Document:

<PAGE>
                                                                   EXHIBIT 10.31

                                 PROMISSORY NOTE
                                  (this "NOTE")

US$7,785,606.87                                                    JUNE 20, 2002

FOR VALUE RECEIVED, NB FINANCE, LTD., a Bermuda corporation, having its
registered office in Clarendon House, 2 Church Street, Hamilton, Bermuda
(hereinafter referred to as "BORROWER"), promises to pay to the order of NB
CAPITAL CORPORATION, a Maryland corporation, at its principal place of business
at 125 West 55th Street, New York, New York 10019 (hereinafter referred to as
"LENDER"), or at such other place as the holder thereof may from time to time
designate in writing, the principal sum of seven million seven hundred
eighty-five thousand six hundred six dollars and eighty-seven cents
(US$7,785,606.87) (the "ORIGINAL PRINCIPAL AMOUNT") in lawful money of the
United States of America with interest on the principal amount outstanding from
time to time to be computed from the date hereof until such principal amount is
paid in full at an annual rate equal to the lesser of (i) the maximum
non-usurious rate permitted by applicable law and (ii) eight percent and seven
hundred and forty-nine thousandths of a percent (8.749%) calculated monthly on a
semi-annual basis (the "INTEREST RATE"), said Original Principal Amount and
interest to be paid as follows:

(i)      With respect to each Interest Period, interest payments shall be paid
         in arrears on the fifteenth (15th) day of each calendar month
         immediately following such Interest Period; provided, however, that if
         such day is not a Business Day, interest payments shall be made on the
         immediately succeeding Business Day (the "INTEREST PAYMENT DATE").
         "INTEREST PERIOD" means each calendar month or portion thereof during
         the term of the Note or, in the case of the initial Interest Period,
         the date hereof through July 15, 2002. "BUSINESS DAY" means a day of
         the year on which banks are not required or authorized by law to close
         in Maryland, Bermuda and Quebec.

(ii)     The Original Principal Amount shall be due and payable, unless
         otherwise accelerated or prepaid in accordance with the terms of this
         Note or the Loan Agreement dated as of the date hereof, between
         Borrower and Lender (the "LOAN AGREEMENT"), on September 15, 2009 (the
         "MATURITY DATE") in whole.

         SECTION 1. Incorporation by Reference. All of the terms, covenants and
conditions contained in the Mortgage Loan Assignment Agreement and the Loan
Agreement with respect to the indebtedness evidenced by this Note are hereby
made a part of this Note to the same extent and with the same force as if they
were fully set forth herein.

         SECTION 2. Security. The indebtedness evidenced by this Note is secured
pursuant to that certain mortgage loan assignment agreement of even date
herewith (the "MORTGAGE LOAN ASSIGNMENT AGREEMENT"), assigning the mortgage
loans more particularly described therein as well as Borrower's interest in the
real property securing such Mortgage Loans (the "MORTGAGE LOANS") as security to
Lender, subject to a reassignment upon satisfaction in full of any indebtedness
evidenced by this Note.

<PAGE>

                                     - 2 -

         SECTION 3. Prepayment. The Original Principal Amount of this Note is
not subject to optional prepayment but is subject to mandatory prepayment prior
to the Maturity Date upon the terms and conditions specified in the Loan
Agreement.

         SECTION 4. Default and Acceleration. If an Event of Default (as defined
in the Loan Agreement), other than an Event of Default described in SECTION
6.1(G) of the Loan Agreement has occurred and is continuing, Lender may at any
time, in addition to any other rights or remedies available to it pursuant to
this Note, the Loan Agreement and the Mortgage Loan Assignment Agreement, or at
law or in equity, take such action, without notice or demand, that Lender deems
advisable to protect and enforce its rights against Borrower and in any of the
Collateral (as defined in the Loan Agreement), including, without limitation, by
notice to Borrower, declare the Debt to be forthwith due and payable, whereupon
such Debt shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by Borrower, and may enforce or avail itself of any or all rights or
remedies provided in this Note, the Loan Agreement and the Mortgage Loan
Assignment Agreement against Borrower and/or the Collateral (including selling
the Mortgage Loans); and upon an Event of Default described in SECTION 6.1(G) of
the Loan Agreement, the Debt shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by Borrower. "DEBT" means (a) the outstanding principal
balance of this Note, (b) interest, default interest at the Default Rate, late
charges and other sums, as provided in this Note, the Loan Agreement or the
Mortgage Loan Assignment Agreement, (c) all other monies agreed or provided to
be paid by Borrower in this Note, the Loan Agreement or the Mortgage Loan
Assignment Agreement, and (d) all sums advanced and costs and expenses incurred
by Lender in connection with the Debt or any part thereof, any renewal,
extension, or change of or substitution of the Debt or any part thereof, or the
acquisition or perfection of the security therefor, whether made or incurred at
the request of Borrower or Lender.

         SECTION 5. Savings Clause. It is expressly stipulated and agreed to be
the intent of Borrower and Lender that this Note complies with the applicable
usury and other laws relating to this Note now or hereafter in effect. If any
such applicable laws render usurious any amount called for under this Note, or
contracted for, charged or received with respect to this Note, or if the
acceleration of the maturity of this Note or if any prepayment by Borrower
results in Borrower having paid any interest in excess of that permitted by
applicable law, then it is the express intent of the parties that all excess
amounts theretofore collected by Lender be refunded to Borrower, and the
provisions of this Note immediately be deemed reformed and the amounts
thereafter collected under this Note reduced, without the necessity of the
execution of any new document, so as to comply with the then applicable law, but
so as to permit the recovery of the fullest amount otherwise called for under
this Note.

         SECTION 6. Late Charges; Mortgage Default Interest Rate.

         (a) Subject to SECTION 5, in the event that any installment of interest
or principal shall become overdue for a period in excess of five (5) days, a
"late charge" in an amount equal to five percent (5%) of the amount so overdue
may be charged to Borrower by Lender for the purpose of defraying the expenses
incident to handling such delinquent payments. Subject to SECTION 5, such late
charge shall be in addition to, and not in lieu of, any other remedy Lender may
have

<PAGE>

                                     - 3 -

and is in addition to Lender's right to collect reasonable fees and charges of
any agents or attorneys which Lender may employ in connection with any default.

         (b) If Borrower shall default in any payment of principal or interest,
or any other amount owed by Borrower under this Note, the Loan Agreement or the
Mortgage Loan Assignment Agreement, Borrower shall pay interest on the unpaid
principal amount of this Note, payable in arrears on each Interest Payment Date
and on demand, at a rate per annum equal at all times to the lesser of (x) the
maximum non-usurious rate permitted by applicable law or (y) three percent (3%)
per annum above the applicable Interest Rate until such defaulted amount has
been paid by Borrower, together with interest thereon at the Default Rate.
Payment or acceptance of the increased rate as provided in this Section is not a
permitted alternative for timely payment and shall not constitute a waiver of a
Default or an Event of Default or an amendment to this Note, the Loan Agreement
or the Mortgage Loan Assignment Agreement and shall not otherwise prejudice or
limit any rights or remedies of Lender.

         SECTION 7. No Oral Change. This Note may not be modified, amended,
waived, extended, changed, discharged or terminated orally or by act or failure
to act on the part of Borrower or Lender, but only by an agreement in writing
signed by the party against whom enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is sought.

         SECTION 8. Waivers. Except for any notices expressly provided for in
this Note, the Loan Agreement or the Mortgage Loan Assignment Agreement,
Borrower and all others who may become liable for the payment of all or any part
of the Debt do hereby severally waive presentment and demand for payment, notice
of dishonor, protest and notice of protest and non-payment and all other notices
of any kind. No release of any security for the Debt or extension of time for
payment of this Note or any installment hereof, and no alteration, amendment or
waiver of any provision of this Note, the Loan Agreement or the Mortgage Loan
Assignment Agreement between Lender or any other person or party shall release,
modify, amend, waive, extend, change, discharge, terminate or affect the
liability of Borrower, and any other person or entity who may become liable for
the payment of all or any part of the Debt, under this Note, the Loan Agreement
or the Mortgage Loan Assignment Agreement. No notice to or demand on Borrower
shall be deemed to be a waiver of the obligation of Borrower or of the right of
Lender to take further action without further notice or demand as provided for
in this Note, the Loan Agreement or the Mortgage Loan Assignment Agreement. Any
failure of Lender to insist upon strict performance by Borrower of any of the
provisions of this Note, the Loan Agreement or the Mortgage Loan Assignment
Agreement shall not be deemed a waiver of any of the terms or provisions of this
Note, the Loan Agreement or the Mortgage Loan Assignment Agreement, and Lender
shall have the right thereafter to insist upon strict performance by Borrower of
any and all of them.

         SECTION 9. Non Recourse. Except as otherwise provided herein and the
Loan Agreement and the Mortgage Loan Assignment Agreement, Lender shall not
enforce the liability and obligation of Borrower to perform and observe the
obligations contained in this Note, the Loan Agreement and the Mortgage Loan
Assignment Agreement by any action or proceeding wherein a money judgment shall
be sought against Borrower, except that Lender may bring an action or proceeding
to enable Lender to enforce and realize upon this Note, the

<PAGE>

                                     - 4 -

Loan Agreement and the Mortgage Loan Assignment Agreement, and the interest in
the Mortgage Loans and in any Collateral (as defined in the Loan Agreement)
given to Lender created by this Note, the Loan Agreement or the Mortgage Loan
Assignment Agreement, provided, however, that any judgment in any action or
proceeding shall be enforceable against Borrower only to the extent of
Borrower's interest in the Mortgage Loans and other Collateral given to Lender.
The provisions of this Section shall not however (i) constitute a waiver,
release or impairment of any obligation evidenced or secured by this Note, the
Loan Agreement or the Mortgage Loan Assignment Agreement, (ii) affect the
validity or enforceability of any indemnity made in connection with this Note,
the Loan Agreement or the Mortgage Loan Assignment Agreement, or (iii) impair
the enforcement of the Mortgage Loan Assignment Agreement.

         SECTION 10. Authority. Borrower (and the undersigned representative of
Borrower, if any) represents that Borrower has full power, authority and legal
right to execute and deliver this Note, the Loan Agreement and the Mortgage Loan
Assignment Agreement and that this Note, the Loan Agreement and the Mortgage
Loan Assignment Agreement are valid and binding in accordance with their terms.

         SECTION 11. Applicable Law. This Note shall be governed, construed,
applied and enforced in accordance with the laws of Bermuda.

         SECTION 12. Counsel Fees. In the event that it should become necessary
to employ counsel to collect the Debt or to protect or foreclose the security
therefor, Borrower also agrees to pay all reasonable fees and expenses of
Lender, including, without limitation, reasonable attorney's fees for the
services of such counsel whether or not suit be brought.

         SECTION 13. Notices. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered, if to
Borrower, at its address c/o Codan Services Limited, Clarendon House, 2 Church
Street, Hamilton, HM 11 Bermuda, Attention: Roger Burgess; and if to Lender, at
its address at 125 West 55th Street, New York, New York 10019, Attention: Chief
Executive Officer; with a copy to National Bank of Canada, as servicer of
Lender, at National Bank Tower, 600 de La Gauchetiere West, Montreal, Quebec H3B
4L2 or as to each other party, at such other address as shall be designated by
such party in a written notice to Borrower and Lender. All such notices and
communications shall, when mailed, telegraphed, telecopied or telexed, be
effective when deposited in the mails, delivered to the telegraph company,
transmitted by telecopier or confirmed by telex answerback, respectively.

         SECTION 14. Payment. Borrower shall make each payment, irrespective of
any right of counterclaim or set-off, not later than 11:00 a.m. (Eastern
Standard time) on each Interest Payment Date in United States dollars to Lender
at an account or accounts Lender may designate from time to time in same day
funds. All computations of interest and fees shall be made by Lender on the
basis of a year of 360 days consisting of twelve (12) months of thirty (30) days
each. Each determination by Lender of interest or fees hereunder shall be
conclusive and binding for all purposes, absent manifest error.

<PAGE>

                                     - 5 -

         IN WITNESS WHEREOF, Borrower has caused this instrument to be duly
executed as of the date in the year first above written.

                                           BORROWER

                                           NB FINANCE, LTD.

                                           By:
                                                    ----------------------------

                                           LENDER

                                           NB CAPITAL CORPORATION

                                           By:
                                                    ----------------------------

<PAGE>

                                 PROMISSORY NOTE
                                  (this "NOTE")

US$5,333,848.08                                                   JUNE 20, 2002

FOR VALUE RECEIVED, NB FINANCE, LTD., a Bermuda corporation, having its
registered office in Clarendon House, 2 Church Street, Hamilton, Bermuda
(hereinafter referred to as "BORROWER"), promises to pay to the order of NB
CAPITAL CORPORATION, a Maryland corporation, at its principal place of business
at 125 West 55th Street, New York, New York 10019 (hereinafter referred to as
"Lender"), or at such other place as the holder thereof may from time to time
designate in writing, the principal sum of five million three hundred
thirty-three thousand eight hundred forty-eight dollars and eight cents
(US$5,333,848.08) (the "ORIGINAL PRINCIPAL AMOUNT") in lawful money of the
United States of America with interest on the principal amount outstanding from
time to time to be computed from the date hereof until such principal amount is
paid in full at an annual rate equal to the lesser of (i) the maximum
non-usurious rate permitted by applicable law and (ii) eight percent and four
hundred and seventy-two thousandths of a percent (8.472%) calculated monthly on
a semi-annual basis (the "INTEREST RATE"), said Original Principal Amount and
interest to be paid as follows:

(i)      With respect to each Interest Period, interest payments shall be paid
         in arrears on the fifteenth (15th) day of each calendar month
         immediately following such Interest Period; provided, however, that if
         such day is not a Business Day, interest payments shall be made on the
         immediately succeeding Business Day (the "INTEREST PAYMENT DATE").
         "INTEREST PERIOD" means each calendar month or portion thereof during
         the term of the Note or, in the case of the initial Interest Period,
         the date hereof through July 15, 2002. "BUSINESS DAY" means a day of
         the year on which banks are not required or authorized by law to close
         in Maryland, Bermuda and Quebec.

(ii)     The Original Principal Amount shall be due and payable, unless
         otherwise accelerated or prepaid in accordance with the terms of this
         Note or the Loan Agreement dated as of the date hereof, between
         Borrower and Lender (the "LOAN AGREEMENT"), on September 15, 2009 (the
         "MATURITY DATE") in whole.

         SECTION 1. Incorporation by Reference. All of the terms, covenants and
conditions contained in the Mortgage Loan Assignment Agreement and the Loan
Agreement with respect to the indebtedness evidenced by this Note are hereby
made a part of this Note to the same extent and with the same force as if they
were fully set forth herein.

         SECTION 2. Security. The indebtedness evidenced by this Note is secured
pursuant to that certain mortgage loan assignment agreement of even date
herewith (the "MORTGAGE LOAN ASSIGNMENT AGREEMENT"), assigning the mortgage
loans more particularly described therein as well as Borrower's interest in the
real property securing such Mortgage Loans (the "MORTGAGE LOANS") as security to
Lender, subject to a reassignment upon satisfaction in full of any indebtedness
evidenced by this Note.

<PAGE>

                                     - 2 -

         SECTION 3. Prepayment. The Original Principal Amount of this Note is
not subject to optional prepayment but is subject to mandatory prepayment prior
to the Maturity Date upon the terms and conditions specified in the Loan
Agreement.

         SECTION 4. Default and Acceleration. If an Event of Default (as defined
in the Loan Agreement), other than an Event of Default described in SECTION
6.1(G) of the Loan Agreement has occurred and is continuing, Lender may at any
time, in addition to any other rights or remedies available to it pursuant to
this Note, the Loan Agreement and the Mortgage Loan Assignment Agreement, or at
law or in equity, take such action, without notice or demand, that Lender deems
advisable to protect and enforce its rights against Borrower and in any of the
Collateral (as defined in the Loan Agreement), including, without limitation, by
notice to Borrower, declare the Debt to be forthwith due and payable, whereupon
such Debt shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by Borrower, and may enforce or avail itself of any or all rights or
remedies provided in this Note, the Loan Agreement and the Mortgage Loan
Assignment Agreement against Borrower and/or the Collateral (including selling
the Mortgage Loans); and upon an Event of Default described in SECTION 6.1(G) of
the Loan Agreement, the Debt shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by Borrower. "DEBT" means (a) the outstanding principal
balance of this Note, (b) interest, default interest at the Default Rate, late
charges and other sums, as provided in this Note, the Loan Agreement or the
Mortgage Loan Assignment Agreement, (c) all other monies agreed or provided to
be paid by Borrower in this Note, the Loan Agreement or the Mortgage Loan
Assignment Agreement, and (d) all sums advanced and costs and expenses incurred
by Lender in connection with the Debt or any part thereof, any renewal,
extension, or change of or substitution of the Debt or any part thereof, or the
acquisition or perfection of the security therefor, whether made or incurred at
the request of Borrower or Lender.

         SECTION 5. Savings Clause. It is expressly stipulated and agreed to be
the intent of Borrower and Lender that this Note complies with the applicable
usury and other laws relating to this Note now or hereafter in effect. If any
such applicable laws render usurious any amount called for under this Note, or
contracted for, charged or received with respect to this Note, or if the
acceleration of the maturity of this Note or if any prepayment by Borrower
results in Borrower having paid any interest in excess of that permitted by
applicable law, then it is the express intent of the parties that all excess
amounts theretofore collected by Lender be refunded to Borrower, and the
provisions of this Note immediately be deemed reformed and the amounts
thereafter collected under this Note reduced, without the necessity of the
execution of any new document, so as to comply with the then applicable law, but
so as to permit the recovery of the fullest amount otherwise called for under
this Note.

         SECTION 6. Late Charges; Mortgage Default Interest Rate.

         (a) Subject to SECTION 5, in the event that any installment of interest
or principal shall become overdue for a period in excess of five (5) days, a
"late charge" in an amount equal to five percent (5%) of the amount so overdue
may be charged to Borrower by Lender for the purpose of defraying the expenses
incident to handling such delinquent payments. Subject to SECTION 5, such late
charge shall be in addition to, and not in lieu of, any other remedy Lender may
have

<PAGE>

                                     - 3 -

and is in addition to Lender's right to collect reasonable fees and charges of
any agents or attorneys which Lender may employ in connection with any default.

         (b) If Borrower shall default in any payment of principal or interest,
or any other amount owed by Borrower under this Note, the Loan Agreement or the
Mortgage Loan Assignment Agreement, Borrower shall pay interest on the unpaid
principal amount of this Note, payable in arrears on each Interest Payment Date
and on demand, at a rate per annum equal at all times to the lesser of (x) the
maximum non-usurious rate permitted by applicable law or (y) three percent (3%)
per annum above the applicable Interest Rate until such defaulted amount has
been paid by Borrower, together with interest thereon at the Default Rate.
Payment or acceptance of the increased rate as provided in this Section is not a
permitted alternative for timely payment and shall not constitute a waiver of a
Default or an Event of Default or an amendment to this Note, the Loan Agreement
or the Mortgage Loan Assignment Agreement and shall not otherwise prejudice or
limit any rights or remedies of Lender.

