted average life to maturity of the
                  portion of the Indebtedness being replaced, refunded, renewed,
                  refinanced or extended that is scheduled to mature on or prior
                  to the maturity date of the Notes;

         (4)      such Refinancing Indebtedness is in an aggregate principal
                  amount that is equal to or less than the sum of (a) the
                  aggregate principal amount then outstanding under the
                  Indebtedness being replaced, refunded, renewed, refinanced or
                  extended, (b) the amount of accrued and unpaid interest, if
                  any, and premiums owed, if any, not in excess of preexisting
                  prepayment provisions on such Indebtedness being replaced,
                  refunded, renewed, refinanced or extended and (c) the amount
                  of customary fees, expenses and costs related to the
                  incurrence of such Refinancing Indebtedness; and

         (5)      such Refinancing Indebtedness is incurred by the same Person
                  that initially incurred the Indebtedness being replaced,
                  refunded, renewed, refinanced or extended, except that the
                  Company may incur Refinancing Indebtedness to refund,
                  refinance or extend Indebtedness of any Wholly-Owned
                  Restricted Subsidiary.

         "Registration Rights Agreement" means the Registration Rights
Agreement, dated the date hereof by and among the Company and the other parties
named on the signature pages thereof, as such agreement may be amended, modified
or supplemented from time to time and, with respect to any Additional Notes, one
or more registration rights agreements between the Company and the other parties
thereto, as such agreement(s) may be amended, modified or supplemented from time
to time, relating to rights given by the Company to the purchasers of Additional
Notes to register such Additional Notes under the Securities Act.

                                       20
<PAGE>

         "Regulation S" means Regulation S promulgated under the Securities Act.

         "Regulation S Global Note" means a Global Note in the form of Exhibit A
hereto bearing the Global Note Legend (but without the Private Placement Legend)
and deposited with or on behalf of and registered in the name of the Depositary
or its nominee.

         "Replacement Assets" means (i) properties or assets (other than cash or
Cash Equivalents or any Capital Stock or other security) that will be used or
useful in the business of the Company or its Restricted Subsidiaries as
conducted on the Issue Date, or in businesses similar to or ancillary to the
business of the Company or its Restricted Subsidiaries as conducted on the Issue
Date or (ii) Capital Stock of any Person that will become on the date of
acquisition thereof a Guarantor as a result of such acquisition.

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

         "Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.

         "Restricted Global Note" means a Global Note bearing the Private
Placement Legend.

         "Restricted Subsidiary" means a Subsidiary of the Company other than an
Unrestricted Subsidiary. The Board of Directors of the Company may designate any
Unrestricted Subsidiary or any Person that is to become a Subsidiary as a
Restricted Subsidiary if immediately after giving effect to such action (and
treating any Acquired Indebtedness as having been incurred at the time of such
action), (i) the Company could have incurred at least US$1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.09 hereof
and (ii) no Default or Event of Default shall have occurred and be continuing.

         "Rule 144" means Rule 144 promulgated under the Securities Act.

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

         "Rule 903" means Rule 903 promulgated under the Securities Act.

         "Rule 904" means Rule 904 promulgated the Securities Act.

         "Sale and Lease-Back Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Restricted Subsidiary of any
real or tangible personal property, which property has been or is to be sold or
transferred by the Company or such Restricted Subsidiary to such Person in
contemplation of such leasing.

                                       21
<PAGE>

          "Securities Act" means the U.S. Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder.

         "Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.

         "Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.

         "Special Interest" means all special interest then owing pursuant to
the Registration Rights Agreement.

         "Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which the payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.

         "Subsidiary" of any specified Person means any corporation,
partnership, joint venture, limited liability company, association or other
business entity, whether now existing or hereafter organized or acquired, (i) in
the case of a corporation, of which more than 50% of the total voting power of
the Capital Stock entitled (without regard to the occurrence of any contingency)
to vote in the election of directors, officers or trustees thereof is held by
such first-named Person or any of its Subsidiaries; or (ii) in the case of a
partnership, joint venture, limited liability company, association or other
business entity, with respect to which such first-named Person or any of its
Subsidiaries has the power to direct or cause the direction of the management
and policies of such entity by contract or otherwise or if in accordance with
GAAP such entity is consolidated with the first named Person for financial
statement purposes.

         "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.

         "Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.

         "Unrestricted Definitive Note" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.

         "Unrestricted Global Note" means a permanent Global Note, substantially
in the form of Exhibit A attached hereto, that bears the Global Note Legend and
that has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing Notes that do not bear the Private Placement
Legend.

         "Unrestricted Subsidiary" means (a) any Subsidiary of an Unrestricted
Subsidiary and (b) any Subsidiary of the Company which is classified after the
Issue Date as an Unrestricted

                                       22
<PAGE>

Subsidiary by a resolution adopted by the Board of Directors of the Company;
provided that a Subsidiary may be so classified as an Unrestricted Subsidiary
only if such classification is in compliance with Section 4.07 hereof. The
Trustee shall be given prompt notice by the Company of each resolution adopted
by the Board of Directors of the Company under this provision, together with a
copy of each such resolution adopted.

         "U.S." and "United States" means the United States of America, its
territories and possessions, any state of the United states, and the District of
Columbia.

         "U.S. Dollar" and "US$" mean United States dollars.

         "$" means Canadian dollars.

         "U.S. Person" means a U.S. person as defined in Rule 902(k) under the
Securities Act.

         "Wholly-Owned Restricted Subsidiary" means any Restricted Subsidiary,
all of the outstanding voting securities (other than directors' qualifying
shares or similar requirements of law) of which are owned, directly or
indirectly, by the Company or another Wholly-Owned Restricted Subsidiary.

Section 1.02     Other Definitions.

                                                                      Defined in
        Term                                                            Section
        ----                                                          ----------

        "Additional Amounts"                                             4.20
        "Affiliate Transaction"                                          4.11
        "Asset Sale Offer"                                               4.10
        "Asset Sale Payment"                                             4.10
        "Change of Control Offer"                                        4.15
        "Change of Control Payment"                                      4.15
        "Covenant Defeasance"                                            8.03
        "DTC"                                                            2.03
        "Designation"                                                    4.07
        "Designation Amount"                                             4.07
        "Event of Default"                                               6.01

                                       23
<PAGE>

                                                                      Defined in
        Term                                                            Section
        ----                                                          ----------

        "Excess Proceeds"                                                4.10
        "Excluded Holder"                                                4.20
        "First Currency"                                                12.15
        "judgment currency"                                             12.14
        "Legal Defeasance"                                               8.02
        "Note Register"                                                  2.03
        "Offer Amount"                                                   3.09
        "Offer Period"                                                   3.09
        "Other Currency"                                                12.15
        "Paying Agent"                                                   2.03
        "Payment Default"                                                6.01
        "Permitted Indebtedness"                                         4.09
        "Purchase Date"                                                  3.09
        "Registrar"                                                      2.03
        "Repurchase Offer"                                               3.09
        "Restricted Payments"                                            4.07
        "Successor Company"                                              5.01
        "Taxes"                                                          4.20

Section 1.03     Incorporation by Reference of Trust Indenture Act.

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

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

                                       24
<PAGE>

         "indenture securities" means the Notes;

         "indenture security Holder" means a Holder of a Note;

         "indenture to be qualified" means this Indenture;

         "indenture trustee" or "institutional trustee" means the Trustee; and

         "obligor" on the Notes and the Note Guarantees means the Company and
the Guarantors, respectively, and any successor obligor upon the Notes and the
Note Guarantees, respectively.

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

Section 1.04     Rules of Construction.

         Unless the context otherwise requires:

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

         (b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;

         (c) "or" is not exclusive;

         (d) words in the singular include the plural, and in the plural include
the singular;

         (e) provisions apply to successive events and transactions;

         (f) references to sections of, or rules under, the Securities Act shall
be deemed to include substitute, replacement or successor sections or rules
adopted by the Commission from time to time;

         (g) unless the context otherwise requires, any reference to an
"Article", "Section" or "clause" refers to an Article, Section or clause, as the
case may be of this Indenture; and

         (h) the words "herein," "hereof" and "hereunder" and other words of
similar import, refer to this Indenture as a whole and not any particular
Article, Section, clause or other subdivision.

                                   ARTICLE 2.
                                   THE NOTES

Section 2.01     Form and Dating; Terms.

         (a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or

                                       25
<PAGE>

endorsements required by law, stock exchange rule or usage. Each Note shall be
dated the date of its authentication. The Notes shall be in denominations of
US$1,000 and integral multiples thereof.

         (b) The terms and provisions contained in the Notes shall constitute,
and are hereby expressly made, a part of this Indenture and the Company, the
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with this Indenture, this
Indenture shall govern and be controlling.

         (c) Global Notes. Notes issued in global form shall be substantially in
the form of Exhibit A attached hereto (including the Global Note Legend thereon
and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.

         (d) Terms. The aggregate principal amount of Notes which may be
authenticated and delivered under this Indenture is unlimited.

         The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company, the
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.

         The Notes shall be subject to repurchase by the Company pursuant to an
Asset Sale Offer as provided in Section 4.10 hereof or a Change of Control Offer
as provided in Section 4.15 hereof. The Notes shall not be redeemable, other
than as provided in Article 3.

         Additional Notes ranking pari passu with the Initial Notes may be
created and issued from time to time by the Company without notice to or consent
of the Holders and shall be consolidated with and form a single class with the
Initial Notes and shall have the same terms as to status, redemption or
otherwise as the Initial Notes; and provided that the Company's ability to issue
Additional Notes shall be subject to the Company's compliance with Section 4.09
hereof. Any Additional Notes shall be issued with the benefit of an indenture
supplemental to this Indenture.

(e) Euroclear and Clearstream Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear"

                                       26
<PAGE>

and the "General Terms and Conditions of Clearstream" and "Customer Handbook" of
Clearstream shall be applicable to transfers of beneficial interests in the
Regulation S Global Notes that are held by Participants through Euroclear or
Clearstream.

Section 2.02     Execution and Authentication.

         One or more Officers shall execute the Notes on behalf of the Company
by manual or facsimile signature.

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

         A Note shall not be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose until authenticated substantially in the
form of Exhibit A attached hereto by the manual signature of the Trustee. The
signature shall be conclusive evidence that the Note has been duly authenticated
and delivered under this Indenture.

         The Trustee shall, upon a Company Order authenticate and deliver Notes
for original issue in an aggregate principal amount of US$190,000,000 for the
Initial Notes and in an aggregate principal amount specified in a Company Order
for any Additional Notes issued hereunder.

         The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.

Section 2.03     Registrar and Paying Agent for the Notes.

         The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes ("Note Register") and of their
transfer and exchange. The Company may appoint one or more co-registrars and one
or more additional paying agents. The term "Registrar" includes any co-registrar
and the term "Paying Agent" includes any additional paying agent. The Company
may change any Paying Agent or Registrar without prior notice to any Holder. The
Company shall notify the Trustee in writing of the name and address of any Agent
not a party to this Indenture. If the Company fails to appoint or maintain
another entity as Registrar or Paying Agent, the Trustee shall act as such. The
Company or any of the Restricted Subsidiaries may act as Paying Agent or
Registrar.

         The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.

         The Company initially appoints the Trustee to act as the Paying Agent
and Registrar for the Notes and to act as Custodian with respect to the Global
Notes.

                                       27
<PAGE>

Section 2.04     Paying Agent to Hold Money in Trust.

         The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium, if any, or Special Interest, if any, or interest on the
Notes, and will notify the Trustee of any default by the Company in making any
such payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a Restricted
Subsidiary) shall have no further liability for the money. If the Company or a
Restricted Subsidiary acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Holders all money held by it as
Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the
Company, the Trustee shall serve as Paying Agent for the Notes.

Section 2.05     Holder Lists.

         The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee 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 the Holders of
Notes and the Company shall otherwise comply with TIA ss. 312(a).

Section 2.06     Transfer and Exchange.

         (a) Transfer and Exchange of Global Notes. Except as otherwise set
forth in this Section 2.06, a Global Note may be transferred in whole and not in
part only to a nominee of the Depositary, or to a successor Depositary or a
nominee of such successor Depositary. A beneficial interest in a Global Note may
not be exchanged for a Definitive Note unless (i) the Depositary (x) notifies
the Company that it is unwilling or unable to continue as Depositary for such
Global Note or (y) has ceased to be a clearing agency registered under the
Exchange Act, and in either case, a successor Depositary is not appointed by the
Company within 120 days, (ii) the Company is required by law to exchange Global
Notes for Definitive Notes and the Company delivers a written notice to the
Trustee to such effect, or (iii) there shall have occurred and be continuing an
Event of Default with respect to the Notes. Upon the occurrence of any of the
preceding events in (i) to (iii) above, Definitive Notes shall be issued in such
names and denominations as the Depositary shall instruct the Trustee. Global
Notes also may be exchanged or replaced as provided in Sections 2.07 and 2.10
hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a
Global Note or any portion thereof, pursuant to this Section 2.06 or Section
2.07 or 2.10 hereof, shall be authenticated and delivered in the form of, and
shall be, a Global Note, except for Definitive Notes issued subsequent to any of
the preceding events in (i) to (iii) above. A Global Note may not be exchanged
for another Note other than as provided in this Section 2.06(a), however,
beneficial interests in a Global Note may be transferred and exchanged as
provided in Section 2.06(b), (c) or (f) hereof.

                                       28
<PAGE>

         (b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:

                  (i) Transfer of Beneficial Interests in the Same Global Note.
         Beneficial interests in any Restricted Global Note may be transferred
         to Persons who take delivery thereof in the form of a beneficial
         interest in the same Restricted Global Note in accordance with the
         transfer restrictions set forth in the Private Placement Legend.
         Beneficial interests in any Unrestricted Global Note may be transferred
         to Persons who take delivery thereof in the form of a beneficial
         interest in an Unrestricted Global Note. No written orders or
         instructions shall be required to be delivered to the Registrar to
         effect the transfers described in this Section 2.06(b)(i).

                  (ii) All Other Transfers and Exchanges of Beneficial Interests
         in Global Notes. In connection with all transfers and exchanges of
         beneficial interests that are not subject to Section 2.06(b)(i) above,
         the transferor of such beneficial interest must deliver to the
         Registrar either (A) (1) a written order from a Participant or an
         Indirect Participant given to the Depositary in accordance with the
         Applicable Procedures directing the Depositary to credit or cause to be
         credited a beneficial interest in another Global Note in an amount
         equal to the beneficial interest to be transferred or exchanged and (2)
         instructions given in accordance with the Applicable Procedures
         containing information regarding the Participant account to be credited
         with such increase or (B) (1) a written order from a Participant or an
         Indirect Participant given to the Depositary in accordance with the
         Applicable Procedures directing the Depositary to cause to be issued a
         Definitive Note in an amount equal to the beneficial interest to be
         transferred or exchanged and (2) instructions given by the Depositary
         to the Registrar containing information regarding the Person in whose
         name such Definitive Note shall be registered to effect the transfer or
         exchange referred to in (1) above. Upon consummation of an Exchange
         Offer by the Company in accordance with Section 2.06(f) hereof, the
         requirements of this Section 2.06(b)(ii) shall be deemed to have been
         satisfied upon receipt by the Registrar of the instructions contained
         in the Letter of Transmittal delivered by the Holder of such beneficial
         interests in the Global Notes. Upon satisfaction of all of the
         requirements for transfer or exchange of beneficial interests in Global
         Notes contained in this Indenture and the Notes or otherwise applicable
         under the Securities Act, the Trustee shall adjust the principal amount
         of the relevant Global Note(s) pursuant to Section 2.06(h) hereof.

                  (iii) Transfer of Beneficial Interests to Another Restricted
         Global Note. A beneficial interest in any Restricted Global Note may be
         transferred to a Person who takes delivery thereof in the form of a
         beneficial interest in another Restricted Global Note if the transfer
         complies with the requirements of Section 2.06(b)(ii) above and the
         Registrar receives a certificate in the form of Exhibit B hereto,
         including the certifications in item (1) thereof.

                                       29
<PAGE>

                  (iv) Transfer and Exchange of Beneficial Interests in a
         Restricted Global Note for Beneficial Interests in the Unrestricted
         Global Note. A beneficial interest in any Restricted Global Note may be
         exchanged by any holder thereof for a beneficial interest in an
         Unrestricted Global Note or transferred to a Person who takes delivery
         thereof in the form of a beneficial interest in an Unrestricted Global
         Note if the exchange or transfer complies with the requirements of
         Section 2.06(b)(ii) hereof and:

                           (A) such exchange or transfer is effected pursuant to
                  the Exchange Offer in accordance with the Registration Rights
                  Agreement and the holder of the beneficial interest to be
                  transferred, in the case of an exchange, or the transferee, in
                  the case of a transfer, certifies in the applicable Letter of
                  Transmittal that it is not (1) a Broker-Dealer, (2) a Person
                  participating in the distribution of the Exchange Notes or (3)
                  a Person who is an affiliate (as defined in Rule 144) of the
                  Company;

                           (B) such transfer is effected pursuant to the Shelf
                  Registration Statement in accordance with the Registration
                  Rights Agreement;

                           (C) such transfer is effected by a Broker-Dealer
                  pursuant to the Exchange Offer Registration Statement in
                  accordance with the Registration Rights Agreement; or

                           (D) the Registrar receives the following:

                                    (1) if the holder of such beneficial
                           interest in a Restricted Global Note proposes to
                           exchange such beneficial interest for a beneficial
                           interest in an Unrestricted Global Note, a
                           certificate from such Holder substantially in the
                           form of Exhibit C hereto, including the
                           certifications in item (1)(a) thereof; or

                                    (2) if the holder of such beneficial
                           interest in a Restricted Global Note proposes to
                           transfer such beneficial interest to a Person who
                           shall take delivery thereof in the form of a
                           beneficial interest in an Unrestricted Global Note, a
                           certificate from such holder in the form of Exhibit B
                           hereto, including the certifications in item (4)
                           thereof;

                           and, in each such case set forth in this subparagraph
                           (D), if the Registrar so requests or if the
                           Applicable Procedures so require, an Opinion of
                           Counsel in form reasonably acceptable to the
                           Registrar to the effect that such exchange or
                           transfer is in compliance with the Securities Act and
                           that the restrictions on transfer contained herein
                           and in the Private Placement Legend are no longer
                           required in order to maintain compliance with the
                           Securities Act.

         If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate

                                       30
<PAGE>

one or more Unrestricted Global Notes in an aggregate principal amount equal to
the aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.

         Beneficial interests in an Unrestricted Global Note can be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Note without any certification.

         (c) Transfer or Exchange of Beneficial Interests for Definitive Notes.

                  (i) Beneficial Interests in Restricted Global Notes to
         Restricted Definitive Notes. If any holder of a beneficial interest in
         a Restricted Global Note proposes to exchange such beneficial interest
         for a Restricted Definitive Note or to transfer such beneficial
         interest to a Person who takes delivery thereof in the form of a
         Restricted Definitive Note, then, upon the occurrence of any of the
         preceding events in 2.06(a)(i) - (iii) and receipt by the Registrar of
         the following documentation:

                           (A) if the holder of such beneficial interest in a
                  Restricted Global Note proposes to exchange such beneficial
                  interest for a Restricted Definitive Note, a certificate from
                  such holder substantially in the form of Exhibit C hereto,
                  including the certifications in item (2)(a) thereof;

                           (B) if such beneficial interest is being transferred
                  to a QIB in accordance with Rule 144A under the Securities
                  Act, a certificate substantially in the form of Exhibit B
                  hereto, including the certifications in item (1) thereof;

                           (C) if such beneficial interest is being transferred
                  to a Non-U.S. Person in an offshore transaction in accordance
                  with Rule 903 or Rule 904 under the Securities Act, a
                  certificate substantially in the form of Exhibit B hereto,
                  including the certifications in item (2) thereof;

                           (D) if such beneficial interest is being transferred
                  pursuant to an exemption from the registration requirements of
                  the Securities Act in accordance with Rule 144 under the
                  Securities Act, a certificate substantially in the form of
                  Exhibit B hereto, including the certifications in item (3)(a)
                  thereof;

                           (E) if such beneficial interest is being transferred
                  to an Institutional Accredited Investor in reliance on an
                  exemption from the registration requirements of the Securities
                  Act other than those listed in subparagraph (B) above, a
                  certificate substantially in the form of Exhibit B hereto,
                  including the certifications in item 3(d) thereof and such
                  certificates and Opinion of Counsel required by item (3)
                  thereof, if applicable; or

                           (F) if such beneficial interest is being transferred
                  to the Company or any of its Restricted Subsidiaries, a
                  certificate substantially in the form of Exhibit B hereto,
                  including the certifications in item (3)(b) thereof,

                                       31
<PAGE>

                           (G) if such beneficial interest is being transferred
                  pursuant to an effective registration statement under the
                  Securities Act, a certificate substantially in the form of
                  Exhibit B hereto, including the certifications in item (3)(c)
                  thereof,

the Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the
Company shall execute and the Trustee shall authenticate and deliver to the
Person designated in the instructions a Definitive Note in the appropriate
principal amount. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes to the
Persons in whose names such Notes are so registered. Any Definitive Note issued
in exchange for a beneficial interest in a Restricted Global Note pursuant to
this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be
subject to all restrictions on transfer contained therein.

                  (ii) Beneficial Interests in Restricted Global Notes to
         Unrestricted Definitive Notes. A holder of a beneficial interest in a
         Restricted Global Note may exchange such beneficial interest for an
         Unrestricted Definitive Note or may transfer such beneficial interest
         to a Person who takes delivery thereof in the form of an Unrestricted
         Definitive Note only upon the occurrence of any of the preceding events
         in 2.06(a)(i) - (iii) and if:

                           (A) such exchange or transfer is effected pursuant to
                  the Exchange Offer in accordance with the Registration Rights
                  Agreement and the holder of such beneficial interest, in the
                  case of an exchange, or the transferee, in the case of a
                  transfer, certifies in the applicable Letter of Transmittal
                  that it is not (1) a Broker-Dealer, (2) a Person participating
                  in the distribution of the Exchange Notes or (3) a Person who
                  is an affiliate (as defined in Rule 144) of the Company;

                           (B) such transfer is effected pursuant to the Shelf
                  Registration Statement in accordance with the Registration
                  Rights Agreement;

                           (C) such transfer is effected by a Broker-Dealer
                  pursuant to the Exchange Offer Registration Statement in
                  accordance with the Registration Rights Agreement; or

                           (D) the Registrar receives the following:

                                    (1) if the holder of such beneficial
                           interest in a Restricted Global Note proposes to
                           exchange such beneficial interest for a Definitive
                           Note that does not bear the Private Placement Legend,
                           a certificate from such holder substantially in the
                           form of Exhibit C hereto, including the
                           certifications in item (1)(b) thereof; or

                                    (2) if the holder of such beneficial
                           interest in a Restricted Global Note proposes to
                           transfer such beneficial interest to a Person who

                                       32
<PAGE>

                           shall take delivery thereof in the form of a
                           Definitive Note that does not bear the Private
                           Placement Legend, a certificate from such holder
                           substantially in the form of Exhibit B hereto,
                           including the certifications in item (4) thereof;

                  and, in each such case set forth in this subparagraph (D), if
                  the Registrar so requests or if the Applicable Procedures so
                  require, an Opinion of Counsel in form reasonably acceptable
                  to the Registrar to the effect that such exchange or transfer
                  is in compliance with the Securities Act and that the
                  restrictions on transfer contained herein and in the Private
                  Placement Legend are no longer required in order to maintain
                  compliance with the Securities Act.

                  (iii) Beneficial Interests in Unrestricted Global Notes to
         Unrestricted Definitive Notes. If any holder of a beneficial interest
         in an Unrestricted Global Note proposes to exchange such beneficial
         interest for a Definitive Note or to transfer such beneficial interest
         to a Person who takes delivery thereof in the form of a Definitive
         Note, then, upon the occurrence of any of the preceding events in
         2.06(a)(i) - (iii) and satisfaction of the conditions set forth in
         Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate
         principal amount of the applicable Global Note to be reduced
         accordingly pursuant to Section 2.06(h) hereof, and the Company shall
         execute and the Trustee shall authenticate and deliver to the Person
         designated in the instructions a Definitive Note in the appropriate
         principal amount. Any Definitive Note issued in exchange for a
         beneficial interest pursuant to this Section 2.06(c)(iii) shall be
         registered in such name or names and in such authorized denomination or
         denominations as the holder of such beneficial interest shall instruct
         the Registrar through instructions from the Depositary and the
         Participant or Indirect Participant. The Trustee shall deliver such
         Definitive Notes to the Persons in whose names such Notes are so
         registered. Any Definitive Note issued in exchange for a beneficial
         interest pursuant to this Section 2.06(c)(iii) shall not bear the
         Private Placement Legend.

         (d) Transfer and Exchange of Definitive Notes for Beneficial Interests.

                  (i) Restricted Definitive Notes to Beneficial Interests in
         Restricted Global Notes. If any Holder of a Restricted Definitive Note
         proposes to exchange such Note for a beneficial interest in a
         Restricted Global Note or to transfer such Restricted Definitive Note
         to a Person who takes delivery thereof in the form of a beneficial
         interest in a Restricted Global Note, then, upon receipt by the
         Registrar of the following documentation:

                           (A) if the Holder of such Restricted Definitive Note
                  proposes to exchange such Note for a beneficial interest in a
                  Restricted Global Note, a certificate from such Holder
                  substantially in the form of Exhibit C hereto, including the
                  certifications in item (2)(b) thereof;

                                       33
<PAGE>

                           (B) if such Restricted Definitive Note is being
                  transferred to a QIB in accordance with Rule 144A under the
                  Securities Act, a certificate substantially in the form of
                  Exhibit B hereto, including the certifications in item (1)
                  thereof;

                           (C) if such Restricted Definitive Note is being
                  transferred to a Non-U.S. Person in an offshore transaction in
                  accordance with Rule 903 or Rule 904 under the Securities Act,
                  a certificate substantially in the form of Exhibit B hereto,
                  including the certifications in item (2) thereof;

                           (D) if such Restricted Definitive Note is being
                  transferred pursuant to an exemption from the registration
                  requirements of the Securities Act in accordance with Rule 144
                  under the Securities Act, a certificate substantially in the
                  form of Exhibit B hereto, including the certifications in item
                  (3)(a) thereof;

                           (E) if such Restricted Definitive Note is being
                  transferred to an Institutional Accredited Investor in
                  reliance on an exemption from the registration requirements of
                  the Securities Act other than those listed in subparagraphs
                  (B) through (D) above, a certificate substantially in the form
                  of Exhibit B hereto, including the certification in item 3(d)
                  thereof and such certificates and Opinion of Counsel required
                  therein by item, if applicable; or

                           (F) if such Restricted Definitive Note is being
                  transferred to the Company or any of its Restricted
                  Subsidiaries, a certificate substantially in the form of
                  Exhibit B hereto, including the certifications in item (3)(b)
                  thereof,

                           (G) if such Restricted Definitive Note is being
                  transferred pursuant to an effective registration statement
                  under the Securities Act, a certificate substantially in the
                  form of Exhibit B hereto, including the certifications in item
                  (3)(c) thereof,

         the Trustee shall cancel the Restricted Definitive Note, increase or
         cause to be increased the aggregate principal amount of, in the case of
         clause (A) above, the appropriate Restricted Global Note, in the case
         of clause (B) above, the appropriate 144A Global Note, in the case of
         clause (C) above, the appropriate Regulation S Global Note.

                  (ii) Restricted Definitive Notes to Beneficial Interests in
         Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
         exchange such Note for a beneficial interest in an Unrestricted Global
         Note or transfer such Restricted Definitive Note to a Person who takes
         delivery thereof in the form of a beneficial interest in an
         Unrestricted Global Note only if:

                           (A) such exchange or transfer is effected pursuant to
                  the Exchange Offer in accordance with the Registration Rights
                  Agreement and the Holder, in the case of an exchange, or the
                  transferee, in the case of a transfer, certifies in the
                  applicable Letter of Transmittal that it is not (1) a
                  Broker-Dealer, (2) a Person participating in the distribution
                  of the Exchange Notes or (3) a Person who is an affiliate (as
                  defined in Rule 144) of the Company;

                                       34
<PAGE>

                           (B) such transfer is effected pursuant to the Shelf
                  Registration Statement in accordance with the Registration
                  Rights Agreement;

                           (C) such transfer is effected by a Broker-Dealer
                  pursuant to the Exchange Offer Registration Statement in
                  accordance with the Registration Rights Agreement; or

                           (D) the Registrar receives the following:

                                    (1) if the Holder of such Definitive Notes
                           proposes to exchange such Notes for a beneficial
                           interest in the Unrestricted Global Note, a
                           certificate from such Holder substantially in the
                           form of Exhibit C hereto, including the
                           certifications in item (1)(c) thereof; or

                                    (2) if the Holder of such Definitive Notes
                           proposes to transfer such Notes to a Person who shall
                           take delivery thereof in the form of a beneficial
                           interest in the Unrestricted Global Note, a
                           certificate from such Holder substantially in the
                           form of Exhibit B hereto, including the
                           certifications in item (4) thereof;

                           and, in each such case set forth in this subparagraph
                           (D), if the Registrar so requests or if the
                           Applicable Procedures so require, an Opinion of
                           Counsel in form reasonably acceptable to the
                           Registrar to the effect that such exchange or
                           transfer is in compliance with the Securities Act and
                           that the restrictions on transfer contained herein
                           and in the Private Placement Legend are no longer
                           required in order to maintain compliance with the
                           Securities Act.

                  Upon satisfaction of the conditions of any of the
         subparagraphs in this Section 2.06(d)(ii), the Trustee shall cancel the
         Definitive Notes and increase or cause to be increased the aggregate
         principal amount of the Unrestricted Global Note.

                  (iii) Unrestricted Definitive Notes to Beneficial Interests in
         Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note
         may exchange such Note for a beneficial interest in an Unrestricted
         Global Note or transfer such Definitive Notes to a Person who takes
         delivery thereof in the form of a beneficial interest in an
         Unrestricted Global Note at any time. Upon receipt of a request for
         such an exchange or transfer, the Trustee shall cancel the applicable
         Unrestricted Definitive Note and increase or cause to be increased the
         aggregate principal amount of one of the Unrestricted Global Notes.

                  (iv) Unrestricted Definitive Notes to Beneficial Interests in
         Restricted Global Notes. A Holder of an Unrestricted Definitive Note
         may exchange such Note for a beneficial interest in a Restricted Global
         Note or transfer such Definitive Notes to a Person who takes delivery
         thereof in the form of a beneficial interest in a Restricted Global
         Note at any time. Upon receipt of a request for such an exchange or
         transfer, the Trustee shall cancel the applicable Unrestricted
         Definitive Note and increase or cause to be increased the aggregate
         principal amount of one of the Restricted Global Notes.

                                       35
<PAGE>

                  If any such exchange or transfer from a Definitive Note to a
         beneficial interest is effected pursuant to subparagraphs (ii)(B),
         (ii)(D) or (iii) above at a time when an Unrestricted Global Note has
         not yet been issued, the Company shall issue and, upon receipt of an
         Authentication Order in accordance with Section 2.02 hereof, the
         Trustee shall authenticate one or more Unrestricted Global Notes in an
         aggregate principal amount equal to the principal amount of Definitive
         Notes so transferred.

         (e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance with
the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder shall present or surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).

                  (i) Restricted Definitive Notes to Restricted Definitive
         Notes. Any Restricted Definitive Note may be transferred to and
         registered in the name of Persons who take delivery thereof in the form
         of a Restricted Definitive Note if the Registrar receives the
         following:

                           (A) if the transfer will be made pursuant to a QIB in
                  accordance with Rule 144A under the Securities Act, then the
                  transferor must deliver a certificate substantially in the
                  form of Exhibit B hereto, including the certifications in item
                  (1) thereof;

                           (B) if the transfer shall be made pursuant to Rule
                  903 or Rule 904 then the transferor must deliver a certificate
                  in the form of Exhibit B hereto, including the certificates in
                  item (2) thereof; or

                           (C) if the transfer will be made pursuant to any
                  other exemption from the registration requirements of the
                  Securities Act, then the transferor must deliver a certificate
                  in the form of Exhibit B hereto, including the certifications,
                  certificates and Opinion of Counsel required by item (3)
                  thereof, if applicable.

                  (ii) Restricted Definitive Notes to Unrestricted Definitive
         Notes. Any Restricted Definitive Note may be exchanged by the Holder
         thereof for an Unrestricted Definitive Note or transferred to a Person
         or Persons who take delivery thereof in the form of an Unrestricted
         Definitive Note if:

                           (A) such exchange or transfer is effected pursuant to
                  the Exchange Offer in accordance with the Registration Rights
                  Agreement and the Holder, in the case of an exchange, or the
                  transferee, in the case of a transfer, certifies in the
                  applicable Letter of Transmittal that it is not (1) a
                  Broker-Dealer, (2) a Person participating in the distribution
                  of the Exchange Notes or (3) a Person who is an affiliate (as
                  defined in Rule 144) of the Company;

                                       36
<PAGE>

                           (B) any such transfer is effected pursuant to the
                  Shelf Registration Statement in accordance with the
                  Registration Rights Agreement;

                           (C) any such transfer is effected by a Broker-Dealer
                  pursuant to the Exchange Offer Registration Statement in
                  accordance with the Registration Rights Agreement; or

                           (D) the Registrar receives the following:

                                    (1) if the Holder of such Restricted
                           Definitive Notes proposes to exchange such Notes for
                           an Unrestricted Definitive Note, a certificate from
                           such Holder substantially in the form of Exhibit C
                           hereto, including the certifications in item (1)(d)
                           thereof; or

                                    (2) if the Holder of such Restricted
                           Definitive Notes proposes to transfer such Notes to a
                           Person who shall take delivery thereof in the form of
                           an Unrestricted Definitive Note, a certificate from
                           such Holder substantially in the form of Exhibit B
                           hereto, including the certifications in item (4)
                           thereof;

                  and, in each such case set forth in this subparagraph (D), if
                  the Registrar so requests, an Opinion of Counsel in form
                  reasonably acceptable to the Company to the effect that such
                  exchange or transfer is in compliance with the Securities Act
                  and that the restrictions on transfer contained herein and in
                  the Private Placement Legend are no longer required in order
                  to maintain compliance with the Securities Act.

                  (iii) Unrestricted Definitive Notes to Unrestricted Definitive
         Notes. A Holder of Unrestricted Definitive Notes may transfer such
         Notes to a Person who takes delivery thereof in the form of an
         Unrestricted Definitive Note. Upon receipt of a request to register
         such a transfer, the Registrar shall register the Unrestricted
         Definitive Notes pursuant to the instructions from the Holder thereof.