         SECTION 7. No Oral Change. This Note may not be modified, amended,
waived, extended, changed, discharged or terminated orally or by act or failure
to act on the part of Borrower or Lender, but only by an agreement in writing
signed by the party against whom enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is sought.

         SECTION 8. Waivers. Except for any notices expressly provided for in
this Note, the Loan Agreement or the Mortgage Loan Assignment Agreement,
Borrower and all others who may become liable for the payment of all or any part
of the Debt do hereby severally waive presentment and demand for payment, notice
of dishonor, protest and notice of protest and non-payment and all other notices
of any kind. No release of any security for the Debt or extension of time for
payment of this Note or any installment hereof, and no alteration, amendment or
waiver of any provision of this Note, the Loan Agreement or the Mortgage Loan
Assignment Agreement between Lender or any other person or party shall release,
modify, amend, waive, extend, change, discharge, terminate or affect the
liability of Borrower, and any other person or entity who may become liable for
the payment of all or any part of the Debt, under this Note, the Loan Agreement
or the Mortgage Loan Assignment Agreement. No notice to or demand on Borrower
shall be deemed to be a waiver of the obligation of Borrower or of the right of
Lender to take further action without further notice or demand as provided for
in this Note, the Loan Agreement or the Mortgage Loan Assignment Agreement. Any
failure of Lender to insist upon strict performance by Borrower of any of the
provisions of this Note, the Loan Agreement or the Mortgage Loan Assignment
Agreement shall not be deemed a waiver of any of the terms or provisions of this
Note, the Loan Agreement or the Mortgage Loan Assignment Agreement, and Lender
shall have the right thereafter to insist upon strict performance by Borrower of
any and all of them.

         SECTION 9. Non Recourse. Except as otherwise provided herein and the
Loan Agreement and the Mortgage Loan Assignment Agreement, Lender shall not
enforce the liability and obligation of Borrower to perform and observe the
obligations contained in this Note, the Loan Agreement and the Mortgage Loan
Assignment Agreement by any action or proceeding wherein a money judgment shall
be sought against Borrower, except that Lender may bring an action or proceeding
to enable Lender to enforce and realize upon this Note, the

<PAGE>

                                     - 4 -

Loan Agreement and the Mortgage Loan Assignment Agreement, and the interest in
the Mortgage Loans and in any Collateral (as defined in the Loan Agreement)
given to Lender created by this Note, the Loan Agreement or the Mortgage Loan
Assignment Agreement, provided, however, that any judgment in any action or
proceeding shall be enforceable against Borrower only to the extent of
Borrower's interest in the Mortgage Loans and other Collateral given to Lender.
The provisions of this Section shall not however (i) constitute a waiver,
release or impairment of any obligation evidenced or secured by this Note, the
Loan Agreement or the Mortgage Loan Assignment Agreement, (ii) affect the
validity or enforceability of any indemnity made in connection with this Note,
the Loan Agreement or the Mortgage Loan Assignment Agreement, or (iii) impair
the enforcement of the Mortgage Loan Assignment Agreement.

         SECTION 10. Authority. Borrower (and the undersigned representative of
Borrower, if any) represents that Borrower has full power, authority and legal
right to execute and deliver this Note, the Loan Agreement and the Mortgage Loan
Assignment Agreement and that this Note, the Loan Agreement and the Mortgage
Loan Assignment Agreement are valid and binding in accordance with their terms.

         SECTION 11. Applicable Law. This Note shall be governed, construed,
applied and enforced in accordance with the laws of Bermuda.

         SECTION 12. Counsel Fees. In the event that it should become necessary
to employ counsel to collect the Debt or to protect or foreclose the security
therefor, Borrower also agrees to pay all reasonable fees and expenses of
Lender, including, without limitation, reasonable attorney's fees for the
services of such counsel whether or not suit be brought.

         SECTION 13. Notices. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered, if to
Borrower, at its address c/o Codan Services Limited, Clarendon House, 2 Church
Street, Hamilton, HM 11 Bermuda, Attention: Roger Burgess; and if to Lender, at
its address at 125 West 55th Street, New York, New York 10019, Attention: Chief
Executive Officer; with a copy to National Bank of Canada, as servicer of
Lender, at National Bank Tower, 600 de La Gauchetiere West, Montreal, Quebec H3B
4L2 or as to each other party, at such other address as shall be designated by
such party in a written notice to Borrower and Lender. All such notices and
communications shall, when mailed, telegraphed, telecopied or telexed, be
effective when deposited in the mails, delivered to the telegraph company,
transmitted by telecopier or confirmed by telex answerback, respectively.

         SECTION 14. Payment. Borrower shall make each payment, irrespective of
any right of counterclaim or set-off, not later than 11:00 a.m. (Eastern
Standard time) on each Interest Payment Date in United States dollars to Lender
at an account or accounts Lender may designate from time to time in same day
funds. All computations of interest and fees shall be made by Lender on the
basis of a year of 360 days consisting of twelve (12) months of thirty (30) days
each. Each determination by Lender of interest or fees hereunder shall be
conclusive and binding for all purposes, absent manifest error.

<PAGE>

                                     - 5 -

         IN WITNESS WHEREOF, Borrower has caused this instrument to be duly
executed as of the date in the year first above written.

                                    BORROWER

                                    NB FINANCE, LTD.

                                    By:
                                             ----------------------------------

                                    LENDER

                                    NB CAPITAL CORPORATION

                                    By:
                                             ----------------------------------

<PAGE>
                                 PROMISSORY NOTE
                                  (this "NOTE")

US$11,091,514.69                                                 JUNE 20, 2002

FOR VALUE RECEIVED, NB FINANCE, LTD., a Bermuda corporation, having its
registered office in Clarendon House, 2 Church Street, Hamilton, Bermuda
(hereinafter referred to as "BORROWER"), promises to pay to the order of NB
CAPITAL CORPORATION, a Maryland corporation, at its principal place of business
at 125 West 55th Street, New York, New York 10019 (hereinafter referred to as
"LENDER"), or at such other place as the holder thereof may from time to time
designate in writing, the principal sum of eleven million ninety-one thousand
five hundred fourteen dollars and sixty-nine cents (US$11,091,514.69) (the
"ORIGINAL PRINCIPAL AMOUNT") in lawful money of the United States of America
with interest on the principal amount outstanding from time to time to be
computed from the date hereof until such principal amount is paid in full at an
annual rate equal to the lesser of (i) the maximum non-usurious rate permitted
by applicable law and (ii) eight percent and one hundred thousandths of a
percent (8.100%) calculated monthly on a semi-annual basis (the "INTEREST
RATE"), said Original Principal Amount and interest to be paid as follows:

(i)      With respect to each Interest Period, interest payments shall be paid
         in arrears on the fifteenth (15th) day of each calendar month
         immediately following such Interest Period; provided, however, that if
         such day is not a Business Day, interest payments shall be made on the
         immediately succeeding Business Day (the "INTEREST PAYMENT DATE").
         "INTEREST PERIOD" means each calendar month or portion thereof during
         the term of the Note or, in the case of the initial Interest Period,
         the date hereof through July 15, 2002. "BUSINESS DAY" means a day of
         the year on which banks are not required or authorized by law to close
         in Maryland, Bermuda and Quebec.

(ii)     The Original Principal Amount shall be due and payable, unless
         otherwise accelerated or prepaid in accordance with the terms of this
         Note or the Loan Agreement dated as of the date hereof, between
         Borrower and Lender (the "LOAN AGREEMENT"), on September 15, 2009 (the
         "MATURITY DATE") in whole.

         SECTION 1. Incorporation by Reference. All of the terms, covenants and
conditions contained in the Mortgage Loan Assignment Agreement and the Loan
Agreement with respect to the indebtedness evidenced by this Note are hereby
made a part of this Note to the same extent and with the same force as if they
were fully set forth herein.

         SECTION 2. Security. The indebtedness evidenced by this Note is secured
pursuant to that certain mortgage loan assignment agreement of even date
herewith (the "MORTGAGE LOAN ASSIGNMENT AGREEMENT"), assigning the mortgage
loans more particularly described therein as well as Borrower's interest in the
real property securing such Mortgage Loans (the "MORTGAGE LOANS") as security to
Lender, subject to a reassignment upon satisfaction in full of any indebtedness
evidenced by this Note.

<PAGE>

                                     - 2 -

         SECTION 3. Prepayment. The Original Principal Amount of this Note is
not subject to optional prepayment but is subject to mandatory prepayment prior
to the Maturity Date upon the terms and conditions specified in the Loan
Agreement.

         SECTION 4. Default and Acceleration. If an Event of Default (as defined
in the Loan Agreement), other than an Event of Default described in SECTION
6.1(G) of the Loan Agreement has occurred and is continuing, Lender may at any
time, in addition to any other rights or remedies available to it pursuant to
this Note, the Loan Agreement and the Mortgage Loan Assignment Agreement, or at
law or in equity, take such action, without notice or demand, that Lender deems
advisable to protect and enforce its rights against Borrower and in any of the
Collateral (as defined in the Loan Agreement), including, without limitation, by
notice to Borrower, declare the Debt to be forthwith due and payable, whereupon
such Debt shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by Borrower, and may enforce or avail itself of any or all rights or
remedies provided in this Note, the Loan Agreement and the Mortgage Loan
Assignment Agreement against Borrower and/or the Collateral (including selling
the Mortgage Loans); and upon an Event of Default described in SECTION 6.1(G) of
the Loan Agreement, the Debt shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by Borrower. "DEBT" means (a) the outstanding principal
balance of this Note, (b) interest, default interest at the Default Rate, late
charges and other sums, as provided in this Note, the Loan Agreement or the
Mortgage Loan Assignment Agreement, (c) all other monies agreed or provided to
be paid by Borrower in this Note, the Loan Agreement or the Mortgage Loan
Assignment Agreement, and (d) all sums advanced and costs and expenses incurred
by Lender in connection with the Debt or any part thereof, any renewal,
extension, or change of or substitution of the Debt or any part thereof, or the
acquisition or perfection of the security therefor, whether made or incurred at
the request of Borrower or Lender.

         SECTION 5. Savings Clause. It is expressly stipulated and agreed to be
the intent of Borrower and Lender that this Note complies with the applicable
usury and other laws relating to this Note now or hereafter in effect. If any
such applicable laws render usurious any amount called for under this Note, or
contracted for, charged or received with respect to this Note, or if the
acceleration of the maturity of this Note or if any prepayment by Borrower
results in Borrower having paid any interest in excess of that permitted by
applicable law, then it is the express intent of the parties that all excess
amounts theretofore collected by Lender be refunded to Borrower, and the
provisions of this Note immediately be deemed reformed and the amounts
thereafter collected under this Note reduced, without the necessity of the
execution of any new document, so as to comply with the then applicable law, but
so as to permit the recovery of the fullest amount otherwise called for under
this Note.

         SECTION 6. Late Charges; Mortgage Default Interest Rate.

         (a) Subject to SECTION 5, in the event that any installment of interest
or principal shall become overdue for a period in excess of five (5) days, a
"late charge" in an amount equal to five percent (5%) of the amount so overdue
may be charged to Borrower by Lender for the purpose of defraying the expenses
incident to handling such delinquent payments. Subject to SECTION 5, such late
charge shall be in addition to, and not in lieu of, any other remedy Lender may
have

<PAGE>

                                     - 3 -

and is in addition to Lender's right to collect reasonable fees and charges of
any agents or attorneys which Lender may employ in connection with any default.

         (b) If Borrower shall default in any payment of principal or interest,
or any other amount owed by Borrower under this Note, the Loan Agreement or the
Mortgage Loan Assignment Agreement, Borrower shall pay interest on the unpaid
principal amount of this Note, payable in arrears on each Interest Payment Date
and on demand, at a rate per annum equal at all times to the lesser of (x) the
maximum non-usurious rate permitted by applicable law or (y) three percent (3%)
per annum above the applicable Interest Rate until such defaulted amount has
been paid by Borrower, together with interest thereon at the Default Rate.
Payment or acceptance of the increased rate as provided in this Section is not a
permitted alternative for timely payment and shall not constitute a waiver of a
Default or an Event of Default or an amendment to this Note, the Loan Agreement
or the Mortgage Loan Assignment Agreement and shall not otherwise prejudice or
limit any rights or remedies of Lender.

         SECTION 7. No Oral Change. This Note may not be modified, amended,
waived, extended, changed, discharged or terminated orally or by act or failure
to act on the part of Borrower or Lender, but only by an agreement in writing
signed by the party against whom enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is sought.

         SECTION 8. Waivers. Except for any notices expressly provided for in
this Note, the Loan Agreement or the Mortgage Loan Assignment Agreement,
Borrower and all others who may become liable for the payment of all or any part
of the Debt do hereby severally waive presentment and demand for payment, notice
of dishonor, protest and notice of protest and non-payment and all other notices
of any kind. No release of any security for the Debt or extension of time for
payment of this Note or any installment hereof, and no alteration, amendment or
waiver of any provision of this Note, the Loan Agreement or the Mortgage Loan
Assignment Agreement between Lender or any other person or party shall release,
modify, amend, waive, extend, change, discharge, terminate or affect the
liability of Borrower, and any other person or entity who may become liable for
the payment of all or any part of the Debt, under this Note, the Loan Agreement
or the Mortgage Loan Assignment Agreement. No notice to or demand on Borrower
shall be deemed to be a waiver of the obligation of Borrower or of the right of
Lender to take further action without further notice or demand as provided for
in this Note, the Loan Agreement or the Mortgage Loan Assignment Agreement. Any
failure of Lender to insist upon strict performance by Borrower of any of the
provisions of this Note, the Loan Agreement or the Mortgage Loan Assignment
Agreement shall not be deemed a waiver of any of the terms or provisions of this
Note, the Loan Agreement or the Mortgage Loan Assignment Agreement, and Lender
shall have the right thereafter to insist upon strict performance by Borrower of
any and all of them.

         SECTION 9. Non Recourse. Except as otherwise provided herein and the
Loan Agreement and the Mortgage Loan Assignment Agreement, Lender shall not
enforce the liability and obligation of Borrower to perform and observe the
obligations contained in this Note, the Loan Agreement and the Mortgage Loan
Assignment Agreement by any action or proceeding wherein a money judgment shall
be sought against Borrower, except that Lender may bring an action or proceeding
to enable Lender to enforce and realize upon this Note, the

<PAGE>

                                      - 4 -

Loan Agreement and the Mortgage Loan Assignment Agreement, and the interest in
the Mortgage Loans and in any Collateral (as defined in the Loan Agreement)
given to Lender created by this Note, the Loan Agreement or the Mortgage Loan
Assignment Agreement, provided, however, that any judgment in any action or
proceeding shall be enforceable against Borrower only to the extent of
Borrower's interest in the Mortgage Loans and other Collateral given to Lender.
The provisions of this Section shall not however (i) constitute a waiver,
release or impairment of any obligation evidenced or secured by this Note, the
Loan Agreement or the Mortgage Loan Assignment Agreement, (ii) affect the
validity or enforceability of any indemnity made in connection with this Note,
the Loan Agreement or the Mortgage Loan Assignment Agreement, or (iii) impair
the enforcement of the Mortgage Loan Assignment Agreement.

         SECTION 10. Authority. Borrower (and the undersigned representative of
Borrower, if any) represents that Borrower has full power, authority and legal
right to execute and deliver this Note, the Loan Agreement and the Mortgage Loan
Assignment Agreement and that this Note, the Loan Agreement and the Mortgage
Loan Assignment Agreement are valid and binding in accordance with their terms.

         SECTION 11. Applicable Law. This Note shall be governed, construed,
applied and enforced in accordance with the laws of Bermuda.

         SECTION 12. Counsel Fees. In the event that it should become necessary
to employ counsel to collect the Debt or to protect or foreclose the security
therefor, Borrower also agrees to pay all reasonable fees and expenses of
Lender, including, without limitation, reasonable attorney's fees for the
services of such counsel whether or not suit be brought.

         SECTION 13. Notices. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered, if to
Borrower, at its address c/o Codan Services Limited, Clarendon House, 2 Church
Street, Hamilton, HM 11 Bermuda, Attention: Roger Burgess; and if to Lender, at
its address at 125 West 55th Street, New York, New York 10019, Attention: Chief
Executive Officer; with a copy to National Bank of Canada, as servicer of
Lender, at National Bank Tower, 600 de La Gauchetiere West, Montreal, Quebec H3B
4L2 or as to each other party, at such other address as shall be designated by
such party in a written notice to Borrower and Lender. All such notices and
communications shall, when mailed, telegraphed, telecopied or telexed, be
effective when deposited in the mails, delivered to the telegraph company,
transmitted by telecopier or confirmed by telex answerback, respectively.

         SECTION 14. Payment. Borrower shall make each payment, irrespective of
any right of counterclaim or set-off, not later than 11:00 a.m. (Eastern
Standard time) on each Interest Payment Date in United States dollars to Lender
at an account or accounts Lender may designate from time to time in same day
funds. All computations of interest and fees shall be made by Lender on the
basis of a year of 360 days consisting of twelve (12) months of thirty (30) days
each. Each determination by Lender of interest or fees hereunder shall be
conclusive and binding for all purposes, absent manifest error.

<PAGE>

                                     - 5 -

         IN WITNESS WHEREOF, Borrower has caused this instrument to be duly
executed as of the date in the year first above written.

                                        BORROWER

                                        NB FINANCE, LTD.

                                        By:
                                                 -------------------------------

                                        LENDER

                                        NB CAPITAL CORPORATION

                                        By:
                                                 -------------------------------

<PAGE>

                                 PROMISSORY NOTE
                                  (this "NOTE")

US$4,485,702.88                                                   JUNE 20, 2002

FOR VALUE RECEIVED, NB FINANCE, LTD., a Bermuda corporation, having its
registered office in Clarendon House, 2 Church Street, Hamilton, Bermuda
(hereinafter referred to as "BORROWER"), promises to pay to the order of NB
CAPITAL CORPORATION, a Maryland corporation, at its principal place of business
at 125 West 55th Street, New York, New York 10019 (hereinafter referred to as
"LENDER"), or at such other place as the holder thereof may from time to time
designate in writing, the principal sum of four million four hundred eighty-five
thousand seven hundred two dollars and eighty-eight cents (US$4,485,702.88) (the
"ORIGINAL PRINCIPAL AMOUNT") in lawful money of the United States of America
with interest on the principal amount outstanding from time to time to be
computed from the date hereof until such principal amount is paid in full at an
annual rate equal to the lesser of (i) the maximum non-usurious rate permitted
by applicable law and (ii) seven percent and five hundred and ninety thousandths
of a percent (7.590%) calculated monthly on a semi-annual basis (the "INTEREST
RATE"), said Original Principal Amount and interest to be paid as follows:

(i)      With respect to each Interest Period, interest payments shall be paid
         in arrears on the fifteenth (15th) day of each calendar month
         immediately following such Interest Period; provided, however, that if
         such day is not a Business Day, interest payments shall be made on the
         immediately succeeding Business Day (the "INTEREST PAYMENT DATE").
         "INTEREST PERIOD" means each calendar month or portion thereof during
         the term of the Note or, in the case of the initial Interest Period,
         the date hereof through July 15, 2002. "BUSINESS DAY" means a day of
         the year on which banks are not required or authorized by law to close
         in Maryland, Bermuda and Quebec.

(ii)     The Original Principal Amount shall be due and payable, unless
         otherwise accelerated or prepaid in accordance with the terms of this
         Note or the Loan Agreement dated as of the date hereof, between
         Borrower and Lender (the "LOAN AGREEMENT"), on September 15, 2008 (the
         "MATURITY DATE") in whole.

         SECTION 1. Incorporation by Reference. All of the terms, covenants and
conditions contained in the Mortgage Loan Assignment Agreement and the Loan
Agreement with respect to the indebtedness evidenced by this Note are hereby
made a part of this Note to the same extent and with the same force as if they
were fully set forth herein.

         SECTION 2. Security. The indebtedness evidenced by this Note is secured
pursuant to that certain mortgage loan assignment agreement of even date
herewith (the "MORTGAGE LOAN ASSIGNMENT AGREEMENT"), assigning the mortgage
loans more particularly described therein as well as Borrower's interest in the
real property securing such Mortgage Loans (the "MORTGAGE LOANS") as security to
Lender, subject to a reassignment upon satisfaction in full of any indebtedness
evidenced by this Note.

<PAGE>

                                     - 2 -

         SECTION 3. Prepayment. The Original Principal Amount of this Note is
not subject to optional prepayment but is subject to mandatory prepayment prior
to the Maturity Date upon the terms and conditions specified in the Loan
Agreement.

         SECTION 4. Default and Acceleration. If an Event of Default (as defined
in the Loan Agreement), other than an Event of Default described in SECTION
6.1(G) of the Loan Agreement has occurred and is continuing, Lender may at any
time, in addition to any other rights or remedies available to it pursuant to
this Note, the Loan Agreement and the Mortgage Loan Assignment Agreement, or at
law or in equity, take such action, without notice or demand, that Lender deems
advisable to protect and enforce its rights against Borrower and in any of the
Collateral (as defined in the Loan Agreement), including, without limitation, by
notice to Borrower, declare the Debt to be forthwith due and payable, whereupon
such Debt shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by Borrower, and may enforce or avail itself of any or all rights or
remedies provided in this Note, the Loan Agreement and the Mortgage Loan
Assignment Agreement against Borrower and/or the Collateral (including selling
the Mortgage Loans); and upon an Event of Default described in SECTION 6.1(G) of
the Loan Agreement, the Debt shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by Borrower. "DEBT" means (a) the outstanding principal
balance of this Note, (b) interest, default interest at the Default Rate, late
charges and other sums, as provided in this Note, the Loan Agreement or the
Mortgage Loan Assignment Agreement, (c) all other monies agreed or provided to
be paid by Borrower in this Note, the Loan Agreement or the Mortgage Loan
Assignment Agreement, and (d) all sums advanced and costs and expenses incurred
by Lender in connection with the Debt or any part thereof, any renewal,
extension, or change of or substitution of the Debt or any part thereof, or the
acquisition or perfection of the security therefor, whether made or incurred at
the request of Borrower or Lender.

         SECTION 5. Savings Clause. It is expressly stipulated and agreed to be
the intent of Borrower and Lender that this Note complies with the applicable
usury and other laws relating to this Note now or hereafter in effect. If any
such applicable laws render usurious any amount called for under this Note, or
contracted for, charged or received with respect to this Note, or if the
acceleration of the maturity of this Note or if any prepayment by Borrower
results in Borrower having paid any interest in excess of that permitted by
applicable law, then it is the express intent of the parties that all excess
amounts theretofore collected by Lender be refunded to Borrower, and the
provisions of this Note immediately be deemed reformed and the amounts
thereafter collected under this Note reduced, without the necessity of the
execution of any new document, so as to comply with the then applicable law, but
so as to permit the recovery of the fullest amount otherwise called for under
this Note.

         SECTION 6. Late Charges; Mortgage Default Interest Rate.

         (a) Subject to SECTION 5, in the event that any installment of interest
or principal shall become overdue for a period in excess of five (5) days, a
"late charge" in an amount equal to five percent (5%) of the amount so overdue
may be charged to Borrower by Lender for the purpose of defraying the expenses
incident to handling such delinquent payments. Subject to SECTION 5, such late
charge shall be in addition to, and not in lieu of, any other remedy Lender may
have

<PAGE>

                                     - 3 -

and is in addition to Lender's right to collect reasonable fees and charges of
any agents or attorneys which Lender may employ in connection with any default.

         (b) If Borrower shall default in any payment of principal or interest,
or any other amount owed by Borrower under this Note, the Loan Agreement or the
Mortgage Loan Assignment Agreement, Borrower shall pay interest on the unpaid
principal amount of this Note, payable in arrears on each Interest Payment Date
and on demand, at a rate per annum equal at all times to the lesser of (x) the
maximum non-usurious rate permitted by applicable law or (y) three percent (3%)
per annum above the applicable Interest Rate until such defaulted amount has
been paid by Borrower, together with interest thereon at the Default Rate.
Payment or acceptance of the increased rate as provided in this Section is not a
permitted alternative for timely payment and shall not constitute a waiver of a
Default or an Event of Default or an amendment to this Note, the Loan Agreement
or the Mortgage Loan Assignment Agreement and shall not otherwise prejudice or
limit any rights or remedies of Lender.

         SECTION 7. No Oral Change. This Note may not be modified, amended,
waived, extended, changed, discharged or terminated orally or by act or failure
to act on the part of Borrower or Lender, but only by an agreement in writing
signed by the party against whom enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is sought.

         SECTION 8. Waivers. Except for any notices expressly provided for in
this Note, the Loan Agreement or the Mortgage Loan Assignment Agreement,
Borrower and all others who may become liable for the payment of all or any part
of the Debt do hereby severally waive presentment and demand for payment, notice
of dishonor, protest and notice of protest and non-payment and all other notices
of any kind. No release of any security for the Debt or extension of time for
payment of this Note or any installment hereof, and no alteration, amendment or
waiver of any provision of this Note, the Loan Agreement or the Mortgage Loan
Assignment Agreement between Lender or any other person or party shall release,
modify, amend, waive, extend, change, discharge, terminate or affect the
liability of Borrower, and any other person or entity who may become liable for
the payment of all or any part of the Debt, under this Note, the Loan Agreement
or the Mortgage Loan Assignment Agreement. No notice to or demand on Borrower
shall be deemed to be a waiver of the obligation of Borrower or of the right of
Lender to take further action without further notice or demand as provided for
in this Note, the Loan Agreement or the Mortgage Loan Assignment Agreement. Any
failure of Lender to insist upon strict performance by Borrower of any of the
provisions of this Note, the Loan Agreement or the Mortgage Loan Assignment
Agreement shall not be deemed a waiver of any of the terms or provisions of this
Note, the Loan Agreement or the Mortgage Loan Assignment Agreement, and Lender
shall have the right thereafter to insist upon strict performance by Borrower of
any and all of them.

         SECTION 9. Non Recourse. Except as otherwise provided herein and the
Loan Agreement and the Mortgage Loan Assignment Agreement, Lender shall not
enforce the liability and obligation of Borrower to perform and observe the
obligations contained in this Note, the Loan Agreement and the Mortgage Loan
Assignment Agreement by any action or proceeding wherein a money judgment shall
be sought against Borrower, except that Lender may bring an action or proceeding
to enable Lender to enforce and realize upon this Note, the

<PAGE>

                                     - 4 -

Loan Agreement and the Mortgage Loan Assignment Agreement, and the interest in
the Mortgage Loans and in any Collateral (as defined in the Loan Agreement)
given to Lender created by this Note, the Loan Agreement or the Mortgage Loan
Assignment Agreement, provided, however, that any judgment in any action or
proceeding shall be enforceable against Borrower only to the extent of
Borrower's interest in the Mortgage Loans and other Collateral given to Lender.
The provisions of this Section shall not however (i) constitute a waiver,
release or impairment of any obligation evidenced or secured by this Note, the
Loan Agreement or the Mortgage Loan Assignment Agreement, (ii) affect the
validity or enforceability of any indemnity made in connection with this Note,
the Loan Agreement or the Mortgage Loan Assignment Agreement, or (iii) impair
the enforcement of the Mortgage Loan Assignment Agreement.

         SECTION 10. Authority. Borrower (and the undersigned representative of
Borrower, if any) represents that Borrower has full power, authority and legal
right to execute and deliver this Note, the Loan Agreement and the Mortgage Loan
Assignment Agreement and that this Note, the Loan Agreement and the Mortgage
Loan Assignment Agreement are valid and binding in accordance with their terms.

         SECTION 11. Applicable Law. This Note shall be governed, construed,
applied and enforced in accordance with the laws of Bermuda.

         SECTION 12. Counsel Fees. In the event that it should become necessary
to employ counsel to collect the Debt or to protect or foreclose the security
therefor, Borrower also agrees to pay all reasonable fees and expenses of
Lender, including, without limitation, reasonable attorney's fees for the
services of such counsel whether or not suit be brought.

         SECTION 13. Notices. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered, if to
Borrower, at its address c/o Codan Services Limited, Clarendon House, 2 Church
Street, Hamilton, HM 11 Bermuda, Attention: Roger Burgess; and if to Lender, at
its address at 125 West 55th Street, New York, New York 10019, Attention: Chief
Executive Officer; with a copy to National Bank of Canada, as servicer of
Lender, at National Bank Tower, 600 de La Gauchetiere West, Montreal, Quebec H3B
4L2 or as to each other party, at such other address as shall be designated by
such party in a written notice to Borrower and Lender. All such notices and
communications shall, when mailed, telegraphed, telecopied or telexed, be
effective when deposited in the mails, delivered to the telegraph company,
transmitted by telecopier or confirmed by telex answerback, respectively.

         SECTION 14. Payment. Borrower shall make each payment, irrespective of
any right of counterclaim or set-off, not later than 11:00 a.m. (Eastern
Standard time) on each Interest Payment Date in United States dollars to Lender
at an account or accounts Lender may designate from time to time in same day
funds. All computations of interest and fees shall be made by Lender on the
basis of a year of 360 days consisting of twelve (12) months of thirty (30) days
each. Each determination by Lender of interest or fees hereunder shall be
conclusive and binding for all purposes, absent manifest error.

<PAGE>

                                     - 5 -

         IN WITNESS WHEREOF, Borrower has caused this instrument to be duly
executed as of the date in the year first above written.

                                       BORROWER

                                       NB FINANCE, LTD.

                                       By:
                                                -------------------------------

                                       LENDER

                                       NB CAPITAL CORPORATION

                                       By:
                                                -------------------------------

<PAGE>

                                 PROMISSORY NOTE
                                  (this "NOTE")

US$7,060,741.94                                                   JUNE 20, 2002

FOR VALUE RECEIVED, NB FINANCE, LTD., a Bermuda corporation, having its
registered office in Clarendon House, 2 Church Street, Hamilton, Bermuda
(hereinafter referred to as "BORROWER"), promises to pay to the order of NB
CAPITAL CORPORATION, a Maryland corporation, at its principal place of business
at 125 West 55th Street, New York, New York 10019 (hereinafter referred to as
"LENDER"), or at such other place as the holder thereof may from time to time
designate in writing, the principal sum of seven million sixty thousand seven
hundred forty-one dollars and ninety-four cents (US$7,060,741.94) (the "ORIGINAL
PRINCIPAL AMOUNT") in lawful money of the United States of America with interest
on the principal amount outstanding from time to time to be computed from the
date hereof until such principal amount is paid in full at an annual rate equal
to the lesser of (i) the maximum non-usurious rate permitted by applicable law
and (ii) eight percent and eight hundred and thirty-five thousandths of a
percent (8.835%) calculated monthly on a semi-annual basis (the "INTEREST
RATE"), said Original Principal Amount and interest to be paid as follows:

(i)      With respect to each Interest Period, interest payments shall be paid
         in arrears on the fifteenth (15th) day of each calendar month
         immediately following such Interest Period; provided, however, that if
         such day is not a Business Day, interest payments shall be made on the
         immediately succeeding Business Day (the "INTEREST PAYMENT DATE").
         "INTEREST PERIOD" means each calendar month or portion thereof during
         the term of the Note or, in the case of the initial Interest Period,
         the date hereof through July 15, 2002. "BUSINESS DAY" means a day of
         the year on which banks are not required or authorized by law to close
         in Maryland, Bermuda and Quebec.

(ii)     The Original Principal Amount shall be due and payable, unless
         otherwise accelerated or prepaid in accordance with the terms of this
         Note or the Loan Agreement dated as of the date hereof, between
         Borrower and Lender (the "LOAN AGREEMENT"), on September 15, 2008 (the
         "MATURITY DATE") in whole.

         SECTION 1. Incorporation by Reference. All of the terms, covenants and
conditions contained in the Mortgage Loan Assignment Agreement and the Loan
Agreement with respect to the indebtedness evidenced by this Note are hereby
made a part of this Note to the same extent and with the same force as if they
were fully set forth herein.

         SECTION 2. Security. The indebtedness evidenced by this Note is secured
pursuant to that certain mortgage loan assignment agreement of even date
herewith (the "MORTGAGE LOAN ASSIGNMENT AGREEMENT"), assigning the mortgage
loans more particularly described therein as well as Borrower's interest in the
real property securing such Mortgage Loans (the "MORTGAGE LOANS") as security to
Lender, subject to a reassignment upon satisfaction in full of any indebtedness
evidenced by this Note.

<PAGE>

                                     - 2 -

         SECTION 3. Prepayment. The Original Principal Amount of this Note is
not subject to optional prepayment but is subject to mandatory prepayment prior
to the Maturity Date upon the terms and conditions specified in the Loan
Agreement.

         SECTION 4. Default and Acceleration. If an Event of Default (as defined
in the Loan Agreement), other than an Event of Default described in SECTION
6.1(G) of the Loan Agreement has occurred and is continuing, Lender may at any
time, in addition to any other rights or remedies available to it pursuant to
this Note, the Loan Agreement and the Mortgage Loan Assignment Agreement, or at
law or in equity, take such action, without notice or demand, that Lender deems
advisable to protect and enforce its rights against Borrower and in any of the
Collateral (as defined in the Loan Agreement), including, without limitation, by
notice to Borrower, declare the Debt to be forthwith due and payable, whereupon
such Debt shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by Borrower, and may enforce or avail itself of any or all rights or
remedies provided in this Note, the Loan Agreement and the Mortgage Loan
Assignment Agreement against Borrower and/or the Collateral (including selling
the Mortgage Loans); and upon an Event of Default described in SECTION 6.1(G) of
the Loan Agreement, the Debt shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by Borrower. "DEBT" means (a) the outstanding principal
balance of this Note, (b) interest, default interest at the Default Rate, late
charges and other sums, as provided in this Note, the Loan Agreement or the
Mortgage Loan Assignment Agreement, (c) all other monies agreed or provided to
be paid by Borrower in this Note, the Loan Agreement or the Mortgage Loan
Assignment Agreement, and (d) all sums advanced and costs and expenses incurred
by Lender in connection with the Debt or any part thereof, any renewal,
extension, or change of or substitution of the Debt or any part thereof, or the
acquisition or perfection of the security therefor, whether made or incurred at
the request of Borrower or Lender.

         SECTION 5. Savings Clause. It is expressly stipulated and agreed to be
the intent of Borrower and Lender that this Note complies with the applicable
usury and other laws relating to this Note now or hereafter in effect. If any
such applicable laws render usurious any amount called for under this Note, or
contracted for, charged or received with respect to this Note, or if the
acceleration of the maturity of this Note or if any prepayment by Borrower
results in Borrower having paid any interest in excess of that permitted by
applicable law, then it is the express intent of the parties that all excess
amounts theretofore collected by Lender be refunded to Borrower, and the
provisions of this Note immediately be deemed reformed and the amounts
thereafter collected under this Note reduced, without the necessity of the
execution of any new document, so as to comply with the then applicable law, but
so as to permit the recovery of the fullest amount otherwise called for under
this Note.

         SECTION 6. Late Charges; Mortgage Default Interest Rate.

         (a) Subject to SECTION 5, in the event that any installment of interest
or principal shall become overdue for a period in excess of five (5) days, a
"late charge" in an amount equal to five percent (5%) of the amount so overdue
may be charged to Borrower by Lender for the purpose of defraying the expenses
incident to handling such delinquent payments. Subject to SECTION 5, such late
charge shall be in addition to, and not in lieu of, any other remedy Lender may
have

<PAGE>

                                     - 3 -

and is in addition to Lender's right to collect reasonable fees and charges of
any agents or attorneys which Lender may employ in connection with any default.

         (b) If Borrower shall default in any payment of principal or interest,
or any other amount owed by Borrower under this Note, the Loan Agreement or the
Mortgage Loan Assignment Agreement, Borrower shall pay interest on the unpaid
principal amount of this Note, payable in arrears on each Interest Payment Date
and on demand, at a rate per annum equal at all times to the lesser of (x) the
maximum non-usurious rate permitted by applicable law or (y) three percent (3%)
per annum above the applicable Interest Rate until such defaulted amount has
been paid by Borrower, together with interest thereon at the Default Rate.
Payment or acceptance of the increased rate as provided in this Section is not a
permitted alternative for timely payment and shall not constitute a waiver of a
Default or an Event of Default or an amendment to this Note, the Loan Agreement
or the Mortgage Loan Assignment Agreement and shall not otherwise prejudice or
limit any rights or remedies of Lender.

         SECTION 7. No Oral Change. This Note may not be modified, amended,
waived, extended, changed, discharged or terminated orally or by act or failure
to act on the part of Borrower or Lender, but only by an agreement in writing
signed by the party against whom enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is sought.

         SECTION 8. Waivers. Except for any notices expressly provided for in
this Note, the Loan Agreement or the Mortgage Loan Assignment Agreement,
Borrower and all others who may become liable for the payment of all or any part
of the Debt do hereby severally waive presentment and demand for payment, notice
of dishonor, protest and notice of protest and non-payment and all other notices
of any kind. No release of any security for the Debt or extension of time for
payment of this Note or any installment hereof, and no alteration, amendment or
waiver of any provision of this Note, the Loan Agreement or the Mortgage Loan
Assignment Agreement between Lender or any other person or party shall release,
modify, amend, waive, extend, change, discharge, terminate or affect the
liability of Borrower, and any other person or entity who may become liable for
the payment of all or any part of the Debt, under this Note, the Loan Agreement
or the Mortgage Loan Assignment Agreement. No notice to or demand on Borrower
shall be deemed to be a waiver of the obligation of Borrower or of the right of
Lender to take further action without further notice or demand as provided for
in this Note, the Loan Agreement or the Mortgage Loan Assignment Agreement. Any
failure of Lender to insist upon strict performance by Borrower of any of the
provisions of this Note, the Loan Agreement or the Mortgage Loan Assignment
Agreement shall not be deemed a waiver of any of the terms or provisions of this
Note, the Loan Agreement or the Mortgage Loan Assignment Agreement, and Lender
shall have the right thereafter to insist upon strict performance by Borrower of
any and all of them.