         (f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02 hereof,
the Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Global Notes tendered for acceptance by Persons that certify in
the applicable Letters of Transmittal that (x) they are not broker-dealers, (y)
they are not participating in a distribution of the Exchange Notes and (z) they
are not affiliates (as defined in Rule 144) of the Company, and accepted for
exchange in the Exchange Offer and (ii) Definitive Notes in an aggregate
principal amount equal to the principal amount of the Definitive Notes accepted
for exchange in the Exchange Offer. Concurrently with the issuance of such
Notes, the Trustee shall cause the aggregate principal amount of the applicable
Global Notes to be reduced accordingly, and the Company shall execute and the
Trustee shall authenticate and deliver to the Persons designated by the Holders
of Definitive Notes so accepted Definitive Notes in the

                                       37
<PAGE>

appropriate principal amount. Any Notes that remain outstanding after the
consummation of the Exchange Offer, and Exchange Notes issued in connection with
the Exchange Offer, shall be treated as a single class of securities under this
Indenture.

         (g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.

                  (i) Private Placement Legend.

                           (A) Except as permitted by subparagraph (B) below,
                  each Global Note and each Definitive Note (and all Notes
                  issued in exchange therefor or substitution thereof) shall
                  bear the legend in substantially the following form:

                  "THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
                  UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
                  "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
                  OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHO THE SELLER
                  REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN
                  THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING
                  FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
                  INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS
                  OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH
                  RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT,
                  (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
                  SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE),
                  (4) TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION
                  EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
                  ACT, OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
                  UNDER THE SECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL
                  APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES
                  AND OTHER JURISDICTIONS."

                           (B) Notwithstanding the foregoing, any Regulation S
                  Global Note and any other Global Note or Definitive Note
                  issued pursuant to subparagraphs (b)(iv), (c)(iii), (d)(ii),
                  (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and
                  all Notes issued in exchange therefor or substitution thereof)
                  shall not bear the Private Placement Legend.

                  (ii) Global Note Legend. Each Global Note shall bear a legend
         in substantially the following form:

                  "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
                  INDENTURE GOVERNING THIS NOTE) OR ITS

                                       38
<PAGE>

                  NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS
                  HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
                  CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH
                  NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION
                  2.06(h) OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
                  EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a)
                  OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO
                  THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE
                  INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
                  SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE
                  COMPANY."

         (h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who will take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.

         (i) General Provisions Relating to Transfers and Exchanges.

                  (i) To permit registrations of transfers and exchanges, the
         Company shall execute and the Trustee shall authenticate Global Notes
         and Definitive Notes upon the Company's order or at the Registrar's
         request.

                  (ii) No service charge shall be made to a holder of a
         beneficial interest in a Global Note or to a Holder of a Definitive
         Note for any registration of transfer or exchange, but the Company may
         require payment of a sum sufficient to cover any transfer tax or
         similar governmental charge payable in connection therewith (other than
         any such transfer taxes or similar governmental charge payable upon
         exchange or transfer pursuant to Sections 2.07, 2.10, 3.06, 3.09, 4.10,
         4.15 and 9.05 hereof).

                  (iii) Neither the Registrar nor the Company shall be required
         to register the transfer of or exchange any Note selected for
         redemption in whole or in part, except the unredeemed portion of any
         Note being redeemed in part.

                  (iv) All Global Notes and Definitive Notes issued upon any
         registration of transfer or exchange of Global Notes or Definitive
         Notes shall be the valid obligations of

                                       39
<PAGE>

         the Company, evidencing the same debt, and entitled to the same
         benefits under this Indenture, as the Global Notes or Definitive Notes
         surrendered upon such registration of transfer or exchange.

                  (v) The Company shall not be required (A) to issue, to
         register the transfer of or to exchange any Notes during a period
         beginning at the opening of business 15 days before the day of any
         selection of Notes for redemption under Section 3.02 hereof and ending
         at the close of business on the day of selection, (B) to register the
         transfer of or to exchange any Note so selected for redemption in whole
         or in part, except the unredeemed portion of any Note being redeemed in
         part or (C) to register the transfer of or to exchange a Note between a
         record date and the next succeeding Interest Payment Date.

                  (vi) Prior to due presentment for the registration of a
         transfer of any Note, the Trustee, any Agent and the Company may deem
         and treat the Person in whose name any Note is registered as the
         absolute owner of such Note for the purpose of receiving payment of
         principal of (and premium, if any) and interest on such Notes and for
         all other purposes, and none of the Trustee, any Agent or the Company
         shall be affected by notice to the contrary.

                  (vii) Upon surrender for registration of transfer of any
         Security at the office or agency of the Company designated pursuant to
         Section 4.02, the Company shall execute, and the Trustee shall
         authenticate and deliver, in the name of the designated transferee or
         transferees, one or more replacement Notes of any authorized
         denomination or denominations of a like aggregate principal amount.

                  (viii) At the option of the Holder, Notes may be exchanged for
         other Notes of any authorized denomination or denominations of a like
         aggregate principal amount upon surrender of the Notes to be exchanged
         at such office or agency. Whenever any Global Notes or Definitive Notes
         are so surrendered for exchange, the Company shall execute, and the
         Trustee shall authenticate and deliver, the replacement Global Notes
         and Definitive Notes which the Holder making the exchange is entitled
         to in accordance with the provisions of Section 2.02 hereof.

                  (ix) All certifications, certificates and Opinions of Counsel
         required to be submitted to the Registrar pursuant to this Section 2.06
         to effect a registration of transfer or exchange may be submitted by
         facsimile.

Section 2.07     Replacement Notes.

         If any mutilated Note is surrendered to the Trustee or the Company and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.

                                       40
<PAGE>

         Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.

Section 2.08     Outstanding Notes.

         The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.

         If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.

         If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.

         If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.

Section 2.09     Treasury Notes.

         In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that a Responsible Officer of the Trustee knows are so owned shall be
so disregarded. Notes so owned which have been pledged in good faith shall not
be disregarded if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right to deliver any such direction, waiver or consent with respect to
the Notes and that the pledgee is not the Company or any obligor upon the Notes
or any Affiliate of the Company or of such other obligor.

Section 2.10     Temporary Notes.

         Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated Notes but may have variations that the Company
considers appropriate for temporary Notes and as shall be reasonably acceptable
to the Trustee. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary Notes.

         Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.

                                       41
<PAGE>

Section 2.11     Cancellation.

         The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall dispose of
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the disposal of all cancelled Notes shall be delivered to
the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.

Section 2.12     Defaulted Interest.

         If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such defaulted interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons entitled
to such defaulted interest as provided in this Section 2.12. The Trustee shall
fix or cause to be fixed each such special record date and payment date;
provided that no such special record date shall be less than 10 days prior to
the related payment date for such defaulted interest. The Trustee shall promptly
notify the Company of such special record date. At least 15 days before the
special record date, the Company (or, upon the written request of the Company,
the Trustee in the name and at the expense of the Company) shall mail or cause
to be mailed, first-class postage prepaid, to each Holder a notice at his or her
address as it appears in the Note Register that states the special record date,
the related payment date and the amount of such interest to be paid.

         Subject to the foregoing provisions of this Section 2.12, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.

                                   ARTICLE 3.
                                   REDEMPTION

Section 3.01     Notices to Trustee.

         If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.

                                       42
<PAGE>

Section 3.02     Selection of Notes to be Redeemed.

         If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee shall select the Notes to be redeemed
or purchased among the Holders of the Notes in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or by
such other method the Trustee considers fair and appropriate. In the event of
partial redemption by lot, the particular Notes to be redeemed shall be
selected, unless otherwise provided herein, not less than 30 nor more than 60
days prior to the redemption date by the Trustee from the outstanding Notes not
previously called for redemption.

         The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of US$1,000 or whole multiples of US$1,000;
no Notes of US$1,000 or less can be redeemed in part, except that if all of the
Notes of a Holder are to be redeemed, the entire outstanding amount of Notes
held by such Holder, even if not a multiple of US$1,000, shall be redeemed.
Except as provided in the preceding sentence, provisions of this Indenture that
apply to Notes called for redemption also apply to portions of Notes called for
redemption.

Section 3.03     Notice of Redemption.

         Subject to Section 3.09 hereof, at least 30 days but not more than 60
days before a redemption date (except that redemption notices may be mailed more
than 60 days prior to a redemption date if the notice is issued in connection
with Article 8 or Article 11 hereof) the Company shall mail or cause to be
mailed, by first class mail, a notice of redemption to each Holder whose Notes
are to be redeemed at its registered address.

         The notice shall identify the Notes to be redeemed and shall state:

         (a) the redemption date;

         (b) the redemption price;

         (c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;

         (d) the name and address of the Paying Agent;

         (e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;

         (f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;

                                       43
<PAGE>

         (g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and

         (h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.

         At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided that the Company
shall have delivered to the Trustee, at least 35 days prior to the redemption
date, an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as provided in the
preceding paragraph.

Section 3.04     Effect of Notice of Redemption.

         Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional. On and after the redemption date, interest ceases to accrue on
Notes or portions of Notes called for redemption.

Section 3.05     Deposit of Redemption Price.

         One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued and unpaid interest on all Notes to be redeemed
on that date. The Trustee or the Paying Agent shall promptly return to the
Company any money deposited with the Trustee or the Paying Agent by the Company
in excess of the amounts necessary to pay the redemption price of, and accrued
and unpaid interest on, all Notes to be redeemed.

         If the Company complies with the provisions of the preceding paragraph,
on and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after a
Record Date but on or prior to the related Interest Payment Date, then any
accrued and unpaid interest shall be paid to the Person in whose name such Note
was registered at the close of business on such Record Date. If any Note called
for redemption shall not be so paid upon surrender for redemption because of the
failure of the Company to comply with the preceding paragraph, interest shall be
paid on the unpaid principal, from the redemption date until such principal is
paid, and to the extent lawful on any interest accrued to the redemption date
not paid on such unpaid principal, in each case at the rate provided in the
Notes and in Section 4.01 hereof.

Section 3.06     Notes Redeemed in Part.

         Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.

                                       44
<PAGE>

Section 3.07     Optional Redemption.

         (a) At any time prior to November 15, 2006, the Company may on any one
or more occasions redeem up to 35% of the aggregate principal amount of Notes
issued under this Indenture, calculated after giving effect to the issuance of
Additional Notes, if any, at a redemption price of 107.75% of the principal
amount, plus accrued and unpaid interest and Special Interest, if any, to the
redemption date, with the net cash proceeds of one or more issuances of Common
Stock; provided that:

                  (1) at least 65% of the aggregate principal amount of Notes
         issued under this Indenture, calculated after giving effect to the
         issuance of Additional Notes, if any issued, remains outstanding
         immediately after the occurrence of such redemption (excluding Notes
         held by the Company and its Affiliates); and

                  (2) the redemption occurs within 90 days of the date of the
         closing of such sale of Common Stock.

         (b) Except pursuant to clause (a) above and as described below under
clause (d) of this Section 3.07, the Notes will not be redeemable at the
Company's option before November 15, 2008.

         (c) On or after November 15, 2008, the Company may redeem all or a part
of the Notes upon not less than 30 nor more than 60 days' prior notice, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest and Special Interest, if any, on the Notes
redeemed, to the applicable redemption date, if redeemed during the twelve-month
period beginning on November 15 of the years indicated below:

<TABLE>
<CAPTION>
         YEAR                                               PERCENTAGE
         <S>                                                 <C>
         2008............................................... 103.875%
         2009............................................... 102.583%
         2010............................................... 101.292%
         2011 and thereafter................................ 100.000%
</TABLE>

         (d) Redemption for Changes in Canadian Withholding Taxes: The Company
may redeem all, but not less than all, of the Notes at any time at 100% of the
aggregate principal amount of the Notes, plus accrued and unpaid interest and
Special Interest, if any, on the Notes redeemed to the applicable redemption
date, if the Company has become or would become obligated to pay, on the next
date on which any amount would be payable with respect to the Notes, any
Additional Amounts as a result of a change in the laws (including any
regulations promulgated thereunder) of Canada (or any political subdivision or
taxing authority thereof or therein), or any change in any official position
regarding the application or interpretation of such laws or regulations, which
change is announced or becomes effective on or after the date of the Offering
Circular.

         (e) Any redemption pursuant to this Section 3.07 shall be made pursuant
to the provisions of Sections 3.01 through 3.06 hereof.

                                       45
<PAGE>

Section 3.08     Mandatory Redemption.

         The Company shall not be required to make mandatory redemption or
sinking fund payments with respect to the Notes.

Section 3.09     Offer to Purchase by Application of Excess Proceeds.

         (a) In the event that, pursuant to Section 4.10 or 4.15 hereof, the
Company shall be required to commence an Asset Sale offer or a Change of Control
Offer, as the case may be, (each, a "Repurchase Offer"), it shall follow the
procedures specified below.

         (b) The Repurchase Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 or 4.15, as applicable, (the "Offer Amount")
or, if less than the Offer Amount has been tendered, all Notes tendered in
response to the Repurchase Offer. Payment for any Notes so purchased shall be
made in the same manner as interest payments are made.

         (c) If the Purchase Date is on or after a Record Date and on or before
the related Interest Payment Date, any accrued and unpaid interest shall be paid
to the Person in whose name a Note is registered at the close of business on
such record date, and no additional interest shall be payable to Holders who
tender Notes pursuant to the Repurchase Offer.

         (d) Upon the commencement of a Repurchase Offer, the Company shall
send, by first class mail, a notice to each of the Holders, with a copy to the
Trustee. The notice shall contain all instructions and materials necessary to
enable such Holders to tender Notes pursuant to the Repurchase Offer. The
Repurchase Offer shall be made to all Holders. The notice, which shall govern
the terms of the Repurchase Offer, shall state:

                  (i)      that the Repurchase Offer is being made pursuant to
                           this Section 3.09 and Section 4.10 or 4.15, as
                           applicable, the length of time the Repurchase Offer
                           shall remain open. If the Repurchase Offer is a
                           Change of Control Offer made pursuant to Section 4.15
                           such notice shall describe the transaction or
                           transactions that constitute the Change of Control
                           and that all Notes tendered will be accepted for
                           payment;

                  (ii)     the Offer Amount, the Asset Sale Payment or Change of
                           Control Payment, as applicable, and the Purchase
                           Date;

                  (iii)    that any Note not tendered or accepted for payment
                           shall continue to accrete or accrue interest;

                  (iv)     that, unless the Company defaults in making such
                           payment, any Note accepted for payment pursuant to
                           the Repurchase Offer shall cease to accrete or accrue
                           interest after the Purchase Date;

                                       46
<PAGE>

                  (v)      that Holders electing to have a Note purchased
                           pursuant to a Repurchase Offer may elect to have
                           Notes purchased in integral multiples of US$1,000
                           only;

                  (vi)     that Holders electing to have a Note purchased
                           pursuant to any Repurchase Offer shall be required to
                           surrender the Note, with the form entitled "Option of
                           Holder to Elect Purchase" on the reverse of the Note
                           completed, or transfer by book-entry transfer, to the
                           Company, a depositary, if appointed by the Company,
                           or a Paying Agent at the address specified in the
                           notice at least three days before the Purchase Date;

                  (vii)    that Holders shall be entitled to withdraw their
                           election if the Company, the depositary or the Paying
                           Agent, as the case may be, receives, not later than
                           the expiration of the Offer Period, a telegram,
                           telex, facsimile transmission or letter setting forth
                           the name of the Holder, the principal amount of the
                           Note the Holder delivered for purchase and a
                           statement that such Holder is withdrawing his
                           election to have such Note purchased;

                  (viii)   that, if the aggregate principal amount of Notes
                           surrendered by Holders exceeds the Offer Amount
                           required pursuant to Section 4.10, the Company shall
                           select the Notes to be purchased pursuant to Section
                           3.02 (with such adjustments as may be deemed
                           appropriate by the Company so that only Notes in
                           denominations of US$1,000, or integral multiples
                           thereof, shall be purchased); and

                  (ix)     that Holders whose Notes were purchased only in part
                           shall be issued new Notes equal in principal amount
                           to the unpurchased portion of the Notes surrendered
                           (or transferred by book-entry transfer).

         (e) On or before the Purchase Date, the Company shall, to the extent
lawful, (1) accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Repurchase
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
(2) deposit with the Paying Agent an amount equal to the Offer Amount in respect
of all Notes, or portions thereof; properly tendered, and (3) shall deliver to
the Trustee an Officers' Certificate stating that such Notes or portions thereof
were accepted for payment by the Company in accordance with the terms of this
Section 3.09.

         (f) The Company, the Depositary or the Paying Agent, as the case may
be, shall promptly (but in any case not later than five days after the Purchase
Date) mail or deliver to each tendering Holder an amount equal to the purchase
price of the Notes tendered by such Holder and accepted by the Company for
purchase, and the Company shall promptly issue a new Note, and the Trustee, upon
written request from the Company shall authenticate and mail or deliver such new
Note to such Holder, in a principal amount equal to any unpurchased portion of
the Note surrendered. Any Note not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof. The Company shall publicly
announce the results of the Repurchase Offer on the Purchase Date.

         Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.

                                       47
<PAGE>

                                   ARTICLE 4.
                                    COVENANTS

Section 4.01     Payment of Notes.

         The Company shall pay or cause to be paid the principal of, premium, if
any, Special Interest, if any, and interest on the Notes on the dates and in the
manner provided in the Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Company
or a Restricted Subsidiary thereof, holds as of 2:00 p.m. Eastern Time on the
due date money deposited by the Company in immediately available funds and
designated for and sufficient to pay all principal, premium, if any, and
interest then due.

         The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the then applicable
interest rate on the Notes to the extent lawful; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest and Special Interest (without regard to any
applicable grace period) at the same rate to the extent lawful.

Section 4.02     Maintenance of Office or Agency.

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

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

         The Company hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of the Company in accordance with Section 2.03
hereof.

Section 4.03     Reports to Holders.

         (a) Whether or not required by the Commission, so long as any Notes are
outstanding, the Company will furnish to the Holders of Notes, within the time
periods specified in the Commission's rules and regulations all quarterly and
annual financial information that the Company would have been required to file
with the Commission (i) on Forms 10-Q or 10-K if the Company were required to
file on such Forms, or (ii) on Forms 6-K, 20-F or 40-F, including

                                       48
<PAGE>

in each case a "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and, with respect to the annual information only, a
report on the annual financial statements by the Company's certified independent
accountants.

         (b) If, at any time after consummation of the Exchange Offer the
Company is no longer subject to the periodic reporting requirements of the
Exchange Act for any reason, the Company will nevertheless continue filing the
reports specified in the preceding paragraph with the Commission within the time
periods specified above unless the Commission will not accept such a filing. The
Company agrees that it will not take any action for the purpose of causing the
Commission not to accept any such filings. If, notwithstanding the foregoing,
the Commission will not accept the Company's filings for any reason, the Company
will post the reports referred to in the preceding paragraph on its website
within the time periods that would apply if the Company were required to file
those reports with the Commission. In addition, the Company and the Guarantors
have agreed that, for so long as any Notes remain outstanding, they will furnish
to the Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act and including any information that would be required by
clause (ii) of the preceding paragraph.

         (c) Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to conclusively rely exclusively on Officers' Certificates).

Section 4.04     Compliance Certificate.

         (a) The Company shall deliver to the Trustee, within 90 days after the
end of each fiscal year, and within 90 days after the end of each fiscal quarter
(other than the fourth fiscal quarter) ending after the date hereof, a
certificate from the principal executive officer, principal financial officer or
principal accounting officer stating that a review of the activities of the
Company and its Restricted Subsidiaries during the preceding fiscal year has
been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every condition and
covenant contained in this Indenture and is not in default in the performance or
observance of any of the terms, provisions, covenants and conditions of this
Indenture (or, if a Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default of which he or she may have knowledge and
what action the Company is taking or proposes to take with respect thereto).

         (b) When any Default or Event of Default has occurred and is continuing
under this Indenture, or if the Trustee for the Notes or the holder of any other
evidence of Indebtedness of the Company or any Subsidiary gives any notice or
takes any other action with respect to a claimed Default or Event of Default,
the Company shall as soon as practicable (and, in any event, within 10 days
after the Company's knowledge thereof) deliver to the Trustee by registered or
certified mail or by facsimile transmission an Officers' Certificate specifying
such event and what action the Company proposes to take thereto.

                                       49
<PAGE>

Section 4.05     Taxes.

         The Company shall pay, and shall cause each of its Restricted
Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate negotiations or proceedings or where the failure to effect such
payment is not adverse in any material respect to the Holders of the Notes.

Section 4.06     Stay, Extension and Usury Laws.

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

Section 4.07     Limitation on Restricted Payments.

         The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly:

         (a) declare or pay any dividend or any other distribution or payment on
Capital Stock of the Company or any Restricted Subsidiary or any payment made to
the direct or indirect holders (in their capacities as such) of Capital Stock of
the Company or any Restricted Subsidiary (other than (x) dividends or
distributions payable solely in Capital Stock (other than Disqualified Capital
Stock) of the Company, and (y) in the case of Restricted Subsidiaries of the
Company, dividends or distributions payable to the Company or to a Restricted
Subsidiary);

         (b) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or any of its Restricted Subsidiaries (other than
Capital Stock owned by the Company or a Restricted Subsidiary) or any Capital
Stock of any direct or indirect parent of the Company;

         (c) make any principal payment on, or purchase, defease, repurchase,
redeem or otherwise acquire or retire for value, prior to any scheduled
maturity, scheduled repayment or scheduled sinking fund payment, any
Indebtedness of the Company or any Guarantor which is subordinated in right of
payment to the Notes or such Guarantor's Guarantee, as the case may be (other
than any subordinated Indebtedness held by the Company or any Wholly-Owned
Restricted Subsidiary or any such Indebtedness acquired in anticipation of
satisfying a scheduled sinking fund obligation, principal installment or final
maturity in each case due within one year of the date of acquisition);

         (d) make any Investment other than a Permitted Investment;

         (e) designate any Subsidiary of the Company as an Unrestricted
Subsidiary (a "Designation"); provided that the Designation of a Subsidiary of
the Company as an Unrestricted

                                       50
<PAGE>

Subsidiary shall be deemed to include the Designation of all of the Subsidiaries
of such Subsidiary; or

         (f) forgive any Indebtedness of an Affiliate of the Company owed to the
Company or a Restricted Subsidiary.

(all such payments and other actions set forth in clauses (a) through (f) above
being collectively referred to as "Restricted Payments") unless, at the time of
and after giving effect to such Restricted Payment:

                  (1) no Default or Event of Default shall have occurred and be
         continuing at the time of or immediately after giving effect to such
         Restricted Payment;

                  (2) immediately after giving pro forma effect to such
         Restricted Payment, the Company could incur US$1.00 of additional
         Indebtedness (other than Permitted Indebtedness) under in Section 4.09
         hereof; and

                  (3) immediately after giving effect to such Restricted
         Payment, the aggregate amount of all Restricted Payments declared or
         made after the Issue Date does not exceed the sum (without duplication)
         of:

                           (i)      50% of the Company's cumulative Consolidated
                                    Net Income (or if cumulative Consolidated
                                    Net Income shall be a loss, minus 100% of
                                    such loss) for the period beginning on the
                                    first day of the Company's fiscal quarter
                                    commencing after the Issue Date and ending
                                    on the last day of the fiscal quarter
                                    immediately preceding the date of such
                                    proposed Restricted Payment (treating such
                                    period as a single accounting period);

                           (ii)     100% of the aggregate net cash proceeds
                                    received by the Company from the issuance or
                                    sale after the Issue Date (other than to a
                                    Restricted Subsidiary) of (A) Capital Stock
                                    (other than Disqualified Capital Stock) of
                                    the Company or (B) any Indebtedness or other
                                    securities of the Company that are
                                    convertible into or exercisable or
                                    exchangeable for Capital Stock (other than
                                    Disqualified Capital Stock) of the Company
                                    which have been so converted, exercised or
                                    exchanged, as the case may be, excluding, in
                                    the case of clause (3)(ii), any net cash
                                    proceeds from the issuance of Common Stock
                                    to the extent such net cash proceeds are
                                    used to redeem the Notes in accordance with
                                    Section 3.07(a) above;

                           (iii)    without duplication of any amounts included
                                    in clause (3)(i) above, so long as the
                                    Designation thereof was treated as a
                                    Restricted Payment made after the Issue
                                    Date, with respect to any Unrestricted
                                    Subsidiary that has been redesignated as a
                                    Restricted Subsidiary after the Issue Date
                                    in accordance with the definition of
                                    Restricted Subsidiary, the Company's
                                    proportionate interest in an amount equal to
                                    the Fair Market Value of the Company's
                                    interest in such Subsidiary; provided that
                                    such amount shall not in any case exceed

                                       51
<PAGE>

                                    the Designation Amount with respect to such
                                    Restricted Subsidiary at the time of its
                                    Designation;

                           (iv)     in the case of the disposition or repayment
                                    of any Investment, or the release of a
                                    Guarantee, constituting a Restricted Payment
                                    made after the Issue Date, an amount equal
                                    to the lesser of the return of capital with
                                    respect to such Investment and the initial
                                    amount of such Investment which was treated
                                    as a Restricted Payment, in either case,
                                    less the cost of the disposition of such
                                    Investment and net of taxes; and

                           (v)      $10.0 million.

                           In determining the amount of any Restricted Payment,
                  cash distributed or invested shall be valued at the face
                  amount thereof and Property other than cash shall be valued at
                  its Fair Market Value, except that, in determining the amount
                  of any Restricted Payment made under clause (e) above, the
                  amount of such Restricted Payment (the "Designation Amount")
                  shall be equal to the greater of (i) the book value or (ii)
                  the Fair Market Value of the Company's proportionate interest
                  in such Subsidiary on such date

         The provisions of this covenant shall not prevent:

         (a) the payment of any dividend or distribution within 60 days after
the date of declaration thereof, if at such date of declaration such payment
would comply with the provisions of this Indenture;

         (b) the repurchase, redemption or other acquisition or retirement of
any shares of Capital Stock of the Company or Indebtedness of the Company or any
Guarantor subordinated to the Notes or such Guarantor's Guarantee, as the case
may be, by conversion into, or by or in exchange for, shares of Capital Stock of
the Company (other than Disqualified Capital Stock), or out of the net cash
proceeds of the substantially concurrent sale (other than to a Restricted
Subsidiary) of other shares of Capital Stock of the Company (other than
Disqualified Capital Stock); provided that any such net cash proceeds are
excluded from clause (3)(ii) of the immediately preceding paragraph for the
purposes of this calculation (and were not included therein at any time) and are
not used to redeem the Notes pursuant to Section 3.07 (a), (b) or (c) above;

         (c) the redemption, repayment or retirement of Indebtedness of the
Company or any Guarantor subordinated to the Notes or such Guarantor's
Guarantee, as the case may be, in exchange for, by conversion into, or out of
the net cash proceeds of, (x) a substantially concurrent sale or incurrence of
Indebtedness of the Company or such Guarantor, as the case may be (other than
any Indebtedness owed to a Restricted Subsidiary), that is contractually
subordinated in right of payment to the Notes or such Guarantor's Guarantee, as
the case may be, to at least the same extent as the Indebtedness being redeemed,
repaid or retired or (y) a substantially concurrent sale (other than to a
Restricted Subsidiary) of shares of Capital Stock of the Company; provided that
any such net cash proceeds are excluded from clause (3)(ii) of the

                                       52
<PAGE>

immediately preceding paragraph (and were not included therein at any time) and
are not used to redeem the Notes pursuant to Section 3.07 (a) or (b) above;

         (d) the retirement of any shares of Disqualified Capital Stock of the
Company by conversion into, or by exchange for, other shares of Disqualified
Capital Stock of the Company, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Restricted Subsidiary) of other
shares of Disqualified Capital Stock of the Company; provided that any such net
cash proceeds are excluded from clause (3)(ii) of the immediately preceding
paragraph (and were not included therein at any time) and are not used to redeem
the Notes pursuant to Section 3.07 (a) or (b) above;

         (e) (x) the purchase, redemption or other acquisition for value of
shares of Capital Stock of the Company (other than Disqualified Capital Stock)
held by employees or directors (or their estates or beneficiaries under their
estates) of the Company upon the death, retirement or termination of employment
or directorship of such employees or directors pursuant to the terms of an
employee benefit plan or other agreement approved by the Board of Directors of
the Company and (y) the purchase, redemption, acquisition or other retirement
for nominal value of any rights issued in accordance with this Indenture and
granted pursuant to any shareholder rights plan approved by the Board of
Directors of the Company; provided that the aggregate cash consideration paid,
or distributions made, pursuant to this clause (e) do not exceed $2.0 million in
the aggregate subsequent to the Issue Date;

         (f) the payment of any dividend by a Restricted Subsidiary that is not
a Wholly-Owned Restricted Subsidiary to the holders of its Capital Stock on a
pro rata basis;

         (g) repurchases of Capital Stock deemed to occur upon the exercise of
stock options;

         (h) payments of (x) dividends on, and (y) the repurchase, redemption,
retirement or acquisition at the scheduled maturity, scheduled repayment or
scheduled sinking fund date of, Disqualified Capital Stock the incurrence of
which was permitted by this Indenture; and

         (i) Investments acquired as a capital contribution to, or in exchange
for, or out of the net cash proceeds of a substantially concurrent offering of,
Capital Stock (other than Disqualified Capital Stock) of the Company; provided
that the amount of any such net cash proceeds that are utilized for any such
acquisition or exchange shall be excluded from clause (3)(ii) of the immediately
preceding paragraph.

         In calculating the aggregate amount of Restricted Payments made
subsequent to the Issue Date for purposes of paragraph (3) of this Section 4.07,
amounts expended pursuant to clauses (a) (but only if the declaration thereof
has not been counted in a prior period), (e) and (h)(x) of this paragraph shall
be included in such calculation and clauses (b), (c), (d), (f), (g), (h)(y) and
(i) of this paragraph shall not be included in such calculation.

         Not later than the date of making any Restricted Payment other than a
Restricted Payment under clause (b), (c), (d), (e), (f), (g) or (i), which
together with any Restricted Payments not previously reported pursuant to this
sentence, exceeds $3.0 million, the Company shall deliver to the Trustee an
Officers' Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by the covenant
described above were

                                       53
<PAGE>

computed, which calculations may be based upon the Company's latest available
financial statements, and that no Default or Event of Default has occurred and
is continuing and no Default or Event of Default will occur immediately after
giving effect to any such Restricted Payment.

Section 4.08     Limitation on Dividend and Other Payment Restrictions Affecting
                 Restricted Subsidiaries.

         The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or restriction on
the ability of any Restricted Subsidiary to:

         (a) pay dividends or make any other distributions to the Company or any
Restricted Subsidiary (A) on its Capital Stock or (B) with respect to any other
interest or participation in, or measured by, its profits;

         (b) repay any Indebtedness or any other obligation owed to the Company
or any Restricted Subsidiary;

         (c) make loans or advances or capital contributions to the Company or
any of its Restricted Subsidiaries; or

         (d) transfer any of its properties or assets to the Company or any of
its Restricted Subsidiaries;

except for such encumbrances or restrictions existing under or by reason of:

         (a) encumbrances or restrictions existing on the Issue Date to the
extent and in the manner such encumbrances and restrictions are in effect on the
Issue Date;

         (b) this Indenture, the Notes and any Guarantees, or any other
instrument governing debt securities of the Company incurred in compliance with
Section 4.09 hereof that are no more restrictive, taken as a whole, than those
contained in this Indenture, the Notes and the Guarantees;

         (c) applicable law;

         (d) any instrument governing Acquired Indebtedness or Capital Stock of
a Person acquired by the Company or its Restricted Subsidiaries as in effect at
the time of such acquisition, which encumbrance or restriction is not applicable
to any Person, or the properties or assets of any Person, other than the Person
(including any Subsidiary of the Person), the property or assets of the Person
(including any Subsidiary of the Person) or the properties or assets, in each
case, so acquired;

         (e) customary non assignment provisions in leases or other agreements
entered in the ordinary course of business and consistent with past practices;

         (f) encumbrances or restrictions under Credit Facilities;

                                       54
<PAGE>

         (g) Refinancing Indebtedness; provided that such restrictions are no
more restrictive than those contained in the agreements governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded;

         (h) customary restrictions in security agreements or mortgages securing
Indebtedness of the Company or a Restricted Subsidiary only to the extent such
restrictions restrict the transfer of the property subject to such security
agreements and mortgages;

         (i) customary restrictions with respect to a Restricted Subsidiary
pursuant to an agreement that has been entered into for the sale or disposition
of all or substantially all of the Capital Stock or assets of such Restricted
Subsidiary to be consummated in accordance with the terms of this Indenture
solely in respect of the Capital Stock or assets to be sold or disposed of;

         (j) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements, assets sale agreements, stock
sale agreements and other similar agreements entered into in the ordinary course
of business; or

         (k) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business.

Section 4.09     Limitation on Additional Indebtedness.