         SECTION 9. Non Recourse. Except as otherwise provided herein and the
Loan Agreement and the Mortgage Loan Assignment Agreement, Lender shall not
enforce the liability and obligation of Borrower to perform and observe the
obligations contained in this Note, the Loan Agreement and the Mortgage Loan
Assignment Agreement by any action or proceeding wherein a money judgment shall
be sought against Borrower, except that Lender may bring an action or proceeding
to enable Lender to enforce and realize upon this Note, the

<PAGE>

                                     - 4 -

Loan Agreement and the Mortgage Loan Assignment Agreement, and the interest in
the Mortgage Loans and in any Collateral (as defined in the Loan Agreement)
given to Lender created by this Note, the Loan Agreement or the Mortgage Loan
Assignment Agreement, provided, however, that any judgment in any action or
proceeding shall be enforceable against Borrower only to the extent of
Borrower's interest in the Mortgage Loans and other Collateral given to Lender.
The provisions of this Section shall not however (i) constitute a waiver,
release or impairment of any obligation evidenced or secured by this Note, the
Loan Agreement or the Mortgage Loan Assignment Agreement, (ii) affect the
validity or enforceability of any indemnity made in connection with this Note,
the Loan Agreement or the Mortgage Loan Assignment Agreement, or (iii) impair
the enforcement of the Mortgage Loan Assignment Agreement.

         SECTION 10. Authority. Borrower (and the undersigned representative of
Borrower, if any) represents that Borrower has full power, authority and legal
right to execute and deliver this Note, the Loan Agreement and the Mortgage Loan
Assignment Agreement and that this Note, the Loan Agreement and the Mortgage
Loan Assignment Agreement are valid and binding in accordance with their terms.

         SECTION 11. Applicable Law. This Note shall be governed, construed,
applied and enforced in accordance with the laws of Bermuda.

         SECTION 12. Counsel Fees. In the event that it should become necessary
to employ counsel to collect the Debt or to protect or foreclose the security
therefor, Borrower also agrees to pay all reasonable fees and expenses of
Lender, including, without limitation, reasonable attorney's fees for the
services of such counsel whether or not suit be brought.

         SECTION 13. Notices. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered, if to
Borrower, at its address c/o Codan Services Limited, Clarendon House, 2 Church
Street, Hamilton, HM 11 Bermuda, Attention: Roger Burgess; and if to Lender, at
its address at 125 West 55th Street, New York, New York 10019, Attention: Chief
Executive Officer; with a copy to National Bank of Canada, as servicer of
Lender, at National Bank Tower, 600 de La Gauchetiere West, Montreal, Quebec H3B
4L2 or as to each other party, at such other address as shall be designated by
such party in a written notice to Borrower and Lender. All such notices and
communications shall, when mailed, telegraphed, telecopied or telexed, be
effective when deposited in the mails, delivered to the telegraph company,
transmitted by telecopier or confirmed by telex answerback, respectively.

         SECTION 14. Payment. Borrower shall make each payment, irrespective of
any right of counterclaim or set-off, not later than 11:00 a.m. (Eastern
Standard time) on each Interest Payment Date in United States dollars to Lender
at an account or accounts Lender may designate from time to time in same day
funds. All computations of interest and fees shall be made by Lender on the
basis of a year of 360 days consisting of twelve (12) months of thirty (30) days
each. Each determination by Lender of interest or fees hereunder shall be
conclusive and binding for all purposes, absent manifest error.

<PAGE>

                                     - 5 -

         IN WITNESS WHEREOF, Borrower has caused this instrument to be duly
executed as of the date in the year first above written.

                                     BORROWER

                                     NB FINANCE, LTD.

                                     By:
                                              ----------------------------------

                                     LENDER

                                     NB CAPITAL CORPORATION

                                     By:
                                              ----------------------------------

<PAGE>

                                 PROMISSORY NOTE
                                  (this "NOTE")

US$7,066,547.59                                                   JUNE 20, 2002

FOR VALUE RECEIVED, NB FINANCE, LTD., a Bermuda corporation, having its
registered office in Clarendon House, 2 Church Street, Hamilton, Bermuda
(hereinafter referred to as "BORROWER"), promises to pay to the order of NB
CAPITAL CORPORATION, a Maryland corporation, at its principal place of business
at 125 West 55th Street, New York, New York 10019 (hereinafter referred to as
"LENDER"), or at such other place as the holder thereof may from time to time
designate in writing, the principal sum of seven million sixty-six thousand five
hundred forty-seven dollars and fifty-nine cents (US$7,066,547.59) (the
"ORIGINAL PRINCIPAL AMOUNT") in lawful money of the United States of America
with interest on the principal amount outstanding from time to time to be
computed from the date hereof until such principal amount is paid in full at an
annual rate equal to the lesser of (i) the maximum non-usurious rate permitted
by applicable law and (ii) seven percent and five hundred and thirty-seven
thousandths of a percent (7.537%) calculated monthly on a semi-annual basis (the
"INTEREST RATE"), said Original Principal Amount and interest to be paid as
follows:

(i)      With respect to each Interest Period, interest payments shall be paid
         in arrears on the fifteenth (15th) day of each calendar month
         immediately following such Interest Period; provided, however, that if
         such day is not a Business Day, interest payments shall be made on the
         immediately succeeding Business Day (the "INTEREST PAYMENT DATE").
         "INTEREST PERIOD" means each calendar month or portion thereof during
         the term of the Note or, in the case of the initial Interest Period,
         the date hereof through July 15, 2002. "BUSINESS DAY" means a day of
         the year on which banks are not required or authorized by law to close
         in Maryland, Bermuda and Quebec.

(ii)     The Original Principal Amount shall be due and payable, unless
         otherwise accelerated or prepaid in accordance with the terms of this
         Note or the Loan Agreement dated as of the date hereof, between
         Borrower and Lender (the "LOAN AGREEMENT"), on March 15, 2009 (the
         "MATURITY DATE") in whole.

         SECTION 1. Incorporation by Reference. All of the terms, covenants and
conditions contained in the Mortgage Loan Assignment Agreement and the Loan
Agreement with respect to the indebtedness evidenced by this Note are hereby
made a part of this Note to the same extent and with the same force as if they
were fully set forth herein.

         SECTION 2. Security. The indebtedness evidenced by this Note is secured
pursuant to that certain mortgage loan assignment agreement of even date
herewith (the "MORTGAGE LOAN ASSIGNMENT AGREEMENT"), assigning the mortgage
loans more particularly described therein as well as Borrower's interest in the
real property securing such Mortgage Loans (the "MORTGAGE LOANS") as security to
Lender, subject to a reassignment upon satisfaction in full of any indebtedness
evidenced by this Note.

<PAGE>

                                     - 2 -

         SECTION 3. Prepayment. The Original Principal Amount of this Note is
not subject to optional prepayment but is subject to mandatory prepayment prior
to the Maturity Date upon the terms and conditions specified in the Loan
Agreement.

         SECTION 4. Default and Acceleration. If an Event of Default (as defined
in the Loan Agreement), other than an Event of Default described in SECTION
6.1(G) of the Loan Agreement has occurred and is continuing, Lender may at any
time, in addition to any other rights or remedies available to it pursuant to
this Note, the Loan Agreement and the Mortgage Loan Assignment Agreement, or at
law or in equity, take such action, without notice or demand, that Lender deems
advisable to protect and enforce its rights against Borrower and in any of the
Collateral (as defined in the Loan Agreement), including, without limitation, by
notice to Borrower, declare the Debt to be forthwith due and payable, whereupon
such Debt shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by Borrower, and may enforce or avail itself of any or all rights or
remedies provided in this Note, the Loan Agreement and the Mortgage Loan
Assignment Agreement against Borrower and/or the Collateral (including selling
the Mortgage Loans); and upon an Event of Default described in SECTION 6.1(G) of
the Loan Agreement, the Debt shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by Borrower. "DEBT" means (a) the outstanding principal
balance of this Note, (b) interest, default interest at the Default Rate, late
charges and other sums, as provided in this Note, the Loan Agreement or the
Mortgage Loan Assignment Agreement, (c) all other monies agreed or provided to
be paid by Borrower in this Note, the Loan Agreement or the Mortgage Loan
Assignment Agreement, and (d) all sums advanced and costs and expenses incurred
by Lender in connection with the Debt or any part thereof, any renewal,
extension, or change of or substitution of the Debt or any part thereof, or the
acquisition or perfection of the security therefor, whether made or incurred at
the request of Borrower or Lender.

         SECTION 5. Savings Clause. It is expressly stipulated and agreed to be
the intent of Borrower and Lender that this Note complies with the applicable
usury and other laws relating to this Note now or hereafter in effect. If any
such applicable laws render usurious any amount called for under this Note, or
contracted for, charged or received with respect to this Note, or if the
acceleration of the maturity of this Note or if any prepayment by Borrower
results in Borrower having paid any interest in excess of that permitted by
applicable law, then it is the express intent of the parties that all excess
amounts theretofore collected by Lender be refunded to Borrower, and the
provisions of this Note immediately be deemed reformed and the amounts
thereafter collected under this Note reduced, without the necessity of the
execution of any new document, so as to comply with the then applicable law, but
so as to permit the recovery of the fullest amount otherwise called for under
this Note.

         SECTION 6. Late Charges; Mortgage Default Interest Rate.

         (a) Subject to SECTION 5, in the event that any installment of interest
or principal shall become overdue for a period in excess of five (5) days, a
"late charge" in an amount equal to five percent (5%) of the amount so overdue
may be charged to Borrower by Lender for the purpose of defraying the expenses
incident to handling such delinquent payments. Subject to SECTION 5, such late
charge shall be in addition to, and not in lieu of, any other remedy Lender may
have

<PAGE>

                                     - 3 -

and is in addition to Lender's right to collect reasonable fees and charges of
any agents or attorneys which Lender may employ in connection with any default.

         (b) If Borrower shall default in any payment of principal or interest,
or any other amount owed by Borrower under this Note, the Loan Agreement or the
Mortgage Loan Assignment Agreement, Borrower shall pay interest on the unpaid
principal amount of this Note, payable in arrears on each Interest Payment Date
and on demand, at a rate per annum equal at all times to the lesser of (x) the
maximum non-usurious rate permitted by applicable law or (y) three percent (3%)
per annum above the applicable Interest Rate until such defaulted amount has
been paid by Borrower, together with interest thereon at the Default Rate.
Payment or acceptance of the increased rate as provided in this Section is not a
permitted alternative for timely payment and shall not constitute a waiver of a
Default or an Event of Default or an amendment to this Note, the Loan Agreement
or the Mortgage Loan Assignment Agreement and shall not otherwise prejudice or
limit any rights or remedies of Lender.

         SECTION 7. No Oral Change. This Note may not be modified, amended,
waived, extended, changed, discharged or terminated orally or by act or failure
to act on the part of Borrower or Lender, but only by an agreement in writing
signed by the party against whom enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is sought.

         SECTION 8. Waivers. Except for any notices expressly provided for in
this Note, the Loan Agreement or the Mortgage Loan Assignment Agreement,
Borrower and all others who may become liable for the payment of all or any part
of the Debt do hereby severally waive presentment and demand for payment, notice
of dishonor, protest and notice of protest and non-payment and all other notices
of any kind. No release of any security for the Debt or extension of time for
payment of this Note or any installment hereof, and no alteration, amendment or
waiver of any provision of this Note, the Loan Agreement or the Mortgage Loan
Assignment Agreement between Lender or any other person or party shall release,
modify, amend, waive, extend, change, discharge, terminate or affect the
liability of Borrower, and any other person or entity who may become liable for
the payment of all or any part of the Debt, under this Note, the Loan Agreement
or the Mortgage Loan Assignment Agreement. No notice to or demand on Borrower
shall be deemed to be a waiver of the obligation of Borrower or of the right of
Lender to take further action without further notice or demand as provided for
in this Note, the Loan Agreement or the Mortgage Loan Assignment Agreement. Any
failure of Lender to insist upon strict performance by Borrower of any of the
provisions of this Note, the Loan Agreement or the Mortgage Loan Assignment
Agreement shall not be deemed a waiver of any of the terms or provisions of this
Note, the Loan Agreement or the Mortgage Loan Assignment Agreement, and Lender
shall have the right thereafter to insist upon strict performance by Borrower of
any and all of them.

         SECTION 9. Non Recourse. Except as otherwise provided herein and the
Loan Agreement and the Mortgage Loan Assignment Agreement, Lender shall not
enforce the liability and obligation of Borrower to perform and observe the
obligations contained in this Note, the Loan Agreement and the Mortgage Loan
Assignment Agreement by any action or proceeding wherein a money judgment shall
be sought against Borrower, except that Lender may bring an action or proceeding
to enable Lender to enforce and realize upon this Note, the

<PAGE>

                                     - 4 -

Loan Agreement and the Mortgage Loan Assignment Agreement, and the interest in
the Mortgage Loans and in any Collateral (as defined in the Loan Agreement)
given to Lender created by this Note, the Loan Agreement or the Mortgage Loan
Assignment Agreement, provided, however, that any judgment in any action or
proceeding shall be enforceable against Borrower only to the extent of
Borrower's interest in the Mortgage Loans and other Collateral given to Lender.
The provisions of this Section shall not however (i) constitute a waiver,
release or impairment of any obligation evidenced or secured by this Note, the
Loan Agreement or the Mortgage Loan Assignment Agreement, (ii) affect the
validity or enforceability of any indemnity made in connection with this Note,
the Loan Agreement or the Mortgage Loan Assignment Agreement, or (iii) impair
the enforcement of the Mortgage Loan Assignment Agreement.

         SECTION 10. Authority. Borrower (and the undersigned representative of
Borrower, if any) represents that Borrower has full power, authority and legal
right to execute and deliver this Note, the Loan Agreement and the Mortgage Loan
Assignment Agreement and that this Note, the Loan Agreement and the Mortgage
Loan Assignment Agreement are valid and binding in accordance with their terms.

         SECTION 11. Applicable Law. This Note shall be governed, construed,
applied and enforced in accordance with the laws of Bermuda.

         SECTION 12. Counsel Fees. In the event that it should become necessary
to employ counsel to collect the Debt or to protect or foreclose the security
therefor, Borrower also agrees to pay all reasonable fees and expenses of
Lender, including, without limitation, reasonable attorney's fees for the
services of such counsel whether or not suit be brought.

         SECTION 13. Notices. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered, if to
Borrower, at its address c/o Codan Services Limited, Clarendon House, 2 Church
Street, Hamilton, HM 11 Bermuda, Attention: Roger Burgess; and if to Lender, at
its address at 125 West 55th Street, New York, New York 10019, Attention: Chief
Executive Officer; with a copy to National Bank of Canada, as servicer of
Lender, at National Bank Tower, 600 de La Gauchetiere West, Montreal, Quebec H3B
4L2 or as to each other party, at such other address as shall be designated by
such party in a written notice to Borrower and Lender. All such notices and
communications shall, when mailed, telegraphed, telecopied or telexed, be
effective when deposited in the mails, delivered to the telegraph company,
transmitted by telecopier or confirmed by telex answerback, respectively.

         SECTION 14. Payment. Borrower shall make each payment, irrespective of
any right of counterclaim or set-off, not later than 11:00 a.m. (Eastern
Standard time) on each Interest Payment Date in United States dollars to Lender
at an account or accounts Lender may designate from time to time in same day
funds. All computations of interest and fees shall be made by Lender on the
basis of a year of 360 days consisting of twelve (12) months of thirty (30) days
each. Each determination by Lender of interest or fees hereunder shall be
conclusive and binding for all purposes, absent manifest error.

<PAGE>

                                     - 5 -

         IN WITNESS WHEREOF, Borrower has caused this instrument to be duly
executed as of the date in the year first above written.

                                  BORROWER

                                  NB FINANCE, LTD.

                                  By:
                                           ------------------------------------

                                  LENDER

                                  NB CAPITAL CORPORATION

                                  By:
                                           ------------------------------------

<PAGE>

                                 PROMISSORY NOTE
                                  (this "NOTE")

US$10,058,418.73                                                  JUNE 20, 2002

FOR VALUE RECEIVED, NB FINANCE, LTD., a Bermuda corporation, having its
registered office in Clarendon House, 2 Church Street, Hamilton, Bermuda
(hereinafter referred to as "BORROWER"), promises to pay to the order of NB
CAPITAL CORPORATION, a Maryland corporation, at its principal place of business
at 125 West 55th Street, New York, New York 10019 (hereinafter referred to as
"LENDER"), or at such other place as the holder thereof may from time to time
designate in writing, the principal sum of ten million fifty-eight thousand four
hundred eighteen dollars and seventy-three cents (US$10,058,418.73) (the
"ORIGINAL PRINCIPAL AMOUNT") in lawful money of the United States of America
with interest on the principal amount outstanding from time to time to be
computed from the date hereof until such principal amount is paid in full at an
annual rate equal to the lesser of (i) the maximum non-usurious rate permitted
by applicable law and (ii) eight percent and two hundred and seventy-two
thousandths of a percent (8.272%) calculated monthly on a semi-annual basis (the
"INTEREST RATE"), said Original Principal Amount and interest to be paid as
follows:

(i)      With respect to each Interest Period, interest payments shall be paid
         in arrears on the fifteenth (15th) day of each calendar month
         immediately following such Interest Period; provided, however, that if
         such day is not a Business Day, interest payments shall be made on the
         immediately succeeding Business Day (the "INTEREST PAYMENT DATE").
         "INTEREST PERIOD" means each calendar month or portion thereof during
         the term of the Note or, in the case of the initial Interest Period,
         the date hereof through July 15, 2002. "BUSINESS DAY" means a day of
         the year on which banks are not required or authorized by law to close
         in Maryland, Bermuda and Quebec.

(ii)     The Original Principal Amount shall be due and payable, unless
         otherwise accelerated or prepaid in accordance with the terms of this
         Note or the Loan Agreement dated as of the date hereof, between
         Borrower and Lender (the "LOAN AGREEMENT"), on March 15, 2009 (the
         "MATURITY DATE") in whole.

         SECTION 1. Incorporation by Reference. All of the terms, covenants and
conditions contained in the Mortgage Loan Assignment Agreement and the Loan
Agreement with respect to the indebtedness evidenced by this Note are hereby
made a part of this Note to the same extent and with the same force as if they
were fully set forth herein.

         SECTION 2. Security. The indebtedness evidenced by this Note is secured
pursuant to that certain mortgage loan assignment agreement of even date
herewith (the "MORTGAGE LOAN ASSIGNMENT AGREEMENT"), assigning the mortgage
loans more particularly described therein as well as Borrower's interest in the
real property securing such Mortgage Loans (the "MORTGAGE LOANS") as security to
Lender, subject to a reassignment upon satisfaction in full of any indebtedness
evidenced by this Note.

<PAGE>

                                     - 2 -

         SECTION 3. Prepayment. The Original Principal Amount of this Note is
not subject to optional prepayment but is subject to mandatory prepayment prior
to the Maturity Date upon the terms and conditions specified in the Loan
Agreement.

         SECTION 4. Default and Acceleration. If an Event of Default (as defined
in the Loan Agreement), other than an Event of Default described in SECTION
6.1(G) of the Loan Agreement has occurred and is continuing, Lender may at any
time, in addition to any other rights or remedies available to it pursuant to
this Note, the Loan Agreement and the Mortgage Loan Assignment Agreement, or at
law or in equity, take such action, without notice or demand, that Lender deems
advisable to protect and enforce its rights against Borrower and in any of the
Collateral (as defined in the Loan Agreement), including, without limitation, by
notice to Borrower, declare the Debt to be forthwith due and payable, whereupon
such Debt shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by Borrower, and may enforce or avail itself of any or all rights or
remedies provided in this Note, the Loan Agreement and the Mortgage Loan
Assignment Agreement against Borrower and/or the Collateral (including selling
the Mortgage Loans); and upon an Event of Default described in SECTION 6.1(G) of
the Loan Agreement, the Debt shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by Borrower. "DEBT" means (a) the outstanding principal
balance of this Note, (b) interest, default interest at the Default Rate, late
charges and other sums, as provided in this Note, the Loan Agreement or the
Mortgage Loan Assignment Agreement, (c) all other monies agreed or provided to
be paid by Borrower in this Note, the Loan Agreement or the Mortgage Loan
Assignment Agreement, and (d) all sums advanced and costs and expenses incurred
by Lender in connection with the Debt or any part thereof, any renewal,
extension, or change of or substitution of the Debt or any part thereof, or the
acquisition or perfection of the security therefor, whether made or incurred at
the request of Borrower or Lender.

         SECTION 5. Savings Clause. It is expressly stipulated and agreed to be
the intent of Borrower and Lender that this Note complies with the applicable
usury and other laws relating to this Note now or hereafter in effect. If any
such applicable laws render usurious any amount called for under this Note, or
contracted for, charged or received with respect to this Note, or if the
acceleration of the maturity of this Note or if any prepayment by Borrower
results in Borrower having paid any interest in excess of that permitted by
applicable law, then it is the express intent of the parties that all excess
amounts theretofore collected by Lender be refunded to Borrower, and the
provisions of this Note immediately be deemed reformed and the amounts
thereafter collected under this Note reduced, without the necessity of the
execution of any new document, so as to comply with the then applicable law, but
so as to permit the recovery of the fullest amount otherwise called for under
this Note.

         SECTION 6. Late Charges; Mortgage Default Interest Rate.

         (a) Subject to SECTION 5, in the event that any installment of interest
or principal shall become overdue for a period in excess of five (5) days, a
"late charge" in an amount equal to five percent (5%) of the amount so overdue
may be charged to Borrower by Lender for the purpose of defraying the expenses
incident to handling such delinquent payments. Subject to SECTION 5, such late
charge shall be in addition to, and not in lieu of, any other remedy Lender may
have

<PAGE>

                                     - 3 -

and is in addition to Lender's right to collect reasonable fees and charges of
any agents or attorneys which Lender may employ in connection with any default.

         (b) If Borrower shall default in any payment of principal or interest,
or any other amount owed by Borrower under this Note, the Loan Agreement or the
Mortgage Loan Assignment Agreement, Borrower shall pay interest on the unpaid
principal amount of this Note, payable in arrears on each Interest Payment Date
and on demand, at a rate per annum equal at all times to the lesser of (x) the
maximum non-usurious rate permitted by applicable law or (y) three percent (3%)
per annum above the applicable Interest Rate until such defaulted amount has
been paid by Borrower, together with interest thereon at the Default Rate.
Payment or acceptance of the increased rate as provided in this Section is not a
permitted alternative for timely payment and shall not constitute a waiver of a
Default or an Event of Default or an amendment to this Note, the Loan Agreement
or the Mortgage Loan Assignment Agreement and shall not otherwise prejudice or
limit any rights or remedies of Lender.

         SECTION 7. No Oral Change. This Note may not be modified, amended,
waived, extended, changed, discharged or terminated orally or by act or failure
to act on the part of Borrower or Lender, but only by an agreement in writing
signed by the party against whom enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is sought.

         SECTION 8. Waivers. Except for any notices expressly provided for in
this Note, the Loan Agreement or the Mortgage Loan Assignment Agreement,
Borrower and all others who may become liable for the payment of all or any part
of the Debt do hereby severally waive presentment and demand for payment, notice
of dishonor, protest and notice of protest and non-payment and all other notices
of any kind. No release of any security for the Debt or extension of time for
payment of this Note or any installment hereof, and no alteration, amendment or
waiver of any provision of this Note, the Loan Agreement or the Mortgage Loan
Assignment Agreement between Lender or any other person or party shall release,
modify, amend, waive, extend, change, discharge, terminate or affect the
liability of Borrower, and any other person or entity who may become liable for
the payment of all or any part of the Debt, under this Note, the Loan Agreement
or the Mortgage Loan Assignment Agreement. No notice to or demand on Borrower
shall be deemed to be a waiver of the obligation of Borrower or of the right of
Lender to take further action without further notice or demand as provided for
in this Note, the Loan Agreement or the Mortgage Loan Assignment Agreement. Any
failure of Lender to insist upon strict performance by Borrower of any of the
provisions of this Note, the Loan Agreement or the Mortgage Loan Assignment
Agreement shall not be deemed a waiver of any of the terms or provisions of this
Note, the Loan Agreement or the Mortgage Loan Assignment Agreement, and Lender
shall have the right thereafter to insist upon strict performance by Borrower of
any and all of them.

         SECTION 9. Non Recourse. Except as otherwise provided herein and the
Loan Agreement and the Mortgage Loan Assignment Agreement, Lender shall not
enforce the liability and obligation of Borrower to perform and observe the
obligations contained in this Note, the Loan Agreement and the Mortgage Loan
Assignment Agreement by any action or proceeding wherein a money judgment shall
be sought against Borrower, except that Lender may bring an action or proceeding
to enable Lender to enforce and realize upon this Note, the

<PAGE>

                                     - 4 -

Loan Agreement and the Mortgage Loan Assignment Agreement, and the interest in
the Mortgage Loans and in any Collateral (as defined in the Loan Agreement)
given to Lender created by this Note, the Loan Agreement or the Mortgage Loan
Assignment Agreement, provided, however, that any judgment in any action or
proceeding shall be enforceable against Borrower only to the extent of
Borrower's interest in the Mortgage Loans and other Collateral given to Lender.
The provisions of this Section shall not however (i) constitute a waiver,
release or impairment of any obligation evidenced or secured by this Note, the
Loan Agreement or the Mortgage Loan Assignment Agreement, (ii) affect the
validity or enforceability of any indemnity made in connection with this Note,
the Loan Agreement or the Mortgage Loan Assignment Agreement, or (iii) impair
the enforcement of the Mortgage Loan Assignment Agreement.

         SECTION 10. Authority. Borrower (and the undersigned representative of
Borrower, if any) represents that Borrower has full power, authority and legal
right to execute and deliver this Note, the Loan Agreement and the Mortgage Loan
Assignment Agreement and that this Note, the Loan Agreement and the Mortgage
Loan Assignment Agreement are valid and binding in accordance with their terms.

         SECTION 11. Applicable Law. This Note shall be governed, construed,
applied and enforced in accordance with the laws of Bermuda.

         SECTION 12. Counsel Fees. In the event that it should become necessary
to employ counsel to collect the Debt or to protect or foreclose the security
therefor, Borrower also agrees to pay all reasonable fees and expenses of
Lender, including, without limitation, reasonable attorney's fees for the
services of such counsel whether or not suit be brought.

         SECTION 13. Notices. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered, if to
Borrower, at its address c/o Codan Services Limited, Clarendon House, 2 Church
Street, Hamilton, HM 11 Bermuda, Attention: Roger Burgess; and if to Lender, at
its address at 125 West 55th Street, New York, New York 10019, Attention: Chief
Executive Officer; with a copy to National Bank of Canada, as servicer of
Lender, at National Bank Tower, 600 de La Gauchetiere West, Montreal, Quebec H3B
4L2 or as to each other party, at such other address as shall be designated by
such party in a written notice to Borrower and Lender. All such notices and
communications shall, when mailed, telegraphed, telecopied or telexed, be
effective when deposited in the mails, delivered to the telegraph company,
transmitted by telecopier or confirmed by telex answerback, respectively.

         SECTION 14. Payment. Borrower shall make each payment, irrespective of
any right of counterclaim or set-off, not later than 11:00 a.m. (Eastern
Standard time) on each Interest Payment Date in United States dollars to Lender
at an account or accounts Lender may designate from time to time in same day
funds. All computations of interest and fees shall be made by Lender on the
basis of a year of 360 days consisting of twelve (12) months of thirty (30) days
each. Each determination by Lender of interest or fees hereunder shall be
conclusive and binding for all purposes, absent manifest error.

<PAGE>

                                     - 5 -

         IN WITNESS WHEREOF, Borrower has caused this instrument to be duly
executed as of the date in the year first above written.

                                        BORROWER

                                        NB FINANCE, LTD.

                                        By:
                                                 ------------------------------

                                        LENDER

                                        NB CAPITAL CORPORATION

                                        By:
                                                 ------------------------------

<PAGE>

                                 PROMISSORY NOTE
                                  (this "NOTE")

US$11,338,982.20                                                   JUNE 20, 2002

FOR VALUE RECEIVED, NB FINANCE, LTD., a Bermuda corporation, having its
registered office in Clarendon House, 2 Church Street, Hamilton, Bermuda
(hereinafter referred to as "BORROWER"), promises to pay to the order of NB
CAPITAL CORPORATION, a Maryland corporation, at its principal place of business
at 125 West 55th Street, New York, New York 10019 (hereinafter referred to as
"LENDER"), or at such other place as the holder thereof may from time to time
designate in writing, the principal sum of eleven million three hundred
thirty-eight thousand nine hundred eighty-two dollars and twenty cents
(US$11,338,982.20) (the "ORIGINAL PRINCIPAL AMOUNT") in lawful money of the
United States of America with interest on the principal amount outstanding from
time to time to be computed from the date hereof until such principal amount is
paid in full at an annual rate equal to the lesser of (i) the maximum
non-usurious rate permitted by applicable law and (ii) seven percent and five
hundred and thirty-one thousandths of a percent (7.531%) calculated monthly on a
semi-annual basis (the "INTEREST RATE"), said Original Principal Amount and
interest to be paid as follows:

(i)      With respect to each Interest Period, interest payments shall be paid
         in arrears on the fifteenth (15th) day of each calendar month
         immediately following such Interest Period; provided, however, that if
         such day is not a Business Day, interest payments shall be made on the
         immediately succeeding Business Day (the "INTEREST PAYMENT DATE").
         "INTEREST PERIOD" means each calendar month or portion thereof during
         the term of the Note or, in the case of the initial Interest Period,
         the date hereof through July 15, 2002. "BUSINESS DAY" means a day of
         the year on which banks are not required or authorized by law to close
         in Maryland, Bermuda and Quebec.

(ii)     The Original Principal Amount shall be due and payable, unless
         otherwise accelerated or prepaid in accordance with the terms of this
         Note or the Loan Agreement dated as of the date hereof, between
         Borrower and Lender (the "LOAN AGREEMENT"), on September 15, 2009 (the
         "MATURITY DATE") in whole.

         SECTION 1. Incorporation by Reference. All of the terms, covenants and
conditions contained in the Mortgage Loan Assignment Agreement and the Loan
Agreement with respect to the indebtedness evidenced by this Note are hereby
made a part of this Note to the same extent and with the same force as if they
were fully set forth herein.

         SECTION 2. Security. The indebtedness evidenced by this Note is secured
pursuant to that certain mortgage loan assignment agreement of even date
herewith (the "MORTGAGE LOAN ASSIGNMENT AGREEMENT"), assigning the mortgage
loans more particularly described therein as well as Borrower's interest in the
real property securing such Mortgage Loans (the "MORTGAGE LOANS") as security to
Lender, subject to a reassignment upon satisfaction in full of any indebtedness
evidenced by this Note.

<PAGE>

                                     - 2 -

         SECTION 3. Prepayment. The Original Principal Amount of this Note is
not subject to optional prepayment but is subject to mandatory prepayment prior
to the Maturity Date upon the terms and conditions specified in the Loan
Agreement.

         SECTION 4. Default and Acceleration. If an Event of Default (as defined
in the Loan Agreement), other than an Event of Default described in SECTION
6.1(G) of the Loan Agreement has occurred and is continuing, Lender may at any
time, in addition to any other rights or remedies available to it pursuant to
this Note, the Loan Agreement and the Mortgage Loan Assignment Agreement, or at
law or in equity, take such action, without notice or demand, that Lender deems
advisable to protect and enforce its rights against Borrower and in any of the
Collateral (as defined in the Loan Agreement), including, without limitation, by
notice to Borrower, declare the Debt to be forthwith due and payable, whereupon
such Debt shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by Borrower, and may enforce or avail itself of any or all rights or
remedies provided in this Note, the Loan Agreement and the Mortgage Loan
Assignment Agreement against Borrower and/or the Collateral (including selling
the Mortgage Loans); and upon an Event of Default described in SECTION 6.1(G) of
the Loan Agreement, the Debt shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by Borrower. "DEBT" means (a) the outstanding principal
balance of this Note, (b) interest, default interest at the Default Rate, late
charges and other sums, as provided in this Note, the Loan Agreement or the
Mortgage Loan Assignment Agreement, (c) all other monies agreed or provided to
be paid by Borrower in this Note, the Loan Agreement or the Mortgage Loan
Assignment Agreement, and (d) all sums advanced and costs and expenses incurred
by Lender in connection with the Debt or any part thereof, any renewal,
extension, or change of or substitution of the Debt or any part thereof, or the
acquisition or perfection of the security therefor, whether made or incurred at
the request of Borrower or Lender.

         SECTION 5. Savings Clause. It is expressly stipulated and agreed to be
the intent of Borrower and Lender that this Note complies with the applicable
usury and other laws relating to this Note now or hereafter in effect. If any
such applicable laws render usurious any amount called for under this Note, or
contracted for, charged or received with respect to this Note, or if the
acceleration of the maturity of this Note or if any prepayment by Borrower
results in Borrower having paid any interest in excess of that permitted by
applicable law, then it is the express intent of the parties that all excess
amounts theretofore collected by Lender be refunded to Borrower, and the
provisions of this Note immediately be deemed reformed and the amounts
thereafter collected under this Note reduced, without the necessity of the
execution of any new document, so as to comply with the then applicable law, but
so as to permit the recovery of the fullest amount otherwise called for under
this Note.

         SECTION 6. Late Charges; Mortgage Default Interest Rate.

         (a) Subject to SECTION 5, in the event that any installment of interest
or principal shall become overdue for a period in excess of five (5) days, a
"late charge" in an amount equal to five percent (5%) of the amount so overdue
may be charged to Borrower by Lender for the purpose of defraying the expenses
incident to handling such delinquent payments. Subject to SECTION 5, such late
charge shall be in addition to, and not in lieu of, any other remedy Lender may
have

<PAGE>
                                      - 3 -

and is in addition to Lender's right to collect reasonable fees and charges
of any agents or attorneys which Lender may employ in connection with any
default.

         (b) If Borrower shall default in any payment of principal or interest,
or any other amount owed by Borrower under this Note, the Loan Agreement or the
Mortgage Loan Assignment Agreement, Borrower shall pay interest on the unpaid
principal amount of this Note, payable in arrears on each Interest Payment Date
and on demand, at a rate per annum equal at all times to the lesser of (x) the
maximum non-usurious rate permitted by applicable law or (y) three percent (3%)
per annum above the applicable Interest Rate until such defaulted amount has
been paid by Borrower, together with interest thereon at the Default Rate.
Payment or acceptance of the increased rate as provided in this Section is not a
permitted alternative for timely payment and shall not constitute a waiver of a
Default or an Event of Default or an amendment to this Note, the Loan Agreement
or the Mortgage Loan Assignment Agreement and shall not otherwise prejudice or
limit any rights or remedies of Lender.

         SECTION 7. No Oral Change. This Note may not be modified, amended,
waived, extended, changed, discharged or terminated orally or by act or failure
to act on the part of Borrower or Lender, but only by an agreement in writing
signed by the party against whom enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is sought.

         SECTION 8. Waivers. Except for any notices expressly provided for in
this Note, the Loan Agreement or the Mortgage Loan Assignment Agreement,
Borrower and all others who may become liable for the payment of all or any part
of the Debt do hereby severally waive presentment and demand for payment, notice
of dishonor, protest and notice of protest and non-payment and all other notices
of any kind. No release of any security for the Debt or extension of time for
payment of this Note or any installment hereof, and no alteration, amendment or
waiver of any provision of this Note, the Loan Agreement or the Mortgage Loan
Assignment Agreement between Lender or any other person or party shall release,
modify, amend, waive, extend, change, discharge, terminate or affect the
liability of Borrower, and any other person or entity who may become liable for
the payment of all or any part of the Debt, under this Note, the Loan Agreement
or the Mortgage Loan Assignment Agreement. No notice to or demand on Borrower
shall be deemed to be a waiver of the obligation of Borrower or of the right of
Lender to take further action without further notice or demand as provided for
in this Note, the Loan Agreement or the Mortgage Loan Assignment Agreement. Any
failure of Lender to insist upon strict performance by Borrower of any of the
provisions of this Note, the Loan Agreement or the Mortgage Loan Assignment
Agreement shall not be deemed a waiver of any of the terms or provisions of this
Note, the Loan Agreement or the Mortgage Loan Assignment Agreement, and Lender
shall have the right thereafter to insist upon strict performance by Borrower of
any and all of them.

         SECTION 9. Non Recourse. Except as otherwise provided herein and the
Loan Agreement and the Mortgage Loan Assignment Agreement, Lender shall not
enforce the liability and obligation of Borrower to perform and observe the
obligations contained in this Note, the Loan Agreement and the Mortgage Loan
Assignment Agreement by any action or proceeding wherein a money judgment shall
be sought against Borrower, except that Lender may bring an action or proceeding
to enable Lender to enforce and realize upon this Note, the

<PAGE>

                                     - 4 -

Loan Agreement and the Mortgage Loan Assignment Agreement, and the interest in
the Mortgage Loans and in any Collateral (as defined in the Loan Agreement)
given to Lender created by this Note, the Loan Agreement or the Mortgage Loan
Assignment Agreement, provided, however, that any judgment in any action or
proceeding shall be enforceable against Borrower only to the extent of
Borrower's interest in the Mortgage Loans and other Collateral given to Lender.
The provisions of this Section shall not however (i) constitute a waiver,
release or impairment of any obligation evidenced or secured by this Note, the
Loan Agreement or the Mortgage Loan Assignment Agreement, (ii) affect the
validity or enforceability of any indemnity made in connection with this Note,
the Loan Agreement or the Mortgage Loan Assignment Agreement, or (iii) impair
the enforcement of the Mortgage Loan Assignment Agreement.

         SECTION 10. Authority. Borrower (and the undersigned representative of
Borrower, if any) represents that Borrower has full power, authority and legal
right to execute and deliver this Note, the Loan Agreement and the Mortgage Loan
Assignment Agreement and that this Note, the Loan Agreement and the Mortgage
Loan Assignment Agreement are valid and binding in accordance with their terms.

         SECTION 11. Applicable Law. This Note shall be governed, construed,
applied and enforced in accordance with the laws of Bermuda.

         SECTION 12. Counsel Fees. In the event that it should become necessary
to employ counsel to collect the Debt or to protect or foreclose the security
therefor, Borrower also agrees to pay all reasonable fees and expenses of
Lender, including, without limitation, reasonable attorney's fees for the
services of such counsel whether or not suit be brought.