         (a) The Company shall not, and shall not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, incur (as defined in Section
1.01), any Indebtedness (including, without limitation, any Acquired
Indebtedness); provided that if no Default or Event of Default shall have
occurred and be continuing at the time as a consequence of the incurrence of
such Indebtedness, the Company or any Restricted Subsidiary may incur
Indebtedness (including any Acquired Indebtedness) if the Company's Consolidated
Fixed Charge Coverage Ratio is greater than 2.0 to 1;

         Notwithstanding the foregoing, the following items of Indebtedness may
be incurred (collectively, "Permitted Indebtedness"):

         (i) Indebtedness of the Company or any Restricted Subsidiary arising
under or in connection with Credit Facilities in an aggregate principal amount
at any time outstanding not to exceed the greater of (i) $50.0 million, less any
prepayments actually made thereunder that permanently reduce the commitment
under a Credit Facility and (ii) the sum of (x) 85.0% of the net book value of
accounts receivable of the Company and its Restricted Subsidiaries and (y) 60.0%
of the net book value of inventory of the Company and its Restricted
Subsidiaries;

         (ii) Indebtedness under the Notes and any Guarantees to be issued on
the Issue Date, and the Exchange Notes and any Guarantees to be issued pursuant
to the Registration Rights Agreement;

         (iii) Indebtedness not covered by any other clause of this definition
which is outstanding on the Issue Date;

                                       55
<PAGE>

         (iv) Indebtedness of the Company owed to and held by any Wholly-Owned
Restricted Subsidiary which is unsecured and subordinated in right of payment to
the payment and performance of the Company's obligations under this Indenture
and the Notes and Indebtedness of any Restricted Subsidiary owed to and held by
the Company or another Wholly-Owned Restricted Subsidiary; provided that:

                  (1) any sale or other disposition of any Indebtedness of the
         Company or any Restricted Subsidiary referred to in this clause (d) to
         a Person (other than the Company or a Wholly-Owned Restricted
         Subsidiary);

                  (2) any sale or other disposition of Capital Stock of any
         Wholly-Owned Restricted Subsidiary which holds Indebtedness of the
         Company or another Restricted Subsidiary such that such Wholly-Owned
         Restricted Subsidiary ceases to be a Wholly-Owned Restricted
         Subsidiary; and

                  (3) the Designation of a Restricted Subsidiary that holds
         Indebtedness of the Company or any other Restricted Subsidiary as an
         Unrestricted Subsidiary;

         shall be deemed to be an incurrence of Indebtedness not constituting
         Permitted Indebtedness by the issuer of such Indebtedness;

         (v) Purchase Money Indebtedness and Capitalized Lease Obligations
incurred to acquire, construct or improve property in the ordinary course of
business in an aggregate principal amount outstanding not to exceed, together
with all other Indebtedness outstanding under this clause (e), at the time of
any such incurrence and after giving pro forma effect thereto, 5.0% of the
consolidated tangible assets of the Company and its Restricted Subsidiaries as
of the end of the most recent fiscal quarter for which consolidated financial
statements are available ending on or prior to the date of determination;

         (vi) Interest Rate Agreements relating to Indebtedness of the Company
or any Restricted Subsidiary (which indebtedness (a) bears interest at
fluctuating interest rates and (b) is otherwise permitted to be incurred
pursuant to this Section 4.09; provided that the notional principal amount of
such Interest Rate Agreements, at the time of the incurrence thereof, does not
exceed the principal amount of the Indebtedness to which such Interest Rate
Agreements relate;

         (vii) Indebtedness under Currency Agreements; provided that in the case
of Currency Agreements which relate to Indebtedness, such Currency Agreements do
not increase the principal amount of Indebtedness of the Company and its
Restricted Subsidiaries outstanding other than as a result of fluctuations in
foreign currency exchange rates or by reason of fees, indemnities or
compensation payable thereunder;

         (viii) Indebtedness of the Company or any Restricted Subsidiary in
respect of reimbursement obligations relating to undrawn standby letters of
credit issued for the account of the Company or such Restricted Subsidiary, as
the case may be, in the ordinary course of business;

                                       56
<PAGE>

         (ix) Indebtedness of the Company or any Restricted Subsidiary in
respect of bid, performance, surety and appeal bonds, statutory obligations or
other obligations of a like nature, provided in the ordinary course of business;

         (x) additional Indebtedness of the Company or a Restricted Subsidiary
not to exceed $25.0 million in aggregate principal amount at any one time
outstanding;

         (xi) Refinancing Indebtedness;

         (xii) the guarantee by the Company or any of the Guarantors of
Indebtedness of the Company or a Guarantor that was permitted to be incurred by
another provision of this covenant;

         (xiii) the accrual of interest, the accretion or amortization of
original issue discount, the payment of interest on any Indebtedness in the form
of additional Indebtedness with the same terms, and the payment of dividends on
Disqualified Capital Stock in the form of additional shares of the same class of
Disqualified Capital Stock; provided, in each such case, that the amount thereof
is included in the Consolidated Fixed Charges of the Company as accrued;

         (xiv) Indebtedness of the Company or any Restricted Subsidiary
consisting of guarantees, indemnities or obligations in respect of purchase
price adjustments in connection with the acquisition or disposition of assets,
including, without limitation, Capital Stock; and

         (xv) the incurrence of Indebtedness by the Company or any Restricted
Subsidiary arising from the honoring by a bank or other financial institution of
a check, draft or similar instrument inadvertently (except in the case of
daylight overdrafts) drawn against insufficient funds in the ordinary course of
business; provided that such Indebtedness is extinguished within 30 days of
incurrence.

         (b) For purposes of determining compliance with this Section 4.09, in
the event that an item of proposed Indebtedness meets the criteria of more than
one of the categories of Permitted Indebtedness described in clauses (i) through
(xv) of such definition, or is entitled to be incurred pursuant to paragraph (a)
of this covenant, the Company will be permitted to classify or reclassify such
item of Indebtedness in any manner that complies with this covenant.

Section 4.10     Asset Sales.

         (a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale in any single transaction or series of
related transactions unless:

         (i) The Company (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of the Asset Sale at least equal to the Fair
Market Value of the assets or Capital Stock issued or sold or otherwise disposed
of;

         (ii) the Fair Market Value is determined by the Company's Board of
Directors and evidenced by a resolution of the Board of Directors set forth in
an officers' certificate delivered to the Trustee; and

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<PAGE>

         (iii) at least 75% of the consideration received in the Asset Sale by
the Company or such Restricted Subsidiary is in the form of cash or Cash
Equivalents or Replacement Assets, in each case received at the time of such
sale of other disposition. For purposes of this provision, each of the following
will be deemed to be cash:

                  (1) any liabilities, as shown on the Company's or such
         Restricted Subsidiary's most recent balance sheet, of the Company or
         any Restricted Subsidiary (other than contingent liabilities and
         liabilities that are by their terms subordinated to the Notes or any
         Guarantee) that are assumed by the transferee of any such assets
         pursuant to a customary novation agreement that releases the Company or
         such Restricted Subsidiary from further liability; and

                  (2) any securities, notes or other obligations received by the
         Company or any such Restricted Subsidiary from such transferee that are
         contemporaneously, subject to ordinary settlement periods, converted by
         the Company or such Restricted Subsidiary into cash, to the extent of
         the cash or Cash Equivalents received in that conversion;

         (b) Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Company or such Restricted Subsidiary may apply those Net Proceeds at
its option:

         (i) to repay term or revolving credit Indebtedness under a Credit
Facility (other than any such Indebtedness that is subordinate in right of
payment to the Notes) and, if the Indebtedness repaid is revolving credit
Indebtedness, to correspondingly reduce commitments with respect thereto;

         (ii) if the Asset Sale is by a Restricted Subsidiary that is not a
Guarantor, to repay, redeem or repurchase any Indebtedness of that Restricted
Subsidiary; or

         (iii) to purchase Replacement Assets or make a capital expenditure.

         Pending the final application of any Net Proceeds, the Company or such
Restricted Subsidiary may temporarily reduce revolving credit borrowings or
otherwise invest the Net Proceeds in any manner that is not prohibited by this
Indenture.

         (c) Any Net Proceeds from Asset Sales that are not applied or invested
as provided in the preceding paragraph will constitute "Excess Proceeds." When
the aggregate amount of Excess Proceeds exceeds US$10.0 million, the Company
will make an offer (an "Asset Sale Offer") to all Holders of Notes and all
holders of other Indebtedness that is pari passu with the Notes containing
provisions similar to those set forth in this Indenture with respect to offers
to purchase or redeem such indebtedness with the proceeds of sales of assets, to
purchase the maximum principal amount of Notes and such other pari passu
Indebtedness that may be purchased out of the Excess Proceeds. In the Asset Sale
Offer, the Company shall offer an asset sale payment in cash equal to 100% of
the principal amount plus accrued and unpaid interest and Special Interest, if
any, to the date of purchase (the "Asset Sale Payment"). If any Excess Proceeds
remain after consummation of an Asset Sale Offer, the Company or such Restricted
Subsidiary may use those Excess Proceeds for any purpose not otherwise
prohibited by this Indenture. If the aggregate principal amount of Notes and
other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes and such other
pari

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<PAGE>

passu Indebtedness to be purchased on a pro rata basis. Upon completion of each
Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

         (d) Any Asset Sale Offer shall be made in accordance with Section 3.09.

         (e) The Company will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with Sections 4.10 or
3.09 of this Indenture, the Company will comply with the applicable securities
laws and regulations and will not be deemed to have breached its obligations
hereunder by virtue of such conflict.

Section 4.11     Limitation on Transactions with Affiliates.

         (a) The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into or suffer to
exist any transaction or series of related transactions (including, without
limitation, the sale, purchase, exchange or lease of assets, property or
services) with any Affiliate (each an "Affiliate Transaction") or extend, renew,
waive or otherwise modify the terms of any Affiliate Transaction entered into
prior to the Issue Date unless:

         (i) such Affiliate Transaction is between or among the Company and its
Restricted Subsidiaries or between or among Restricted Subsidiaries; or

         (ii) the terms of such Affiliate Transaction are fair to the Company or
such Restricted Subsidiary, as the case may be, and are at least as favorable as
the terms which could be obtained by the Company or such Restricted Subsidiary,
as the case may be, in a comparable transaction made on an arm's-length basis
between unaffiliated parties.

         (b) In any Affiliate Transaction (or any series of related Affiliate
Transactions) involving an amount or having a Fair Market Value in excess of
$2.0 million which is not permitted under clause (i) of Section 4.11(a) , the
Company must obtain a resolution of the disinterested members of the Board of
Directors of the Company certifying that they have approved such Affiliate
Transaction and determined that such Affiliate Transaction complies with clause
(ii) of Section 4.11(a). In addition, in any Affiliate Transaction (or any
series of related Affiliate Transactions) involving an amount or having a Fair
Market Value in excess of $20.0 million which is not permitted under clause (i)
of Section 4.11(a), the Company must obtain a written opinion from an
Independent Financial Advisor that such transaction or transactions are fair to
the Company or such Restricted Subsidiary, as the case may be, from a financial
point of view; provided that the provisions of this sentence shall not apply to
the sale of inventory in the ordinary course of business.

         (c) The foregoing provisions will not apply to:

                  (1) any Permitted Investment or Restricted Payment made in
         compliance with the provisions described under Section 4.07 above;

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<PAGE>

                  (2) reasonable fees and compensation paid to and indemnity
         provided on behalf of officers, directors or employees of the Company
         or any Restricted Subsidiary as determined in good faith by the
         Company's Board of Directors or senior management;

                  (3) the existence of, or performance or payment by any of the
         Company or its Restricted Subsidiaries of its obligations pursuant to
         and in accordance with the terms of, the Meadow Lake Services
         Agreement, the Corporate Services Agreements and the Magnesium Sulphate
         Supply Agreement;

                  (4) sales of Capital Stock of the Company (other than
         Disqualified Capital Stock) to Affiliates of the Company;

                  (5) the pledge of Capital Stock of Unrestricted Subsidiaries
         to support the Indebtedness thereof;

                  (6) customary shareholders and registration rights agreements
         among the Company and its shareholders; and

                  (7) transactions with a Person (other than an Unrestricted
         Subsidiary) that is an Affiliate of the Company solely because the
         Company owns, directly or through a Restricted Subsidiary, Capital
         Stock in, or controls, such Person.

Section 4.12     Limitation on Liens.

         The Company will not, and will not cause or permit any of its
Restricted Subsidiaries, directly or indirectly, to, create, incur or otherwise
cause or suffer to exist or become effective any Liens of any kind (other than
Permitted Liens) upon or with respect to any property or assets of the Company
or any of its Restricted Subsidiaries, unless (i) if such Lien secures
Indebtedness which is ranked equally and ratably with the Notes or any
Guarantee, then the Notes or such Guarantee, as the case may be, are secured on
an equal and ratable basis with the obligations so secured until such time as
such obligations are no longer secured by a Lien or (ii) if such Lien secures
Indebtedness which is subordinated to the Notes or any Guarantee, then the Notes
or such Guarantee, as the case may be, are secured and the Lien securing such
other Indebtedness shall be subordinated to the Lien granted to the holders of
the Notes or such Guarantee, as the case may be, at least to the same extent as
such Indebtedness is subordinated to the Notes or such Guarantee, as the case
may be.

Section 4.13     Payments for Consent.

         The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of any Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Notes unless such consideration is offered to be paid
or agreed to be paid to all Holders of the Notes which so consent, waive or
agree to amend in the time frame set forth in solicitation documents relating to
such consent, waiver or agreement.

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<PAGE>

Section 4.14     Corporate Existence.

         Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Restricted Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Restricted Subsidiary and (ii) the rights (charter and statutory), licenses
and franchises of the Company and its Restricted Subsidiaries; provided, that
the Company shall not be required to preserve any such right, license or
franchise, or the corporate, partnership or other existence of any of its
Restricted Subsidiaries, if the Company in good faith shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Restricted Subsidiaries, taken as a whole, and that the loss
thereof is not adverse in any material respect to the Holders of the Notes.

Section 4.15     Change of Control.

         (a) Upon the occurrence of a Change of Control, the Company shall make
an offer (a "Change of Control Offer") to each Holder to repurchase all or any
part (equal to US$1,000 or an integral multiple thereof) of each Holder's Notes
at a purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Special Interest, if any, thereon, to the date
of repurchase (the "Change of Control Payment").

         (b) Any Change of Control Offer shall be made in accordance with
Section 3.09. The Company shall comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes as a result of a Change of Control. To the extent that the
provisions of any securities laws or regulations conflict with Sections 3.09 or
4.15 of this Indenture, the Company will comply with the applicable securities
laws and regulations and will not be deemed to have breached its obligations
hereunder by virtue of such conflict.

         (c) Notwithstanding anything to the contrary in this Section 4.15, the
Company shall not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in Section
4.15 and Section 3.09 hereof and all other provisions of this Indenture
applicable to a Change of Control Offer made by the Company and purchases all
Notes properly tendered and not withdrawn under the Change of Control Offer.

Section 4.16     Limitation on Subsidiaries.

         If the Company or any of its Restricted Subsidiaries transfers or
causes to be transferred any Property to, or organizes, acquires, invests in or
otherwise holds an Investment in, any Restricted Subsidiary that is not a
Guarantor having total consolidated assets with a book value in excess of
$100,000, then such transferee or acquired or other Restricted Subsidiary shall
(a) execute and deliver to the Trustee a supplemental indenture in form
reasonably satisfactory to the Trustee pursuant to which such Restricted
Subsidiary shall unconditionally guarantee all of the Company's obligations
under the Notes and this Indenture on the terms set forth in this Indenture and
(b) deliver to the Trustee an opinion of counsel that such supplemental
indenture has been

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<PAGE>

duly authorized, executed and delivered by such Restricted Subsidiary and
constitutes a legal, valid, binding and enforceable obligation of such
Restricted Subsidiary. Thereafter, such Restricted Subsidiary shall be a
Guarantor for all purposes of the Indenture. As of the Issue Date, the Company
will have no Subsidiaries.

Section 4.17      Limitation on Issuance of Preferred Stock of Restricted
                  Subsidiaries

         The Company will not permit any Restricted Subsidiary to issue any
Preferred Stock (except Preferred Stock to the Company or a Wholly-Owned
Restricted Subsidiary) or permit any Person (other than the Company or a
Wholly-Owned Restricted Subsidiary) to hold any such Preferred Stock unless the
Company or such Restricted Subsidiary would be entitled to incur or assume
Indebtedness under Section 4.09(a) hereof in an aggregate principal amount equal
to the aggregate state value of the Preferred Stock to be issued.

Section 4.18      Designation of Restricted and Unrestricted Subsidiaries

         The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate
fair market value of all outstanding Investments owned by the Company and its
Restricted Subsidiaries in the Unrestricted Subsidiary properly designated shall
be deemed to be an Investment made as of the time of the designation and shall
reduce the amount available for Restricted Payments under the first paragraph of
Section 4.07 hereof or Permitted Investments. That designation shall only be
permitted if the Investment would be permitted at that time and if the
Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary. In addition, no such designation may be made unless the proposed
Unrestricted Subsidiary does not own any Capital Stock in any Restricted
Subsidiary that is not simultaneously subject to designation as an Unrestricted
Subsidiary. The Board of Directors may redesignate any Unrestricted Subsidiary
to be a Restricted Subsidiary if the redesignation would not cause a Default.

Section 4.19      Limitation on Capital Stock of Restricted Subsidiaries

         The Company will not (i) sell, pledge, hypothecate or otherwise convey
or dispose of any Capital Stock of a Restricted Subsidiary or (ii) permit any of
its Restricted Subsidiaries to issue any Capital Stock, other than to the
Company or a Wholly-Owned Restricted Subsidiary. The foregoing restrictions
shall not apply to an Asset Sale consisting of all of the Capital Stock of a
Restricted Subsidiary owned by the Company made in compliance with Section 4.10
or the issuance of Preferred Stock in compliance with Section 4.17.

Section 4.20      Additional Amounts

         (a) All payments made by the Company under or with respect to the
Notes, or by any Guarantor pursuant to the Guarantees, will be made free and
clear of and without withholding or deduction for or on account of any present
or future tax, duty, levy, impost, assessment or other governmental charge
(including penalties, interest and other liabilities related thereto) imposed or
levied by or on behalf of the Government of Canada or of any province or
territory thereof or by any authority or agency therein or thereof having power
to tax (hereinafter, the "Taxes"), unless the Company or such Guarantor, as the
case may be, is required to withhold or deduct

                                       62
<PAGE>

Taxes by law or by the interpretation or administration thereof. If the Company
or any Guarantor is required to withhold or deduct any amount for or on account
of Taxes from any payment made under or with respect to the Notes, the Company
or such Guarantor will pay such additional amounts (the "Additional Amounts") as
may be necessary so that the net amount received by each Holder of Notes
(including Additional Amounts) after such withholding or deduction will not be
less than the amount such Holder would have received if such Taxes had not been
withheld or deducted; provided, however, that no Additional Amounts will be
payable with respect to a payment made to a Holder (an "Excluded Holder") (i)
with which the Company or such Guarantor does not deal at arm's length (within
the meaning of the Income Tax Act (Canada)) at the time of making such payment,
(ii) which is subject to such Taxes by reason of its being connected with Canada
or any province or territory thereof otherwise than solely by reason of the
Holder's activity in connection with purchasing the Notes, by the mere holding
of Notes or by reason of the receipt of payments thereunder, (iii) which failed
to duly and timely comply with a timely request of the Company to provide
information, documents, certification or other evidence concerning such Holder's
nationality, residence, entitlement to treaty benefits, identity or connection
with Canada or any political subdivision or authority thereof, if and to the
extent that due and timely compliance with such request would have resulted in
the reduction or elimination of any Taxes as to which Additional Amounts would
have otherwise been payable to such Holder of Notes but for this clause (iii),
(iv) which is a fiduciary, a partnership or not the beneficial owner of any
payment on a Note, if and to the extent that any beneficiary or settlor of such
fiduciary, any partner in such partnership or the beneficial owner of such
payment (as the case may be) would not have been entitled to receive Additional
Amounts with respect to such payment if such beneficiary, settlor, partner or
beneficial owner had been the Holder of such Note or (v) any combination of the
foregoing numbered clauses of this proviso. The Company or such Guarantor will
also (a) make such withholding or deduction and (b) remit the full amount
deducted or withheld to the relevant authority in accordance with applicable
law.

         (b) The Company or the Guarantor shall furnish the Holders of the
Notes, within 30 days after the date the payment of any Taxes is due pursuant to
applicable law, certified copies of tax receipts evidencing such payment by the
Company or such Guarantor. The Company or any Guarantor shall, upon written
request of a Holder (other than an Excluded Holder), reimburse each such Holder
for the amount of (x) any Taxes so levied or imposed and paid by such Holder as
a result of payments made under or with respect to the Notes, and (y) any Taxes
so levied or imposed with respect to any reimbursement under the foregoing
clause (x) but excluding any such Taxes on such Holder's net income so that the
net amount received by such Holder (net of payments made under or with respect
to the Notes) after such reimbursement will not be less than the net amount the
Holder would have received if Taxes on such reimbursement had not been imposed.

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

                                       63
<PAGE>

         (d) Whenever in this Indenture there is mentioned, in any context, the
payment of principal, premium, if any, redemption price, Change of Control
Payment, Asset Sale Payment, interest or any other amount payable under or with
respect to any Note, such mention shall be deemed to include mention of the
payment of Additional Amounts to the extent that, in such context, Additional
Amounts are, were or would be payable in respect thereof.

Section 4.21      Money for Security Payments to Be Held in Trust.

         (a) If the Company or any of the Restricted Subsidiaries shall at any
time act as Paying Agent hereunder, it shall, on or before each due date of the
principal of (and premium, if any) or interest and Special Interest, if any, on
any of the Notes, segregate and hold in trust for the benefit of the Person
entitled thereto a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided, and shall promptly notify the Trustee
of its action or failure so to act.

         (b) Whenever the Company shall have one or more Paying Agents for the
Notes, it shall, on or before each due date of the principal of (and premium, if
any) or interest and Special Interest, if any, on any Notes, deposit with a
Paying Agent a sum in same day funds (or New York Clearing House funds of such
deposit is made prior to the date on which such deposit is required to be made)
sufficient to pay the principal (and premium, if any) or interest and Special
Interest, if any, so becoming due, such sum to be held in trust for the benefit
of the Persons entitled to such principal, premium or interest and the Company
shall promptly notify the Trustee of such action or any failure so to act.

         (c) The Company shall cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section 4.21,
that such Paying Agent shall:

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

                  (ii) give the Trustee notice of any default by the Company (or
         any other obligor upon the Notes) in the making of any payment of
         principal (and premium, if any) or interest and Special Interest, if
         any; and

                  (iii) at any time during the continuance of any such default,
         upon the written request of the Trustee, forthwith pay to the Trustee
         all sums so held in trust by such Paying Agent.

         (d) The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.

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<PAGE>

         Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of (and premium, if
any) or interest and Special Interest, if any, on any Note and remaining
unclaimed for two years after such principal (and premium, if any) or interest
and Special Interest, if any has become due and payable shall be paid to the
Company on Company request, unless an abandoned property law designates another
person, or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Note shall thereafter, as an unsecured general creditor,
look only to the Company for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided that the Trustee or
such Paying Agent, before being required to make any such repayment, shall at
the written direction and at the expense of the Company, cause to be published
once, in the New York Times, The Wall Street Journal (national edition), the
Globe and Mail and the National Post, notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication, any unclaimed balance of such money then
remaining will be repaid to the Company.

Section 4.22      Maintenance of Properties.

         The Company shall cause all properties owned by the Company or any
Restricted Subsidiary and used or useful in the conduct of its business or the
business of any Restricted Subsidiary to be maintained and kept in good
condition, repair and working order (reasonable wear and tear excepted) and
supplied with all necessary equipment and shall cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section 4.22 shall prevent the Company
or any Restricted Subsidiary from discontinuing the maintenance of any of such
properties if such discontinuance is, as determined by the Company or such
Restricted Subsidiary in good faith, desirable in the conduct of its business or
the business of any Restricted Subsidiary and not disadvantageous in any
material respect to the Holders.

Section 4.23      Maintenance of Insurance.

         The Company shall, and shall cause its Restricted Subsidiaries to, keep
at all times all of their properties which are of an insurable nature insured
(which may include self-insurance) against loss or damage with insurers believed
by the Company to be responsible to the extent that property of similar
character is usually so insured or self-insured by corporations similarly
situated and owning like properties in accordance with customary business
practices.

                                   ARTICLE 5.
                                   SUCCESSORS

Section 5.01      Merger, Consolidation or Sale of Assets.

         (a) The Company will not, and will not cause or permit any Guarantor
to, consolidate with, amalgamate with, merge with or into, or sell, assign,
transfer, lease, convey or otherwise

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dispose of all or substantially all of its assets (as an entirety or
substantially as an entirety in one transaction or a series of related
transactions), to any Person unless:

                  (1) (x) the Company or such Guarantor, as the case may be,
         shall be the continuing Person, or (y) the Person (if other than the
         Company or such Guarantor) formed by such consolidation or amalgamation
         or into which the Company or such Guarantor, as the case may be, is
         merged or to which the properties and assets of the Company or such
         Guarantor, as the case may be, are sold, assigned, transferred, leased,
         conveyed or otherwise disposed of (in any case, the "Successor
         Company") shall be a corporation organized and existing under the laws
         of the United States or any State thereof or the District of Columbia
         or the laws of Canada or any province or territory thereof and the
         Successor Company shall expressly assume, by a supplemental indenture,
         executed and delivered to the Trustee, in form satisfactory to the
         Trustee, all of the obligations of the Company or such Guarantor, as
         the case may be, under this Indenture, the Notes and the Guarantees, as
         the case may be, and the obligations thereunder shall remain in full
         force and effect;

                  (2) immediately before and immediately after giving effect to
         such transaction (including, without limitation, giving effect to any
         Indebtedness and Acquired Indebtedness incurred or anticipated to be
         incurred and any Lien granted in connection with or in respect of the
         transaction), no Default or Event of Default shall have occurred and be
         continuing; and;

                  (3) immediately after giving effect to such transaction, on a
         pro forma basis, the Company or such Successor Company could incur at
         least US$1.00 of additional Indebtedness (other than Permitted
         Indebtedness) under the covenant described in Section 4.09 above;
         provided that a Person that is a Guarantor may merge into the Company
         or another Person that is a Guarantor without complying with this
         clause (3).

         (b) In connection with any consolidation, merger or transfer of assets
contemplated by this provision, the Company shall deliver, or cause to be
delivered, to the Trustee in form and substance reasonably satisfactory to the
Trustee, an officers' certificate and an opinion of counsel, each stating that
such consolidation, merger or transfer and the supplemental indenture in respect
thereto comply with this provision and that all conditions precedent herein
provided for relating to such transaction or transactions have been complied
with.

         For purposes of the foregoing, the transfer (by lease, assignment, sale
or otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries of the Company, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.

Section 5.02      Successor Corporation Substituted.

         Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with

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which the Company is merged or to which such sale, assignment, transfer, lease,
conveyance or other disposition is made shall succeed to, and be substituted for
(so that from and after the date of such consolidation, merger, sale, lease,
conveyance or other disposition, the provisions of this Indenture referring to
the Company shall refer instead to the successor corporation and not to the
Company), and may exercise every right and power of the Company under this
Indenture with the same effect as if such successor Person had been named as the
Company herein; provided that the predecessor Company shall not be relieved from
the obligation to pay the principal of and interest and Special Interest, if
any, on the Notes except in the case of a sale, assignment, transfer, conveyance
or other disposition of all of the Company's assets that meets the requirements
of Section 5.01 hereof.

                                   ARTICLE 6.
                              DEFAULTS AND REMEDIES

Section 6.01      Events of Default.

         An "Event of Default" wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):

         (a) Default in payment of any principal of, or premium, if any, on the
Notes when due (whether at maturity, upon redemption or otherwise);

         (b) Default in the payment of any interest on, or Special Interest with
respect to, any Note when due, which Default continues for 30 days or more;

         (c) Default by the Company or any Restricted Subsidiary in the
observance or performance of any other covenant in the Notes or this Indenture
for 30 days after written notice from the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Notes then outstanding (except in
the case of a Default with respect to the provisions of Sections 4.10, 4.15 or
5.01 hereof, which shall constitute an Event of Default with such notice
requirement but without such passage of time requirement);

         (d) Default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Restricted Subsidiaries), whether such Indebtedness or Guarantee now exists, or
is created after the date of this Indenture, if that default:

                  (i) is caused by a failure to pay principal of, or interest or
         premium, if any, on such Indebtedness prior to the expiration of the
         grace period provided in such Indebtedness on the date of such default
         (a "Payment Default"); or

                  (ii) results in the acceleration of such Indebtedness prior to
         its expressed maturity,

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and, in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$7.0 million or more;

         (e) any final judgment or judgments which can no longer be appealed for
the payment of money in excess of $7.0 million (in excess of amounts covered by
insurance and as to which the insurer has acknowledged coverage) shall be
rendered against the Company or any Restricted Subsidiary thereof, and shall not
be discharged for any period of 60 consecutive days during which a stay of
enforcement shall not be in effect;

         (f) if the Company or any of its Restricted Subsidiaries pursuant to or
within the meaning of Bankruptcy Law:

                  (i) commences proceedings to be adjudicated bankrupt or
         insolvent;

                  (ii) consents to the institution of bankruptcy or insolvency
         proceedings against it, or the filing by it of a petition or answer or
         consent seeking reorganization or relief under applicable Bankruptcy
         law;

                  (iii) consents to the appointment of a receiver, liquidator,
         assignee, trustee, sequestrator or other similar official of it or for
         all or substantially all of its property;

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

                  (v) generally is not paying its debts as they become due.

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

                  (i) is for relief against the Company or any of its Restricted
         Subsidiaries in a proceeding in which the Company or any such
         Restricted Subsidiary is to be adjudicated bankrupt or insolvent;

                  (ii) appoints a receiver, liquidator, assignee, trustee,
         sequestrator or other similar official of the Company or any of its
         Restricted Subsidiaries or for all or substantially all of the property
         of the Company or any of its Restricted Subsidiaries; or

                  (iii) orders the liquidation of the Company or any of its
         Restricted Subsidiaries;

and the order or decree remains unstayed and in effect for 60 consecutive days.

         (h) any of the Guarantees of a Material Subsidiary ceases to be in full
force and effect or any of the Guarantees of a Material Subsidiary is declared
to be null and void and unenforceable or any of the Guarantees of a Material
Subsidiary is found to be invalid or any of the Guarantors denies its liability
under its Guarantee (other than by reason of release of a Guarantor in
accordance with the terms of this Indenture).

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         The Company shall deliver to the Trustee, as soon as practicable and in
any event within 10 days after the Company's knowledge thereof, written notice
in the form of an Officers' Certificate of any Default under this Indenture, its
status and what action the Company proposes to take with respect thereto.

Section 6.02      Acceleration.

         (a) If any Event of Default (other than an Event of Default specified
in clauses (f) or (g) of Section 6.01 hereof with respect to the Company or any
of its Restricted Subsidiaries) occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. Upon any such
declaration, the Notes shall become due and payable immediately. Notwithstanding
the foregoing, if an Event of Default specified in clauses (f) or (g) of Section
6.01 hereof occurs with respect to the Company or any of its Restricted
Subsidiaries all outstanding Notes shall be due and payable immediately without
further action or notice. The Holders of a majority in aggregate principal
amount of the then outstanding Notes by written notice to the Trustee may on
behalf of all of the Holders rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default (except nonpayment of principal, interest or premium that has
become due solely because of the acceleration) have been cured or waived.

         (b) If an Event of Default occurs by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company or any of its
Restricted Subsidiaries with the intention of avoiding payment of the premium
that the Company would have had to pay if the Company then had elected to redeem
the Notes pursuant to Section 3.07 hereof, then, upon acceleration of the Notes,
an equivalent premium shall also become and be immediately due and payable, to
the extent permitted by law.

         (c) At any time after a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as provided in this Article, the Holders of a majority in aggregate
principal amount of the Notes outstanding, by written notice to the Company and
the Trustee, may rescind and annul such declaration and its consequences if:

         (i) the Company or the Guarantors have paid or deposited with the
Trustee a sum sufficient to pay;

                  (A)      all overdue interest on all outstanding Notes;

                  (B)      all unpaid principal of (and premium, if any, on) any
                           outstanding Notes which has become due otherwise than
                           by such declaration of acceleration, and interest on
                           such unpaid principal at the rate borne by the Notes;

                  (C)      to the extent that payment of such interest is
                           lawful, interest on overdue interest and overdue
                           principal at the rate borne by the Notes, which has
                           become due otherwise than by such declaration of
                           acceleration; and

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<PAGE>

                  (D)      all sums paid or advanced by the Trustee hereunder
                           and the reasonable compensation, expenses,
                           disbursements and advances of the Trustee, its agents
                           and counsel; and

         (ii) no such rescission would conflict with any judgment or decree of a
court of competent jurisdiction; and

         (iii) all Events of Default, other than the non-payment of amounts of
principal of (or premium, if any, on) or interest on the Notes which have become
due solely by such declaration of acceleration, have been cured or waived as
provided in Section 6.04.

No such rescission shall affect any subsequent default or impair any right
consequent thereon.

         (d) Notwithstanding the preceding paragraph, in the event of a
declaration of acceleration in respect of the Notes because of an Event of
Default specified in Section 6.01(d) shall have occurred and be continuing, such
declaration of acceleration shall be automatically annulled if the Indebtedness
that is the subject of such Event of Default has been discharged or the Holders
thereof have rescinded their declaration of acceleration in respect of such
Indebtedness, and written notice of such discharge or rescission, as the case
may be, shall have been given to the Trustee by the Company and countersigned by
the Holders of such Indebtedness or a trustee, fiduciary or agent for such
Holders, within 30 days after such declaration of acceleration in respect of the
Notes, and no other Event of Default has occurred during such 30-day period
which has not been cured or waived during such period.

Section 6.03      Other Remedies.

         If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.

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

Section 6.04      Waiver of Past Defaults.

         Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Special Interest, if any, or interest
on, the Notes (including in connection with a Repurchase Offer); provided that
the Holders of a majority in aggregate principal amount of the then outstanding
Notes may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration. Upon any such waiver, such
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured for every purpose of this

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Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.

Section 6.05      Control by Majority.

         Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default if it determines that
withholding notice is in their interest, except a Default or Event of Default
relating to the payment of principal or interest or Special Interest.

Section 6.06      Limitation on Suits.

         Subject to Section 6.07, a Holder of a Note may pursue a remedy with
respect to this Indenture or the Notes only if:

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

         (b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;

         (c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;

         (d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and

         (e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.

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

Section 6.07      Rights of Holders of Notes to Receive Payment.

         Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium and Special Interest,
if any, and interest on the Note, on or after the respective due dates expressed
in the Note (including in connection with a Repurchase Offer), or to bring suit
for the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of such Holder.

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Section 6.08      Collection Suit by Trustee.

         If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal of, premium and Special Interest, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.

Section 6.09      Restoration of Rights and Remedies.

         If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceedings, the Company, the Trustee and the Holders
shall be restored severally and respectively to their former positions hereunder
and thereafter all rights and remedies of the Trustee and the Holders shall
continue as though no such proceeding has been instituted.

Section 6.10      Rights and Remedies Cumulative.

         Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Notes in Section 2.07, no right or
remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.

Section 6.11      Delay or Omission Not Waiver.

         No delay or omission of the Trustee or of any Holder of any Note 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 6.12      Trustee May File Proofs of Claim.

         The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes including the Guarantors), its creditors or
its property and shall be entitled and empowered to collect, receive and
distribute any money or other property payable or deliverable on any such claims
and any custodian in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee, and in the

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event that the Trustee shall consent to the making of such payments directly to
the Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To
the extent that the payment of any such compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.07 hereof out of the estate in any such proceeding,
shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends, money,
securities and other properties that the Holders may be entitled to receive in
such proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder, or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.

Section 6.13      Priorities.

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

                  (i) to the Trustee, its agents and attorneys for amounts due
         under Section 7.07 hereof, including payment of all compensation,
         expense and liabilities incurred, and all advances made, by the Trustee
         and the costs and expenses of collection;

                  (i) to Holders of Notes for amounts due and unpaid on the
         Notes for principal, premium and Special Interest, if any, and
         interest, ratably, without preference or priority of any kind,
         according to the amounts due and payable on the Notes for principal,
         premium and Special Interest, if any and interest, respectively; and

                  (i) to the Company or to such party as a court of competent
         jurisdiction shall direct including a Guarantor, if applicable.

         The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.13.

Section 6.14      Undertaking for Costs.

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

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<PAGE>

                                   ARTICLE 7.
                                    TRUSTEE

Section 7.01      Duties of Trustee.

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

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

                  (i) the duties of the Trustee shall be determined solely by
         the express provisions of this Indenture and 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; and

                  (ii) in the absence of bad faith on its part, the Trustee may
         conclusively rely, as to the truth of the statements and the
         correctness of the opinions expressed therein, upon certificates or
         opinions furnished to the Trustee and conforming to the requirements of
         this Indenture. However, in the case of any such certificates or
         opinions which by any provision hereof are specifically required to be
         furnished to the Trustee, the Trustee shall examine the certificates
         and opinions to determine whether or not they conform to the
         requirements of this Indenture.

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

                  (i) this paragraph does not limit the effect of paragraph (b)
         of this Section 7.01;

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

                  (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 6.05 hereof.