         SECTION 13. Notices. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered, if to
Borrower, at its address c/o Codan Services Limited, Clarendon House, 2 Church
Street, Hamilton, HM 11 Bermuda, Attention: Roger Burgess; and if to Lender, at
its address at 125 West 55th Street, New York, New York 10019, Attention: Chief
Executive Officer; with a copy to National Bank of Canada, as servicer of
Lender, at National Bank Tower, 600 de La Gauchetiere West, Montreal, Quebec H3B
4L2 or as to each other party, at such other address as shall be designated by
such party in a written notice to Borrower and Lender. All such notices and
communications shall, when mailed, telegraphed, telecopied or telexed, be
effective when deposited in the mails, delivered to the telegraph company,
transmitted by telecopier or confirmed by telex answerback, respectively.

         SECTION 14. Payment. Borrower shall make each payment, irrespective of
any right of counterclaim or set-off, not later than 11:00 a.m. (Eastern
Standard time) on each Interest Payment Date in United States dollars to Lender
at an account or accounts Lender may designate from time to time in same day
funds. All computations of interest and fees shall be made by Lender on the
basis of a year of 360 days consisting of twelve (12) months of thirty (30) days
each. Each determination by Lender of interest or fees hereunder shall be
conclusive and binding for all purposes, absent manifest error.

<PAGE>

                                       -5-

         IN WITNESS WHEREOF, Borrower has caused this instrument to be duly
executed as of the date in the year first above written.

                                             BORROWER

                                             NB FINANCE, LTD.

                                             By:
                                                      --------------------------

                                             LENDER

                                             NB CAPITAL CORPORATION

                                             By:
                                                      --------------------------exv10w16

Table of Contents

Exhibit 10.16

Form of Amended and Restated Trust Agreement

Between First Union Trust Company, National Association

and Hollinger International Inc. dated as of August 24, 2001

HOLLINGER PARTICIPATION TRUST

 

 

 

AMENDED AND RESTATED TRUST AGREEMENT

between

FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION,

as Trustee

and

HOLLINGER INTERNATIONAL INC.,

as Depositor

 

 

Dated as of August 24, 2001

TABLE OF CONTENTS

									
	ARTICLE I   DEFINITIONS
		SECTION 1.02 Computation of Time Periods.
		SECTION 1.03 Accounting Terms.
		SECTION 1.04 No Presumption Against Any Party.
		SECTION 1.05 Use of Certain Terms.
		SECTION 1.06 Headings and References.
	ARTICLE II   GENERAL
		SECTION 2.01 Appointment of Trustee.
		SECTION 2.02 Formation of the Trust.
		SECTION 2.03 Name, Principal Office, and Name and Address of Trustee as Agent for Service of Process.
		SECTION 2.04 Purpose and Powers.
		SECTION 2.05 Claims Against the Trust.
		SECTION 2.06 Beneficial Interests.
		SECTION 2.07 Situs of Trust.
		SECTION 2.08 Duration of Trust.
		SECTION 2.09 Separate Identity and Operations.
	ARTICLE III   CONTRIBUTIONS
		SECTION 3.01 Initial Contribution.
		SECTION 3.02 Contributions by the Note Holders.
		SECTION 3.03 Holding of the Trust Estate.
		SECTION 3.04 Limitation on the Liability of the Depositor and the Holders.
	ARTICLE IV   THE NOTES
		SECTION 4.01 Beneficial Owners.
		SECTION 4.02 Authorization of Notes.
		SECTION 4.03 Form of Notes.
		SECTION 4.04 Payment Rights and Preferences.
		SECTION 4.05 Global Notes.
		SECTION 4.06 Registration of, Issuance, Transfer and Exchange of Notes.
		SECTION 4.07 Mutilated, Destroyed, Lost or Stolen Notes.
		SECTION 4.08 Persons Deemed Owners.
		SECTION 4.09 Maintenance of Office or Agency.
		SECTION 4.10 Book-Entry Provisions for Global Notes.
	ARTICLE V   RIGHTS, OBLIGATIONS, POWERS AND STATUS OF THE NOTE HOLDERS
		SECTION 5.01 Management of the Trust.
		SECTION 5.02 Bankruptcy, Dissolution or Termination of any Note Holder.
		SECTION 5.03 Creditors of Note Holders.
		SECTION 5.04 Certain Rights of the Majority Note Holders.
		SECTION 5.05 Restriction on Transfers of Notes.
		SECTION 5.06 Conditions to Permitted Transfers.
		SECTION 5.07 Prohibited Transfers.
		SECTION 5.08 Information.
		SECTION 5.09 Acts of Note Holders.
		SECTION 5.10 Action by Note Holders.
		SECTION 5.11 Proof of Record of Note Holders’ Meeting.
		SECTION 5.12 Revocation of Consents; Future Note Holders Bound.
		SECTION 5.13 Purposes of Meeting.
		SECTION 5.14 Call of Meetings by Trustee.
		SECTION 5.15 Call of Meetings by the Trust or Note Holders.
		SECTION 5.16 Qualifications for Voting.
		SECTION 5.17 Regulations.
		SECTION 5.18 Voting.
		SECTION 5.19 No Delay of Rights by Meeting.
		SECTION 5.20 Obligations of the Depositor to Note Holders.
	ARTICLE VI   COLLECTIONS; DISTRIBUTIONS; REDEMPTIONS; REGISTRATION RIGHTS; FURTHER ISSUANCES
		SECTION 6.01 Payments from Trust Estate.
		SECTION 6.02 Establishment of Trust Account.
		SECTION 6.03 Distributions from the Trust Account.
		SECTION 6.04 Payment Date Statements.
		SECTION 6.05 Tax Allocations.
		SECTION 6.06 Withholding.
		SECTION 6.07 Redemptions.
		SECTION 6.08 Interest Rate Reset Request.
		SECTION 6.09 Registration Rights.
		SECTION 6.10 Further Issuances.
		SECTION 6.11 Supplemental Agreement.
	ARTICLE VII   CONCERNING THE TRUSTEE AND THE DEPOSITOR
		SECTION 7.01 Accounting and Reports to Note Holders, Internal Revenue Service and Others.
		SECTION 7.02 Duties of Trustee.
		SECTION 7.03 Execution of Documents.
		SECTION 7.04 Acceptance of Trusts and Duties.
		SECTION 7.05 Refrain from Certain Actions.
		SECTION 7.06 Furnishing of Documents.
		SECTION 7.07 Representations and Warranties of Trustee.
		SECTION 7.08 Reliance; Advice of Counsel.
		SECTION 7.09 Action upon Instruction.
		SECTION 7.11 Resignation and Removal of the Trustee; Appointment of a Successor Trustee.
		SECTION 7.12 Merger or Consolidation of Trustee.
		SECTION 7.13 Eligibility Requirements for Trustee.
		SECTION 7.14 Trustee’s Fees and Expenses; Indemnification.
		SECTION 7.15 Obligations of the Depositor.
		SECTION 7.16 Prevention or Delay in Performance by the Trustee.
	ARTICLE VIII   DISSOLUTION, LIQUIDATION AND TERMINATION OF THE TRUST
	SECTION 8.01 Dissolution of the Trust.
	ARTICLE IX   CURRENCY EXCHANGE
		SECTION 9.01 Appointment of Exchange Rate Agent.
		SECTION 9.02 Payments in US Dollars.
		SECTION 9.03 Fees and Expenses.
	ARTICLE X   NOTICES
		SECTION 10.01 Notices.
	ARTICLE XI   MISCELLANEOUS PROVISIONS
		SECTION 11.01 Entire Agreement.
		SECTION 11.02 Governing Law.
		SECTION 11.03 Consent to Jurisdiction and Service of Process.
		SECTION 11.04 Severability of Provisions.
		SECTION 11.05 Amendment or Waiver; Effect on Agreement.
		SECTION 11.06 Binding Upon Assigns.
		SECTION 11.07 Survival.
		SECTION 11.08 Tax Characterization.
		SECTION 11.09 Counterparts.
		SECTION 11.10 Waiver of Jury Trial.
	Amended and Restated Trust Agreement
	Supplemental Trust Agreement
	Amended and Restated Participation Agreement
	Purchase Agreement dated December 16, 2002
	Registration Rights Agreement
	The Indenture dated as of December 23, 2002
	Fifth Amended and Restated Credit Agreement
	Fourth Amended and Restated Company Pledge
	Fourth Amended and Restated Guaranty
	Amended and Restated Pledge Agreement
	Intellectual Property Security Agreement
	Third Amended and Restated Guaranty
	Third Amended and Restated Security Agreement
	U.K. Subsidiary Guarantee
	U.S. Pledge Agreement
	Significant Subsidiaries of Hollinger Internationa
	Consent of KPMG LLP
	Certification of Chief Executive Officer
	Certification of Chief Financial Officer

Table of Contents

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 
	 	 	 	 	 	Page
	 	 	 	 	 	

	ARTICLE 1 DEFINITIONS	 	 	1	 
	 	SECTION 1.01	 	Definitions
	 	 	1	 
	 	SECTION 1.02	 	Computation of Time Periods
	 	 	8	 
	 	SECTION 1.03	 	Accounting Terms
	 	 	8	 
	 	SECTION 1.04	 	No Presumption Against Any Party
	 	 	8
	 	SECTION 1.05	 	Use of Certain Terms
	 	 	8	 
	 	SECTION 1.06	 	Headings and References
	 	 	8	 
	ARTICLE II GENERAL	 	 	9	 
	 	SECTION 2.01	 	Appointment of Trustee
	 	 	9	 
	 	SECTION 2.02	 	Formation of the Trust
	 	 	9	 
	 	SECTION 2.03	 	Name, Principal Office, and Name and Address of Trustee
as Agent for Service of Process
	 	 	9	 
	 	SECTION 2.04	 	Purpose and Powers
	 	 	9	 
	 	SECTION 2.05	 	Claims Against the Trust
	 	 	10	 
	 	SECTION 2.06	 	Beneficial Interests
	 	 	10	 
	 	SECTION 2.07	 	Situs of Trust
	 	 	10	 
	 	SECTION 2.08	 	Duration of Trust
	 	 	10	 
	 	SECTION 2.09	 	Separate Identity and Operations
	 	 	10	 
	ARTICLE III CONTRIBUTIONS	 	 	11	 
	 	SECTION 3.01	 	Initial Contribution
	 	 	11	 
	 	SECTION 3.02	 	Contributions by the Note Holders
	 	 	11	 
	 	SECTION 3.03	 	Holding of the Trust Estate
	 	 	11	 
	 	SECTION 3.04	 	Limitation on the Liability of the Depositor and the Holders
	 	 	11	 
	ARTICLE IV THE NOTES	 	 	11	 
	 	SECTION 4.01	 	Beneficial Owners
	 	 	11	 
	 	SECTION 4.02	 	Authorization of Notes
	 	 	11	 
	 	SECTION 4.03	 	Form of Notes
	 	 	12	 
	 	SECTION 4.04	 	Payment Rights and Preferences
	 	 	12	 
	 	SECTION 4.05	 	Global Notes
	 	 	12	 
	 	SECTION 4.06	 	Registration of, Issuance, Transfer and Exchange of Notes
	 	 	13	 
	 	SECTION 4.07	 	Mutilated, Destroyed, Lost or Stolen Notes
	 	 	14	 
	 	SECTION 4.08	 	Persons Deemed Owners
	 	 	15	 
	 	SECTION 4.09	 	Maintenance of Office or Agency
	 	 	15	 
	 	SECTION 4.10	 	Book-Entry Provisions for Global Notes
	 	 	15	 
	ARTICLE V RIGHTS, OBLIGATIONS, POWERS AND STATUS OF THE NOTE HOLDERS	 	 	16	 
	 	SECTION 5.01	 	Management of the Trust
	 	 	16	 
	 	SECTION 5.02	 	Bankruptcy, Dissolution or Termination of any Note Holder
	 	 	16	 

Table of Contents

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 
	 	 	 	 	 	Page
	 	 	 	 	 	

	 	SECTION 5.03	 	Creditors of Note Holders
	 	 	16	 
	 	SECTION 5.04	 	Certain Rights of the Majority Note Holders
	 	 	16	 
	 	SECTION 5.05	 	Restriction on Transfers of Notes
	 	 	17	 
	 	SECTION 5.06	 	Conditions to Permitted Transfers
	 	 	17	 
	 	SECTION 5.07	 	Prohibited Transfers
	 	 	18	 
	 	SECTION 5.08	 	Information
	 	 	18	 
	 	SECTION 5.09	 	Acts of Note Holders
	 	 	18	 
	 	SECTION 5.10	 	Action by Note Holders
	 	 	19	 
	 	SECTION 5.11	 	Proof of Record of Note Holders’ Meeting
	 	 	20	 
	 	SECTION 5.12	 	Revocation of Consents; Future Note Holders Bound
	 	 	20	 
	 	SECTION 5.13	 	Purposes of Meeting
	 	 	20	 
	 	SECTION 5.14	 	Call of Meetings by Trustee
	 	 	20	 
	 	SECTION 5.15	 	Call of Meetings by the Trust or Note Holders
	 	 	21	 
	 	SECTION 5.16	 	Qualifications for Voting
	 	 	21	 
	 	SECTION 5.17	 	Regulations
	 	 	21	 
	 	SECTION 5.18	 	Voting
	 	 	22	 
	 	SECTION 5.19	 	No Delay of Rights by Meeting
	 	 	22	 
	 	SECTION 5.20	 	Obligations of the Depositor to Note Holders
	 	 	22	 
	ARTICLE VI COLLECTIONS; DISTRIBUTIONS; REDEMPTIONS;
REGISTRATION RIGHTS; FURTHER ISSUANCES	 	 	23	 
	 	SECTION 6.01	 	Payments from Trust Estate
	 	 	23	 
	 	SECTION 6.02	 	Establishment of Trust Account
	 	 	24	 
	 	SECTION 6.03	 	Distributions from the Trust Account
	 	 	24	 
	 	SECTION 6.04	 	Payment Date Statements
	 	 	26	 
	 	SECTION 6.05	 	Tax Allocations
	 	 	26	 
	 	SECTION 6.06	 	Withholding
	 	 	26	 
	 	SECTION 6.07	 	Redemptions
	 	 	26	 
	 	SECTION 6.08	 	Interest Rate Reset Request
	 	 	27	 
	 	SECTION 6.09	 	Registration Rights
	 	 	27	 
	 	SECTION 6.10	 	Further Issuances
	 	 	27	 
	 	SECTION 6.11	 	Supplemental Agreement
	 	 	28	 
	ARTICLE VII CONCERNING THE TRUSTEE AND THE DEPOSITOR	 	 	28	 
	 	SECTION 7.01	 	Accounting and Reports to Note Holders, Internal Revenue
Service and Others
	 	 	28	 
	 	SECTION 7.02	 	Duties of Trustee
	 	 	29	 
	 	SECTION 7.03	 	Execution of Documents
	 	 	30	 
	 	SECTION 7.04	 	Acceptance of Trusts and Duties
	 	 	30	 
	 	SECTION 7.05	 	Refrain from Certain Actions
	 	 	32	 
	 	SECTION 7.06	 	Furnishing of Documents
	 	 	32	 
	 	SECTION 7.07	 	Representations and Warranties of Trustee
	 	 	32	 
	 	SECTION 7.08	 	Reliance; Advice of Counsel
	 	 	33	 
	 	SECTION 7.09	 	Action upon Instruction
	 	 	34	 
	 	SECTION 7.10	 	Trustee May Not Own Notes
	 	 	34	 
	 	SECTION 7.11	 	Resignation and Removal of the Trustee; Appointment of a
Successor Trustee
	 	 	35	 

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	 	 	 	 	 	Page
	 	 	 	 	 	

	 	SECTION 7.12	 	Merger or Consolidation of Trustee
	 	 	36	 
	 	SECTION 7.13	 	Eligibility Requirements for Trustee
	 	 	36	 
	 	SECTION 7.14	 	Trustee’s Fees and Expenses; Indemnification
	 	 	36	 
	 	SECTION 7.15	 	Obligations of the Depositor
	 	 	37	 
	 	SECTION 7.16	 	Prevention or Delay in Performance by the Trustee
	 	 	37	 
	ARTICLE VIII DISSOLUTION, LIQUIDATION AND
TERMINATION OF THE TRUST	 	 	37	 
	 	SECTION 8.01	 	Dissolution of the Trust
	 	 	37	 
	ARTICLE IX CURRENCY EXCHANGE	 	 	38	 
	 	SECTION 9.01	 	Appointment of Exchange Rate Agent
	 	 	38	 
	 	SECTION 9.02	 	Payments in US Dollars
	 	 	39	 
	 	SECTION 9.03	 	Fees and Expenses
	 	 	39	 
	ARTICLE X NOTICES	 	 	39	 
	 	SECTION 10.01	 	Notices
	 	 	39	 
	ARTICLE XI MISCELLANEOUS PROVISIONS	 	 	39	 
	 	SECTION 11.01	 	Entire Agreement
	 	 	39	 
	 	SECTION 11.02	 	Governing Law
	 	 	39	 
	 	SECTION 11.03	 	Consent to Jurisdiction and Service of Process
	 	 	41	 
	 	SECTION 11.04	 	Severability of Provisions
	 	 	40	 
	 	SECTION 11.05	 	Amendment or Waiver; Effect on Agreement
	 	 	40	 
	 	SECTION 11.06	 	Binding Upon Assigns
	 	 	40	 
	 	SECTION 11.07	 	Survival
	 	 	40	 
	 	SECTION 11.08	 	Tax Characterization
	 	 	41	 
	 	SECTION 11.09	 	Counterparts
	 	 	41	 
	 	SECTION 11.10	 	Waiver of Jury Trial
	 	 	42	 

 

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HOLLINGER PARTICIPATION TRUST

AMENDED AND RESTATED TRUST AGREEMENT

          AMENDED AND RESTATED TRUST AGREEMENT (this “Agreement”) of Hollinger
Participation Trust, a Delaware statutory business trust (the “Trust”), is made
and entered into as of August 24, 2001 by First Union Trust Company, National
Association, a national banking association (not in its individual capacity but
solely as trustee hereunder and including its successors, the “Trustee”), and
Hollinger International Inc., a Delaware corporation (“Hollinger” or the
“Depositor”), as depositor.

RECITALS

          WHEREAS, the Trustee and the Depositor have previously formed the Trust as
a statutory business trust under the Delaware Business Trust Act pursuant to
that certain Trust Agreement dated as of August 15, 2001 (the “Original Trust
Agreement”) and by the Trustee’s filing the Certificate of Trust;

          WHEREAS, the Trustee and the Depositor desire to continue the Trust and to
amend and restate the Original Trust Agreement in its entirety to provide that
the purposes of the Trust are holding a participation interest in the Fixed
Rate Subordinated Debentures due 2010 (the “Underlying Debentures”) of 3815668
Canada Inc. (the “Issuer”), and issuing the 12 1/8% Senior Notes due 2010 (the
“Notes”) representing undivided beneficial interests in the Trust; and

          WHEREAS, the Depositor desires to confirm its appointment of the Trustee
to manage the affairs of the Trust.

          NOW THEREFORE, it being the intention of the parties hereto that the Trust
continues to constitute a business trust under the Delaware Business Trust Act
and that this Agreement constitute the governing instrument of such business
trust, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

          Unless the context otherwise requires, capitalized terms used in this
Agreement but not defined herein shall have the respective meanings assigned to
them in the Participation Agreement (as defined herein). As used in this
Agreement, the following terms shall have the following meanings:

          SECTION 1.01 Definitions.

          “Act” has the meaning set forth in Section 5.09.

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          “Additional Notes” means Notes that are issued under an agreement
supplemental to this Agreement after the date that Notes are first issued by
the Trust and executed and delivered by the Trustee under this Agreement, which
will rank pari passu with the Notes initially issued in all respects, except
that interest will only accrue on such Additional Notes as and from the issue
date of such Additional Notes or such other date as set forth in the terms of
such Additional Notes.

          “Affiliate” means, with respect to any Person, any other Person
controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, “control” when used with respect
to any specified Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms “controlling” and
“controlled” have meanings correlative to the foregoing.

          “Agent Members” has the meaning set forth in Section 4.10(b).

          “Applicable Procedures” means, with respect to any transfer or exchange of
or for beneficial interests in any Global Note, the rules and procedures of DTC
or any successor depositary that apply to such transfer or exchange.

          “Available Funds” means, with respect to any Payment Date or other date,
the aggregate amount of cash on deposit in the Trust Account on such Payment
Date or other date.

          “Business Day” means any day other than (i) a Saturday or a Sunday, or
(ii) a day on which banking institutions in the State of Delaware and New York
City or Toronto, Canada are authorized or obligated by law or executive order
to be closed for business.

          “C$” means the lawful currency of Canada.

          “CanWest” means CanWest Global Communications Corp., the parent of the
Issuer.

          “Certificate of Cancellation” means the certificate of cancellation filed
under the Delaware Business Trust Act with the Secretary of State upon the
winding up and termination of the Trust.

          “Certificate of Trust” means the Certificate of Trust filed under the
Delaware Business Trust Act with the Secretary of State on even date with the
Original Trust Agreement, as such Certificate of Trust may be amended or
restated from time to time.

          “Closing Date” means August 24, 2001.

          “Code” means the Internal Revenue Code of 1986, as amended, and Treasury
Regulations promulgated thereunder.

          “Delaware Business Trust Act” means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code §§3801 et seq.

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          “Depositary” means a clearing agency registered under the Exchange Act
that is designated to act as Depositary for the Global Notes. The Depositor
has initially appointed DTC as the Depositary.

          “Depositor” has the meaning set forth in the Recitals hereto.

          “Dollars” and “$” each means the lawful currency of the United States.

          “DTC” means The Depository Trust Company, a New York limited purpose trust
company.

          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          “Exchange Rate Agent” has the meaning set forth in Section 9.01.

          “Expenses” has the meaning set forth in Section 7.14.

          “Extraordinary Expenses” means any and all costs, expenses or liabilities
arising out of the existence or administration of the Trust or the
Participation Agreement, other than (i) Ordinary Expenses and (ii) costs and
expenses payable by a particular Note Holder, the Trust, or any other Person
pursuant to this Agreement, the Participation Agreement or any other agreement.

          “Fixed
Exchange Rate” means the exchange rate fixed on the Closing Date
using the Noon Buying Rate on such date, being US$0.6482 for each C$1.00.

          “Global Note” means one or more Notes evidencing all or part of the Notes
bearing the legends set forth in Exhibit B.

          “Indemnified Person” means the Trust, any Note Holder, the Depositor and
any director, officer, trustee, member, shareholder, general partner, employee,
administrator or agent of the foregoing.

          “Indemnified Trustee Parties” has the meaning set forth in Section 7.14.

          “Initial Purchasers” means Credit Suisse First Boston Corporation and RBC
Dominion Securities Corporation.

          “Interest Rate Reset” means the reset of the interest rate payable on the
Notes.

          “Investment Company Act” means the Investment Company Act of 1940, as
amended.

          “Issuer” has the meaning set forth in the Recitals.

          “Majority Note Holders” means, at any time, Note Holders holding,
collectively, Notes evidencing more than 50% of the aggregate principal amount
of all Notes outstanding at such time.

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          “Moody’s” means Moody’s Investors Service, Inc. or any successor to the
rating agency business thereof.

          “Noon Buying Rate” means the noon buying rate in New York City for cable
transfers in foreign currencies as certified for customs purposes by the
Federal Reserve Bank of New York.

          “Note” means a Note substantially in the form of Exhibit B hereto
evidencing an undivided beneficial interest in the Trust issued pursuant to
Article IV of this Agreement.

          “Note Holders” means, at any time, the Person or Persons in whose name
Notes (other than Notes that have been redeemed pursuant to Section 6.07 or
cancelled pursuant to Section 8.01(c)) are registered in the Note Register at
such time.

          “Note Register” has the meaning set forth in Section 4.06(a).

          “Note Registrar” has the meaning set forth in Section 4.06(a).

          “Ordinary Expenses” shall mean the Trustee’s ordinary fees and expenses as
set forth in a letter agreement among the Trustee and the Depositor (including,
but not limited to, expenses reasonably incurred in connection with the
establishment of the Trust in the ordinary course), which fees and expenses
shall be paid in full by the Depositor.

          “Original Trust Agreement” has the meaning set forth in the Recitals.

          “Participation Agreement” means the Participation Agreement dated as of
August 17, 2001 between the Depositor and the Trust.

          “Payment” or “Payments” means the amounts payable or paid to the Note
Holders by the Trustee on the Notes.

          “Payment Date” means one (1) Business Day from the date the Depositor
receives payments on the Underlying Debentures from the Issuer.

          “Payment
Date Statement” has the meaning set forth in Section 6.04.

          “Periodic Tax Filings” means any tax filings or submissions that the Trust
is required to make with any federal, state or local taxing authority or
regulatory agency.

          “Permitted Transfer” means any Transfer of a Note permitted by Section
5.06.

          “Person” means (a) any natural person, (b) any corporation, limited
liability company, partnership, business trust, joint stock company,
unincorporated association, joint venture or other entity established to
conduct business or (c) any United States federal, national, state, provincial,
municipal, local, territorial or other governmental department, commission,
board, bureau, agency, regulatory authority, instrumentality or judicial or
administrative body, whether domestic or foreign.

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          “Place of Payment” means, when used with respect to the Notes, the place
or places where the principal of and interest on such Notes are payable as
specified as contemplated by Section 4.09.

          “Proportionate Interest” means, at any time, with respect to a Note
Holder, the proportion that the aggregate principal amount of the Notes held by
such Note Holder at such time bears to the aggregate principal amount of all
Notes outstanding at such time.

          “Purchase Agreement” means the agreement entered into between the Trust,
and the Initial Purchasers dated as of August 17, 2001 pursuant to which the
Initial Purchasers will initially purchase the Notes.

          “Registration” has the meaning set forth in Section 6.09.

          “Regular Record Date” has the meaning set forth in Section 6.03(a).

          “Required
Note Holders” means the Majority Note Holders;
provided,
however, that, in the case of any Reserved Action, “Required Note Holders”
shall mean Super Majority Note Holders.

          “Reserved Action” means any action or inaction the effect of which is to

		
	 	     (1) amend, modify, waive or supplement any provision of this
Agreement or the Certificate of Trust in any way that, directly or
indirectly, would:

		
	 	     (a) reduce the principal amount of any Note or the aggregate
principal amount of all Notes issued and outstanding at any time; or
	 
	 	     (b) reduce the rate of or change the time of Payments payable in
respect of the Notes or any portion thereof; or
	 
	 	     (c) change the currency in which any amount due in respect of the
Notes is payable; or
	 
	 	     (d) reduce the principal of or any premium on or change the stated
maturity of any Notes or alter the redemption or interest reset
provisions with respect thereto; or
	 
	 	     (e) reduce the relative ranking of any Notes in a manner adverse to
Note Holders; or
	 
	 	     (f) subject any Note Holder or any Indemnified Person to any
increased or additional obligations under or in connection with any
Operative Document; or
	 
	 	     (g) change the tax characterization of the Trust from that provided
in Section 11.08; or

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	 	     (2) consent to any action to be taken described under clauses (1)
through (9) of Section 8.02 of the Trust Indenture; or
	 
	 	     (3) amend, waive, modify or supplement this definition of “Reserved
Action”, or the definition of “Majority Note Holders”, “Super Majority
Note Holders” or “Required Note Holders” in this Agreement or of
“Required Holders” in the Purchase Agreement or amend, waive, modify or
supplement any other provision of this Agreement, the Purchase Agreement
or any Operative Document in a manner that would materially impair,
directly or indirectly, the operation of any such definition; or
	 
	 	     (4) release or dispose of any portion of the Trust Estate, except in
accordance with the provisions of this Agreement;

provided, however, that, notwithstanding anything to the contrary in this
definition, any ministerial amendment to cure any ambiguity, defect or
inconsistency in this Agreement, any Operative Document or any other instrument
or document delivered pursuant hereto or thereto, including in any provision
referred to in this definition, to which the Depositor consents in writing (a
copy of which is delivered to the Trustee) shall not be a “Reserved Action”.

          “Reset Rate of Interest” means the lesser of 13% per annum or the then
current market rate for debt instruments of like nature.

          “Responsible Officer” means, with respect to the Trustee, any officer
within the Corporate Trust Administration Department of the Trustee, including
any Vice President, Assistant Vice President, Secretary, Assistant Secretary,
Financial Services Officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer’s knowledge of and
familiarity with the particular subject.

          “Secretary of State” means the office of the Secretary of State of the
State of Delaware.

          “Securities Act” means the Securities Act of 1933, as amended.

          “S&P” means Standard and Poor’s Ratings Corporation.

          “Super Majority Note Holders” means, at any time, Note Holders holding,
collectively, Notes evidencing 66 2/3% or more of the aggregate principal amount
of all Notes outstanding at such time.

          “Tax Matters Representing Purchaser” means a Person that is able to
represent that (A) it is acting for its own account and not as the nominee or
agent of any other Person, (B) either (1) it is not a partnership, grantor
trust, or S corporation for United States Federal income tax purposes (a
“Flowthrough Entity”) or (2) it is a Flowthrough Entity but less than 50% of
the assets of the Flowthrough Entity will be represented, directly or
indirectly, by Notes or (3) it is a Flowthrough Entity (x) whose nominal owners
are able to make the representations in (A) and either (B)(1) or (B)(2) or, (y)
to the extent that any of its direct or indirect nominal owners

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cannot make the representations in (B)(1) or (B)(2) and is itself a
Flowthrough Entity (an “Upper Tier Flowthrough Entity”), the nominal owners of
any such Upper Tier Flowthrough Entity are able to make the representations in
(A) and either (B)(1) or (B)(2) (each such nominal owner
described in clause 3
that makes the representations in either (B)(1) or (B)(2), an “Indirect Tax
Matters Representing Purchaser”), and (C) it has not acquired, and will not
transfer, any Notes (or any derivative interest therein) on or through an
established securities market within the meaning of Section 7704(b)(1) of the
Code (and Treasury Regulations thereunder).

          “Transfer” means, with respect to any Note, as a noun, any transfer or
sale of, assignment of an interest (including a security interest) in or other
disposition of such Note (other than a redemption of any Note), and as a verb,
to transfer, sell, assign (including assign for security) or otherwise dispose
of, such Note, including, in each case, any transfer by operation of law,
merger, bankruptcy or other means. The adjective “Transferred” has the
correlative meaning.

          “Treasury
Regulations” means regulations, including proposed or temporary
regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.

          “Trust” has the meaning set forth in the Recitals hereto.

          “Trustee” has the meaning set forth in the Recitals hereto.

          “Trust Account” has the meaning set forth in Section 6.02.

          “Trust Estate” means all right, title and interest of the Trust in, to and
under the Participation Agreement, the Participation, any Distribution and any
other property or asset contributed to the Trust or otherwise acquired by the
Trust, together with all distributions, payments, revenues, issues, profits or
proceeds thereof and therefrom.

          “Trust Indenture” means the trust indenture dated November 15, 2000
between the Issuer and The Bank of Nova Scotia governing the Underlying
Debentures.

          “UCC” means the Uniform Commercial Code as in effect in the State of
Delaware.

          “Underlying Debentures” has the meaning set forth in the Recitals.

          “United States” and “U.S.” each means the United States of America.

          “U.S. Government Obligations” means securities which are (i) direct
obligations of the Government of the United States, (ii) part of the Evergreen
Institutional Treasury Money Market Fund or (iii) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of the
Government of the United States, the payment of which is unconditionally
guaranteed by such government, which, in either case, are full faith and credit
obligations of such government payable in U.S. dollars and are not callable or
redeemable at the option of the issuer thereof and shall also include a
depository receipt issued by a bank or trust

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company as custodian with respect to any such U.S. Government Obligation
or a specific payment of interest on or principal of any such U.S. Government
Obligation held by such custodian for the account of the holder of a depository
receipt; provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of interest or principal of
the U.S. Government Obligation evidenced by such depository receipt.

          SECTION 1.02 Computation of Time Periods. Unless otherwise stated in this
Agreement, in the computation of periods of time from a specified date to a
later specified date, the words or phrase “from” and “commencing on” mean “from
and including”, the word “through” means “to and including”, and the words or
phrase “to” and “until” and “ending on” each mean “to but excluding”.

          SECTION 1.03 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles in effect from time to time in the United States
(“GAAP”).

          SECTION 1.04 No Presumption Against Any Party. Neither this Agreement nor
any uncertainty or ambiguity herein shall be construed against any particular
party, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by each party and its counsel and shall be
construed and interpreted according to the ordinary meaning of the words used
so as to fairly accomplish the purposes and intentions of all parties hereto.

          SECTION 1.05 Use of Certain Terms. Unless the context of this Agreement
requires otherwise, the plural includes the singular, the singular includes the
plural, and “including” has the inclusive meaning of “including without
limitation”. The words “hereof”, “herein”, “hereby”, “hereunder” and other
similar terms of this Agreement refer to this Agreement as a whole and not
exclusively to any particular provision of this Agreement. All pronouns and
any variations thereof shall be deemed to refer to masculine, feminine or
neuter, singular or plural, as the identity of the Person or Persons may
require.

          SECTION 1.06 Headings and References. Section and other headings are for
reference only, and shall not affect the interpretation or meaning of any
provision of or to this Agreement. Unless otherwise provided, references to
Articles, Sections, Schedules and Exhibits shall be deemed to be references to
Articles, Sections, Schedules and Exhibits of or to this Agreement. Whether or
not stated herein, references to this Agreement and any other agreement include
this Agreement and such other agreement as the same may be amended,
supplemented or otherwise modified from time to time pursuant to the provisions
hereof and thereof. Whether or not stated herein, a reference to any
law shall mean that law as it may be amended, supplemented or otherwise
modified from time to time, and any successor law. A reference to a Person
includes the successors and assigns of such Person, but such reference shall
not increase, decrease or otherwise modify in any way the effectiveness of the
provisions in this Agreement or any other agreement governing the assignment of
rights and obligations under this Agreement or any other agreement.

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ARTICLE II

GENERAL

          SECTION
2.01 Appointment of Trustee. The Depositor hereby confirms its
appointment of First Union Trust Company, National Association, as the Trustee
of the Trust upon the terms and conditions set forth herein, with all the
rights, powers and duties set forth herein and in the Delaware Business Trust
Act, and First Union Trust Company, National Association, hereby confirms its
acceptance of such appointment.

          SECTION 2.02 Formation of the Trust. Pursuant to the Original Trust
Agreement, the Trust was formed as a statutory business trust under and
pursuant to the Delaware Business Trust Act, and on the date of the execution
of the Original Trust Agreement, the Trustee caused the Certificate of Trust in
the form attached as Exhibit A to be filed with the Secretary of State.

          SECTION 2.03 Name, Principal Office, and Name and Address of Trustee as
Agent for Service of Process. The Trust created by this Agreement shall be
named “Hollinger Participation Trust”. All activities of the Trust shall be
conducted under such name, and the Trust, or the Trustee on behalf of the
Trust, shall enter into contracts and agreements with respect to the
transactions contemplated hereby under such name. The principal place of
business and office of the Trust shall be c/o First Union Trust Company,
National Association, Corporate Trust Administration, One Rodney Square, 1st
Floor, 920 King Street, Wilmington, DE 19801, Attention: Corporate Trust
Administration. The Trustee is hereby designated to accept service of process
on behalf of the Trust, and its current office is located at the address
provided in the preceding sentence. The Trustee shall maintain its principal
office in the State of Delaware during the term of this Agreement.

          SECTION
2.04 Purpose and Powers.

	 	(a)	 	The purpose of the Trust shall be limited to engaging in the following
activities:

	 	(i)	 	entering into and performing the Purchase
Agreement and issuing the Notes pursuant to this Agreement;
	 
	 	(ii)	 	making Payments to the Note Holders pursuant to
and in accordance with this Agreement;
	 
	 	(iii)	 	entering into, complying with its obligations
and exercising its rights under, and consummating the
transactions and engaging in the activities contemplated by,
the Participation Agreement and all other Operative Documents
to which it is to be a party or under which it has rights; and
	 
	 	(iv)	 	engaging in those activities that are necessary
to accomplish the foregoing or are related or incidental
thereto.

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          (b) The Trust is hereby authorized to engage in the foregoing activities.
Neither the Trust nor the Depositor in its capacity as the Depositor, shall
engage in any activity other than (i) the activities described
in subsection (a) above or (ii) subject to the terms of this Agreement, as the Note Holders
and the Depositor, may from time to time direct. The Trust shall not issue any
securities other than the Notes.

          SECTION 2.05 Claims Against the Trust. All Persons extending credit to,
contracting with or having any claim against the Trust shall look only to the
Trust for payment under such credit, contract or claim. None of the Trustee
(including in its individual capacity), the Depositor, the Note Holders or any
of the officers, employees or agents, whether past, present or future, of the
Trust or any of the foregoing shall be personally liable therefor.

          SECTION
2.06 Beneficial Interests. The beneficial interests in the Trust
will be divided into the Notes. Notes will be evidenced by certificates
substantially in the form of Exhibit B hereto, each of which shall constitute
an undivided beneficial interest in the Trust Estate to the extent set forth in
this Agreement. The rights, preferences and powers of, and duties of the Note
Holders are more particularly set forth in Article IV hereof.

          SECTION 2.07 Situs of Trust. The Trust shall be located and administered
in the State of Delaware. All bank accounts maintained by the Trustee on
behalf of the Trust shall be located in the State of Delaware, the State of New
York or the State of North Carolina. The Trust shall not have any employees in
any state other than Delaware; provided, however, that nothing herein shall
restrict or prohibit the Trustee from having employees within or without the
State of Delaware. Payments shall be received by the Trust only in Delaware,
New York, North Carolina or Canada, and payments will be made by the Trust only
from Delaware, New York, North Carolina or Canada. The only office of the
Trust shall be in the State of Delaware.

          SECTION 2.08 Duration of Trust. The Trust, absent termination pursuant to the provisions of Article
VIII, shall terminate on the twentieth anniversary of the Closing Date.