         (d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section 7.01.

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

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

Section 7.02      Rights of Trustee.

         (a) The Trustee may conclusively rely upon any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney
at the sole cost of the Company and shall incur no liability or additional
liability of any kind by reason of such inquiry or investigation.

         (b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel of its selection and the written advice of such counsel or any Opinion
of Counsel shall be full and complete authorization and protection from
liability in respect of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon.

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

         (d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.

         (e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.

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

         (g) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the Corporate Trust Office of the Trustee,
and such notice references the Notes and this Indenture

         (h) In no event shall the Trustee be responsible or liable for special,
indirect, or consequential loss or damage of any kind whatsoever (including, but
not limited to, loss of profit) irrespective of whether the Trustee has been
advised of the likelihood of such loss or damage and regardless of the form of
action.

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

         (j) The Trustee may request that the Company deliver an Officers'
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Indenture,
which Officers' Certificate may be signed by any person authorized to sign an
Officers' Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded.

Section 7.03      Individual Rights of Trustee.

         The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the Commission
for permission to continue as trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof.

Section 7.04      Trustee's Disclaimer.

         The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.

Section 7.05      Notice of Defaults.

         If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest or Special Interest, if any, on any Note, 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 the Holders of the
Notes and the Trustee shall withhold the notice of any Default under Section
6.01(d) hereof until 30 days after notice under such section is given.

Section 7.06      Reports by Trustee to Holders of the Notes.

         Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA ss. 313(a) (but if no event described in
TIA ss. 313(a) has occurred within the twelve months preceding the reporting

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date, no report need be transmitted). The Trustee also shall comply with TIA ss.
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA ss. 313(c).

         A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the Commission and each
stock exchange on which the Notes are listed in accordance with TIA ss. 313(d).
The Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange.

Section 7.07      Compensation and Indemnity.

         The Company shall pay to the Trustee from time to time such
compensation for its acceptance of this Indenture and services hereunder as the
parties shall agree in writing from time to time. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee promptly upon request for all
reasonable disbursements, advances and expenses incurred or made by it in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel.

         The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.

         To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.

         When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(h) or (i) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.

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

Section 7.08      Replacement of Trustee.

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

         The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of a majority
in principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:

         (a) the Trustee fails to comply with Section 7.10 hereof;

         (b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;

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         (c) a custodian or public officer takes charge of the Trustee or its
property; or

         (d) the Trustee becomes incapable of acting.

         If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.

         If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee (at the Company's
expense), the Company, or the Holders of at least 10% in principal amount of the
then outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.

         If the Trustee, after written request by any Holder who has been a
Holder for at least six months, fails to comply with Section 7.10, such Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.

         A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee; provided, all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.

Section 7.09      Successor Trustee by Merger, etc.

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

Section 7.10      Eligibility; Disqualification.

         There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $50,000,000
as set forth in its most recent published annual report of condition.

         This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).

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Section 7.11      Preferential Collection of Claims Against Company.

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

Section 7.12      Appointment of Co-Trustee.

         It is the purpose of this Indenture that there shall be no violation of
any law of any jurisdiction denying or restricting the right of banking
corporations or associations to transact business as trustee in such
jurisdiction. It is recognized that in case of litigation under this Indenture,
and in particular in case of the enforcement thereof on default, or in the case
the Trustee deems that by reason of any present or future law of any
jurisdiction it may not exercise any of the powers, rights or remedies herein
granted to the Trustee or hold title to the properties, in trust, as herein
granted or take any action which may be desirable or necessary in connection
therewith, it may be necessary that the Trustee appoint an individual or
institution as a separate or co-trustee. The following provisions of this
Section are adopted to these ends.

         In the event that the Trustee appoints an additional individual or
institution as a separate or co-trustee, each and every remedy, power, right,
claim, demand, cause of action, immunity, estate, title, interest and lien
expressed or intended by this Indenture to be exercised by or vested in or
conveyed to the Trustee with respect thereto shall be exercisable by and vest in
such separate or co-trustee but only to the extent necessary to enable such
separate or co-trustee to exercise such powers, rights and remedies, and only to
the extent that the Trustee by the laws of any jurisdiction is incapable of
exercising such powers, rights and remedies and every covenant and obligation
necessary to the exercise thereof by such separate or co-trustee shall run to
and be enforceable by either of them.

         Should any instrument in writing from the Company be required by the
separate or co-trustee so appointed by the Trustee for more fully and certainly
vesting in and confirming to it such properties, rights, powers, trusts, duties
and obligations, any and all such instruments in writing shall, on request, be
executed, acknowledged and delivered by the Company; provided, that if an Event
of Default shall have occurred and be continuing, if the Company does not
execute any such instrument within fifteen (15) days after request therefor, the
Trustee shall be empowered as an attorney-in-fact for the Company to execute any
such instrument in the Company's name and stead. In case any separate or
co-trustee or a successor to either shall die, become incapable of acting,
resign or be removed, all the estates, properties, rights, powers, trusts,
duties and obligations of such separate or co-trustee, so far as permitted by
law, shall vest in and be exercised by the Trustee until the appointment of a
new trustee or successor to such separate or co-trustee.

         Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:

         (i) all rights and powers, conferred or imposed upon the Trustee shall
be conferred or imposed upon and may be exercised or performed by such separate
trustee or co-trustee; and

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         (ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder.

         Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Indenture and the conditions
of this Article.

         Any separate trustee or co-trustee may at any time appoint the Trustee
as its agent or attorney-in-fact with full power and authority, to the extent
not prohibited by law, to do any lawful act under or in respect of this
Indenture on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.

                                   ARTICLE 8.
                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01      Option to Effect Legal Defeasance or Covenant Defeasance.

         The Company may, at its option and at any time, elect to have either
Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance
with the conditions set forth below in this Article Eight.

Section 8.02      Legal Defeasance and Discharge.

         Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company and the Guarantors shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
deemed to have been discharged from their obligations with respect to all
outstanding Notes and Guarantees on the date the conditions set forth below are
satisfied ("Legal Defeasance"). For this purpose, Legal Defeasance means that
the Company shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Notes, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 8.05 hereof and the other
Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Notes and this Indenture
including that of the Guarantors (and the Trustee, on demand of and at the
expense of the Company, shall execute proper instruments acknowledging the
same), except for the following provisions which shall survive until otherwise
terminated or discharged hereunder: (a) the rights of Holders of outstanding
Notes to receive solely from the trust fund described in Section 8.04 hereof,
and as more fully set forth in such Section, payments in respect of the
principal of, or interest or premium and Special Interest, if any, on such Notes
when such payments are due, (b) the Company's obligations with respect to such
Notes under Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and the Company's and the
Guarantors' obligations in connection therewith and (d) this Article Eight.
Subject to compliance with this Article Eight, the Company may exercise its
option under this Section 8.02 notwithstanding the prior exercise of its option
under Section 8.03 hereof.

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Section 8.03      Covenant Defeasance.

         Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company and its Guarantors shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
released from their obligations under the covenants contained in Sections 4.04,
4.05, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18, 4.19,
4.22 and 4.23 hereof and clauses (2) and (3) of Section 5.01(a) hereof with
respect to the outstanding Notes on and after the date the conditions set forth
in Section 8.04 hereof are satisfied ("Covenant Defeasance"), and the Notes
shall thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding Notes,
the Company may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.01 hereof, but,
except as specified above, the remainder of this Indenture and such Notes shall
be unaffected thereby. In addition, upon the Company's exercise under Section
8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(c), 6.01(d), 6.01(e), and 6.01(h) hereof shall not constitute Events of
Default.

Section 8.04      Conditions to Legal or Covenant Defeasance.

         The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:

         In order to exercise either Legal Defeasance or Covenant Defeasance:

         (a) The Company shall irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders of the Notes, cash in U.S. dollars, non-callable
Government Securities, or a combination of cash in U.S. dollars and non-callable
Government Securities, in such amounts as will be sufficient, in the opinion of
a nationally recognized firm of independent public accountants, to pay the
principal of, or interest and premium and Special Interest, if any, on the
outstanding Notes on the stated maturity or on the applicable redemption date,
as the case may be, and the Company must specify whether the Notes are being
defeased to maturity or to a particular redemption date;

         (b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable
to the Trustee confirming that (a) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or (b) since the date
of this Indenture, there has been a change in the applicable U.S. federal income
tax law, in either case to the effect that, and based thereon such Opinion of
Counsel shall confirm that, the Holders of the outstanding Notes will not
recognize income, gain or loss for U.S. federal income tax purposes as a result
of such Legal Defeasance and will be

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<PAGE>

subject to U.S. federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Legal Defeasance had not
occurred;

         (c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable
to the Trustee confirming that the Holders of the outstanding Notes will not
recognize income, gain or loss for U.S. federal income tax purposes as a result
of such Covenant Defeasance and will be subject to U.S. federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred;

         (d) in the case of Section 8.02 or Section 8.03, the Company shall have
delivered to the Trustee an Opinion of Counsel in Canada to the effect that
Holders of the outstanding Notes will not recognize income, gain or loss for
Canadian federal or provincial income tax or other tax purposes as a result of
such Legal Defeasance or Covenant Defeasance, as applicable, and will be subject
to Canadian federal or provincial income tax and other tax on the same amounts,
in the same manner and at the same times as would have been the case if such
Legal Defeasance or Covenant Defeasance, as applicable, had not occurred (which
condition may not be waived by any Holder or the Trustee);

         (e) no Default or Event of Default may have occurred and be continuing
on the date of such deposit (other than a Default or Event of Default resulting
from the borrowing of funds to be applied to such deposit);

         (f) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;

         (g) The Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders of Notes over the other creditors of the Company with
the intent of defeating, hindering, delaying or defrauding creditors of the
Company or others; and

         (h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent relating to the Legal Defeasance or the Covenant Defeasance have been
complied with.

Section 8.05      Deposited Money and Government Securities to be Held in Trust;
                  Other Miscellaneous Provisions.

         Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company or a Guarantor acting as Paying
Agent) as the Trustee may determine, to the Holders of such Notes of all sums
due and to become due thereon in

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respect of principal, premium and Special Interest, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.

         The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.

         Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.

Section 8.06      Repayment to Company.

         Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium and
Special Interest, if any, or interest on any Note and remaining unclaimed for
two years after such principal, and premium and Special Interest, if any, or
interest has become due and payable shall be paid to the Company on its request
or (if then held by the Company) shall be discharged from such trust; and the
Holder of such Note shall thereafter look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in the New York Times, The Wall Street Journal (national
edition), the Globe and Mail and the National Post, notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.

Section 8.07      Reinstatement.

         If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided that, if the Company makes any payment of
principal of, premium and Special Interest, if any, or interest on any Note
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Notes to receive such payment from the
money held by the Trustee or Paying Agent.

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                                   ARTICLE 9.
                        AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01      Without Consent of Holders of Notes.

         Notwithstanding Section 9.02 hereof, the Company, the Guarantors and
the Trustee may amend or supplement this Indenture, the Note Guarantees or the
Notes without the consent of any Holder of a Note:

         (1) to cure any ambiguity, defect or inconsistency;

         (2) to provide for uncertificated Notes in addition to or in place of
certificated Notes;

         (3) to provide for the assumption of the Company's obligations to
Holders of Notes by a successor to the Company pursuant to Article 5 or Article
10 hereof;

         (4) to make any change that would provide any additional rights or
benefits to the Holders of Notes or that in the good faith opinion of the Board
of Directors of the Company (evidenced by a resolution of the Board of Directors
set forth in an Officers' Certificate delivered to the Trustee) does not
adversely affect the rights under this Indenture of any such Holder;

         (5) to add a Guarantor;

         (6) to comply with requirements of the Commission in order to effect or
maintain the qualification of this Indenture under the TIA; or

         (7) to issue Additional Notes in compliance with Section 4.09.

         Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company and the Guarantors in the
execution of any amended or supplemental indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.

Section 9.02      With Consent of Holders of Notes.

         Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture (including Section 3.09, 4.10 and
4.15 hereof), the Note Guarantees and the Notes with the consent of the Holders
of at least a majority in principal amount of the Notes (including Additional
Notes, if any) then outstanding voting as a single class (including consents
obtained in connection with a tender offer or exchange offer for, or purchase
of, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing
Default or Event of Default (other than a Default or Event of Default in the
payment of the principal of, premium and Special

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<PAGE>

Interest, if any, or interest on the Notes, except a payment default resulting
from an acceleration that has been rescinded) or compliance with any provision
of this Indenture, the Note Guarantees or the Notes may be waived with the
consent of the Holders of a majority in principal amount of the then outstanding
Notes (including Additional Notes, if any) voting as a single class (including
consents obtained in connection with a tender offer or exchange offer for, or
purchase of, the Notes).

         Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental indenture
unless such amended or supplemental indenture directly affects the Trustee's own
rights, duties or immunities under this indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental indenture.

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

         After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes (including Additional Notes,
if any) then outstanding voting as a single class may waive compliance in a
particular instance by the Company with any provision of this Indenture or the
Notes. However, without the consent of each Holder affected, an amendment or
waiver under this Section 9.02 may not (with respect to any Notes held by a
non-consenting Holder):

         (1) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;

         (2) reduce the principal of or change the fixed maturity of any Note or
alter the provisions with respect to the redemption of the Notes or reduce the
redemption or repurchase price thereof;

         (3) reduce the rate of or change the time for payment of interest on
any Note, including Additional Amounts;

         (4) waive a Default or Event of Default in the payment of principal of,
or interest or premium, or Special Interest, if any, on the Notes (except a
rescission of acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the Notes and a waiver of the payment default that
resulted from such acceleration);

         (5) make any Note payable in money other than that stated in the Notes;

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<PAGE>

         (6) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or interest or premium or Special Interest, if any, on the
Notes;

         (7) waive a redemption payment with respect to any Note (other than a
payment required by Section 4.10 or Section 4.15 hereof);

         (8) release any Guarantor from any of its obligations under its
Guarantee or this Indenture, except in accordance with the terms of this
Indenture; or

         (9) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions.

Section 9.03      Compliance with Trust Indenture Act.

         Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.

Section 9.04      Revocation and Effect of Consents.

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

         The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement, or waiver. If a record date is fixed, then, notwithstanding the
preceding paragraph, those Persons who were Holders at such record date (or
their duly designated proxies), and only such Persons, shall be entitled to
consent to such amendment, supplement, or waiver or to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 120 days
after such record date unless the consent of the requisite number of Holders has
been obtained.

Section 9.05      Notation on or Exchange of Notes.

         The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.

         Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.

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Section 9.06      Trustee to Sign Amendments, etc.

         The Trustee shall sign any amendment, supplement or waiver authorized
pursuant to this Article Nine if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment, supplement or waiver until the Board of Directors
approves it. In executing any amendment, supplement or waiver, the Trustee shall
be entitled to receive and (subject to Section 7.01 hereof) shall be fully
protected in relying upon, in addition to the documents required by Section
12.04 hereof, an Officers' Certificate and an Opinion of Counsel stating that
the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture.

                                  ARTICLE 10.
                                  GUARANTEES

Section 10.01     Note Guarantee.

         Subject to this Article 10, each of the Guarantors hereby, jointly and
severally, unconditionally guarantees to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes or
the obligations of the Company hereunder or thereunder, that: (a) the principal,
interest, premium and Special Interest, if any, on the Notes will be promptly
paid in full when due, whether at maturity, by acceleration, redemption or
otherwise, and interest on the overdue principal of and interest on the Notes,
if any, if lawful, and all other obligations of the Company to the Holders or
the Trustee hereunder or thereunder will be promptly paid in full or performed,
all in accordance with the terms hereof and thereof; and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, that same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. Failing payment when due of any amount
so guaranteed or any performance so guaranteed for whatever reason, the
Guarantors shall be jointly and severally obligated to pay the same immediately.
Each Guarantor agrees that this is a guarantee of payment and not a guarantee of
collection.

         The Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenant that this Note Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and this Indenture.

         The obligations of the Guarantor under its Note Guarantee are
independent of the obligations guaranteed by such Guarantor hereunder, and a
separate action or actions may be

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<PAGE>

brought and prosecuted by the Trustee on behalf of, or by, the Holders, subject
to the terms and conditions set forth in this Indenture against a Guarantor to
enforce the Note Guarantee, irrespective of whether any action is brought
against the Company or whether the Company is joined in any such action or
actions.

         The Guarantor hereby agrees that, in the event of a default in payment
of principal (or premium and Special Interest, if any) or interest on a Note,
whether at its stated maturity, by acceleration, purchase or otherwise, legal
proceedings may be instituted by the Trustee on behalf of, or by, the Holder of
such Note, subject to the terms and conditions set forth in this Indenture,
directly against each of the Guarantors to enforce such Guarantor's Note
Guarantee without first proceeding against the Company or any other Guarantor.
The Guarantor agrees that if, after the occurrence and during the continuance of
an Event of Default, the Trustee or any of the Holders are prevented by
applicable law from exercising their respective rights to accelerate the
maturity of the Notes, to collect interest on the Notes, or to enforce or
exercise any other right or remedy with respect to the Notes, such Guarantor
shall pay to the Trustee for the account of the Holder, upon demand therefor,
the amount that would otherwise have been due and payable had such rights and
remedies been permitted to be exercised by the Trustee or any of the Holders.

         If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Guarantors or any custodian, trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantors, any amount paid either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.

         Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 hereof
for the purposes of this Note Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 6 hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by the Guarantors
for the purpose of this Note Guarantee. The Guarantors shall have the right to
seek contribution from any non-paying Guarantor so long as the exercise of such
right does not impair the rights of the Holders under the Guarantee.

         Each Note Guarantee shall remain in full force and effect and continue
to be effective should any petition be filed by or against the Company for
liquidation, reorganization, should the Company become insolvent or make an
assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of the Company's assets, and shall, to
the fullest extent permitted by law, continue to be effective or be reinstated,
as the case may be, if at any time payment and performance of the Notes are,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee on the Notes or Note Guarantees, whether as
a "voidable preference", "fraudulent transfer" or otherwise, all as though such
payment or performance had not been made. In the event that any payment or any
part thereof, is rescinded, reduced, restored or returned, the Note shall, to
the

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<PAGE>

fullest extent permitted by law, be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned. The form of
Note Guarantee is attached hereto as Exhibit E.

         In case any provision of any Note Guarantee shall be invalid, illegal
or unenforceable, the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

         The Note Guarantee issued by any Guarantor shall be a general
obligation of such Guarantor, ranking pari passu with any other senior
indebtedness of such Guarantor, if any.

         Each payment to be made by a Guarantor in respect of its Note Guarantee
shall be made without set-off, counterclaim, reduction or diminution of any kind
or nature.

Section 10.02     Limitation on Guarantor Liability.

         Each Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that the guarantee by each
Guarantor pursuant to its Note Guarantee not constitute a fraudulent transfer or
conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar United States federal or
state law or Canadian federal or provincial law relating to fraudulent transfer
or conveyance. To effectuate the foregoing intention, the Trustee, the Holders
and the Guarantors hereby irrevocably agree that the obligations of each
Guarantor shall be limited to the maximum amount as will, after giving effect to
all other contingent and fixed liabilities of such Guarantor and after giving
effect to any collections from or payments made by or on behalf of any other
Guarantor in respect of the obligations of such other Guarantor under its
Guarantee or pursuant to its contribution obligations under the Indenture,
result in the obligations of such Guarantor under the Guarantee not constituting
a fraudulent conveyance or fraudulent transfer under applicable law. Each
Guarantor that makes a payment or distribution under a Guarantee shall be
entitled to a contribution from each other Guarantor in a proportional amount
based on the net assets of each Guarantor, determined in accordance with GAAP.

Section 10.03     Execution and Delivery of Note Guarantee.

         To evidence its Note Guarantee set forth in Section 10.01, each
Guarantor hereby agrees that a notation of such Note Guarantee substantially in
the form included in Exhibit E shall be endorsed by an Officer of such Guarantor
on each Note authenticated and delivered by the Trustee and that this Indenture
shall be executed on behalf of such Guarantor by its President or one of its
Vice Presidents.

         Each Guarantor hereby agrees that its Note Guarantee set forth in
Section 10.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Note Guarantee.

         If an Officer whose signature is on this Indenture or on the Note
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Note Guarantee is endorsed, the Note Guarantee shall be valid
nevertheless.

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         The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Note Guarantee set forth
in this Indenture on behalf of the Guarantors.

         In the event that the Company creates or acquires any new Restricted
Subsidiaries subsequent to the date of this Indenture, if required by Section
4.18 hereof, the Company shall cause such Restricted Subsidiaries to execute
supplemental indentures to this Indenture and Note Guarantees in accordance with
Section 4.18 hereof and this Article 10, to the extent applicable.

Section 10.04     Guarantors May Consolidate, etc., on Certain Terms.

         Except as otherwise provided in Section 10.05 hereof, no Guarantor may
sell or otherwise dispose of all or substantially all of its assets to, or
consolidate with or merge with or into (whether or not such Guarantor is the
surviving Person) another Person whether or not affiliated with such Guarantor
unless:

         (a) immediately after giving effect to that transaction, no Default or
Event of Default exists; and

         (b) either:

                  (1) the Person acquiring the property in any such sale or
         disposition or the Person formed by or surviving any such
         consolidation, amalgamation or merger, if other than such Guarantor,
         the Company or another Guarantor, assumes all the obligations of that
         Guarantor under this indenture, its Guarantee and, if the Exchange
         Offer has not been consummated or Special Interest remains due and
         owing, under the Registration Rights Agreement pursuant to a
         supplemental Indenture satisfactory to the Trustee and completes all
         other required documentation; or

                  (2) in the case of a sale or disposition constituting an Asset
         Sale, the Net Proceeds of such sale or other disposition are applied in
         accordance with the provisions of this Indenture described in the
         second paragraph under Section 4.10 hereof;

         In case of any such consolidation, amalgamation, merger, sale or
conveyance and upon the assumption by the successor Person (where applicable),
by supplemental indenture, executed and delivered to the Trustee and
satisfactory in form to the Trustee, of the Guarantee endorsed upon the Notes
and the due and punctual performance of all of the covenants and conditions of
this Indenture to be performed by the Guarantor, such successor Person shall
succeed to and be substituted for the Guarantor with the same effect as if it
had been named herein as a Guarantor. Such successor Person thereupon may cause
to be signed any or all of the Note Guarantees to be endorsed upon all of the
Notes issuable hereunder which theretofore shall not have been signed by the
Company and delivered to the Trustee. All the Note Guarantees so issued shall in
all respects have the same legal rank and benefit under this Indenture as the
Note Guarantees theretofore and thereafter issued in accordance with the terms
of this Indenture as though all of such Note Guarantees had been issued at the
date of the execution hereof.

         Except as set forth in Articles 4 and 5 hereof, and notwithstanding
clauses (a) and (b) above, nothing contained in this Indenture or in any of the
Notes shall prevent any consolidation

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<PAGE>

or merger of a Guarantor with or into the Company or another Guarantor, or shall
prevent any sale or conveyance of the property of a Guarantor as an entirety or
substantially as an entirety to the Company or another Guarantor.

Section 10.05     Releases Following Sale of Assets.

         A Guarantor shall be released from all of its obligations under its
Guarantee if all of its assets or Capital Stock is sold, in each case in a
transaction in compliance with Section 4.10 hereof, or the Guarantor merges with
or into or consolidates with, or transfers all or substantially all of its
assets in compliance with Section 5.01 hereof, provided that the Net Proceeds of
such sale are applied in accordance with the applicable provisions of this
Indenture, including (without limitation) Section 4.10 hereof. Further, if the
Company redesignates any Restricted Subsidiary that is a Guarantor as an
Unrestricted Subsidiary in accordance with Section 4.19 hereof then such
Guarantor will be released and relieved of any obligations under its Note
Guarantee. Upon delivery by the Company to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that such sale or other
disposition was made by the Company in accordance with the provisions of this
Indenture, including without limitation Section 4.10 hereof, the Trustee shall
execute any documents reasonably required in order to evidence the release of
any Guarantor from its obligations under its Note Guarantee.

         Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under this Indenture
as provided in this Article 10.

Section 10.06     Subrogation.

         Each Guarantor shall be subrogated to all rights of Holders of Notes
against the Company in respect of any amounts paid by any Guarantor pursuant to
the provisions of Section 10.01; provided that, if an Event of Default has
occurred and is continuing, no Guarantor shall be entitled to enforce or receive
any payments arising out of, or based upon, such right of subrogation until all
amounts then due and payable by the Company under this Indenture or the Notes
shall have been paid in full.

Section 10.07     Benefits Acknowledged.

         Each Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by this Indenture and that
the guarantee and waivers made by it pursuant to its Note Guarantee are
knowingly made in contemplation of such benefits.

                                  ARTICLE 11.
                           SATISFACTION AND DISCHARGE

Section 11.01     Satisfaction and Discharge.

         This Indenture will be discharged and will cease to be of further
effect as to all Notes issued thereunder, when:

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<PAGE>

         (a) either:

                  (1) all Notes that have been authenticated, except lost,
         stolen or destroyed Notes that have been replaced or paid and Notes for
         whose payment money has been deposited in trust and thereafter repaid
         to the Company, have been delivered to the Trustee for cancellation; or

                  (2) all Notes that have not been delivered to the Trustee for
         cancellation have become due and payable by reason of the mailing of a
         notice of redemption or otherwise or will become due and payable within
         one year and the Company or any Guarantor has irrevocably deposited or
         caused to be deposited with the Trustee as trust funds in trust solely
         for the benefit of the Holders, cash in U.S. dollars, non-callable
         Government Securities, or a combination of cash in U.S. dollars and
         non-callable Government Securities, in amounts as will be sufficient
         without consideration of any reinvestment of interest, to pay and
         discharge the entire indebtedness on the Notes not delivered to the
         Trustee for cancellation for principal, premium and Special Interest,
         if any, and accrued interest to the date of maturity or redemption;

         (b) no Default or Event of Default shall have occurred and be
continuing on the date of the deposit or shall occur as a result of the deposit
and the deposit will not result in a breach or violation of, or constitute a
default under, any other instrument to which the Company or any Guarantor is a
party or by which the Company or any Guarantor is bound;

         (c) The Company or any Guarantor has paid or caused to be paid all sums
payable by it under this Indenture; and

         (d) The Company has delivered irrevocable instructions to the Trustee
under this Indenture to apply the deposited money toward the payment of the
Notes at maturity or the redemption date, as the case may be.

In addition, the Company must deliver an Officers' Certificate and an opinion of
counsel to the Trustee stating that all conditions precedent to satisfaction and
discharge have been satisfied.

         Notwithstanding the satisfaction and discharge of this Indenture, if
money shall have been deposited with the Trustee pursuant to subclause (2) of
clause (a) of this Section 11.01, the provisions of Section 11.02 and Section
8.06 hereof shall survive.

Section 11.02     Application of Trust Money.

         Subject to the provisions of Section 8.06 hereof, all money deposited
with the Trustee pursuant to Section 11.01 hereof shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium and
Special Interest, if any) and interest for whose payment such money has been
deposited with the Trustee; but such money need not be segregated from other
funds except to the extent required by law.

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<PAGE>

         If the Trustee or Paying Agent is unable to apply any money or
Government Securities in accordance with Section 11.01 hereof by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's and any Guarantor's obligations under this Indenture
and the Notes shall be revived and reinstated as though no deposit had occurred
pursuant to Section 11.01 hereof; provided that if the Company has made any
payment of principal of, premium and Special Interest, if any, or interest on
any Notes because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money or Government Securities held by the Trustee or Paying Agent.

                                   ARTICLE 12.
                                  MISCELLANEOUS

Section 12.01     Trust Indenture Act Controls.

         If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA ss.318(c), the imposed duties shall control.

Section 12.02     Notices.

         Any notice or communication by the Company, any Guarantor or the
Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:

         If to the Company and/or any Guarantor:

         Millar Western Forest Products Ltd.
         16640-111 Avenue,
         Edmonton, Alberta,
         Canada, T2M 2S5
         Telecopier No.:  (780) 486-8282
         Attention:  Chief Financial Officer

         With a copy to:

         Fraser Milner Casgrain LLP
         10180 101 Street
         Edmonton, Alberta,
         T5J 3V5
         Telecopier No.:  (780) 423-7276
         Attention:  Robert J. Turner

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<PAGE>

         If to the Trustee:

         The Bank of New York
         101 Barclay Street, Floor 21W
         New York, NY 10286
         Telecopier No.:  (212) 815-5803
         Attention:  Corporate Trust Administration

         The Company, any Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.

         All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telecopied; and the next Business Day
after timely delivery to the courier, if sent by overnight air courier
guaranteeing next day delivery; provided that any notice or communication
delivered to the Trustee shall be deemed effective upon actual receipt thereof.

         Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA ss. 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.

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

         If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.

Section 12.03     Communication by Holders of Notes with Other Holders of Notes.

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

Section 12.04     Certificate and Opinion as to Conditions Precedent.

         (a) Upon any request or application by the Company or any of the
Restricted Subsidiaries to the Trustee to take any action under this Indenture,
the Company or such Guarantor, as the case may be, shall furnish to the Trustee
an Officers' Certificate in form and substance reasonably satisfactory to the
Trustee (which shall include the statements set forth in Section 12.05 hereof)
stating that, in the opinion of the signers, all conditions precedent and
covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and

         (b) An Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 12.05
below) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.

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<PAGE>

Section 12.05     Statements Required in Certificate or Opinion.

         Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to Section 4.04 hereof or TIA ss. 314(a)(4)) shall comply with the
provisions of TIA ss. 314(e) and shall include:

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

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

         (c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with (and, in the case of an Opinion of Counsel, may be limited to
reliance on an Officers Certificate as to matters of fact); and

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

Section 12.06     Rules by Trustee and Agents.

         The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.

Section 12.07     No Personal Liability of Directors, Officers, Trustees,
                  Employees, Shareholders, Partners and Principals.

         No past, present or future director, officer, employee, incorporator or
shareholder of the Company or any Guarantor, as such, shall have any liability
for any obligations of the Company or the Guarantors under the Notes, this
Indenture, the Note Guarantees, or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Notes by accepting
a Note waives and releases all such liability. The waiver and release are part
of the consideration for issuance of the Notes.

Section 12.08     Governing Law.

         THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE
THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES.

Section 12.09     Waiver of Jury Trial.

         EACH OF THE COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE
SECURITIES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

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<PAGE>

Section 12.10     Force Majeure.

         In no event shall the Trustee be responsible or liable for any failure
or delay in the performance of its obligations under this Indenture arising out
of or caused by, directly or indirectly, forces beyond its reasonable control,
including without limitation strikes, work stoppages, accidents, acts of war or
terrorism, civil or military disturbances, nuclear or natural catastrophes or
acts of god, and interruptions, loss or malfunctions of utilities,
communications or computer (software or hardware) services.

Section 12.11     No Adverse Interpretation of Other Agreements.

         This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or their Restricted Subsidiaries or of any
other Person. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.

Section 12.12     Successors.

         All agreements of the Company in this Indenture and the Notes shall
bind their successors. All agreements of the Trustee in this Indenture shall
bind its successors. All agreements of each Guarantor in this Indenture shall
bind its successors, except as otherwise provided in Section 10.05.

Section 12.13     Agent for Service; Submission to Jurisdiction; Waiver of
                  Immunities.

         By the execution and delivery of this Indenture, the Company and each
of the non-U.S. Guarantors (i) acknowledges that it has, by separate written
instrument, irrevocably designated and appointed CT Corporation System, 111
Eighth Avenue, 13th Floor, New York, New York 10011 as its authorized agent upon
which process may be served in any suit, action or proceeding arising out of or
relating to the Notes, the Note Guarantees or this Indenture that may be
instituted in any U.S. federal or state court located in the Borough of
Manhattan in The City of New York, or brought under federal or state securities
laws or brought by the Trustee (whether in its individual capacity or in its
capacity as Trustee hereunder), and acknowledges that CT Corporation System has
accepted such designation, (ii) submits to the non-exclusive jurisdiction of
such courts in any such suit, action or proceeding, and (iii) agrees that
service of process upon CT Corporation System and written notice of said service
to it (mailed or delivered to its Chief Financial Officer at its principal
office in Edmonton, Alberta as specified in Section 12.02 hereof), shall be
deemed in every respect effective service of process upon it in any such suit or
proceeding. The Company further agrees to take any and all action, including the
execution and filing of any and all such documents and instruments, as may be
necessary to continue such designation and appointment in full force and effect
so long as this Indenture shall be in full force and effect.

         To the extent that any of the Company or the Guarantors has or
hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service of notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, each of the Company and the Guarantors hereby irrevocably

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<PAGE>

waives such immunity in respect of its obligations under this Indenture and the
Notes, to the extent permitted by law.

Section 12.14     Conversion of Currency.

         (a) (i) If for the purpose of obtaining judgment in, or enforcing the
judgment of, any court in any country, it becomes necessary to convert into any
other currency (the "judgment currency") an amount due in U.S. dollars, then the
conversion shall be made at the rate of exchange prevailing on the Business Day
before the day on which the judgment is given or the order of enforcement is
made, as the case may be (unless a court shall otherwise determine). (ii) If
there is a change in the rate of exchange prevailing between the Business Day
before the day on which the judgment is given or an order of enforcement is
made, as the case may be (or such other date as a court shall determine), and
the date of receipt of the amount due, the Company will pay such additional (or,
as the case may be, such lesser) amount, if any, as may be necessary so that the
amount paid in the judgment currency when converted at the rate of exchange
prevailing on the date of receipt will produce the amount in U.S. dollars
originally due.

         (b) In the event of the winding-up of the Company at any time while any
amount or damages owing under the Notes, Note Guarantees or this Indenture, or
any judgment or order rendered in respect thereof, shall remain outstanding, the
Company shall indemnify and hold the Holders and the Trustee harmless against
any deficiency arising or resulting from any variation in rates of exchange
between (1) the date as of which the equivalent of the amount in U.S. dollars
due or contingently due under the Notes, Note Guarantees or this Indenture
(other than under this Subsection (b)) is calculated for the purposes of such
winding-up and (2) the final date for the filing of proofs of claim in such
winding-up. For the purpose of this Clause (b), the final date for the filing of
proofs of claim in the winding-up of the Company shall be the date fixed by the
liquidator or otherwise in accordance with the relevant provisions of applicable
law as being the latest practicable date as at which liabilities of the Company
may be ascertained for such winding-up prior to payment by the liquidator or
otherwise in respect thereto.

         (c) The obligations contained in Clauses (a)(ii) and (b) of this
Section 12.12 shall constitute separate and independent obligations of the
Company from its other obligations under the Notes, Note Guarantees and this
Indenture, shall give rise to separate and independent causes of action against
the Company, shall apply irrespective of any waiver or extension granted by any
Holder or Trustee or either of them from time to time and shall continue in full
force and effect notwithstanding any judgment or order or the filing of any
proof of claim in the winding-up of the Company for a liquidated sum in respect
of amounts due hereunder (other than under Clause (b) above) or under any such
judgment or order. Any such deficiency as aforesaid shall be deemed to
constitute a loss suffered by the Holders or the Trustee, as the case may be,
and no proof or evidence of any actual loss shall be required by the Company,
the Guarantors or the liquidator or otherwise. In the case of Clause (b) above,
the amount of such deficiency shall not be deemed to be reduced by any variation
in rates of exchange occurring between the said final date and the date of any
liquidating distribution.

         (d) The term "rate(s) of exchange" shall mean the rate of exchange
quoted by the Federal Reserve Bank of New York, noon buying rate on the date of
determination for purchases of U.S.

                                       97
<PAGE>

dollars with the judgment currency other than U.S. dollars referred to in
Clauses (a) and (b) above and includes any premiums and costs of exchange
payable.

         (e) The Trustee shall have no duty or liability with respect to
monitoring or enforcing this Section 12.12.

Section 12.15     Currency Equivalent.

         Except as provided in Section 12.12, for purposes of the construction
of the terms of this Indenture or of the Notes and Note Guarantees, in the event
that any amount is stated herein in the currency of one nation (the "First
Currency"), as of any date such amount shall also be deemed to represent the
amount in the currency of any other relevant nation (the "Other Currency") which
is required to purchase such amount in the First Currency at the rate of
exchange quoted by the Federal Reserve Bank of New York, noon buying rate on the
date of determination.

Section 12.16     Severability.

         In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

Section 12.17     Counterpart Originals.

         The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.

Section 12.18     Table of Contents, Headings, etc.

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

                         [Signatures on following page]

                                       98
<PAGE>

                                   SIGNATURES

                                   MILLAR WESTERN FOREST
                                   PRODUCTS LTD.

                                   By: /s/ H. MacKenzie Millar
                                       -----------------------------------------
                                       Name:  H. MacKenzie Millar
                                       Title: President, Chief Executive Officer

                                   By: /s/ Joseph R. Concini
                                       -----------------------------------------
                                       Name:  Joseph R. Concini
                                       Title: Chief Financial Officer

<PAGE>

                                   THE BANK OF NEW YORK, AS TRUSTEE

                                   By: /s/ Peter Pavlyshin
                                       -----------------------------------------
                                       Name:  Peter Pavlyshin
                                       Title: Assistant Vice President

<PAGE>
                                                                       EXHIBIT A

                                 [Face of Note]

  [Insert the Global Note Legend, if applicable pursuant to the provisions of
                                 the Indenture]
 [Insert the Private Placement Legend, if applicable pursuant to the provisions
                               of the Indenture]

<PAGE>

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

                                                           Rule 144A Note CUSIP:
                                                            Rule 144A Note ISIN:
                                                        Regulation S Note CUSIP:
                                                         Regulation S Note ISIN:

                    7.75% Senior Notes due November 15, 2013

No. ___                                                          US$____________

                       MILLAR WESTERN FOREST PRODUCTS LTD.

promises to pay to _____________________________ or registered assigns,

the principal sum of ___________________________________________________________

Dollars on November 15, 2013.

Interest Payment Dates:  May 15th and November 15th

Record Dates:  May 1 and November 1

                                      A-2
<PAGE>

         IN WITNESS HEREOF, the Company has caused this instrument to be duly
executed.

Dated:

                                       MILLAR WESTERN FOREST PRODUCTS LTD.

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

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

This is one of the Notes referred to in the within-mentioned Indenture:

                                       The Bank of New York
                                        as Trustee

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

                                      A-3
<PAGE>

                                 [Back of Note]
                    7.75% Senior Notes due November 15, 2013

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

         1. INTEREST. Millar Western Forest Products Ltd., a corporation
incorporated under the laws of the Province of Alberta (the "Company"), promises
to pay interest on the principal amount of this Note at 7.75% per annum from
November 25, 2003 until maturity and shall pay the Special Interest, if any,
payable pursuant to the Registration Rights Agreement referred to below. The
Company will pay interest and Special Interest, if any, semi-annually in arrears
on May 15th and November 15th of each year, or if any such day is not a Business
Day, on the next succeeding Business Day (each an "Interest Payment Date").
Interest on the Notes will accrue from the most recent date to which interest
has been paid or, if no interest has been paid, from the date of issuance;
provided that the first Interest Payment Date shall be May 15, 2004. The Company
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at the then applicable interest rate on the Notes to the extent lawful;
it shall pay interest (including post-petition interest in any proceeding under
any Bankruptcy Law) on overdue installments of interest and Special Interest
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months. For the purposes of disclosure
under the Interest Act (Canada), the yearly rate of interest which is equivalent
to the rate payable hereunder is the rate payable multiplied by the actual
number of days in the year divided by 360.

         2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Special Interest, if any, to the Persons who are
registered Holders of Notes at the close of business on the May 1 or November 1
(whether or not a Business Day), as the case may be, next preceding the Interest
Payment Date, even if such Notes are canceled after such record date and on or
before such Interest Payment Date, except as provided in Section 2.12 of the
Indenture with respect to defaulted interest. Payment of interest and Special
Interest, if any, may be made by check mailed to the Holders at their addresses
set forth in the register of Holders, and provided that payment by wire transfer
of immediately available funds will be required with respect to principal of and
interest, premium and Special Interest, if any, on, all Global Notes and all
other Notes the Holders of which shall have provided wire transfer instructions
to the Company or the Paying Agent. Such payment shall be in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.

         3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to the Holders. The
Company or any of the Restricted Subsidiaries may act in any such capacity.

         4. INDENTURE. The Company issued the Notes under an Indenture dated as
of November 25, 2003 (the "Indenture") between the Company and the Trustee. The
terms of the Notes

                                      A-4
<PAGE>

include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended. The Notes are subject
to all such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. To the extent any provision of this Note conflicts with
the express provisions of the Indenture, the provisions of the Indenture shall
govern and be controlling.

         5. OPTIONAL REDEMPTION.

         (a) At any time prior to November 15, 2006 the Company may on any one
or more occasions redeem up to 35% of the aggregate principal amount of Notes,
calculated after giving effect to the issuance of Additional Notes, if any, at a
redemption price of 107.75% of the principal amount, plus accrued and unpaid
interest and Special Interest, if any, to the redemption date, with the net cash
proceeds of one or more sales of Common Stock of the Company; provided that:

                  (1) at least 65% of the aggregate principal amount of Notes
         theretofor issued under the Indenture, calculated after giving effect
         to the issuance of Additional Notes, if any, remain outstanding
         immediately after the occurrence of such redemption (excluding Notes
         held by the Company and its Affiliates); and

                  (2) the redemption occurs within 90 days of the date of the
         closing of such sale of Common Stock.

         (b) Except pursuant to the preceding paragraph and as described below
under clause (d) hereof, the Notes will not be redeemable at the Company's
option before November 15, 2008.

         (c) On or after November 15, 2008, the Company may redeem all or a part
of the Notes upon not less than 30 nor more than 60 days' prior notice, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest and Special Interest, if any, on the Notes
redeemed, to the applicable redemption date, if redeemed during the twelve-month
period beginning on November 15 of the years indicated below:

<TABLE>
<CAPTION>
         YEAR                                               PERCENTAGE
         <S>                                                 <C>
         2008............................................... 103.875%
         2009............................................... 102.583%
         2010............................................... 101.292%
         2011 and thereafter................................ 100.000%
</TABLE>

         (d) The Company may redeem all, but not less than all, of the Notes at
any time at 100% of the aggregate principal amount of the Notes, plus accrued
and unpaid interest and Special Interest, if any, on the Notes redeemed to the
applicable redemption date, if the Company has become or would become obligated
to pay, on the next date on which any amount would be payable with respect to
the Notes, any Additional Amounts as a result of a change in the laws (including
any regulations promulgated thereunder) of Canada (or any political subdivision
or taxing authority thereof or therein), or any change in any official position
regarding the application or interpretation of such laws or regulations, which
change is announced or becomes effective on or after the date hereof.

                                      A-5
<PAGE>

         6. MANDATORY REDEMPTION.

         The Company shall not be required to make mandatory redemption or
sinking fund payments with respect to the Notes.

         7. REPURCHASE AT OPTION OF HOLDER.

         (a) Upon the occurrence of a Change of Control, the Company shall make
an offer (a "Change of Control Offer") to each Holder to repurchase all or any
part (equal to US$1,000 or an integral multiple thereof) of each Holder's Notes
at a purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Special Interest thereon, if any, to the date of
purchase (the "Change of Control Payment"). The Change of Control Offer shall be
made in accordance with Sections 3.09 and 4.15 of the Indenture.

         (b) If the Company or any of its Restricted Subsidiaries consummates an
Asset Sale, within five days of each date on which the aggregate amount of
Excess Proceeds exceeds US$10.0 million, the Company shall commence an offer (an
"Asset Sale Offer") to all Holders of Notes and all Holders of other
Indebtedness that is pari passu with the Notes pursuant to Section 3.09 of the
Indenture to purchase the maximum principal amount of Notes (including any
Additional Notes) and such other pari passu Indebtedness that may be purchased
out of the Excess Proceeds at an offer price in cash in an amount equal to 100%
of the principal amount thereof plus accrued and unpaid interest and Special
Interest thereon, if any, to the date fixed for the closing of such offer, in
accordance with the procedures set forth in the Indenture. To the extent that
the aggregate amount of Notes (including any Additional Notes) and other pari
passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the
Excess Proceeds, the Company (or such Restricted Subsidiary) may use those
Excess Proceeds for any purpose not otherwise prohibited by the Indenture. If
the aggregate principal amount of Notes and other pari passu Indebtedness
tendered pursuant to an Asset Sale Offer exceeds the amount of Excess Proceeds,
the Trustee shall select the Notes and such other pari passu Indebtedness to be
purchased on a pro rata basis. Holders of Notes that are the subject of an offer
to purchase will receive an Asset Sale Offer from the Company prior to any
related purchase date and may elect to have such Notes purchased by completing
the form entitled "Option of Holder to Elect Purchase" on the reverse of the
Notes.

         8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date (except that
redemption notices may be mailed more than 60 days prior to a redemption date if
the notice is issued in connection with Article 8 or Article 11 of the
Indenture) to each Holder whose Notes are to be redeemed at its registered
address. Notes in denominations larger than US$1,000 may be redeemed in part but
only in whole multiples of US$1,000, unless all of the Notes held by a Holder
are to be redeemed. On and after the redemption date interest ceases to accrue
on Notes or portions thereof called for redemption.

         9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of US$1,000 and integral multiples of US$1,000.
The transfer of Notes may be registered and Notes may be exchanged as provided
in the Indenture. The Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate

                                      A-6
<PAGE>

endorsements and transfer documents and the Company may require a Holder to pay
any taxes and fees required by law or permitted by the Indenture. The Company
need not exchange or register the transfer of any Note or portion of a Note
selected for redemption, except for the unredeemed portion of any Note being
redeemed in part. Also, the Company need not exchange or register the transfer
of any Notes for a period of 15 days before a selection of Notes to be redeemed.

         10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.

         11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture, the Note Guarantees or the Notes may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the then outstanding Notes and Additional Notes, if any, voting as a single
class, and any existing default or compliance with any provision of the
Indenture, the Note Guarantees or the Notes may be waived (other than a Default
or Event of Default in the payment of the principal of, premium and Special
Interest, if any, or interest on the Notes, except a payment default resulting
from an acceleration that has been rescinded) with the consent of the Holders of
a majority in principal amount of the then outstanding Notes and Additional
Notes, if any, voting as a single class. Without the consent of any Holder of a
Note, the Indenture, the Note Guarantees or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger, consolidation or sale of assets, to make any change that
would provide any additional rights or benefits to the Holders of the Notes or
that does not adversely affect the legal rights under the Indenture of any such
Holder, to add a Guarantor, to comply with the requirements of the Commission in
order to effect or maintain the qualification of the Indenture under the Trust
Indenture Act of 1939, as amended, to provide for the Issuance of Additional
Notes in accordance with the limitations set forth in the Indenture, or to allow
any Guarantor to execute a supplemental indenture to the Indenture and/or a Note
Guarantee with respect to the Notes.

         12. DEFAULTS AND REMEDIES. The Events of Default relating to the Notes
are defined in Section 6.01 of the Indenture. If any Event of Default occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, all outstanding Notes
will become due and payable without further action or notice. Holders may not
enforce the Indenture, the Notes or the Note Guarantees except as provided in
the Indenture. Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal, premium or Special
Interest, if any, or interest) if it determines that withholding notice is in
their interest. The Holders of a majority in aggregate principal amount of the
Notes then outstanding by notice to the Trustee may on behalf of the Holders of
all of the Notes waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of interest or Special Interest on, or the principal of, premium
and Special Interest, if any, or interest on, the

                                      A-7
<PAGE>

Notes. The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.

         12. AUTHENTICATION. This Note shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose until
authenticated by the manual signature of the Trustee.

         13. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement, dated as of November 25, 2003, between the Company and the parties
named on the signature pages thereof (the "Registration Rights Agreement"),
including the right to receive Special Interest (as defined in the Registration
Rights Agreement).

         14. GOVERNING LAW. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND
BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES.

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

         The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:

Millar Western Forest Products Ltd.
16640-111 Avenue,
Edmonton, Alberta, Canada T2M 2S5
Attention:  Chief Financial Officer

                                      A-8
<PAGE>

                                 ASSIGNMENT FORM

         To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to:___________________________________
                                                (Insert assignee's legal name)

________________________________________________________________________________
                  (Insert assignee's soc. sec. or tax I.D. no.)

________________________________________________________________________________

________________________________________________________________________________

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

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

Date:______________________

                             Your Signature: ___________________________________
                    (Sign exactly as your name appears on the face of this Note)

Signature Guarantee*:_________________________________________

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

                                      A-9
<PAGE>

                       OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Note purchased by the Company pursuant to
Section 4.10 or 4.15 of the Indenture, check the appropriate box below:

        [ ] Section 4.10                      > [ ] Section 4.15

         If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:

                               US$_______________

Date:______________________

                             Your Signature: ___________________________________
                    (Sign exactly as your name appears on the face of this Note)

                     Tax Identification No.: ___________________________________

Signature Guarantee*:  _________________________

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

                                      A-10
<PAGE>

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*

         The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:

                                                  Principal
                               Amount of       Amount of this     Signature of
                Amount of     increase in        Global Note       authorized
              decrease in      Principal       following such      officer of
Date of        Principal     Amount of this      decrease or       Trustee or
Exchange         Amount        Global Note         increase      Note Custodian
----------    -----------    --------------    --------------    --------------

----------------
* This schedule should be included only if the Note is issued in global form.

                                      A-11
<PAGE>

                                                                       EXHIBIT B

                         FORM OF CERTIFICATE OF TRANSFER

Millar Western Forest Products Ltd.
16640-111 Avenue,
Edmonton, Alberta, Canada T2M 2S5
Telecopier No.:  (780) 486-8282
Attention:  Chief Financial Officer

The Bank of New York
101 Barclay Street, Floor 21W
New York, NY 10286
Telecopier No. (212) 815-5803
Attention: Corporate Trust Administration

         Re:      7.75% Senior Notes due November 15, 2013

         Reference is hereby made to the Indenture, dated as of November 25,
2003 (the "Indenture"), among Millar Western Forest Products Ltd., a corporation
incorporated under the laws of the Province of Alberta and The Bank of New York,
as Trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.

         ____________________, (the "Transferor") owns and proposes to transfer
the Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of US$____________________ in such Note[s] or interests (the
"Transfer"), to ____________________ (the "Transferee"), as further specified in
Annex A hereto. In connection with the Transfer, the Transferor hereby certifies
that:

                             [CHECK ALL THAT APPLY]

         1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST
IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer
is being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States.

         2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST
IN THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S.
The Transfer is being effected pursuant to and in accordance with Rule 903 or
Rule 904 under the Securities Act and, accordingly, the Transferor hereby
further certifies that (i) the Transfer is not being made to a person in the
United States and (x) at the time the buy order was originated, the Transferee
was

                                      B-1
<PAGE>

outside the United States or such Transferor and any Person acting on its behalf
reasonably believed and believes that the Transferee was outside the United
States or (y) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither such Transferor nor any Person
acting on its behalf knows that the transaction was prearranged with a buyer in
the United States, (ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S
under the Securities Act (iii) the transaction is not part of a plan or scheme
to evade the registration requirements of the Securities Act and (iv) if the
proposed transfer is being made prior to the expiration of the Restricted
Period, the transfer is not being made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of
the proposed transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the
restrictions on Transfer enumerated in the Indenture and the Securities Act.

         3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A
BENEFICIAL INTEREST IN THE DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE
SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is being
effected in compliance with the transfer restrictions applicable to beneficial
interests in Restricted Global Notes and Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act and any applicable blue
sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):

         (a) [ ] such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;

                                       or

         (b) [ ] such Transfer is being effected to the Company or a subsidiary
thereof;

                                       or

         (c) [ ] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;

                                       or

         (d) [ ] such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor
hereby further certifies that it has not engaged in any general solicitation
within the meaning of Regulation D under the Securities Act and the Transfer
complies with the transfer restrictions applicable to beneficial interests in a
Restricted Global Note or Restricted Definitive Notes and the requirements of
the exemption claimed, which certification is supported by (1) a certificate
executed by the Transferee in the form of Exhibit D to the Indenture and (2) an
Opinion of Counsel provided by the Transferor or the Transferee (a copy of which
the Transferor has attached to this certification), to the effect that such
Transfer is in compliance with the Securities Act. Upon consummation of the
proposed transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or

                                      B-2
<PAGE>

Definitive Note will be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Definitive Notes and in the
Indenture and the Securities Act.

         4. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST
IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.

         (a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will no longer be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.

         (b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer
is being effected pursuant to and in accordance with Rule 903 or Rule 904 under
the Securities Act and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any state of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Definitive Notes and in the Indenture.

         (c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.

         This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.

                                       [Insert Name of Transferor]

                                       By: _____________________________________
                                           Name:
                                           Title:

         Dated:  ____________________

                                      B-3
<PAGE>

                       ANNEX A TO CERTIFICATE OF TRANSFER

         5. The Transferor owns and proposes to transfer the following:

                            [CHECK ONE OF (a) OR (b)]

         (a) [ ] a beneficial interest in the:

                 (i)   [ ] 144A Global Note (CUSIP _________), or

                 (ii)  [ ] Regulation S Global Note (CUSIP _________), or

         (b) [ ] a Restricted Definitive Note.

         6. After the Transfer the Transferee will hold:

                                   [CHECK ONE]

         (a) [ ] a beneficial interest in the:

                 (i)   [ ] 144A Global Note (CUSIP _________), or

                 (ii)  [ ] Regulation S Global Note (CUSIP _________), or

                 (iii) [ ] Unrestricted Global Note (CUSIP _________); or

         (b) [ ] a Restricted Definitive Note; or

         (c) [ ] an Unrestricted Definitive Note,

in accordance with the terms of the Indenture.

                                      B-4
<PAGE>

                                                                       EXHIBIT C

                         FORM OF CERTIFICATE OF EXCHANGE

Millar Western Forest Products Ltd.
16640-111 Avenue,
Edmonton, Alberta, Canada T2M 2S5
Attention:  Chief Financial Officer

The Bank of New York
101 Barclay Street, Floor 21W
New York, NY 10286
Telecopier No. (212) 815-5803
Attention: Corporate Trust Administration

         Re:      [___]% Senior Notes due November 15, 2013

         Reference is hereby made to the Indenture, dated as of November 25,
2003 (the "Indenture"), among Millar Western Forest Products Ltd., a corporation
incorporated under the laws of the Province of Alberta and The Bank of New York,
as Trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.

         ____________________, (the "Owner") owns and proposes to exchange the
Note[s] or interest in such Note[s] specified herein, in the principal amount of
US$____________________ in such Note[s] or interests (the "Exchange"). In
connection with the Exchange, the Owner hereby certifies that:

         1) EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN AN UNRESTRICTED GLOBAL NOTE

                  a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
         RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL
         NOTE. In connection with the Exchange of the Owner's beneficial
         interest in a Restricted Global Note for a beneficial interest in an
         Unrestricted Global Note in an equal principal amount, the Owner hereby
         certifies (i) the beneficial interest is being acquired for the Owner's
         own account without transfer, (ii) such Exchange has been effected in
         compliance with the transfer restrictions applicable to the Global
         Notes and pursuant to and in accordance with the United States
         Securities Act of 1933, as amended (the "Securities Act"), (iii) the
         restrictions on transfer contained in the Indenture and the Private
         Placement Legend are not required in order to maintain compliance with
         the Securities Act and (iv) the beneficial interest in an Unrestricted
         Global Note is being acquired in compliance with any applicable blue
         sky securities laws of any state of the United States.

                  b) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
         RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection
         with the Exchange of the Owner's beneficial interest in a Restricted
         Global Note for an Unrestricted Definitive Note, the Owner hereby
         certifies (i) the Definitive Note is being acquired for the Owner's

                                      C-1
<PAGE>

         own account without transfer, (ii) such Exchange has been effected in
         compliance with the transfer restrictions applicable to the Restricted
         Global Notes and pursuant to and in accordance with the Securities Act,
         (iii) the restrictions on transfer contained in the Indenture and the
         Private Placement Legend are not required in order to maintain
         compliance with the Securities Act and (iv) the Definitive Note is
         being acquired in compliance with any applicable blue sky securities
         laws of any state of the United States.

                  c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
         BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with
         the Owner's Exchange for a Restricted Definitive Note for a beneficial
         interest in an Unrestricted Global Note, the Owner hereby certifies (i)
         the beneficial interest is being acquired for the Owner's own account
         without transfer, (ii) such Exchange has been effected in compliance
         with the transfer restrictions applicable to Restricted Definitive
         Notes and pursuant to and in accordance with the Securities Act, (iii)
         the restrictions on transfer contained in the Indenture and the Private
         Placement Legend are not required in order to maintain compliance with
         the Securities Act and (iv) the beneficial interest is being acquired
         in compliance with any applicable blue sky securities laws of any state
         of the United States.

                  d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
         UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange
         of a Restricted Definitive Note for an Unrestricted Definitive Note,
         the Owner hereby certifies (i) the Unrestricted Definitive Note is
         being acquired for the Owner's own account without transfer, (ii) such
         Exchange has been effected in compliance with the transfer restrictions
         applicable to Restricted Definitive Notes and pursuant to and in
         accordance with the Securities Act, (iii) the restrictions on transfer
         contained in the Indenture and the Private Placement Legend are not
         required in order to maintain compliance with the Securities Act and
         (iv) the Unrestricted Definitive Note is being acquired in compliance
         with any applicable blue sky securities laws of any state of the United
         States.

         2) EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES

                  a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
         RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection
         with the Exchange of the Owner's beneficial interest in a Restricted
         Global Note for a Restricted Definitive Note with an equal principal
         amount, the Owner hereby certifies that the Restricted Definitive Note
         is being acquired for the Owner's own account without transfer. Upon
         consummation of the proposed Exchange in accordance with the terms of
         the Indenture, the Restricted Definitive Note issued will continue to
         be subject to the restrictions on transfer enumerated in the Private
         Placement Legend printed on the Restricted Definitive Note and in the
         Indenture and the Securities Act.

                  b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
         BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the
         Exchange of the Owner's Restricted Definitive Note for a beneficial
         interest in the 144A Global Note,

                                      C-2
<PAGE>

         with an equal principal amount, the Owner hereby certifies (i) the
         beneficial interest is being acquired for the Owner's own account
         without transfer and (ii) such Exchange has been effected in compliance
         with the transfer restrictions applicable to the Restricted Global
         Notes and pursuant to and in accordance with the Securities Act, and in
         compliance with any applicable blue sky securities laws of any state of
         the United States. Upon consummation of the proposed Exchange in
         accordance with the terms of the Indenture, the beneficial interest
         issued will be subject to the restrictions on transfer enumerated in
         the Private Placement Legend printed on the relevant Restricted Global
         Note and in the Indenture and the Securities Act.

         This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and are dated _______________________ .

                                       [Insert Name of Transferor]

                                       By: _____________________________________
                                           Name:
                                           Title:

Dated:  ____________________

                                      C-3
<PAGE>

                                                                       EXHIBIT D

                            [FORM OF CERTIFICATE FROM
                  ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR]

Millar Western Forest Products Ltd.
16640-111 Avenue,
Edmonton, Alberta, Canada T2M 2S5
Attention:  Chief Financial Officer

The Bank of New York
101 Barclay Street, Floor 21W
New York, NY 10286
Telecopier No. (212) 815-5803
Attention: Corporate Trust Administration

         Re:      [___]% Senior Notes due November 15, 2013

         Reference is hereby made to the Indenture, dated as of November 25,
2003 (the "Indenture"), among Millar Western Forest Products Ltd., a corporation
incorporated under the laws of the Province of Alberta and The Bank of New York,
as Trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.

         In connection with our proposed purchase of US$______________________
aggregate principal amount of:

         a) [ ] a beneficial interest in a Global Note, or

         b) [ ] a Definitive Note,

         we confirm that:

         1) We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").

         2) We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the

                                      D-1
<PAGE>

Company a signed letter substantially in the form of this letter and an Opinion
of Counsel in form reasonably acceptable to the Company to the effect that such
transfer is in compliance with the Securities Act, (D) outside the United States
in accordance with Rule 904 of Regulation S under the Securities Act, (E)
pursuant to the provisions of Rule 144(k) under the Securities Act or (F)
pursuant to an effective registration statement under the Securities Act, and we
further agree to provide to any person purchasing the Definitive Note or
beneficial interest in a Global Note from us in a transaction meeting the
requirements of clauses (A) through (E) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.

         3) We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect.

         4) We are an institutional "accredited investor" (within the meaning of
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes, and
we and any accounts for which we are acting are each able to bear the economic
risk of our or its investment.

         5) We are acquiring the Notes or beneficial interest therein purchased
by us for our own account or for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we exercise sole
investment discretion.

         You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.

                                       [Insert Name of Accredited Investor]

                                       By: _____________________________________
                                           Name:
                                           Title:

Dated:  ____________________

                                      D-2
<PAGE>

                                                                       EXHIBIT E

                         [FORM OF NOTATION OF GUARANTEE]

         For value received, each Guarantor (which term includes any successor
Person under the Indenture) has, jointly and severally, unconditionally
guaranteed, to the extent set forth in the Indenture (as defined below) and
subject to the provisions in the Indenture dated as of November 25, 2003 (the
"Indenture") among Millar Western Forest Products Ltd., a corporation
incorporated under the laws of the Province of Alberta and The Bank of New York,
as Trustee (the "Trustee"), (a) the due and punctual payment of the principal
of, premium and Special Interest, if any, and interest on the Notes (as defined
in the Indenture), whether at maturity, by acceleration, redemption or
otherwise, the due and punctual payment of interest on overdue principal and
premium, and, to the extent permitted by law, interest, and the due and punctual
performance of all other obligations of the Company to the Holders or the
Trustee all in accordance with the terms of the Indenture and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. The obligations of the Guarantors to the
Holders of Notes and to the Trustee pursuant to this Note Guarantee and the
Indenture are expressly set forth in the Indenture and reference is hereby made
to the Indenture for the precise terms of the Note Guarantee.

         THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE
THIS NOTE GUARANTEE.

                                       [NAME OF GUARANTOR(S)]

                                       By:  ____________________________________
                                            Name:
                                            Title:

                                      E-1
<PAGE>

                                                                       EXHIBIT F

                         [FORM OF SUPPLEMENTAL INDENTURE
                    TO BE DELIVERED BY SUBSEQUENT GUARANTORS]

         SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
____________________, among ______________________________ (the "Guaranteeing
Subsidiary"), a subsidiary of Millar Western Forest Products Ltd., a corporation
incorporated under the laws of the Province of Alberta (the "Company"), the
Company, and The Bank of New York, as Trustee under this Indenture referred to
below (the "Trustee").

                               W I T N E S S E T H

         WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of November 25, 2003 providing
for the issuance of an unlimited aggregate principal amount of Senior Notes due
November 15, 2013 (the "Notes");

         WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's Obligations under the Notes and the Indenture on
the terms and conditions set forth herein (the "Note Guarantee"); and

         WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.

         NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
mutually covenant and agree for the equal and ratable benefit of the Holders of
the Notes as follows:

         1) CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.

         2) AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees as
follows:

                  (a) Along with all Guarantors named in the Indenture, to
         jointly and severally unconditionally guarantee to each Holder of a
         Note authenticated and delivered by the Trustee and to the Trustee and
         its successors and assigns, irrespective of the validity and
         enforceability of the Indenture, the Notes or the obligations of the
         Company hereunder or thereunder, that:

                  (i)      the principal of and interest and Special Interest,
                           if any, on the Notes will be promptly paid in full
                           when due, whether at maturity, by acceleration,
                           redemption or otherwise, and interest on the overdue
                           principal of and interest on the Notes, if any, if
                           lawful, and all other obligations of the Company to
                           the Holders or the Trustee hereunder or thereunder
                           will be promptly paid in full or performed, all in
                           accordance with the terms hereof and thereof; and

                                      F-1
<PAGE>

                  (ii)     in case of any extension of time of payment or
                           renewal of any Notes or any of such other
                           obligations, that same will be promptly paid in full
                           when due or performed in accordance with the terms of
                           the extension or renewal, whether at stated maturity,
                           by acceleration or otherwise. Failing payment when
                           due of any amount so guaranteed or any performance so
                           guaranteed for whatever reason, the Guarantors shall
                           be jointly and severally obligated to pay the same
                           immediately.

                  (b) The obligations hereunder shall be unconditional,
         irrespective of the validity, regularity or enforceability of the Notes
         or the Indenture, the absence of any action to enforce the same, any
         waiver or consent by any Holder of the Notes with respect to any
         provisions hereof or thereof, the recovery of any judgment against the
         Company, any action to enforce the same or any other circumstance which
         might otherwise constitute a legal or equitable discharge or defense of
         a guarantor.

                  (c) The obligations of the Guaranteeing Subsidiary under the
         Note Guarantee are independent of the obligations guaranteed by such
         Guaranteeing Subsidiary hereunder, and a separate action or actions may
         be brought and prosecuted by the Trustee on behalf of, or by, the
         Holders, subject to the terms and conditions set forth in the
         Indenture, against a Guarantor to enforce the Note Guarantee,
         irrespective of whether any action is brought against the Company or
         whether the Company is joined in any such action or actions.

                  (d) In the event of a default in payment of principal (or
         premium and Special Interest, if any) or interest on a Note, whether at
         its stated maturity, by acceleration, purchase or otherwise, legal
         proceedings may be instituted by the Trustee on behalf of, or by, the
         Holder of such Note, subject to the terms and conditions set forth in
         the Indenture, directly against the Guaranteeing Subsidiary to enforce
         the Note Guarantee without first proceeding against the Company or any
         other Guarantor. If, after the occurrence and during the continuance of
         an Event of Default, the Trustee or any of the Holders are prevented by
         applicable law from exercising their respective rights to accelerate
         the maturity of the Notes, to collect interest on the Notes, or to
         enforce or exercise any other right or remedy with respect to the
         Notes, the Guaranteeing Subsidiary shall pay to the Trustee for the
         account of the Holder, upon demand therefor, the amount that would
         otherwise have been due and payable had such rights and remedies been
         permitted to be exercised by the Trustee or any of the Holders.

                  (e) The following is hereby waived: diligence presentment,
         demand of payment, filing of claims with a court in the event of
         insolvency or bankruptcy of the Company, any right to require a
         proceeding first against the Company, protest, notice and all demands
         whatsoever.

                  (f) This Note Guarantee shall not be discharged except by
         complete performance of the obligations contained in the Notes, the
         Indenture and this

                                      F-2
<PAGE>

         Supplemental Indenture, and the Guaranteeing Subsidiary accepts all
         obligations of a Guarantor under the Indenture.

                  (g) If any Holder or the Trustee is required by any court or
         otherwise to return to the Company, the Guarantors, or any custodian,
         trustee, liquidator or other similar official acting in relation to
         either the Company or the Guarantors, any amount paid either to the
         Trustee or such Holder, this Note Guarantee, to the extent theretofore
         discharged, shall be reinstated in full force and effect.

                  (h) The Guaranteeing Subsidiary shall not be entitled to any
         right of subrogation in relation to the Holders in respect of any
         obligations guaranteed hereby until payment in full of all obligations
         guaranteed hereby.

                  (i) As between the Guarantors, on the one hand, and the
         Holders and the Trustee, on the other hand, (x) the maturity of the
         obligations guaranteed hereby may be accelerated as provided in Article
         6 of the Indenture for the purposes of this Note Guarantee,
         notwithstanding any stay, injunction or other prohibition preventing
         such acceleration in respect of the obligations guaranteed hereby, and
         (y) in the event of any declaration of acceleration of such obligations
         as provided in Article 6 of the Indenture, such obligations (whether or
         not due and payable) shall forthwith become due and payable by the
         Guarantors for the purpose of this Note Guarantee.

                  (j) The Guarantors shall have the right to seek contribution
         from any non-paying Guarantor so long as the exercise of such right
         does not impair the rights of the Holders under the Guarantee.

                  (k) Pursuant to Section 10.02 of the Indenture, after giving
         effect to all other contingent and fixed liabilities that are relevant
         under any applicable Bankruptcy or fraudulent conveyance laws, and
         after giving effect to any collections from, rights to receive
         contribution from or payments made by or on behalf of any other
         Guarantor in respect of the obligations of such other Guarantor under
         Article 10 of the Indenture, this new Note Guarantee shall be limited
         to the maximum amount permissible such that the obligations of such
         Guaranteeing Subsidiary under this Note Guarantee will not constitute a
         fraudulent transfer or conveyance.

                  (l) The Note Guarantee shall remain in full force and effect
         and continue to be effective should any petition be filed by or against
         the Company for liquidation, reorganization, should the Company become
         insolvent or make an assignment for the benefit of creditors or should
         a receiver or trustee be appointed for all or any significant part of
         the Company's assets, and shall, to the fullest extent permitted by
         law, continue to be effective or be reinstated, as the case may be, if
         at any time payment and performance of the Notes are, pursuant to
         applicable law, rescinded or reduced in amount, or must otherwise be
         restored or returned by any obligee on the Notes and Note Guarantees,
         whether as a "voidable preference", "fraudulent transfer" or otherwise,
         all as though such payment or performance had not been made. In the
         event that any payment or any part thereof, is rescinded, reduced,
         restored or returned, the Note shall, to the fullest extent permitted
         by law, be reinstated and deemed reduced only by such amount paid and
         not so

                                      F-3
<PAGE>

         rescinded, reduced, restored or returned. The form of Note Guarantee is
         attached to the Indenture as Exhibit E.

                  (m) In case any provision of the Note Guarantee shall be
         invalid, illegal or unenforceable, the validity, legality, and
         enforceability of the remaining provisions shall not in any way be
         affected or impaired thereby.

                  (n) The Note Guarantee shall be a general obligation of such
         Guaranteeing Subsidiary, ranking pari passu with any other senior
         indebtedness of the Guaranteeing Subsidiary, if any.

                  (o) Each payment to be made by the Guaranteeing Subsidiary in
         respect of the Note Guarantee shall be made without set-off,
         counterclaim, reduction or diminution of any kind or nature.

         3) EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary agrees that the
Note Guarantees shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Note Guarantee.

         4) GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.

                  (a) Except as otherwise provided in Section 10.05 of the
         Indenture, the Guaranteeing Subsidiary may not sell, or otherwise
         dispose of all or substantially all of its assets to, or consolidate
         with or merge with or into (whether or not such Guaranteeing Subsidiary
         is the surviving Person) another Person whether or not affiliated with
         such Guaranteeing Subsidiary unless:

                  (b) immediately after giving effect to that transaction, no
         Default or Event of Default exists; and

                  (c) either:

                           (1) the Person acquiring the property in any such
                  sale or disposition or the Person formed by or surviving any
                  such consolidation or merger, if other than such Guaranteeing
                  Subsidiary, the Company or another Guarantor, assumes all the
                  obligations of that Guaranteeing Subsidiary under this
                  Indenture, its Guarantee and, if the Exchange Offer has not
                  been consummated or Special Interest remains due and owing,
                  under the Registration Rights Agreement pursuant to a
                  supplemental Indenture satisfactory to the Trustee and
                  completes all other required documentation; or

                           (2) in the case of a sale or disposition constituting
                  an Asset Sale, the Net Proceeds of such sale or other
                  disposition are applied in accordance with the provisions of
                  the Indenture described in the second paragraph under Section
                  4.10 hereof;

                                      F-4
<PAGE>

                  (d) In case of any such consolidation, amalgamation, merger,
         sale or conveyance and upon the assumption by the successor Person
         (where applicable), by supplemental indenture, executed and delivered
         to the Trustee and satisfactory in form to the Trustee, of the
         Guarantee endorsed upon the Notes and the due and punctual performance
         of all of the covenants and conditions of the Indenture to be performed
         by the Guaranteeing Subsidiary, such successor Person shall succeed to
         and be substituted for the Guaranteeing with the same effect as if it
         had been named herein as a Guaranteeing Subsidiary. Such successor
         Person thereupon may cause to be signed any or all of the Note
         Guarantees to be endorsed upon all of the Notes issuable hereunder
         which theretofore shall not have been signed by the Company and
         delivered to the Trustee. All the Note Guarantees so issued shall in
         all respects have the same legal rank and benefit under the Indenture
         as the Note Guarantees theretofore and thereafter issued in accordance
         with the terms of the Indenture as though all of such Note Guarantees
         had been issued at the date of the execution hereof.

                  (e) Except as set forth in Articles 4 and 5 of the Indenture,
         and notwithstanding clauses (a) and (b) above, nothing contained in the
         Indenture or in any of the Notes shall prevent any consolidation or
         merger of a Guarantor with or into the Company or another Guarantor, or
         shall prevent any sale or conveyance of the property of a Guaranteeing
         Subsidiary as an entirety or substantially as an entirety to the
         Company or another Guarantor.

         5) RELEASES.

                  (a) In the event of a sale of all the capital stock of any
         Guaranteeing Subsidiary to a Person that is not (either before or after
         giving effect to such transaction) the Company or a Guarantor then such
         Guaranteeing Subsidiary (in the event of a sale or other disposition,
         by way of merger, consolidation or otherwise, of all of the capital
         stock of such Guaranteeing Subsidiary) will be released and relieved of
         any obligations under its Note Guarantee; provided, that the Net
         Proceeds of such sale or other disposition are applied in accordance
         with the applicable provisions of the Indenture, including (without
         limitation) Section 4.10 of the Indenture. Further, if the Company
         redesignates any Restricted Subsidiary that is a Guarantor as an
         Unrestricted Subsidiary in accordance with Section 4.19 of the
         Indenture then such Guaranteeing Subsidiary will be released and
         relieve of any obligations under its Note Guarantee. Upon delivery by
         the Company to the Trustee of an Officers' Certificate and an Opinion
         of Counsel to the effect that such sale or other disposition was made
         by the Company in accordance with the provisions of the Indenture,
         including without limitation Section 4.10 of the Indenture, the Trustee
         shall execute any documents reasonably required in order to evidence
         the release of any Guaranteeing Subsidiary from its obligations under
         its Note Guarantee.

                  (b) Any Guaranteeing Subsidiary not released from its
         obligations under its Note Guarantee shall remain liable for the full
         amount of principal of and interest on the Notes and for the other
         obligations of any Guaranteeing Subsidiary under the Indenture as
         provided in Article 10 of the Indenture.

                                      F-5
<PAGE>

         6) NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, shareholder or agent of the Guaranteeing
Subsidiary, as such, shall have any liability for any obligations of the Company
or any Guaranteeing Subsidiary under the Notes, any Note Guarantees, the
Indenture or this Supplemental Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of the
Notes by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes. Such waiver may
not be effective to waive liabilities under the federal securities laws and it
is the view of the Commission that such a waiver is against public policy.

         7) THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS SUPPLEMENTAL INDENTURE, THE INDENTURE, THE NOTES AND THE NOTE
GUARANTEES.

         8) COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.

         9) EFFECT OF HEADINGS. The Section headings herein are for convenience
only and shall not affect the construction hereof.

         10) THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.

         11) SUBROGATION. Each Guaranteeing Subsidiary shall be subrogated to
all rights of Holders of Notes against the Company in respect of any amounts
paid by the Guaranteeing Subsidiary pursuant to the provisions of Section 2
hereof; provided, however, that, if an Event of Default has occurred and is
continuing, no Guarantor shall be entitled to enforce or receive any payments
arising out of, or based upon, such right of subrogation until all amounts then
due and payable by the Company under the Indenture or the Notes shall have been
paid in full.

         12) BENEFITS ACKNOWLEDGED. Each Guaranteeing Subsidiary acknowledges
that it will receive direct and indirect benefits from the financing
arrangements contemplated by the Indenture and this Supplement Indenture and
that the guarantee and waivers made by it pursuant to its Note Guarantee are
knowingly made in contemplation of such benefits.

         13) SUCCESSORS. All agreements of the Guaranteeing Subsidiary in this
Supplemental Indenture shall bind its Successors, except as otherwise provided
in Section 2(k) hereof or elsewhere in this Supplemental Indenture. All
agreements of the Trustee in this Supplemental Indenture shall bind its
successors.

                                      F-6
<PAGE>

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

Dated:_____________________, _______

                                       MILLAR WESTERN FOREST PRODUCTS LTD.

                                       By: _____________________________________
                                           Name:
                                           Title:

                                       By: _____________________________________
                                           Name:
                                           Title:

                                       [GUARANTEEING SUBSIDIARY]

                                       By: _____________________________________
                                           Name:
                                           Title:

                                      F-7
<PAGE>

                                       THE BANK OF NEW YORK,  AS TRUSTEE

                                       By: _____________________________________
                                           Authorized Signatory

                                      F-8
<PAGE>

ARTICLE 1.     DEFINITIONS AND INCORPORATION BY REFERENCE......................1

    Section 1.01     Definitions...............................................1
    Section 1.02     Other Definitions........................................23
    Section 1.03     Incorporation by Reference of Trust Indenture Act........24
    Section 1.04     Rules of Construction....................................25

ARTICLE 2.     THE NOTES......................................................25

    Section 2.01     Form and Dating; Terms...................................25
    Section 2.02     Execution and Authentication.............................27
    Section 2.03     Registrar and Paying Agent for the Notes.................27
    Section 2.04     Paying Agent to Hold Money in Trust......................28
    Section 2.05     Holder Lists.............................................28
    Section 2.06     Transfer and Exchange....................................28
    Section 2.07     Replacement Notes........................................40
    Section 2.08     Outstanding Notes........................................41
    Section 2.09     Treasury Notes...........................................41
    Section 2.10     Temporary Notes..........................................41
    Section 2.11     Cancellation.............................................42
    Section 2.12     Defaulted Interest.......................................42

ARTICLE 3.     REDEMPTION.....................................................42

    Section 3.01     Notices to Trustee.......................................42
    Section 3.02     Selection of Notes to be Redeemed........................43
    Section 3.03     Notice of Redemption.....................................43
    Section 3.04     Effect of Notice of Redemption...........................44
    Section 3.05     Deposit of Redemption Price..............................44
    Section 3.06     Notes Redeemed in Part...................................44
    Section 3.07     Optional Redemption......................................45
    Section 3.08     Mandatory Redemption.....................................46
    Section 3.09     Offer to Purchase by Application of Excess Proceeds......46

ARTICLE 4.     COVENANTS......................................................48

    Section 4.01     Payment of Notes.........................................48
    Section 4.02     Maintenance of Office or Agency..........................48
    Section 4.03     Reports to Holders.......................................48
    Section 4.04     Compliance Certificate...................................49

                                       1
<PAGE>

    Section 4.05     Taxes....................................................50
    Section 4.06     Stay, Extension and Usury Laws...........................50
    Section 4.07     Limitation on Restricted Payments........................50
    Section 4.08     Limitation on Dividend and Other Payment Restrictions
                     Affecting Restricted Subsidiaries........................54
    Section 4.09     Limitation on Additional Indebtedness....................55
    Section 4.10     Asset Sales..............................................57
    Section 4.11     Limitation on Transactions with Affiliates...............59
    Section 4.12     Limitation on Liens......................................60
    Section 4.13     Payments for Consent.....................................60
    Section 4.14     Corporate Existence......................................61
    Section 4.15     Change of Control........................................61
    Section 4.16     Limitation on Subsidiaries...............................61
    Section 4.17     Limitation on Issuance of Preferred Stock of
                     Restricted Subsidiaries..................................62
    Section 4.18     Designation of Restricted and Unrestricted Subsidiaries..62
    Section 4.19     Limitation on Capital Stock of Restricted Subsidiaries...62
    Section 4.20     Additional Amounts.......................................62
    Section 4.21     Money for Security Payments to Be Held in Trust..........64
    Section 4.22     Maintenance of Properties................................65
    Section 4.23     Maintenance of Insurance.................................65

ARTICLE 5.     SUCCESSORS.....................................................65

    Section 5.01     Merger, Consolidation, or Sale of Assets.................65
    Section 5.02     Successor Corporation Substituted........................66

ARTICLE 6.     DEFAULTS AND REMEDIES..........................................67

    Section 6.01     Events of Default........................................67
    Section 6.02     Acceleration.............................................69
    Section 6.03     Other Remedies...........................................70
    Section 6.04     Waiver of Past Defaults..................................70
    Section 6.05     Control by Majority......................................71
    Section 6.06     Limitation on Suits......................................71
    Section 6.07     Rights of Holders of Notes to Receive Payment............71
    Section 6.08     Collection Suit by Trustee...............................72

                                       2
<PAGE>

    Section 6.09     Restoration of Rights and Remedies.......................72
    Section 6.10     Rights and Remedies Cumulative...........................72
    Section 6.11     Delay or Omission Not Waiver.............................72
    Section 6.12     Trustee May File Proofs of Claim.........................72
    Section 6.13     Priorities...............................................73
    Section 6.14     Undertaking for Costs....................................73

ARTICLE 7.     TRUSTEE........................................................74

    Section 7.01     Duties of Trustee........................................74
    Section 7.02     Rights of Trustee........................................75
    Section 7.03     Individual Rights of Trustee.............................76
    Section 7.04     Trustee's Disclaimer.....................................76
    Section 7.05     Notice of Defaults.......................................76
    Section 7.06     Reports by Trustee to Holders of the Notes...............76
    Section 7.07     Compensation and Indemnity...............................77
    Section 7.08     Replacement of Trustee...................................77
    Section 7.09     Successor Trustee by Merger, etc.........................78
    Section 7.10     Eligibility; Disqualification............................78
    Section 7.11     Preferential Collection of Claims Against Company........79

ARTICLE 8.     LEGAL DEFEASANCE AND COVENANT DEFEASANCE.......................80

    Section 8.01     Option to Effect Legal Defeasance or
                     Covenant Defeasance......................................80
    Section 8.02     Legal Defeasance and Discharge...........................80
    Section 8.03     Covenant Defeasance......................................81
    Section 8.04     Conditions to Legal or Covenant Defeasance...............81
    Section 8.05     Deposited Money and Government Securities to be Held
                     in Trust; Other Miscellaneous Provisions.................82
    Section 8.06     Repayment to Company.....................................83
    Section 8.07     Reinstatement............................................83

ARTICLE 9.     AMENDMENT, SUPPLEMENT AND WAIVER...............................84

    Section 9.01     Without Consent of Holders of Notes......................84
    Section 9.02     With Consent of Holders of Notes.........................84
    Section 9.03     Compliance with Trust Indenture Act......................86
    Section 9.04     Revocation and Effect of Consents........................86

                                       3
<PAGE>

    Section 9.05     Notation on or Exchange of Notes.........................86
    Section 9.06     Trustee to Sign Amendments, etc..........................87

ARTICLE 10.    GUARANTEES.....................................................87

    Section 10.01    Note Guarantee...........................................87
    Section 10.02    Limitation on Guarantor Liability........................89
    Section 10.03    Execution and Delivery of Note Guarantee.................89
    Section 10.04    Guarantors May Consolidate, etc., on Certain Terms.......90
    Section 10.05    Releases Following Sale of Assets........................91
    Section 10.06    Subrogation..............................................91
    Section 10.07    Benefits Acknowledged....................................91

ARTICLE 11.    SATISFACTION AND DISCHARGE.....................................91

    Section 11.01    Satisfaction and Discharge...............................91
    Section 11.02    Application of Trust Money...............................92

ARTICLE 12.    MISCELLANEOUS..................................................93

    Section 12.01    Trust Indenture Act Controls.............................93
    Section 12.02    Notices..................................................93
    Section 12.03    Communication by Holders of Notes with Other Holders
                     of Notes.................................................94
    Section 12.04    Certificate and Opinion as to Conditions Precedent.......94
    Section 12.05    Statements Required in Certificate or Opinion............95
    Section 12.06    Rules by Trustee and Agents..............................95
    Section 12.07    No Personal Liability of Directors, Officers, Trustees,
                     Employees, Shareholders, Partners and Principals.........95
    Section 12.08    Governing Law............................................95
    Section 12.09    Waiver of Jury Trial.....................................95
    Section 12.10    Force Majeure............................................96
    Section 12.11    No Adverse Interpretation of Other Agreements............96
    Section 12.12    Successors...............................................96
    Section 12.13    Agent for Service; Submission to Jurisdiction; Waiver
                     of Immunities............................................96
    Section 12.14    Conversion of Currency...................................97
    Section 12.15    Currency Equivalent......................................98
    Section 12.16    Severability.............................................98

                                       4
<PAGE>

    Section 12.17    Counterpart Originals....................................98
    Section 12.18    Table of Contents, Headings, etc.........................98

Exhibit A    Form of Global Note
Exhibit B    Form of Certificate of Transfer
Exhibit C    Form of Certificate of Exchange
Exhibit D    Form of Certificate From Acquiring Institutional Accredited
             Investor
Exhibit E    Form of Notation of Guarantor
Exhibit F    Form of Supplemental Indenture to be Delivered by Subsequent
             Guarantors

                                       5<PAGE>
                       MILLAR WESTERN FOREST PRODUCTS LTD.

                           7.75% SENIOR NOTES DUE 2013

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

                   EXCHANGE AND REGISTRATION RIGHTS AGREEMENT

                                                               November 25, 2003
Goldman, Sachs & Co.,
   As representatives of the several Purchasers
   named in Schedule I to the Purchase Agreement
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004

Ladies and Gentlemen:

         Millar Western Forest Products Ltd., a corporation established under
the laws of the Province of Alberta (the "Company"), proposes to issue and sell
to the Purchasers (as defined herein) upon the terms set forth in the Purchase
Agreement (as defined herein) US$190,000,000 aggregate principal amount of its
7.75% Senior Notes Due 2013. As an inducement to the Purchasers to enter into
the Purchase Agreement and in satisfaction of a condition to the obligations of
the Purchasers thereunder, the Company agrees with the Purchasers for the
benefit of holders (as defined herein) from time to time of the Transfer
Restricted Securities (as defined herein) as follows:

         1. Certain Definitions. For purposes of this Exchange and Registration
Rights Agreement, the following terms shall have the following respective
meanings:

                  "Base Interest" shall mean the interest that would otherwise
         accrue on the Securities under the terms thereof and the Indenture,
         without giving effect to the provisions of this Agreement.

                  The term "broker-dealer" shall mean any broker or dealer
         registered with the Commission under the Exchange Act.

                  "Canadian Securities Laws" shall mean securities legislation
         promulgated by any province of Canada and the rules and regulations
         thereunder.

                  "Closing Date" shall mean the date on which the Securities are
         initially issued.

                  "Commission" shall mean the United States Securities and
         Exchange Commission, or any other federal agency at the time
         administering the Exchange Act or the Securities Act, whichever is the
         relevant statute for the particular purpose.

                  "Effective Time," in the case of (i) an Exchange Registration,
         shall mean the time and date as of which the Commission declares the
         Exchange Offer Registration Statement effective or as of which the
         Exchange Offer Registration Statement otherwise becomes effective and
         (ii) a Shelf Registration,

                                       1
<PAGE>

         shall mean the time and date as of which the Commission declares the
         Shelf Registration Statement effective or as of which the Shelf
         Registration Statement otherwise becomes effective.

                  "Effectiveness Target Date" shall have the meaning assigned
         thereto in Section 2(c) hereof.

                  "Electing Holder" shall mean any holder of Transfer Restricted
         Securities that has returned a completed and signed Notice and
         Questionnaire to the Company in accordance with Section 3(d)(ii) or
         3(d)(iii) hereof.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
         or any successor thereto, and the rules and regulations promulgated
         thereunder as the same shall be amended from time to time.

                  "Exchange Notes" shall have the meaning assigned thereto in
         Section 2(a) hereof.

                  "Exchange Offer" shall have the meaning assigned thereto in
         Section 2(a) hereof.

                  "Exchange Offer Registration Statement" shall have the meaning
         assigned thereto in Section 2(a) hereof.

                  "Exchange Registration" shall have the meaning assigned
         thereto in Section 3(c) hereof.

                  "Guarantor" shall have the meaning assigned thereto in the
         Indenture.

                  The term "holder" shall mean the registered holders of the
         Transfer Restricted Securities on the Closing Date and other persons
         who subsequently acquire Transfer Restricted Securities from time to
         time (including any successors or assigns), in each case for so long as
         such person owns any Transfer Restricted Securities; provided that for
         purposes of any obligation of the Company to give notice to any
         holders, "holder" shall mean the record owner of Transfer Restricted
         Securities.

                  "Indenture" shall mean the Indenture, dated as of November 25,
         2003, between the Company and The Bank of New York, as Trustee, as the
         same shall be amended from time to time.

                  "Notice and Questionnaire" means a Notice of Registration
         Statement and Selling Securityholder Questionnaire substantially in the
         form of Exhibit A hereto.

                  The term "person" shall mean a corporation, association,
         partnership, organization, business, individual, government or
         political subdivision thereof or governmental agency.

                  "Purchase Agreement" shall mean the Purchase Agreement, dated
         as of November 20, 2003, between the Purchasers and the Company
         relating to the Securities.

                  "Purchasers" shall mean the Purchasers named in Schedule I to
         the Purchase Agreement.

                  "Registration Default" shall have the meaning assigned thereto
         in Section 2(c) hereof.

                  "Registration Expenses" shall have the meaning assigned
         thereto in Section 4 hereof.

                  "Resale Period" shall have the meaning assigned thereto in
         Section 2(a) hereof.

                  "Restricted Holder" shall mean (i) a holder that is an
         affiliate of the Company within the meaning of Rule 405, (ii) a holder
         who acquires Exchange Notes outside the ordinary course of such
         holder's business, (iii) a holder who has arrangements or
         understandings with any person to participate in the Exchange Offer for
         the purpose of distributing Exchange Notes and (iv) a holder that is a
         broker-

                                       2
<PAGE>

         dealer, but only with respect to Exchange Notes received by such
         broker-dealer pursuant to an Exchange Offer in exchange for Transfer
         Restricted Securities acquired by the broker-dealer directly from the
         Company.

                  "Rule 144," "Rule 405" and "Rule 415" shall mean, in each
         case, such rule promulgated under the Securities Act (or any successor
         provision), as the same shall be amended from time to time.

                  "Securities" shall mean, collectively, the US$190,000,000
         7.75% Senior Notes Due 2013 of the Company to be issued and sold to the
         Purchasers on the Closing Date, and securities issued in exchange
         therefor or in lieu thereof pursuant to the Indenture.

                  "Securities Act" shall mean the Securities Act of 1933, or any
         successor thereto, and the rules and regulations promulgated thereunder
         as the same shall be amended from time to time.

                  "Shelf Registration" shall have the meaning assigned thereto
         in Section 2(b) hereof.

                  "Shelf Registration Statement" shall have the meaning assigned
         thereto in Section 2(b) hereof.

                  "Special Interest" shall have the meaning assigned thereto in
         Section 2(c) hereof.

                  "Transfer Restricted Securities" shall mean the Securities;
         until:

                  (1)      the date on which such Security has been exchanged by
                           a Person other than a broker-dealer for an Exchange
                           Note in the Exchange Offer;

                  (2)      following the exchange by a broker-dealer in the
                           Exchange Offer of a Security for an Exchange Note,
                           the date on which such Exchange Note is sold to a
                           purchaser who receives from such broker-dealer on or
                           prior to the date of such sale a copy of the
                           prospectus contained in the Exchange Offer
                           Registration Statement;

                  (3)      the date on which such Security has been effectively
                           registered under the Securities Act and disposed of
                           in accordance with the Shelf Registration Statement;

                  (4)      the date on which such Security is distributed to the
                           public pursuant to Rule 144 under circumstances in
                           which any legend borne by such Security relating to
                           the restrictions on transferability thereof, under
                           the Securities Act or otherwise, is removed by the
                           Company or pursuant to the Indenture; or

                  (5)      such Security shall cease to be outstanding.

                  "Trust Indenture Act" shall mean the Trust Indenture Act of
         1939, or any successor thereto, and the rules, regulations and forms
         promulgated thereunder, all as the same shall be amended from time to
         time.

        Unless the context otherwise requires, any reference herein to a
"Section" or "clause" refers to a Section or clause, as the case may be, of this
Exchange and Registration Rights Agreement, and the words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Exchange and
Registration Rights Agreement as a whole and not to any particular Section or
other subdivision.

         2. Registration Under the Securities Act.

                  (a) Except as set forth in Section 2(b) below, the Company
         agrees to file under the Securities Act, on or prior to 90 days after
         the Closing Date, a registration statement relating to an offer to
         exchange

                                       3
<PAGE>

         (such registration statement, the "Exchange Offer Registration
         Statement", and such offer, the "Exchange Offer") any and all of the
         Securities for a like aggregate principal amount of debt securities
         issued by the Company, which debt securities are substantially
         identical to the Transfer Restricted Securities (and are entitled to
         the benefits of a trust indenture which is substantially identical to
         the Indenture or is the Indenture and which has been qualified under
         the Trust Indenture Act), except that they have been registered
         pursuant to an effective registration statement under the Securities
         Act and do not contain provisions for the additional interest
         contemplated in Section 2(c) below (such new debt securities
         hereinafter called "Exchange Notes"). The Exchange Notes will be issued
         as evidence of the same continuing indebtedness of the Company and will
         not constitute the creation of new indebtedness. The Company agrees to
         use its reasonable best efforts to cause the Exchange Offer
         Registration Statement to become effective under the Securities Act on
         or prior to 180 days after the Closing Date. The Exchange Offer will be
         registered under the Securities Act on the appropriate form and will
         comply with all applicable tender offer rules and regulations under the
         Exchange Act. The Company further agrees to use its reasonable best
         efforts to commence and complete the Exchange Offer, on or prior to 45
         business days (or longer to the extent required by United States
         federal securities laws) after such registration statement has become
         effective and exchange Exchange Notes for all Transfer Restricted
         Securities that have been properly tendered and not withdrawn on or
         prior to the expiration of the Exchange Offer. The Exchange Offer will
         be deemed to have been "completed" only if the debt securities received
         by holders other than Restricted Holders in the Exchange Offer for
         Transfer Restricted Securities are, upon receipt, transferable by each
         such holder without restriction under the Securities Act and the
         Exchange Act and without material restrictions under the blue sky or
         securities laws of a substantial majority of the States of the United
         States. The Exchange Offer shall be deemed to have been completed upon
         the earlier to occur of (i) the Company having exchanged the Exchange
         Notes for all outstanding Transfer Restricted Securities pursuant to
         the Exchange Offer and (ii) the Company having exchanged, pursuant to
         the Exchange Offer, Exchange Notes for all Transfer Restricted
         Securities that have been properly tendered and not withdrawn before
         the expiration of the Exchange Offer. The Company agrees to include in
         the Exchange Offer Registration Statement a prospectus for use in any
         resales by any holder of Exchange Notes that is a broker-dealer, which
         has acquired such Transfer Restricted Securities for its own account as
         a result of market-making activities or other trading activities and
         not directly from the Company, and to keep such Exchange Offer
         Registration Statement effective for a period (the "Resale Period")
         beginning when Exchange Notes are first issued in the Exchange Offer
         and ending upon the earlier of the expiration of the 180th day after
         the Exchange Offer has been completed or such time as the Company
         reasonably believes that such broker-dealers no longer own any Transfer
         Restricted Securities, other than Transfer Restricted Securities
         acquired from the Company. With respect to such Exchange Offer
         Registration Statement, such holders shall have the benefit of the
         rights of indemnification and contribution set forth in Sections 6(a),
         (c), (d) and (e) hereof.

                  (b) If (i) the Company is not (A) required to file the
         Exchange Offer Registration Statement; or (B) permitted to consummate
         the Exchange Offer because the Exchange Offer is not permitted by
         applicable law or Commission policy, or (ii) any holder of Transfer
         Restricted Securities notifies the Company in writing prior to the 20th
         day following the consummation of the Exchange Offer that (X) it is
         prohibited by applicable law or Commission policy from participating in
         the Exchange Offer; or (Y) that it may not resell the Exchange Notes
         acquired by it in the Exchange Offer to the public in the United States
         without delivering a prospectus and the prospectus contained in the
         Exchange Offer Registration Statement is not appropriate or available
         for such resales; or (Z) it is a broker-dealer and owns Securities
         acquired directly from the Company or an affiliate of the Company, the
         Company will file under the Securities Act, on or prior to 60 days
         after such obligation arises, a "shelf" registration statement
         providing for the registration of, and the sale on a continuous or
         delayed basis by the holders of, all of the Transfer Restricted
         Securities affected thereby, pursuant to Rule 415 or

                                       4
<PAGE>

         any similar rule that may be adopted by the Commission (such filing,
         the "Shelf Registration" and such registration statement, the "Shelf
         Registration Statement"). The Company agrees to use its reasonable best
         efforts (x) to cause the Shelf Registration Statement to become or be
         declared effective on or prior to 150 days after such obligation arises
         and to keep such Shelf Registration Statement continuously effective
         for a period ending on the earlier of the second anniversary of the
         Effective Time or such time as there are no longer any Transfer
         Restricted Securities outstanding, provided, however, that no holder
         shall be entitled to be named as a selling securityholder in the Shelf
         Registration Statement or to use the prospectus forming a part thereof
         for resales of Transfer Restricted Securities unless such holder is an
         Electing Holder, and (y) after the Effective Time of the Shelf
         Registration Statement, promptly upon the request of any holder of
         Transfer Restricted Securities that is not then an Electing Holder, to
         take any action reasonably necessary to enable such holder to use the
         prospectus forming a part thereof for resales of Transfer Restricted
         Securities, including, without limitation, any action necessary to
         identify such holder as a selling securityholder in the Shelf
         Registration Statement, provided, however, that nothing in this clause
         (y) shall relieve any such holder of the obligation to return a
         completed and signed Notice and Questionnaire to the Company in
         accordance with Section 3(d)(iii) hereof. The Company further agrees to
         supplement or make amendments to the Shelf Registration Statement, as
         and when required by the rules, regulations or instructions applicable
         to the registration form used by the Company for such Shelf
         Registration Statement or by the Securities Act or rules and
         regulations thereunder for shelf registration, and the Company agrees
         to furnish to each Electing Holder copies of any such supplement or
         amendment prior to its being used or promptly following its filing with
         the Commission.

                  (c) In the event that (i) the Company has not filed the
         Exchange Offer Registration Statement or Shelf Registration Statement
         on or prior to the date on which such registration statement is
         required to be filed pursuant to Section 2(a) or 2(b), respectively, or
         (ii) such Exchange Offer Registration Statement or Shelf Registration
         Statement has not become effective or been declared effective by the
         Commission on or prior to the date on which such registration statement
         is required to become or be declared effective pursuant to Section 2(a)
         or 2(b), respectively (the "Effectiveness Target Date") or (iii) the
         Exchange Offer has not been completed within 45 business days after the
         initial effective date of the Exchange Offer Registration Statement
         relating to the Exchange Offer (if the Exchange Offer is then required
         to be made), or (iv) any Exchange Offer Registration Statement or Shelf
         Registration Statement required by Section 2(a) or 2(b) hereof is filed
         and declared effective but thereafter ceases to be effective or usable
         in connection with resales of Transfer Restricted Securities during the
         time periods specified herein (each such event referred to in clauses
         (i) through (iv), a "Registration Default" and each period during which
         a Registration Default has occurred and is continuing, a "Registration
         Default Period"), then, as liquidated damages for such Registration
         Default, subject to the provisions of Section 9(b), special interest
         ("Special Interest"), in addition to the Base Interest, shall accrue to
         each holder of Transfer Restricted Securities, with respect to the
         first 90-day period immediately following the occurrence of the first
         Registration Default, in an amount equal to US$0.05 per week per
         US$1,000 principal amount of Transfer Restricted Securities held by the
         Holders. The amount of Special Interest will increase by an additional
         US$0.05 per week per US$1,000 principal amount of Transfer Restricted
         Securities with respect to each subsequent 90-day period until all
         Registration Defaults have been cured, up to a maximum amount of
         Special Interest for all Registration Defaults of US$0.50 per week per
         US$1,000 principal amount of Transfer Restricted Securities. The
         Company shall not be required to pay Special Interest for more than one
         Registration Default at any given time. Following the cure of all
         Registration Defaults, the accrual of Special Interest will cease. All
         accrued Special Interest through each record date with respect to the
         succeeding Interest Payment Date will be paid by the Company on each
         Interest Payment Date (as defined in the Indenture) to the Global Note
         Holder (as defined in the Indenture) by wire transfer of immediately
         available funds or by federal funds check and to Holders of
         Certificated Notes (as

                                       5
<PAGE>

         defined in the Indenture) by wire transfer to the accounts specified by
         them or by mailing checks to their registered addresses if no such
         accounts have been specified.

                  (d) The Company shall use its reasonable best efforts to take
         all actions necessary or advisable to be taken by it to ensure that the
         transactions contemplated herein are effected as so contemplated.

                  (e) Any reference herein to a registration statement as of any
         time shall be deemed to include any document incorporated, or deemed to
         be incorporated, therein by reference as of such time and any reference
         herein to any post-effective amendment to a registration statement as
         of any time shall be deemed to include any document incorporated, or
         deemed to be incorporated, therein by reference as of such time.

         3. Registration Procedures.

         If the Company files a registration statement pursuant to Section 2(a)
or Section 2(b), the following provisions shall apply:

                  (a) At or before the Effective Time of the Exchange Offer or
         the Shelf Registration, as the case may be, the Company shall qualify
         the Indenture under the Trust Indenture Act.

                  (b) In the event that such qualification would require the
         appointment of a new trustee under the Indenture, the Company shall
         appoint a new trustee thereunder pursuant to the applicable provisions
         of the Indenture.

                  (c) In connection with the Company's obligations with respect
         to the registration of Exchange Notes as contemplated by Section 2(a)
         (the "Exchange Registration"), if applicable, the Company shall, as
         soon as practicable (or as otherwise specified):

                           (i) prepare and file with the Commission, on or prior
                  to 90 days after the Closing Date, an Exchange Offer
                  Registration Statement on any form which may be utilized by
                  the Company and which shall permit the Exchange Offer and
                  resales of Exchange Notes by broker-dealers that have not
                  acquired Transfer Restricted Securities directly from the
                  Company during the Resale Period to be effected as
                  contemplated by Section 2(a), and use its reasonable best
                  efforts to cause such Exchange Offer Registration Statement to
                  become effective on or prior to 180 days after the Closing
                  Date;

                           (ii) as soon as practicable prepare and file with the
                  Commission such amendments and supplements to such Exchange
                  Offer Registration Statement and the prospectus included
                  therein as may be necessary to effect and maintain the
                  effectiveness of such Exchange Offer Registration Statement
                  for the periods and purposes contemplated in Section 2(a)
                  hereof and as may be required by the applicable rules and
                  regulations of the Commission and the instructions applicable
                  to the form of such Exchange Offer Registration Statement, and
                  promptly provide each broker-dealer holding Exchange Notes not
                  acquired directly from the Company with such number of copies
                  of the prospectus included therein (as then amended or
                  supplemented), in conformity in all material respects with the
                  requirements of the Securities Act and the Trust Indenture
                  Act, as such broker-dealer reasonably may request prior to the
                  expiration of the Resale Period, for use in connection with
                  resales of Exchange Notes;

                           (iii) promptly notify each broker-dealer that has
                  requested and received copies of the prospectus included in
                  such registration statement, and confirm such advice in
                  writing, (A) in cases where a broker-dealer has specifically
                  requested information on when such Exchange Offer Registration
                  Statement or the prospectus included therein or any prospectus
                  amendment

                                       6
<PAGE>

                  or supplement or post-effective amendment has been filed, or,
                  information with respect to any comments by the Commission and
                  by the blue sky or securities commissioner or regulator of any
                  state or province with respect thereto or on any request by
                  the Commission for amendments or supplements to such Exchange
                  Registration Statement or prospectus or for additional
                  information, (B) with respect to the Exchange Offer
                  Registration Statement or any post-effective amendment, when
                  the same has become effective, (C) of the issuance by the
                  Commission of any stop order suspending the effectiveness of
                  such Exchange Offer Registration Statement or the initiation
                  or threatening of any proceedings for that purpose, (D) if at
                  any time the representations and warranties of the Company
                  contemplated by Section 5 cease to be true and correct in all
                  material respects, (E) of the receipt by the Company of any
                  notification with respect to the suspension of the
                  qualification of the Exchange Notes for sale in any
                  jurisdiction or the initiation or threatening of any
                  proceeding for such purpose, or (F) at any time during the
                  Resale Period when a prospectus is required to be delivered
                  under the Securities Act, that such Exchange Offer
                  Registration Statement, prospectus, prospectus amendment or
                  supplement or post-effective amendment does not conform in all
                  material respects to the applicable requirements of the
                  Securities Act and the Trust Indenture Act and any applicable
                  Canadian Securities Laws or contains an untrue statement of a
                  material fact or omits to state any material fact required to
                  be stated therein or necessary to make the statements therein
                  not misleading in light of the circumstances then existing;

                           (iv) in the event that the Company would be required,
                  pursuant to Section 3(e)(iii)(F) above, to notify any
                  broker-dealers holding Exchange Notes, without delay prepare
                  and furnish to each such holder a reasonable number of copies
                  of a prospectus supplemented or amended so that, as thereafter
                  delivered to purchasers of such Exchange Notes during the
                  Resale Period, such prospectus shall conform in all material
                  respects to the applicable requirements of the Securities Act
                  and the Trust Indenture Act and shall not contain an untrue
                  statement of a material fact or omit to state a material fact
                  required to be stated therein or necessary to make the
                  statements therein not misleading in light of the
                  circumstances then existing;

                           (v) use its reasonable best efforts to obtain the
                  withdrawal of any order suspending the effectiveness of such
                  Exchange Offer Registration Statement or any post-effective
                  amendment thereto at the earliest practicable date;

                           (vi) use its reasonable best efforts to (A) register
                  or qualify the Exchange Notes under the securities laws or
                  blue sky laws of such jurisdictions as are contemplated by
                  Section 2(a) and ensure that the Exchange Securities can be
                  offered in a private placement in each of the provinces of
                  Canada where holders are resident on or prior to the
                  commencement of the Exchange Offer, (B) keep such
                  registrations or qualifications in effect and comply with such
                  laws so as to permit the continuance of offers, sales and
                  dealings therein in such jurisdictions until the expiration of
                  the Resale Period and (C) take any and all other actions as
                  may be reasonably necessary or advisable to enable each
                  broker-dealer holding Exchange Notes not acquired directly
                  from the Company to consummate the disposition thereof in such
                  jurisdictions; provided, however, that the Company shall not
                  be required for any such purpose to (1) qualify as a foreign
                  corporation in any jurisdiction wherein it would not otherwise
                  be required to qualify but for the requirements of this
                  Section 3(c)(vi), (2) consent to general service of process or
                  taxation in any such jurisdiction, (3) make any changes to its
                  articles of incorporation or by-laws or any agreement between
                  it and its shareholders, or (4) file a prospectus in any
                  province or territory of Canada to make the Transfer
                  Restricted Securities or Exchange Securities freely tradable
                  in Canada;

                                       7
<PAGE>

                           (vii) use its reasonable best efforts to obtain the
                  consent or approval of each governmental agency or authority,
                  whether federal, state or local, which may be required to
                  effect the Exchange Registration, the Exchange Offer and the
                  offering and sale of Exchange Notes by broker-dealers during
                  the Resale Period;

                           (viii) provide a CUSIP number for all Exchange Notes,
                  not later than the applicable Effective Time; and

                           (ix) comply with all applicable rules and regulations
                  of the Commission, and make generally available to its
                  securityholders as soon as practicable but no later than
                  eighteen months after the effective date of such Exchange
                  Offer Registration Statement, an earning statement of the
                  Company and its subsidiaries complying with Section 11(a) of
                  the Securities Act (including, at the option of the Company,
                  Rule 158 thereunder).

                  (d) In connection with the Company's obligations with respect
         to the Shelf Registration, if applicable, the Company shall, as soon as
         practicable (or as otherwise specified):

                           (i) prepare and file with the Commission within the
                  time periods specified in Section 2(b), a Shelf Registration
                  Statement on any form which may be utilized by the Company and
                  which shall register all of the Transfer Restricted Securities
                  for resale by the holders thereof in accordance with such
                  method or methods of disposition as may be specified by such
                  of the holders as, from time to time, may be Electing Holders
                  and use its best efforts to cause such Shelf Registration
                  Statement to become effective within the time periods
                  specified in Section 2(b);

                           (ii) not less than 30 calendar days prior to the
                  Effective Time of the Shelf Registration Statement, mail the
                  Notice and Questionnaire to the holders of Transfer Restricted
                  Securities; provided that no holder shall be entitled to be
                  named as a selling securityholder in the Shelf Registration
                  Statement as of the Effective Time, and no holder shall be
                  entitled to use the prospectus forming a part thereof for
                  resales of Transfer Restricted Securities at any time, unless
                  such holder has returned a completed and signed Notice and
                  Questionnaire to the Company by the deadline for response set
                  forth therein; and provided, further, holders of Transfer
                  Restricted Securities shall have at least 28 calendar days
                  from the date on which the Notice and Questionnaire is first
                  mailed to such holders to return a completed and signed Notice
                  and Questionnaire to the Company;

                           (iii) after the Effective Time of the Shelf
                  Registration Statement, upon the request of any holder of
                  Transfer Restricted Securities that is not then an Electing
                  Holder, promptly send a Notice and Questionnaire to such
                  holder; provided that the Company shall not be required to
                  take any action to name such holder as a selling
                  securityholder in the Shelf Registration Statement or to
                  enable such holder to use the prospectus forming a part
                  thereof for resales of Transfer Restricted Securities until 30
                  business days after such holder has returned a completed and
                  signed Notice and Questionnaire to the Company;

                           (iv) as soon as practicable prepare and file with the
                  Commission such amendments and supplements to such Shelf
                  Registration Statement and the prospectus included therein as
                  may be necessary to effect and maintain the effectiveness of
                  such Shelf Registration Statement for the period specified in
                  Section 2(b) hereof and as may be required by the applicable
                  rules and regulations of the Commission and the instructions
                  applicable to the form of such Shelf Registration Statement,
                  and furnish to the Electing Holders copies of any such
                  supplement or amendment simultaneously with or prior to its
                  being used or filed with the Commission;

                                       8
<PAGE>

                           (v) comply with the provisions of the Securities Act
                  and any applicable Canadian Securities Laws with respect to
                  the disposition of all of the Transfer Restricted Securities
                  covered by such Shelf Registration Statement in accordance
                  with the intended methods of disposition by the Electing
                  Holders provided for in such Shelf Registration Statement;

                           (vi) provide (A) the Electing Holders, (B) the
                  underwriters (which term, for purposes of this Exchange and
                  Registration Rights Agreement, shall include a person deemed
                  to be an underwriter within the meaning of Section 2(a)(11) of
                  the Securities Act), if any, thereof, (C) any sales or
                  placement agent therefor, (D) counsel for any such underwriter
                  or agent and (E) not more than one counsel for all the
                  Electing Holders the opportunity to review and provide
                  comments with respect to such Shelf Registration Statement,
                  each prospectus included therein or filed with the Commission
                  and each amendment or supplement thereto;

                           (vii) for a reasonable period prior to the filing of
                  such Shelf Registration Statement, and throughout the period
                  specified in Section 2(b), make available during reasonable
                  business hours at the Company's principal place of business or
                  such other reasonable place for inspection by the persons
                  referred to in Section 3(d)(vi) who shall certify to the
                  Company that they have a current intention to sell the
                  Transfer Restricted Securities pursuant to the Shelf
                  Registration such financial and other information and books
                  and records of the Company, and cause the officers, employees,
                  counsel and independent chartered accountants of the Company
                  to respond to such inquiries, as shall be reasonably
                  necessary, in the judgment of the respective counsel referred
                  to in such Section, to conduct a reasonable investigation
                  within the meaning of Section 11 of the Securities Act;
                  provided, however, that each such party shall be required to
                  agree in writing to maintain in confidence and not to disclose
                  to any other person any information or records reasonably
                  designated by the Company as being confidential, until such
                  time as (A) such information becomes a matter of public record
                  (whether by virtue of its inclusion in such registration
                  statement or otherwise), or (B) such person shall be required
                  so to disclose such information pursuant to a subpoena or
                  order of any court or other governmental agency or body having
                  jurisdiction over the matter (subject to the requirements of
                  such order, and only after such person shall have given the
                  Company prompt prior written notice of such requirement), or
                  (C) such information is required to be set forth in such Shelf
                  Registration Statement or the prospectus included therein or
                  in an amendment to such Shelf Registration Statement or an
                  amendment or supplement to such prospectus in order that such
                  Shelf Registration Statement, prospectus, amendment or
                  supplement, as the case may be, complies with applicable
                  requirements of the United States federal securities laws and
                  the rules and regulations of the Commission and does not
                  contain an untrue statement of a material fact or omit to
                  state therein a material fact required to be stated therein or
                  necessary to make the statements therein not misleading in
                  light of the circumstances then existing;

                           (viii) promptly notify each of the Electing Holders,
                  any sales or placement agent therefor and any underwriter
                  thereof (which notification may be made through any managing
                  underwriter that is a representative of such underwriter for
                  such purpose) and confirm such advice in writing, (A) in cases
                  where a broker-dealer has specifically requested information
                  on when such Shelf Registration Statement or the prospectus
                  included therein or any prospectus amendment or supplement or
                  post-effective amendment has been filed, or, with respect to
                  any comments by the Commission and by the blue sky or
                  securities commissioner or regulator of any state or province
                  with respect thereto (which comments need only be provided to
                  any underwriter in the event of an underwritten offering
                  pursuant to Section 7 hereof or any sales or placement agent
                  in an offering of such Electing Holders' Transfer Restricted
                  Securities and in the event there is no such underwriter or
                  sales or placement agent

                                       9
<PAGE>

                  the Company will not be under an obligation to provide such
                  comments to any Electing Holder) or on any request by the
                  Commission for amendments or supplements to such Shelf
                  Registration Statement or prospectus or for additional
                  information, (B) with respect to such Shelf Registration
                  Statement or any post-effective amendment, when the same has
                  become effective, (C) of the issuance by the Commission of any
                  stop order suspending the effectiveness of such Shelf
                  Registration Statement or the initiation or threatening of any
                  proceedings for that purpose, (D) if at any time the
                  representations and warranties of the Company contemplated by
                  Section 3(d)(xvii) or Section 5 cease to be true and correct
                  in all material respects, (E) of the receipt by the Company of
                  any notification with respect to the suspension of the
                  qualification of the Transfer Restricted Securities for sale
                  in any jurisdiction or the initiation or threatening of any
                  proceeding for such purpose, or (F) if at any time when a
                  prospectus is required to be delivered under the Securities
                  Act, that such Shelf Registration Statement, prospectus,
                  prospectus amendment or supplement or post-effective amendment
                  does not conform in all material respects to the applicable
                  requirements of the Securities Act and the Trust Indenture Act
                  and any applicable Canadian Securities Laws or contains an
                  untrue statement of a material fact or omits to state any
                  material fact required to be stated therein or necessary to
                  make the statements therein not misleading in light of the
                  circumstances then existing;

                           (ix) use its reasonable best efforts to obtain the
                  withdrawal of (A) any order suspending the effectiveness of
                  such registration statement or any post-effective amendment
                  thereto at the earliest practicable date, (B) the suspension
                  of the qualification of the Transfer Restricted Securities for
                  sale in any jurisdiction or (C) the initiation or threatening
                  of any proceeding for such purpose;

                           (x) if requested by any managing underwriter or
                  underwriters, any placement or sales agent or any Electing
                  Holder, promptly incorporate in a prospectus supplement or
                  post-effective amendment such information as is required by
                  the applicable rules and regulations of the Commission and as
                  such managing underwriter or underwriters, such agent or such
                  Electing Holder specifies should be included therein relating
                  to the terms of the sale of such Transfer Restricted
                  Securities, including information with respect to the
                  principal amount of Transfer Restricted Securities being sold
                  by such Electing Holder or agent or to any underwriters, the
                  name and description of such Electing Holder, agent or
                  underwriter, the offering price of such Transfer Restricted
                  Securities and any discount, commission or other compensation
                  payable in respect thereof, the purchase price being paid
                  therefor by such underwriters and with respect to any other
                  terms of the offering of the Transfer Restricted Securities to
                  be sold by such Electing Holder or agent or to such
                  underwriters; and make all required filings of such prospectus
                  supplement or post-effective amendment promptly after
                  notification of the matters to be incorporated in such
                  prospectus supplement or post-effective amendment;

                           (xi) furnish to each Electing Holder, each placement
                  or sales agent, if any, therefor, each underwriter, if any,
                  thereof and the respective counsel referred to in Section
                  3(d)(vi) an executed copy (or, in the case of an Electing
                  Holder, a conformed copy) of such Shelf Registration
                  Statement, each such amendment and supplement thereto (in each
                  case including all exhibits thereto (in the case of an
                  Electing Holder of Transfer Restricted Securities, upon
                  request) and documents incorporated by reference therein) and
                  such number of copies of such Shelf Registration Statement
                  (excluding exhibits thereto and documents incorporated by
                  reference therein unless specifically so requested by such
                  Electing Holder, agent or underwriter, as the case may be) and
                  of the prospectus included in such Shelf Registration
                  Statement (including each preliminary prospectus and any
                  summary prospectus), in

                                       10
<PAGE>

                  conformity in all material respects with the applicable
                  requirements of the Securities Act and the Trust Indenture Act
                  and any applicable Canadian Securities Laws, and such other
                  documents, as such Electing Holder, agent, if any, and
                  underwriter, if any, may reasonably request in order to
                  facilitate the offering and disposition of the Transfer
                  Restricted Securities owned by such Electing Holder, offered
                  or sold by such agent or underwritten by such underwriter and
                  to permit such Electing Holder, agent and underwriter to
                  satisfy the prospectus delivery requirements of the Securities
                  Act and any applicable Canadian Securities Laws; and the
                  Company hereby consents to the use of such prospectus
                  (including such preliminary and summary prospectus) and any
                  amendment or supplement thereto by each such Electing Holder
                  and by any such agent and underwriter, in each case in the
                  form most recently provided to such person by the Company, in
                  connection with the offering and sale of the Transfer
                  Restricted Securities covered by the prospectus (including
                  such preliminary and summary prospectus) or any supplement or
                  amendment thereto provided, however, that the Company shall
                  not be required for any such purpose to file a prospectus in
                  any province or territory of Canada to make the Transfer
                  Restricted Securities or Exchange Securities freely tradable
                  in Canada;

                           (xii) use its reasonable best efforts to (A) register
                  or qualify the Transfer Restricted Securities to be included
                  in such Shelf Registration Statement under such securities
                  laws or blue sky laws of such jurisdictions as any Electing
                  Holder and each placement or sales agent, if any, therefor and
                  underwriter, if any, thereof shall reasonably request and
                  ensure that any Transfer Restricted Securities can be offered
                  in a private placement in all the provinces of Canada where
                  the holders are resident, (B) keep such registrations or
                  qualifications in effect and comply with such laws so as to
                  permit the continuance of offers, sales and dealings therein
                  in such jurisdictions during the period the Shelf Registration
                  is required to remain effective under Section 2(b) above and
                  for so long as may be necessary to enable any such Electing
                  Holder, agent or underwriter to complete its distribution of
                  Securities pursuant to such Shelf Registration Statement and
                  (C) take any and all other actions as may be reasonably
                  necessary or advisable to enable each such Electing Holder,
                  agent, if any, and underwriter, if any, to consummate the
                  disposition in such jurisdictions of such Transfer Restricted
                  Securities; provided, however, that the Company shall not be
                  required for any such purpose to (1) qualify as a foreign
                  corporation in any jurisdiction wherein it would not otherwise
                  be required to qualify but for the requirements of this
                  Section 3(d)(xii), (2) consent to general service of process
                  or taxation in any such jurisdiction, (3) make any changes to
                  its certificate of incorporation or by-laws or any agreement
                  between it and its shareholders or, as applicable, (4) file a
                  prospectus in any province or territory of Canada to make the
                  Transfer Restricted Securities or Exchange Securities freely
                  tradable in Canada;

                           (xiii) use its reasonable best efforts to obtain the
                  consent or approval of each governmental agency or authority,
                  whether federal, state, provincial or local, which may be
                  required to effect the Shelf Registration or the offering or
                  sale in connection therewith or to enable the selling holder
                  or holders to offer, or to consummate the disposition of,
                  their Transfer Restricted Securities in the United States;

                           (xiv) unless any Transfer Restricted Securities shall
                  be in book-entry only form, cooperate with the Electing
                  Holders and the managing underwriters, if any, to facilitate
                  the timely preparation and delivery of certificates
                  representing Transfer Restricted Securities to be sold, which
                  certificates, if so required by any securities exchange upon
                  which any Transfer Restricted Securities are listed, shall be
                  penned, lithographed or engraved, or produced by any
                  combination of such methods, on steel engraved borders, and
                  which certificates shall not bear any restrictive legends;
                  and, in the case of an underwritten offering, enable such
                  Transfer

                                       11
<PAGE>

                  Restricted Securities to be in such denominations and
                  registered in such names as the managing underwriters may
                  request at least two business days prior to any sale of the
                  Transfer Restricted Securities;

                           (xv) provide a CUSIP number for all Transfer
                  Restricted Securities, not later than the applicable Effective
                  Time;

                           (xvi) enter into one or more underwriting agreements,
                  engagement letters, agency agreements, "best efforts"
                  underwriting agreements or similar agreements, as appropriate,
                  including customary provisions relating to indemnification and
                  contribution, and take such other actions in connection
                  therewith as any Electing Holders aggregating at least 33% in
                  aggregate principal amount of the Transfer Restricted
                  Securities at the time outstanding shall request in order to
                  expedite or facilitate the disposition of such Transfer
                  Restricted Securities in the United States;

                           (xvii) whether or not an agreement of the type
                  referred to in Section 3(d)(xvi) hereof is entered into and
                  whether or not any portion of the offering contemplated by the
                  Shelf Registration is an underwritten offering or is made
                  through a placement or sales agent or any other entity, (A)
                  make such representations and warranties to the Electing
                  Holders and the placement or sales agent, if any, therefor and
                  the underwriters, if any, thereof in form, substance and scope
                  as are customarily made in connection with an offering of debt
                  securities pursuant to any appropriate agreement or to a
                  registration statement filed on the form applicable to the
                  Shelf Registration; (B) obtain an opinion of counsel to the
                  Company in customary form and covering such matters, of the
                  type customarily covered by such an opinion, as the managing
                  underwriters, if any, or as any Electing Holders of at least
                  33% in aggregate principal amount of the Transfer Restricted
                  Securities at the time outstanding may reasonably request,
                  addressed to such Electing Holder or Electing Holders and the
                  placement or sales agent, if any, therefor and the
                  underwriters, if any, thereof and dated the effective date of
                  such Shelf Registration Statement (and if such Shelf
                  Registration Statement contemplates an underwritten offering
                  of a part or all of the Transfer Restricted Securities, dated
                  the date of the closing under the underwriting agreement
                  relating thereto) it being agreed that the matters to be
                  covered by such opinion shall include the due incorporation
                  and good standing of the Company; the qualification of the
                  Company to transact business as a foreign corporation or extra
                  provincial corporation; the due authorization, execution and
                  delivery of the relevant agreement of the type referred to in
                  Section 3(d)(xvi) hereof; the due authorization, execution,
                  authentication and issuance, and the validity and
                  enforceability, of the Securities; the absence of material
                  legal or governmental proceedings involving the Company; the
                  absence of a conflict of the offering with material agreements
                  binding upon the Company; the absence of governmental
                  approvals required to be obtained in connection with the Shelf
                  Registration, the offering and sale of the Transfer Restricted
                  Securities, this Exchange and Registration Rights Agreement or
                  any agreement of the type referred to in Section 3(d)(xvi)
                  hereof, except such approvals as may be required under state
                  securities or blue sky laws; the material compliance as to
                  form of such Shelf Registration Statement and any documents
                  incorporated by reference therein and of the Indenture with
                  the requirements of the Securities Act and the Trust Indenture
                  Act, respectively; and, as of the date of the opinion and of
                  the Shelf Registration Statement or most recent post-effective
                  amendment thereto, as the case may be, the absence from such
                  Shelf Registration Statement and the prospectus included
                  therein, as then amended or supplemented, and from the
                  documents incorporated by reference therein (in each case
                  other than the financial statements and other financial
                  information contained therein) of an untrue statement of a
                  material fact or the omission to state therein a material fact
                  necessary to make the statements therein not misleading (in
                  the case of such

                                       12
<PAGE>

                  documents, in the light of the circumstances existing at the
                  time that such documents were filed with the Commission under
                  the Exchange Act)); (C) obtain a "cold comfort" letter or
                  letters from the independent chartered accountants of the
                  Company addressed to the selling Electing Holders, the
                  placement or sales agent, if any, therefor or the
                  underwriters, if any, thereof, dated (i) the effective date of
                  such Shelf Registration Statement and (ii) the effective date
                  of any prospectus supplement to the prospectus included in
                  such Shelf Registration Statement or post-effective amendment
                  to such Shelf Registration Statement which includes unaudited
                  or audited financial statements as of a date or for a period
                  subsequent to that of the latest such statements included in
                  such prospectus (and, if such Shelf Registration Statement
                  contemplates an underwritten offering pursuant to any
                  prospectus supplement to the prospectus included in such Shelf
                  Registration Statement or post-effective amendment to such
                  Shelf Registration Statement which includes unaudited or
                  audited financial statements as of a date or for a period
                  subsequent to that of the latest such statements included in
                  such prospectus, dated the date of the closing under the
                  underwriting agreement relating thereto), such letter or
                  letters to be in customary form and covering such matters of
                  the type customarily covered by letters of such type; (D)
                  deliver such documents and certificates, including officers'
                  certificates, as may be reasonably requested by any Electing
                  Holders of at least 33% in aggregate principal amount of the
                  Transfer Restricted Securities at the time outstanding or the
                  placement or sales agent, if any, therefor and the managing
                  underwriters, if any, thereof to evidence the accuracy of the
                  representations and warranties made pursuant to clause (A)
                  above or those contained in Section 5(a) hereof and the
                  compliance with or satisfaction of any agreements or
                  conditions contained in the underwriting agreement or other
                  agreement entered into by the Company; and (E) undertake such
                  obligations relating to expense reimbursement, indemnification
                  and contribution as are provided in Section 6 hereof;

                           (xviii) notify in writing each holder of Transfer
                  Restricted Securities of any proposal by the Company to amend
                  or waive any provision of this Exchange and Registration
                  Rights Agreement pursuant to Section 9(h) hereof and of any
                  amendment or waiver effected pursuant thereto, each of which
                  notices shall contain the text of the amendment or waiver
                  proposed or effected, as the case may be;

                           (xix) in the event that any broker-dealer registered
                  under the Exchange Act shall underwrite any Transfer
                  Restricted Securities or participate as a member of an
                  underwriting syndicate or selling group or "assist in the
                  distribution" (within the meaning of the Conduct Rules (the
                  "Conduct Rules") of the National Association of Securities
                  Dealers, Inc. ("NASD") or any successor thereto, as amended
                  from time to time) thereof, whether as a holder of such
                  Transfer Restricted Securities or as an underwriter, a
                  placement or sales agent or a broker or dealer in respect
                  thereof, or otherwise, assist such broker-dealer in complying
                  with the requirements of such Conduct Rules, including by (A)
                  if such Conduct Rules shall so require, engaging a "qualified
                  independent underwriter" (as defined in such Conduct Rules) to
                  participate in the preparation of the Shelf Registration
                  Statement relating to such Transfer Restricted Securities, to
                  exercise usual standards of due diligence in respect thereto
                  and, if any portion of the offering contemplated by such Shelf
                  Registration Statement is an underwritten offering or is made
                  through a placement or sales agent, to recommend the yield of
                  such Transfer Restricted Securities, (B) indemnifying any such
                  qualified independent underwriter to the extent of the
                  indemnification of underwriters provided in Section 6 hereof
                  (or to such other customary extent as may be requested by such
                  underwriter), and (C) providing such information to such
                  broker-dealer as may be required in order for such
                  broker-dealer to comply with the requirements of the Conduct
                  Rules; and

                                       13
<PAGE>

                           (xx) comply with all applicable rules and regulations
                  of the Commission, and make generally available to its
                  securityholders as soon as practicable but in any event not
                  later than eighteen months after the effective date of such
                  Shelf Registration Statement, an earning statement of the
                  Company and its subsidiaries complying with Section 11(a) of
                  the Securities Act (including, at the option of the Company,
                  Rule 158 thereunder).

                  (e) In the event that the Company would be required, pursuant
         to Section 3(c)(iii)(F) or Section 3(d)(viii)(F) above, to notify each
         broker-dealer, the Electing Holders, the placement or sales agent, if
         any, therefor and the managing underwriters, if any, thereof, the
         Company shall without delay prepare and furnish to each of the Electing
         Holders, to each placement or sales agent, if any, and to each such
         underwriter, if any, a reasonable number of copies of a prospectus
         supplemented or amended so that, as thereafter delivered to purchasers
         of Transfer Restricted Securities, such prospectus shall conform in all
         material respects to the applicable requirements of the Securities Act
         and the Trust Indenture Act and any applicable Canadian Securities
         Laws, and shall not contain an untrue statement of a material fact or
         omit to state a material fact required to be stated therein or
         necessary to make the statements therein not misleading in light of the
         circumstances then existing. Each Electing Holder agrees that upon
         receipt of any notice from the Company pursuant to Section 3(c)(iii)(F)
         or Section 3(d)(viii)(F) hereof, such broker-dealer, Electing Holder,
         underwriter or placement or sales agent shall forthwith discontinue the
         disposition of Transfer Restricted Securities pursuant to the Shelf
         Registration Statement applicable to such Transfer Restricted
         Securities until such broker-dealer, Electing Holder, underwriter or
         placement or sales agent shall have received copies of such amended or
         supplemented prospectus, and if so directed by the Company, such
         broker-dealer, Electing Holder, underwriter or placement or sales agent
         shall destroy or deliver to the Company (at the Company's expense) all
         copies, other than permanent file copies, then in such Electing
         Holder's possession of the prospectus covering such Transfer Restricted
         Securities at the time of receipt of such notice.

                  (f) In the event of a Shelf Registration, in addition to the
         information required to be provided by each Electing Holder in its
         Notice Questionnaire, the Company may require such Electing Holder to
         furnish to the Company such additional information regarding such
         Electing Holder and such Electing Holder's intended method of
         distribution of Transfer Restricted Securities as may be required in
         the reasonable judgment of counsel for the Company in order to comply
         with the Securities Act. Each such Electing Holder agrees to notify the
         Company as promptly as practicable of any inaccuracy or change in
         information previously furnished by such Electing Holder to the Company
         or of the occurrence of any event in either case as a result of which
         any prospectus relating to such Shelf Registration contains or would
         contain an untrue statement of a material fact regarding such Electing
         Holder or such Electing Holder's intended method of disposition of such
         Transfer Restricted Securities or omits to state any material fact
         regarding such Electing Holder or such Electing Holder's intended
         method of disposition of such Transfer Restricted Securities required
         to be stated therein or necessary to make the statements therein not
         misleading in light of the circumstances then existing, and promptly to
         furnish to the Company any additional information required to correct
         and update any previously furnished information or required so that
         such prospectus shall not contain, with respect to such Electing Holder
         or the disposition of such Transfer Restricted Securities, an untrue
         statement of a material fact or omit to state a material fact required
         to be stated therein or necessary to make the statements therein not
         misleading in light of the circumstances then existing.

                  (g) As a condition to its participation in the Exchange Offer
         pursuant to the terms of this Agreement, each holder of Transfer
         Restricted Securities shall furnish, upon the request of the Company,
         prior to the completion of the Exchange Offer, a written representation
         to the Company (which may be contained in the letter of transmittal
         contemplated by the Exchange Registration Statement) to the effect that
         (A) it is not an affiliate of the Company, (B) it is not engaged in,
         and does not intend to engage in, and has no arrangement or
         understanding with any person to participate in, a

                                       14
<PAGE>

         distribution of the Exchange Securities to be issued in the Exchange
         Offer and (C) it is acquiring the Exchange Securities in its ordinary
         course of business, and such holder shall make such other written
         representations as the Company may reasonably request in order to
         comply with applicable Canadian securities laws. As a condition to its
         participation in the Exchange Offer pursuant to the terms of this
         Agreement, each holder shall acknowledge and agree that any
         broker-dealer and any such holder using the Exchange Offer to
         participate in a distribution of the securities to be acquired in the
         Exchange Offer (1) could not under Commission policy as in effect on
         the date of this Agreement rely on the position of the Commission
         enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and
         Exxon Capital Holdings Corporation (available May 13, 1988), as
         interpreted in the Commission's letter to Shearman & Sterling dated
         July 2, 1993, and similar no-action letters and (2) must comply with
         the registration and prospectus delivery requirements of the Securities
         Act in connection with a secondary resale transaction and that such a
         secondary resale transaction must be covered by an effective
         registration statement containing the selling security holder
         information required by Item 507 or 508, as applicable, of Regulation
         S-K if the resales are of Exchange Securities obtained by such holder
         in exchange for Securities acquired by such holder directly from the
         Company.

                  (h) Until the expiration of two years after the Closing Date,
         the Company will not, and will not permit any of its "affiliates" (as
         defined in Rule 144) to, resell any of the Securities that have been
         reacquired by any of them except pursuant to an effective registration
         statement under the Securities Act.

         4. Registration Expenses.

         The Company agrees to bear and to pay or cause to be paid promptly all
expenses incident to the Company's performance of or compliance with this
Exchange and Registration Rights Agreement, including (a) all Commission and any
NASD registration, filing and review fees and expenses including reasonable fees
and disbursements of counsel for the placement or sales agent or underwriters in
connection with such registration, filing and review, (b) all fees and expenses
in connection with the qualification of the Securities for offering and sale
under the State securities and blue sky laws referred to in Section 3(d)(xii)
hereof and determination of their eligibility for investment under the laws of
such jurisdictions as any managing underwriters or the Electing Holders may
designate, including any fees and disbursements of counsel for the Electing
Holders or underwriters in connection with such qualification and determination,
(c) all expenses relating to the preparation, printing, production, distribution
and reproduction of each registration statement required to be filed hereunder,
each prospectus included therein or prepared for distribution pursuant hereto,
each amendment or supplement to the foregoing, the expenses of preparing the
Securities for delivery and the expenses of printing or producing any
underwriting agreements, agreements among underwriters, selling agreements and
blue sky or legal investment memoranda and all other documents in connection
with the offering, sale or delivery of Securities to be disposed of (including
certificates representing the Securities), (d) messenger, telephone and delivery
expenses relating to the offering, sale or delivery of Securities and the
preparation of documents referred in clause (c) above, (e) fees and expenses of
the Trustee under the Indenture, any agent of the Trustee and any counsel for
the Trustee and of any collateral agent or custodian, (f) internal expenses
(including all salaries and expenses of the Company's officers and employees
performing legal or accounting duties), (g) fees, disbursements and expenses of
counsel and independent chartered accountants of the Company (including the
expenses of any opinions or "cold comfort" letters required by or incident to
such performance and compliance), (h) fees, disbursements and expenses of any
"qualified independent underwriter" engaged pursuant to Section 3(d)(xix)
hereof, (i) reasonable fees, disbursements and expenses of one counsel for the
Electing Holders retained in connection with a Shelf Registration, as selected
by the Electing Holders of at least a majority in aggregate principal amount of
the Transfer Restricted Securities held by Electing Holders (which counsel shall
be reasonably satisfactory to the

                                       15
<PAGE>

Company), (j) any fees charged by securities rating services for rating the
Securities, and (k) fees, expenses and disbursements of any other persons,
including special experts, retained by the Company in connection with such
registration (collectively, the "Registration Expenses"). To the extent that any
Registration Expenses are incurred, assumed or paid by any holder of Transfer
Restricted Securities or any placement or sales agent therefor or underwriter
thereof, the Company shall reimburse such person for the full amount of the
Registration Expenses so incurred, assumed or paid promptly after receipt of a
request therefor. Notwithstanding the foregoing, the holders of the Transfer
Restricted Securities being registered shall pay all agency fees and commissions
and underwriting discounts and commissions attributable to the sale of such
Transfer Restricted Securities and the fees and disbursements of any counsel or
other advisors or experts retained by such holders (severally or jointly), other
than the counsel and experts specifically referred to above.

         5. Representations and Warranties.

         The Company represents and warrants to, and agrees with, each Purchaser
and each of the holders from time to time of Transfer Restricted Securities
that:

                  (a) Each registration statement covering Transfer Restricted
         Securities and each prospectus (including any preliminary or summary
         prospectus) contained therein or furnished pursuant to Section 3(d) or
         Section 3(c) hereof and any further amendments or supplements to any
         such registration statement or prospectus, when it becomes effective or
         is filed with the Commission, as the case may be, and, in the case of
         an underwritten offering of Transfer Restricted Securities, at the time
         of the closing under the underwriting agreement relating thereto, will
         conform in all material respects to the requirements of the Securities
         Act and the Trust Indenture Act and any applicable Canadian Securities
         Laws, and will not contain an untrue statement of a material fact or
         omit to state a material fact required to be stated therein or
         necessary to make the statements therein, in the case of a registration
         statement, not misleading and, in the case of a prospectus not
         misleading in light of the circumstances under which they were made;
         and at all times subsequent to the Effective Time when a prospectus
         would be required to be delivered under the Securities Act, other than
         from (i) such time as a notice has been given to holders of Transfer
         Restricted Securities pursuant to Section 3(d)(viii)(F) or Section
         3(c)(iii)(F) hereof until (ii) such time as the Company furnishes an
         amended or supplemented prospectus pursuant to Section 3(e) or Section
         3(c)(iv) hereof, each such registration statement, and each prospectus
         (including any summary prospectus) contained therein or furnished
         pursuant to Section 3(d) or Section 3(c) hereof, as then amended or
         supplemented, will conform in all material respects to the requirements
         of the Securities Act and the Trust Indenture Act and any applicable
         Canadian Securities Laws, and will not contain an untrue statement of a
         material fact or omit to state a material fact required to be stated
         therein or necessary to make the statements therein not misleading in
         the light of the circumstances then existing; provided, however, that
         this representation and warranty shall not apply to any statements or
         omissions made in reliance upon and in conformity with information
         furnished in writing to the Company by a holder of Transfer Restricted
         Securities or any underwriter or placement agent of any offering
         described therein expressly for use therein.

                  (b) Any documents incorporated by reference in any prospectus
         referred to in Section 5(a) hereof, when they become or became
         effective or are or were filed with the Commission, as the case may be,
         will conform or conformed in all material respects to the requirements
         of the Securities Act or the Exchange Act or any applicable Canadian
         Securities Law, as applicable, and none of such documents will contain
         or contained an untrue statement of a material fact or will omit or
         omitted to state a material fact required to be stated therein or
         necessary to make the statements therein not misleading; provided,
         however, that this representation and warranty shall not apply to any
         statements or omissions made in reliance upon and in conformity with
         information furnished in writing to the

                                       16
<PAGE>

         Company by a holder of Transfer Restricted Securities or any
         underwriter or placement agent of any offering described therein
         expressly for use therein.

                  (c) The compliance by the Company with all of the provisions
         of this Exchange and Registration Rights Agreement and the consummation
         of the transactions herein contemplated will not conflict with or
         result in a breach of any of the terms or provisions of, or constitute
         a default under, any indenture, mortgage, deed of trust, loan agreement
         or other agreement or instrument to which the Company or any subsidiary
         of the Company is a party or by which the Company or any subsidiary of
         the Company is bound or to which any of the property or assets of the
         Company or any subsidiary of the Company is subject, nor will such
         action result in any violation of the provisions of the certificate of
         incorporation or by-laws or other organizational documents, as
         applicable, of the Company or any statute or any order, rule or
         regulation of any court or governmental agency or body having
         jurisdiction over the Company or any subsidiary of the Company or any
         of their properties; and no consent, approval, authorization, order,
         registration or qualification of or with any such court or governmental
         agency or body is required for the consummation by the Company of the
         transactions contemplated by this Exchange and Registration Rights
         Agreement, except the registration under the Securities Act of the
         Securities, qualification of the Indenture under the Trust Indenture
         Act and such consents, approvals, authorizations, registrations or
         qualifications as may be required under any applicable Canadian
         Securities Laws, Canadian federal or provincial corporate law or State
         securities or blue sky laws in connection with the offering and
         distribution of the Securities.

                  (d) This Exchange and Registration Rights Agreement has been
         duly authorized, executed and delivered by the Company.

         6. Indemnification.

                  (a) Indemnification by the Company. The Company will indemnify
         and hold harmless each of the holders of Transfer Restricted Securities
         included in an Exchange Offer Registration Statement, each of the
         Electing Holders of Transfer Restricted Securities included in a Shelf
         Registration Statement and each person who participates as a placement
         or sales agent or as an underwriter in any offering or sale of such
         Transfer Restricted Securities against any losses, claims, damages or
         liabilities, joint or several, to which such holder, agent or
         underwriter may become subject under the Securities Act or otherwise,
         insofar as such losses, claims, damages or liabilities (or actions in
         respect thereof) arise out of or are based upon an untrue statement or
         alleged untrue statement of a material fact contained in any Exchange
         Offer Registration Statement or Shelf Registration Statement, as the
         case may be, under which such Transfer Restricted Securities were
         registered under the Securities Act, or any preliminary, final or
         summary prospectus contained therein or furnished by the Company to any
         such holder, Electing Holder, agent or underwriter, or any amendment or
         supplement thereto, or arise out of or are based upon the omission or
         alleged omission to state therein a material fact required to be stated
         therein or necessary to make the statements therein not misleading, and
         will reimburse such holder, such Electing Holder, such agent and such
         underwriter for any legal or other expenses reasonably incurred by them
         in connection with investigating or defending any such action or claim
         as such expenses are incurred; provided, however, that the Company
         shall not be liable to any such person in any such case to the extent
         that any such loss, claim, damage or liability arises out of or is
         based upon an untrue statement or alleged untrue statement or omission
         or alleged omission made in such registration statement, or
         preliminary, final or summary prospectus, or amendment or supplement
         thereto, in reliance upon and in conformity with written information
         furnished to the Company by such person expressly for use therein
         provided, further, that in a disposition of Transfer Restricted
         Securities that does not involve (in whole or in part) an underwritten
         offering conducted pursuant to Section 7 hereof or a "best efforts"
         offering on an agency basis, the Company shall not be liable to any
         Electing Holder pursuant to the foregoing with respect to any
         prospectus contained in a

                                       17
<PAGE>

         Shelf Registration Statement (a "Prior Prospectus") to the extent the
         Company shall sustain the burden of proving that any such loss, claim,
         damage or liability resulted from the fact that such Electing Holder
         sold Transfer Restricted Securities to a person to whom such Electing
         Holder failed to send or give, at or prior to the, settlement date (the
         "Settlement Date") of such sale, a copy of an amended or supplemented
         prospectus (the "Amended Prospectus"), if: (i) the notice required by
         Section 3(d)(viii) hereof in respect of the Amended Prospectus has been
         given to such Electing Holder prior to the Settlement Date, (ii) the
         Company has previously delivered copies of the Amended Prospectus to
         the Electing Holder (in sufficient quantities and sufficiently in
         advance of the Settlement Date to allow for delivery of the Amended
         Prospectus by the Electing Holder to the transferee of such Transfer
         Restricted Securities by the Settlement Date) and the loss, claim,
         damage or liability of such Electing Holder resulted from an untrue
         statement or omission of a material fact contained in or omitted from a
         Prior Prospectus which was identified in writing at such time to such
         Electing Holder and corrected in the Amended Prospectus prior to the
         Settlement Date and the Amended Prospectus was required by law to be
         delivered at or prior to the Settlement Date to such person and (iii)
         and delivery of the Amended Prospectus by the Settlement Date would
         have cured the defect giving rise to such loss, claim, damage or
         liability.

                  (b) Indemnification by the Holders and any Agents and
         Underwriters. The Company may require, as a condition to including any
         Transfer Restricted Securities in any registration statement filed
         pursuant to Section 2(b) hereof and to entering into any underwriting
         agreement with respect thereto, that the Company shall have received an
         undertaking reasonably satisfactory to it from the Electing Holder of
         such Transfer Restricted Securities and from each underwriter named in
         any such underwriting agreement, severally and not jointly, to (i)
         indemnify and hold harmless the Company and all other holders of
         Transfer Restricted Securities, against any losses, claims, damages or
         liabilities to which the Company or such other holders of Transfer
         Restricted Securities may become subject, under the Securities Act or
         otherwise, insofar as such losses, claims, damages or liabilities (or
         actions in respect thereof) arise out of or are based upon an untrue
         statement or alleged untrue statement of a material fact contained in
         such registration statement, or any preliminary, final or summary
         prospectus contained therein or furnished by the Company to any such
         Electing Holder, agent or underwriter, or any amendment or supplement
         thereto, or arise out of or are based upon the omission or alleged
         omission to state therein a material fact required to be stated therein
         or necessary to make the statements therein not misleading, in each
         case to the extent, but only to the extent, that such untrue statement
         or alleged untrue statement or omission or alleged omission was made in
         reliance upon and in conformity with written information furnished to
         the Company by such Electing Holder or underwriter expressly for use
         therein, and (ii) reimburse the Company for any legal or other expenses
         reasonably incurred by the Company in connection with investigating or
         defending any such action or claim as such expenses are incurred;
         provided, however, that no such Electing Holder shall be required to
         undertake liability to any person under this Section 6(b) for any
         amounts in excess of the dollar amount of the proceeds to be received
         by such Electing Holder from the sale of such Electing Holder's
         Transfer Restricted Securities pursuant to such registration.

                  (c) Notices of Claims, Etc. Promptly after receipt by an
         indemnified party under subsection (a) or (b) above of written notice
         of the commencement of any action, such indemnified party shall, if a
         claim in respect thereof is to be made against an indemnifying party
         pursuant to the indemnification provisions of or contemplated by this
         Section 6, notify such indemnifying party in writing of the
         commencement of such action; but the omission so to notify the
         indemnifying party shall not relieve it from any liability which it may
         have to any indemnified party otherwise than under the indemnification
         provisions of or contemplated by Section 6(a) or 6(b) hereof. In case
         any such action shall be brought against any indemnified party and it
         shall notify an indemnifying party of the commencement thereof, such
         indemnifying party shall be entitled to participate therein and, to the
         extent that it shall wish, jointly with any other indemnifying party
         similarly notified, to assume the

                                       18
<PAGE>

         defense thereof, with counsel reasonably satisfactory to such
         indemnified party (who shall not, except with the consent of the
         indemnified party, be counsel to the indemnifying party), and, after
         notice from the indemnifying party to such indemnified party of its
         election so to assume the defense thereof, such indemnifying party
         shall not be liable to such indemnified party for any legal expenses of
         other counsel or any other expenses, in each case subsequently incurred
         by such indemnified party, in connection with the defense thereof other
         than reasonable costs of investigation. No indemnifying party shall,
         without the written consent of the indemnified party, effect the
         settlement or compromise of, or consent to the entry of any judgment
         with respect to, any pending or threatened action or claim in respect
         of which indemnification or contribution may be sought hereunder
         (whether or not the indemnified party is an actual or potential party
         to such action or claim) unless such settlement, compromise or judgment
         (i) includes an unconditional release of the indemnified party from all
         liability arising out of such action or claim and (ii) does not include
         a statement as to or an admission of fault, culpability or a failure to
         act by or on behalf of any indemnified party, and, no indemnified party
         shall effect the settlement or compromise of, or consent to the entry
         of any judgment with respect to any pending or threatened action or
         claim in respect of which indemnification or contribution may be sought
         hereunder without the consent of the indemnifying party from which
         indemnification or contribution may be sought, which consent shall not
         be unreasonably withheld.

                  (d) Contribution. If for any reason the indemnification
         provisions contemplated by Section 6(a) or Section 6(b) are unavailable
         to or insufficient to hold harmless an indemnified party in respect of
         any losses, claims, damages or liabilities (or actions in respect
         thereof) referred to therein, then each indemnifying party shall
         contribute to the amount paid or payable by such indemnified party as a
         result of such losses, claims, damages or liabilities (or actions in
         respect thereof) in such proportion as is appropriate to reflect the
         relative fault of the indemnifying party and the indemnified party in
         connection with the statements or omissions which resulted in such
         losses, claims, damages or liabilities (or actions in respect thereof),
         as well as any other relevant equitable considerations. The relative
         fault of such indemnifying party and indemnified party shall be
         determined by reference to, among other things, whether the untrue or
         alleged untrue statement of a material fact or omission or alleged
         omission to state a material fact relates to information supplied by
         such indemnifying party or by such indemnified party, and the parties'
         relative intent, knowledge, access to information and opportunity to
         correct or prevent such statement or omission. The parties hereto agree
         that it would not be just and equitable if contributions pursuant to
         this Section 6(d) were determined by pro rata allocation (even if the
         holders or any agents or underwriters or all of them were treated as
         one entity for such purpose) or by any other method of allocation which
         does not take account of the equitable considerations referred to in
         this Section 6(d). The amount paid or payable by an indemnified party
         as a result of the losses, claims, damages, or liabilities (or actions
         in respect thereof) referred to above shall be deemed to include any
         legal or other fees or expenses reasonably incurred by such indemnified
         party in connection with investigating or defending any such action or
         claim. Notwithstanding the provisions of this Section 6(d), no holder
         shall be required to contribute any amount in excess of the amount by
         which the dollar amount of the proceeds received by such holder from
         the sale of any Transfer Restricted Securities (after deducting any
         fees, discounts and commissions applicable thereto) exceeds the amount
         of any damages which such holder has otherwise been required to pay by
         reason of such untrue or alleged untrue statement or omission or
         alleged omission, and no underwriter shall be required to contribute
         any amount in excess of the amount by which the total price at which
         the Transfer Restricted Securities underwritten by it and distributed
         to the public were offered to the public exceeds the amount of any
         damages which such underwriter has otherwise been required to pay by
         reason of such untrue or alleged untrue statement or omission or
         alleged omission. No person guilty of fraudulent misrepresentation
         (within the meaning of Section 11(f) of the Securities Act) shall be
         entitled to contribution from any person who was not guilty of such
         fraudulent misrepresentation. The holders' and any underwriters'
         obligations in this Section 6(d) to

                                       19
<PAGE>

         contribute shall be several in proportion to the principal amount of
         Transfer Restricted Securities registered or underwritten, as the case
         may be, by them and not joint.

                  (e) The obligations of the Company under this Section 6 shall
         be in addition to any liability which the Company may otherwise have
         and shall extend, upon the same terms and conditions, to each officer,
         director and partner of each holder, agent and underwriter and each
         person, if any, who controls any holder, agent or underwriter within
         the meaning of the Securities Act; and the obligations of the holders
         and any agents or underwriters contemplated by this Section 6 shall be
         in addition to any liability which the respective holder, agent or
         underwriter may otherwise have and shall extend, upon the same terms
         and conditions, to each officer and director of the Company (including
         any person who, with his consent, is named in any registration
         statement as about to become a director of the Company) and to each
         person, if any, who controls the Company within the meaning of the
         Securities Act.

         7. Underwritten Offerings.

                  (a) Selection of Underwriters. If any of the Transfer
         Restricted Securities covered by the Shelf Registration are to be sold
         pursuant to an underwritten offering, the managing underwriter or
         underwriters thereof shall be designated by Electing Holders holding at
         least a majority in aggregate principal amount of the Transfer
         Restricted Securities to be included in such offering, provided that
         such designated managing underwriter or underwriters is or are
         reasonably acceptable to the Company.

                  (b) Participation by Holders. Each holder of Transfer
         Restricted Securities hereby agrees with each other such holder that no
         such holder may participate in any underwritten offering hereunder
         unless such holder (i) agrees to sell such holder's Transfer Restricted
         Securities on the basis provided in any underwriting arrangements
         approved by the persons entitled hereunder to approve such arrangements
         and (ii) completes and executes all questionnaires, powers of attorney,
         indemnities, underwriting agreements and other documents reasonably
         required under the terms of such underwriting arrangements.

         8. Rule 144.

         The Company covenants to the holders of Transfer Restricted Securities
that to the extent it shall be required to do so under the Exchange Act, the
Company shall timely file the reports required to be filed by it under the
Exchange Act or the Securities Act (including the reports under Section 13 and
15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144 adopted
by the Commission under the Securities Act) and the rules and regulations
adopted by the Commission thereunder, and shall take such further action as any
holder of Transfer Restricted Securities may reasonably request, all to the
extent required from time to time to enable such holder to sell Transfer
Restricted Securities without registration under the Securities Act within the
limitations of the exemption provided by Rule 144 under the Securities Act, as
such Rule may be amended from time to time, or any similar or successor rule or
regulation hereafter adopted by the Commission. Upon the request of any holder
of Transfer Restricted Securities in connection with that holder's sale pursuant
to Rule 144, the Company shall deliver to such holder a written statement as to
whether it has complied with such requirements.

         9. Miscellaneous.

                  (a) No Inconsistent Agreements. The Company represents,
         warrants, covenants and agrees that it has not granted, and shall not
         grant, registration rights with respect to Transfer Restricted
         Securities or any other securities which would be inconsistent with the
         terms contained in this Exchange and Registration Rights Agreement.

                                       20
<PAGE>

                  (b) Specific Performance. The parties hereto acknowledge that
         there would be no adequate remedy at law if the Company fails to
         perform any of its obligations hereunder and that the Purchasers and
         the holders from time to time of the Transfer Restricted Securities may
         be irreparably harmed by any such failure, and accordingly agree that
         the Purchasers and such holders, in addition to any other remedy to
         which they may be entitled at law or in equity, shall be entitled to
         compel specific performance of the obligations of the Company under
         this Exchange and Registration Rights Agreement in accordance with the
         terms and conditions of this Exchange and Registration Rights
         Agreement, in any court of the United States or any State thereof
         having jurisdiction.

                  (c) Notices. All notices, requests, claims, demands, waivers
         and other communications hereunder shall be in writing and shall be
         deemed to have been duly given when delivered by hand, if delivered
         personally or by courier, or three days after being deposited in the
         mail (registered or certified mail, postage prepaid, return receipt
         requested) as follows: If to the Company, to it at Millar Western
         Forest Products Ltd. at 16640 - 111 Avenue, Edmonton, Alberta, T5M 2S5,
         and if to a holder, to the address of such holder set forth in the
         security register or other records of the Company, or to such other
         address as the Company or any such holder may have furnished to the
         other in writing in accordance herewith, except that notices of change
         of address shall be effective only upon receipt.

                  (d) Parties in Interest. All the terms and provisions of this
         Exchange and Registration Rights Agreement shall be binding upon, shall
         inure to the benefit of and shall be enforceable by the parties hereto
         and the holders from time to time of the Transfer Restricted Securities
         and the respective successors and assigns of the parties hereto and
         such holders. In the event that any transferee of any holder of
         Transfer Restricted Securities shall acquire Transfer Restricted
         Securities, in any manner, whether by gift, bequest, purchase,
         operation of law or otherwise, such transferee shall, without any
         further writing or action of any kind, be deemed a beneficiary hereof
         for all purposes and such Transfer Restricted Securities shall be held
         subject to all of the terms of this Exchange and Registration Rights
         Agreement, and by taking and holding such Transfer Restricted
         Securities such transferee shall be entitled to receive the benefits
         of, and be conclusively deemed to have agreed to be bound by all of the
         applicable terms and provisions of this Exchange and Registration
         Rights Agreement. If the Company shall so request, any such successor,
         assign or transferee shall agree in writing to acquire and hold the
         Transfer Restricted Securities subject to all of the applicable terms
         hereof.

                  (e) Additional Guarantors. The Company hereby covenants that
         in the event that prior to (i) the consummation of the Exchange Offer,
         if the Exchange Offer is consummated or (ii) the termination of the
         period referred to in Section 2(b) of this agreement, if the Shelf
         Registration is effected, any subsidiary of the Company becomes a
         Subsidiary Guarantor under Section o of the Indenture, the Company
         shall, as soon as practicable, cause such subsidiary to become a party
         hereto and by becoming a party hereto such subsidiary shall make the
         warranties, agreements, representations and covenants to the holders of
         the Transfer Restricted Securities as those of the Company.

                  (f) Survival. The respective indemnities, agreements,
         representations, warranties and each other provision set forth in this
         Exchange and Registration Rights Agreement or made pursuant hereto
         shall remain in full force and effect regardless of any investigation
         (or statement as to the results thereof) made by or on behalf of any
         holder of Transfer Restricted Securities, any director, officer or
         partner of such holder, any agent or underwriter or any director,
         officer or partner thereof, or any controlling person of any of the
         foregoing, and shall survive delivery of and payment for the Transfer
         Restricted Securities pursuant to the Purchase Agreement and the
         transfer and registration of Transfer Restricted Securities by such
         holder and the consummation of an Exchange Offer.

                                       21
<PAGE>

                  (g) Governing Law. This Exchange and Registration Rights
         Agreement shall be governed by and construed in accordance with the
         laws of the State of New York.

                  (h) Headings. The descriptive headings of the several Sections
         and paragraphs of this Exchange and Registration Rights Agreement are
         inserted for convenience only, do not constitute a part of this
         Exchange and Registration Rights Agreement and shall not affect in any
         way the meaning or interpretation of this Exchange and Registration
         Rights Agreement.

                  (i) Entire Agreement; Amendments. This Exchange and
         Registration Rights Agreement and the other writings referred to herein
         (including the Indenture and the form of Securities) or delivered
         pursuant hereto which form a part hereof contain the entire
         understanding of the parties with respect to its subject matter. This
         Exchange and Registration Rights Agreement supersedes all prior
         agreements and understandings between the parties with respect to its
         subject matter. This Exchange and Registration Rights Agreement may be
         amended and the observance of any term of this Exchange and
         Registration Rights Agreement may be waived (either generally or in a
         particular instance and either retroactively or prospectively) only by
         a written instrument duly executed by the Company and the holders of at
         least a majority in aggregate principal amount of the Transfer
         Restricted Securities at the time outstanding. Each holder of any
         Transfer Restricted Securities at the time or thereafter outstanding
         shall be bound by any amendment or waiver effected pursuant to this
         Section 9(h), whether or not any notice, writing or marking indicating
         such amendment or waiver appears on such Transfer Restricted Securities
         or is delivered to such holder.

                  (j) Inspection. For so long as this Exchange and Registration
         Rights Agreement shall be in effect, this Exchange and Registration
         Rights Agreement and a complete list of the names and addresses of all
         the holders of Transfer Restricted Securities shall be made available
         for inspection and copying on any business day by any holder of
         Transfer Restricted Securities for proper purposes only (which shall
         include any purpose related to the rights of the holders of Transfer
         Restricted Securities under the Securities, the Indenture and this
         Agreement) at the offices of the Company at the address thereof set
         forth in Section 9(c) above and at the office of the Trustee under the
         Indenture.

                  (k) Counterparts. This agreement may be executed by the
         parties in counterparts, each of which shall be deemed to be an
         original, but all such respective counterparts shall together
         constitute one and the same instrument.

                  (l) Service of Process. The Company irrevocably (i) agrees
         that any legal suit, action or proceeding against the Company brought
         by any holder, Purchaser, agent or underwriter or by any person who
         controls any holder, agent or underwriter arising out of or based upon
         this Exchange and Registration Rights Agreement or the transactions
         contemplated hereby may be instituted in any Federal or state courts
         located in the Borough of Manhattan in The City of New York in the
         State of New York ("New York Court"), (ii) waives, to the fullest
         extent each party may effectively do so, any objection which such party
         may now or hereafter have to the laying of venue of any such proceeding
         and (iii) submits to the non-exclusive jurisdiction of such courts in
         any such suit, action or proceeding. The Company has appointed CT
         Corporation Systems, 111 Eighth Avenue, New York, New York, 10011, as
         its authorized agent (the "Authorized Agent") upon whom process may be
         served in any such action arising out of or based on this Exchange and
         Registration Rights Agreement or the transactions contemplated hereby
         which may be instituted in any New York Court by any holder, agent or
         underwriter or by any person who controls any holder, agent or
         underwriter, expressly consents to the jurisdiction of any such court
         in respect of any such action, and waives any other requirements of or
         objections to personal jurisdiction with respect thereto. Such
         appointments shall be irrevocable. The Company represents and warrants
         that the Authorized Agent has agreed to act as such agent for service
         of process and agrees to take any and all action, including the filing
         of any and all documents and instruments, that may be necessary to
         continue such appointment in full

                                       22
<PAGE>

         force and effect as aforesaid. Service of process upon the Authorized
         Agent and written notice of such service to the Company shall be
         deemed, in every respect, effective service of process upon the
         Company.

                  (m) Judgment Currency. In respect of any judgment or order
         given or made for any amount due hereunder that is expressed and paid
         in a currency (the "judgment currency") other than United States
         dollars, the Company shall indemnify each holder, agent or underwriter
         against any loss incurred by such holder, agent or underwriter as a
         result of any variation as between (i) the rate of exchange at which
         the United States dollar amount is converted into the judgment currency
         for the purpose of such judgment or order and (ii) the rate of exchange
         at which a holder, agent or underwriter is able to purchase United
         States dollars with the amount of judgment currency actually received
         by such holder, agent or underwriter. The foregoing indemnity shall
         constitute a separate and independent obligation of the Company and
         shall continue in full force and effect notwithstanding any such
         judgment or order as aforesaid. The term "rate of exchange" shall
         include any premiums and costs of exchange payable in connection with
         the purchase of or conversion into United States dollars.

                                       23
<PAGE>

         If the foregoing is in accordance with your understanding, please sign
and return to us nine counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Purchasers, this letter and such acceptance hereof
shall constitute a binding agreement between each of the Purchasers the Company.
It is understood that your acceptance of this letter on behalf of each of the
Purchasers is pursuant to the authority set forth in a form of Agreement among
Purchasers, the form of which shall be submitted to the Company for examination
upon request, but without warranty on your part as to the authority of the
signers thereof.

                                   Very truly yours,

                                   MILLAR WESTERN FOREST PRODUCTS LTD.

                                   By: /s/ H. MacKenzie Millar
                                       -----------------------------------------
                                       Name:  H. MacKenzie Millar
                                       Title: President, Chief Executive Officer

                                   By: /s/ Joseph R. Concini
                                       -----------------------------------------
                                       Name:  Joseph R. Concini
                                       Title: Chief Financial Officer

Millar Western Forest Products Ltd.
Exchange and Registration Rights Agreement

Accepted as of the date hereof:

Goldman, Sachs & Co.
CIBC World Markets Corp.
Harris Nesbitt Corp.
HSBC Securities (USA) Inc.

By: /s/ Goldman, Sachs & Co.
    -----------------------------------------
            (Goldman, Sachs & Co.)

On behalf of each of the Purchasers

                                       24
<PAGE>

                                                                       EXHIBIT A

                       MILLAR WESTERN FOREST PRODUCTS LTD.

                         INSTRUCTION TO DTC PARTICIPANTS

                                (Date of Mailing)

                     URGENT - IMMEDIATE ATTENTION REQUESTED

                       DEADLINE FOR RESPONSE: [ ], 2003 *

The Depository Trust Company ("DTC") has identified you as a DTC Participant
through which beneficial interests in the Millar Western Forest Products Ltd.
(the "Company") 7.75% Senior Notes Due 2013 (the "Securities") are held.

The Company is in the process of registering the Securities under the Securities
Act of 1933 for resale by the beneficial owners thereof. In order to have their
Securities included in the registration statement, beneficial owners must
complete and return the enclosed Notice of Registration Statement and Selling
Securityholder Questionnaire.

It is important that beneficial owners of the Securities receive a copy of the
enclosed materials as soon as possible as their rights to have the Securities
included in the registration statement depend upon their returning the Notice
and Questionnaire by [DEADLINE FOR RESPONSE]. Please forward a copy of the
enclosed documents to each beneficial owner that holds interests in the
Securities through you. If you require more copies of the enclosed materials or
have any questions pertaining to this matter, please contact Millar Western
Forest Products Ltd. at 16640 - 111 Avenue, Edmonton, Alberta, T5M 2S5
(Telephone: (780) 486-8200)).

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

* Not less than 28 calendar days from date of mailing.

                                      A-1
<PAGE>

                       Millar Western Forest Products Ltd.

                        Notice of Registration Statement

                                       and

                      Selling Securityholder Questionnaire

                                     [DATE]

Reference is hereby made to the Exchange and Registration Rights Agreement (the
"Exchange and Registration Rights Agreement") between Millar Western Forest
Products Ltd. (the "Company") and the Purchasers named therein. Pursuant to the
Exchange and Registration Rights Agreement, the Company has filed with the
United States Securities and Exchange Commission (the "Commission") a
registration statement on Form F-4 (the "Shelf Registration Statement") for the
registration and resale under Rule 415 of the Securities Act of 1933, as amended
(the "Securities Act"), of the Company's 7.75% Senior Notes Due 2013 (the
"Securities"). A copy of the Exchange and Registration Rights Agreement is
attached hereto. All capitalized terms not otherwise defined herein shall have
the meanings ascribed thereto in the Exchange and Registration Rights Agreement.

Each beneficial owner of Transfer Restricted Securities (as defined below) is
entitled to have the Transfer Restricted Securities beneficially owned by it
included in the Shelf Registration Statement. In order to have Transfer
Restricted Securities included in the Shelf Registration Statement, this Notice
of Registration Statement and Selling Securityholder Questionnaire ("Notice and
Questionnaire") must be completed, executed and delivered to the Company's
counsel at the address set forth herein for receipt ON OR BEFORE [DEADLINE FOR
RESPONSE]. Beneficial owners of Transfer Restricted Securities who do not
complete, execute and return this Notice and Questionnaire by such date (i) will
not be named as selling securityholders in the Shelf Registration Statement and
(ii) may not use the Prospectus forming a part thereof for resales of Transfer
Restricted Securities.

Certain legal consequences arise from being named as a selling securityholder in
the Shelf Registration Statement and related Prospectus. Accordingly, holders
and beneficial owners of Transfer Restricted Securities are advised to consult
their own securities law counsel regarding the consequences of being named or
not being named as a selling securityholder in the Shelf Registration Statement
and related Prospectus.

The term "Transfer Restricted Securities" is defined in the Exchange and
Registration Rights Agreement.

                                      A-2
<PAGE>

                                    ELECTION

The undersigned holder (the "Selling Securityholder") of Transfer Restricted
Securities hereby elects to include in the Shelf Registration Statement the
Transfer Restricted Securities beneficially owned by it and listed below in Item
(3). The undersigned, by signing and returning this Notice and Questionnaire,
agrees to be bound with respect to such Transfer Restricted Securities by the
terms and conditions of this Notice and Questionnaire and the Exchange and
Registration Rights Agreement, including, without limitation, Section 6 of the
Exchange and Registration Rights Agreement, as if the undersigned Selling
Securityholder were an original party thereto.

Upon any sale of Transfer Restricted Securities pursuant to the Shelf
Registration Statement, the Selling Securityholder will be required to deliver
to the Company and Trustee the Notice of Transfer set forth in Appendix A to the
Prospectus and as Exhibit B to the Exchange and Registration Rights Agreement.

The Selling Securityholder hereby provides the following information to the
Company and represents and warrants that such information is accurate and
complete:

                                  QUESTIONNAIRE

(1)  (a)  Full Legal Name of Selling Securityholder:

          ______________________________________________________________________

     (b)  Full Legal Name of Registered Holder (if not the same as in (a) above)
          of Transfer Restricted Securities Listed in Item (3) below:

          ______________________________________________________________________

     (c)  Full Legal Name of DTC Participant (if applicable and if not the same
          as (b) above) Through Which Transfer Restricted Securities Listed in
          Item (3) below are Held:

          ______________________________________________________________________

(2)       Address for Notices to Selling Securityholder:

                           ____________________________________________

                           ____________________________________________

                           ____________________________________________

          Telephone:       ____________________________________________

          Fax:             ____________________________________________

          Contact Person:  ____________________________________________

(3)       Beneficial Ownership of Securities:

          Except as set forth below in this Item (3), the undersigned does not
          beneficially own any Securities.

     (a)  Principal amount of Transfer Restricted Securities beneficially owned:

          ____________________________________________

          CUSIP No(s). of such Transfer Restricted Securities:

          ____________________________________________

                                      A-3
<PAGE>

     (b)  Principal amount of Securities other than Transfer Restricted
          Securities beneficially owned:

          ____________________________________________

          CUSIP No(s). of such other Securities:

          ____________________________________________

     (c)  Principal amount of Transfer Restricted Securities which the
          undersigned wishes to be included in the Shelf Registration Statement:

          ____________________________________________

          CUSIP No(s). of such Transfer Restricted Securities to be included in
          the Shelf Registration Statement:

          ____________________________________________

     (4)  Beneficial Ownership of Other Securities of the Company:

          Except as set forth below in this Item (4), the undersigned Selling
          Securityholder is not the beneficial or registered owner of any other
          securities of the Company, other than the Securities listed above in
          Item (3).

          State any exceptions here:

     (5)  Relationships with the Company:

          Except as set forth below, neither the Selling Securityholder nor any
          of its affiliates, officers, directors or principal equity holders (5%
          or more) has held any position or office or has had any other material
          relationship with the Company (or its predecessors or affiliates)
          during the past three years.

          State any exceptions here:

     (6)  Plan of Distribution:

          Except as set forth below, the undersigned Selling Securityholder
          intends to distribute the Transfer Restricted Securities listed above
          in Item (3) only as follows (if at all): Such Transfer Restricted
          Securities may be sold from time to time directly by the undersigned
          Selling Securityholder or, alternatively, through underwriters,
          broker-dealers or agents. Such Transfer Restricted Securities may be
          sold in one or more transactions at fixed prices, at prevailing market
          prices at the time of sale, at varying prices determined at the time
          of sale, or at negotiated prices. Such sales may be effected in
          transactions (which may involve crosses or block transactions) (i) on
          any national securities exchange or quotation service on which the
          Registered Securities may be listed or quoted at the time of sale,
          (ii) in the over-the-counter market, (iii) in transactions otherwise
          than on such exchanges or services or in the over-the-counter market,
          or (iv) through the writing of options. In connection with sales of
          the Transfer Restricted Securities or otherwise, the Selling
          Securityholder may enter into hedging transactions with
          broker-dealers, which may in turn engage in short sales of the
          Transfer Restricted Securities in the course of hedging the positions
          they assume. The Selling Securityholder may also sell Transfer
          Restricted Securities short and deliver Transfer Restricted Securities
          to close out such short positions, or loan or pledge Transfer
          Restricted Securities to broker-dealers that in turn may sell such
          securities.

                                      A-4
<PAGE>

          State any exceptions here:

By signing below, the Selling Securityholder acknowledges that it understands
its obligation to comply, and agrees that it will comply, with the provisions of
the Exchange Act and the rules and regulations thereunder, particularly
Regulation M.

In the event that the Selling Securityholder transfers all or any portion of the
Transfer Restricted Securities listed in Item (3) above after the date on which
such information is provided to the Company, the Selling Securityholder agrees
to notify the transferee(s) at the time of the transfer of its rights and
obligations under this Notice and Questionnaire and the Exchange and
Registration Rights Agreement.

By signing below, the Selling Securityholder consents to the disclosure of the
information contained herein in its answers to Items (1) through (6) above and
the inclusion of such information in the Shelf Registration Statement and
related Prospectus. The Selling Securityholder understands that such information
will be relied upon by the Company in connection with the preparation of the
Shelf Registration Statement and related Prospectus.

In accordance with the Selling Securityholder's obligation under Section 3(d) of
the Exchange and Registration Rights Agreement to provide such information as
may be required by law for inclusion in the Shelf Registration Statement, the
Selling Securityholder agrees to promptly notify the Company of any inaccuracies
or changes in the information provided herein which may occur subsequent to the
date hereof at any time while the Shelf Registration Statement remains in
effect. All notices hereunder and pursuant to the Exchange and Registration
Rights Agreement shall be made in writing, by hand-delivery, first-class mail,
or air courier guaranteeing overnight delivery as follows:

          (i) To the Company:

                           ____________________________________________

                           ____________________________________________

                           ____________________________________________

                           ____________________________________________

                           ____________________________________________

          (ii) With a copy to:

                           ____________________________________________

                           ____________________________________________

                           ____________________________________________

                           ____________________________________________

                           ____________________________________________

Once this Notice and Questionnaire is executed by the Selling Securityholder and
received by the Company's counsel, the terms of this Notice and Questionnaire,
and the representations and warranties contained herein, shall be binding on,
shall inure to the benefit of and shall be enforceable by the

                                      A-5
<PAGE>

respective successors, heirs, personal representatives, and assigns of the
Company and the Selling Securityholder (with respect to the Transfer Restricted
Securities beneficially owned by such Selling Securityholder and listed in Item
(3) above. This Agreement shall be governed in all respects by the laws of the
State of New York.

                                      A-6
<PAGE>

IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.

Dated: ________________________________________

          ______________________________________________________________________
          Selling Securityholder

          ______________________________________________________________________
          (Print/type full legal name of beneficial owner of Transfer Restricted
          Securities)

          By: __________________________________________________________________
              Name:
              Title:

PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON
OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY'S COUNSEL AT:

                           ____________________________________________

                           ____________________________________________

                           ____________________________________________

                           ____________________________________________

                           ____________________________________________

                                      A-7
<PAGE>

                                                                       EXHIBIT B

              NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT

Bank of New York
Millar Western Forest Products Ltd.
c/o Bank of New York
101 Barclay Street, Floor 21W

New York, NY 10286

Attention:  Trust Officer

         Re:  Millar Western Forest Products Ltd. (the "Company")
              7.75% Senior Notes Due 2013

Dear Sirs:

Please be advised that ________________________________________ has transferred
US$__________________ aggregate principal amount of the above-referenced Notes
pursuant to an effective Registration Statement on Form [____] (File No.
333-__________) filed by the Company.

We hereby certify that the prospectus delivery requirements, if any, of the
Securities Act of 1933, as amended, have been satisfied and that the above-named
beneficial owner of the Notes is named as a "Selling Holder" in the Prospectus
dated [ ], 2003 or in supplements thereto, and that the aggregate principal
amount of the Notes transferred are the Notes listed in such Prospectus opposite
such owner's name.

Dated:

                                       Very truly yours,

                                           ____________________________
                                           (Name)

                                       By: ____________________________
                                           (Authorized Signature)

                                      B-1

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