          SECTION 2.09 Separate Identity and Operations. The Trustee shall cause
the Trust to conduct its business and operations separate and apart from that
of any Note Holder or any Affiliate of such Note Holder, including (i)
segregating Trust assets and not allowing funds or other assets of the Trust to
be commingled with the funds or other assets of, held by, or registered in the
name of, any Note Holder or any Affiliate of such Note Holder, (ii) maintaining
books and financial records of the Trust separate from the books and financial
records of any Note Holder or any Affiliate of such Note Holder, and observing
all Delaware business trust procedures and formalities applicable to the Trust,
including maintaining minutes or records of meetings of the Trust and acting on
behalf of the Trust only pursuant to due authorization by the Note Holders,
(iii) causing the Trust to pay its liabilities from assets of the Trust, and
(iv) causing the Trust to conduct its dealings with third Persons in its own
name and as a separate and independent entity.

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ARTICLE III

CONTRIBUTIONS

          SECTION 3.01 Initial Contribution. On the date of the Original Trust
Agreement, the Depositor transferred to the Trust the sum of $1.00, which
amount constituted the initial Trust Estate. On the Closing Date, the
Depositor will enter into the Participation Agreement with the Trust and
transfer to the Trust pursuant to the Participation Agreement all of its
rights, title and interest existing as of the Closing Date in and to the
Participation, which Participation shall constitute part of the Trust Estate,
in exchange for the proceeds from the issuance of the Notes.

          SECTION 3.02 Contributions by the Note Holders. The Initial Purchasers
shall purchase Notes in accordance with and pursuant to the Purchase Agreement.
The purchase price received by the Trust for the Notes on the Closing Date
shall be paid over to the Depositor on the Closing Date as payment for the
Participation pursuant to the Participation Agreement.

          SECTION 3.03 Holding of the Trust Estate. The Trustee hereby declares and
agrees that it will hold all estate, right, title and interest in and to the
Trust Estate until this Agreement terminates pursuant to the terms of this
Agreement, in trust under and subject to the conditions and agreements
hereinafter set forth, for the use and benefit of the Note Holders.

          SECTION 3.04 Limitation on the Liability of the Depositor and the Holders. None of the Depositor, the Trustee and the Note Holders shall be liable
for any debt, claim, demand, judgment or obligation of any kind of, against or
with respect to the Trust by reason of its being the Depositor, the Trustee or
a Note Holder, nor shall the Depositor, the Trustee or any Note Holder, by
reason of its status as such, be subject to any personal liability whatsoever,
in tort, contract or otherwise, to any Person in connection with the property,
liabilities or affairs of the Trust, except, in each case, to the extent set
forth in Section 7.14.

ARTICLE IV

THE NOTES

          SECTION 4.01 Beneficial Owners. The Note Holders are the beneficial
owners (within the meaning of the Delaware Business Trust Act) of the Trust (it
being understood that Notes may, at the option of any Note Holder, be issued in
the name of a nominee for such Note Holder without affecting such Note Holder’s
interest as a beneficial owner of the Trust). The aggregate principal amount
of Notes that may be delivered under this Agreement is unlimited (of which
$350,000,000 was issued and delivered the date hereof).

          SECTION 4.02 Authorization of Notes. The Trustee is hereby authorized and
directed, subject to the terms and conditions hereof, to execute and deliver
the Notes in the form of one or more Global Notes on behalf of the Trust
subject to and in accordance with the terms of this Agreement. All outstanding
Notes shall share pari passu in the Trust Estate and any

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Payments distributable
to the Note Holders therefrom, to the extent set forth herein, each in
accordance with its Proportionate Interest.

          SECTION
4.03  Form of Notes. The Notes shall be offered and sold by the
Initial Purchasers pursuant to the Purchase Agreement. Each Note will
represent an undivided beneficial interest in the assets of the Trust equal to
the principal amount of such Note, and shall be initially issued in the form of
one or more permanent Global Notes substantially in the form provided for in
Exhibit B, with such applicable legends as are provided for in Exhibit B and
deposited with, or on behalf of, the Depositary or with the Trustee, as
custodian for the Depositary, duly executed by the Trust. The Notes shall be
executed on behalf of the Trust by manual or facsimile signature of any
authorized signatory of the Trustee having such authority. Notes bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall be
validly issued and entitled to the benefits of this Agreement, notwithstanding
that such individuals or any of them have ceased to be so authorized prior to
the delivery of such Notes.

          The initial delivery of the Notes on the Closing Date shall be subject to
the satisfaction of the following conditions on or prior to such Closing Date:
(i) the Depositor shall
have delivered to the Trustee on behalf of the Trust the Participation in
accordance with Section 3.01; (ii) the Trustee shall have received opinions of
counsel to the Depositor, addressed to the Trust and the Trustee, substantially
in the form of Exhibit C; and (iii) the Trustee shall have received fully
executed copies of the Operative Documents, together with all documents and
opinions required to be delivered to the Trust pursuant to the terms of such
Operative Documents.

          The Notes shall be issuable only in registered form without coupons and
other than Notes issued in global form (which may be of any denomination), only
in denominations of $1,000 or any integral multiple thereof.

          SECTION
4.04  Payment Rights and Preferences. The Note Holders shall
receive Payments at the times, and be entitled to such other rights,
preferences and powers of the Notes, as are set forth in Section 6.03.

          SECTION
4.05  Global Notes.

          (a) Each Global Note issued under this Agreement shall be registered in
the name of the Depositary for such Global Note or a nominee thereof and
delivered to such Depositary or a nominee thereof or custodian therefor, and
each such Global Note shall constitute a single Note for all purposes of this
Agreement.

          (b) Notwithstanding any other provision in this Agreement, no Global Note
may be exchanged in whole or in part for Notes registered, and no transfer of a
Global Note in whole or in part may be registered, in the name of any Person
other than the Depositary for such Global Note or a nominee thereof unless (i)
such Depositary (A) has notified the Note Holders that it is unwilling or
unable to continue as Depositary for such Global Note or (B) has ceased to be a
clearing agency registered as such under the Exchange Act, and in either case
the Depositor fails to appoint a successor Depositary within 90 days or (ii)
the Depositor executes and delivers to

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the Trustee a letter of instruction and
authorization substantially in the form of Exhibit D stating that it elects to
cause the issuance of the Notes in certificated form and that all Global Notes
shall be exchanged in whole for Notes that are not Global Notes (in which case
such exchange shall be effected by the Trustee).

          (c) If any Global Note is to be exchanged for other Notes or canceled in
whole, it shall be surrendered by or on behalf of the Depositary or its nominee
to the Trustee, as Note Registrar, for exchange or cancellation as provided in
this Article Four. If any Global Note is to be exchanged for other Notes or
canceled in part, or if another Note is to be exchanged in whole or in part for
a beneficial interest in any Global Note, then either (i) such Global Note
shall be so surrendered for exchange or cancellation as provided in this
Article Four or (ii) the Participated Principal Amount thereof shall be reduced
or increased by an amount equal to the portion thereof to be so exchanged or
canceled, or equal to the Participated Principal Amount of such other Note to
be so exchanged for a beneficial interest therein, as the case may be, by means
of an appropriate adjustment made on the records of the Trustee, as Note
Registrar, whereupon the Trustee, in accordance with the Applicable Procedures,
shall instruct the Depositary or its
authorized representative to make a corresponding adjustment to its
records. Upon any such surrender or adjustment of a Global Note, the Trustee
shall, as otherwise provided in this Article Four, deliver any Notes issuable
in exchange for such Global Note (or any portion thereof) to or upon the
instruction of the Depositor, and registered in such names as may be directed
by, the Depositary or its authorized representative. Upon the request of the
Trustee in connection with the occurrence of any of the events specified in the
preceding paragraph, the Depositor shall promptly make available to the Trustee
a reasonable supply of Notes that are not in the form of Global Notes. The
Trustee shall be entitled to rely upon any order, direction or request of the
Depositary or its authorized representative which is given or made pursuant to
this Article Four if such order, direction or request is given or made in
accordance with the Applicable Procedures, and the Trustee shall have no
liability to any party in connection therewith except to the extent of its own
gross negligence or willful misconduct.

          (d) Every Note delivered upon registration of transfer of, or in exchange
for or in lieu of, a Global Note or any portion thereof, whether pursuant to
this Article Four or otherwise, shall be delivered in the form of, and shall
be, a Global Note, unless such Note is registered in the name of a Person other

than the Depositary for such Global Note or a nominee thereof.

          (e) The Depositary or its nominee, as registered owner of a Global Note,
shall be the Note Holder of such Global Note for all purposes under this
Agreement and the Notes, and owners of beneficial interests in a Global Note
shall hold such interests pursuant to the Applicable Procedures. Accordingly,
any such owner’s beneficial interest in a Global Note will be shown only on,
and the transfer of such interest shall be effected only through, records
maintained by the Depositary or its nominee or its Agent Members.

          SECTION
4.06  Registration of, Issuance, Transfer and Exchange
of Notes.

          (a) The Note Registrar shall maintain, or cause to be maintained, at the
office or agency maintained pursuant to Section 4.09, a note register (the
“Note Register”) in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of Notes and of
transfers and exchanges of Notes as provided in this Agreement.

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     First Union
Trust Company, National Association is hereby initially appointed (and hereby
accepts its appointment as) “Note Registrar” for the purpose of registering
Notes and transfers and exchanges of Notes in the Note Register as provided in
this Agreement.

          (b) Upon surrender for registration of transfer of any Notes at the office
or agency maintained pursuant to Section 4.09, the Trustee, on behalf of the
Trust, shall execute and deliver, in the name of the designated transferee or
transferees, one or more new Notes in authorized denominations in an aggregate
principal amount equal to the Note or Notes so surrendered and dated the date
of execution by the Trustee, subject to the applicable restrictions on transfer
set forth herein. At the option of a Note Holder, such Note Holder’s Notes may
be exchanged for other Notes in authorized denominations having an aggregate
principal amount equal to the aggregate principal amount of the Notes to be
exchanged, upon surrender of the Notes to be exchanged at the office or agency
maintained pursuant to Section 4.09.

          (c) Every Note presented or surrendered for registration of transfer or
exchange shall be accompanied by a written instrument of transfer substantially
in the form of the Assignment Form attached to each Note or, in the case of an
exchange, a written instrument in form satisfactory to the Trustee and the Note
Registrar, in each case duly executed by the Note Holder or its attorney duly
authorized in writing. Each Note surrendered for registration of transfer or
exchange shall be cancelled and subsequently disposed of by the Trustee in
accordance with its customary practice.

          (d) No service charge shall be made for any registration of transfer or
exchange of Notes, but the Trustee or the Note Registrar may require payment of
a sum sufficient to cover any tax (other than income taxes) or governmental
charge that may be imposed on the Trust, the Trustee or the Note Registrar in
connection with any transfer or exchange of Notes.

          (e) Any transfer of a Note shall be subject to the provisions of Sections
5.05, 5.06 and 5.07. In addition, each Note shall be subject to the
restrictions on transfer provided in the applicable legends required to be set
forth on the face of each Note pursuant to Exhibit B hereto.

          (f) Notwithstanding anything contained herein to the contrary, the Trustee
shall not be responsible for ascertaining whether any transfer complies with
the registration provisions or exemptions from the Securities Act, the Exchange
Act, applicable state securities law, the Investment Company Act or any other
laws; provided, however, that, if a certificate is specifically required to be
delivered to the Trustee by a purchaser or a transferee of a Note, the Trustee
shall be obligated to examine such certificate to determine whether it conforms
to the requirements of this Agreement.

          SECTION
4.07 Mutilated, Destroyed, Lost or Stolen Notes. In case any Note
becomes mutilated or defaced or lost, destroyed or stolen, then on the terms
herein set forth, and not otherwise, the Trustee on behalf of the Trust shall
execute and deliver to the registered Note Holder a new Note of like tenor and
date, and bearing such identifying number or designation as the Trustee may
determine, in exchange and substitution for, and upon cancellation of, the
mutilated or defaced Note, or in lieu of and in substitution for the same if
lost, destroyed or stolen. The applicant for a new Note pursuant to this
Section 4.07 shall, in the case of any mutilated or defaced Note, surrender
such Note to the Trustee and furnish to the Trustee, in the

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case of any lost,
destroyed or stolen Note, evidence satisfactory to the Trustee of such loss,
destruction or theft and, in each case, evidence satisfactory to the Trustee of
the ownership and authenticity of such Note and shall pay all expenses and
charges of such substitution and furnish such security or indemnity as may be
reasonably required by the Trustee to indemnify and defend and save the Trustee
and the Trust harmless from any loss (provided that the unsecured agreement of
indemnity of any Note Holder or an Affiliate thereof shall be deemed
satisfactory for the aforementioned purpose, it being understood that the
Trustee may reasonably request information necessary to establish that the
applicable Note Holder is a Qualified Purchaser). Any defaced or mutilated
Note shall be destroyed by the Trustee, or retained in accordance with its
standard retention policy, upon delivery by it of a new Note to the Note
Holder.

          SECTION 4.08 Persons Deemed Owners. Prior to due presentation of a Note for registration of transfer, the
Trustee, the Note Registrar and any agent of the Trustee or the Note Registrar
may treat the Person in whose name such Note is registered as the owner of such
Note for the purpose of receiving Distributions pursuant to Section 6.03 hereof
and pursuant to the Participation Agreement and for all other purposes
whatsoever, and neither the Trustee, the Note Registrar, nor any agent of the
Trustee or the Note Registrar shall be affected by any notice to the contrary.

          SECTION 4.09 Maintenance of Office or Agency. The Trustee shall maintain
in the State of Delaware an office or offices or agency or agencies where Notes
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Trustee in respect of the Notes and the Operative
Documents may be served. The Trustee initially designates First Union Trust
Company, National Association, One Rodney Square, 1st Floor, 920 King Street,
Wilmington, DE 19801, Attention: Corporate Trust Administration for such
purposes. The Trustee shall give prompt written notice to the Note Holders of
any change in the location of the Note Register or any such office or agency.

          SECTION 4.10 Book-Entry Provisions for Global Notes. The Global Notes
initially shall (i) be registered in the name of the Depositary or the nominee
of such Depositary, (ii) be delivered to the Trustee as custodian for such
Depositary and (iii) bear legends as set forth in Exhibit B, to the extent
applicable.

          (a) Members of, or participants in, the Depositary (“Agent Members”) shall
have no rights under this Agreement with respect to any Global Note held on
their behalf by the Depositary, or the Trustee as its custodian, or under the
Global Note, and the Depositary may be treated by the Depositor, the Trustee
and any agent of the Depositor or the Trustee as the absolute owner of the
Global Note for all purposes whatsoever.

          (b) Transfers of Global Notes shall be limited to transfers in whole, but
not in part, to the Depositary, its successors or their respective nominees.
Interests of beneficial owners in the Global Notes may be transferred or
exchanged for registered Notes in accordance with the rules and procedures of
the Depositary and the provisions of Sections 4.05 and 4.06.

          (c) Except as provided above, any Note delivered upon registration of
transfer of, or in exchange for, or in lieu of, any Global Note, whether
pursuant to this Section 4.10 or otherwise, shall also be a Global Note and
bear the legends specified in Exhibit B.

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          (d) The Note Holder of any Global Note may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Note Holder is
entitled to take under this Agreement or the Notes.

ARTICLE V

RIGHTS, OBLIGATIONS, POWERS AND STATUS OF THE NOTE HOLDERS

          SECTION 5.01 Management of the Trust. It is the intention of the parties
hereto (and the Note Holders by their acceptance of the Notes from time to time
shall be deemed to agree), that the Trustee’s duties are to be ministerial in
nature only. Subject to Sections 6.10 and 6.11, the Note Holders (or the
portion thereof as provided herein) shall have the exclusive right and
obligation to determine the matters herein referenced to be determined by the
Note Holders and to direct the Trustee to carry out and accomplish such
matters, and the Note Holders, in that capacity, subject to the provisions of
the Delaware Business Trust Act, the other provisions of this Agreement and the
Operative Documents, shall direct the management of the business and affairs of
the Trust, in a manner consistent with the provisions of this Agreement and the
Delaware Business Trust Act in order best to carry out the Trust’s purposes.

          SECTION 5.02 Bankruptcy, Dissolution or Termination of any Note Holder.
The incapacity, dissolution, termination or bankruptcy of any Note Holder shall
not result in the termination or dissolution of the Trust.

          SECTION 5.03 Creditors of Note Holders. As is provided in paragraph (b)
of Section 3805 of the Delaware Business Trust Act, no creditor of a Note
Holder shall have any right to obtain possession of, or otherwise exercise
legal or equitable remedies with respect to, the Trust Estate.

          SECTION 5.04 Certain Rights of the Majority Note Holders.

          (a) Subject to Section 5.04(b) hereof, the Majority Note Holders shall
have the right to direct all matters on behalf of the Trust and to provide
instructions to the Trustee in connection therewith, including, without
limitation, with respect to the following matters:

	 	(i)	 	any amendment, modification or change in any
manner of any term or condition of, and any cancellation or
termination of, any Operative Document or any consent, waiver
or approval thereunder (including any agreement, consent,
waiver or approval with respect to the exercise by the Trustee
of any discretion, authority or power or any consent or
approval right or power of the Trustee under the Participation
Agreement or any other Operative Document);
	 
	 	(ii)	 	direct the Trustee in accordance with Sections
5.01, 6.02, 6.03 and 7.09 (including directing the Trustee to
exercise the rights of the Trust as a party to the
Participation Agreement or otherwise give consents, waivers

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	 	 	 	or approvals, or otherwise exercise rights, in respect of the
Participation Agreement);
	 
	 	(iii)	 	appoint a successor Trustee pursuant to Section
7.11; and
	 
	 	(iv)	 	instruct the Trustee to appear in, prosecute or
defend any action in accordance with Section 7.02(g).

          (b) Notwithstanding the provisions of Section 5.04(a) or anything else in
this Agreement or the Participation Agreement to the contrary, no Reserved
Action may be taken without the consent of all Note Holders.

          SECTION 5.05 Restriction on Transfers of Notes. Each Note Holder hereby
agrees, for the benefit of each other Note Holder, as set forth in this
Section.

          (a) Restrictions. Except as otherwise permitted by this Agreement, no
Note Holder shall Transfer all or any portion of its Notes.

          (b) Permitted Transfers. Subject to the conditions and restrictions set
forth in Section 5.06, any Note Holder may Transfer to any Person all or a
portion of its Notes (i)(A) to a Person whom the Note Holder reasonably
believes is a Qualified Institutional Buyer within the meaning of Rule 144A
under the Securities Act and who purchases the Note for its own account or for
one or more accounts (each of which is a Qualified Institutional Buyer), in a
transaction that meets the requirements of Rule 144A under the Securities Act
and which may be effected without loss of any applicable Investment Company Act
exemption or (B) to the Depositor in accordance with and subject to the terms
of this Agreement and (ii) in accordance with any applicable securities laws of
any state of the United States and any other applicable jurisdictions.

          SECTION
5.06 Conditions to Permitted Transfers. A Transfer of a Note
shall not be treated as a Permitted Transfer under Section 5.05 unless and
until the following additional conditions are satisfied:

          (a) Payment of Expenses, etc. Unless the requirements of this Section
5.06(a) have been waived by the Required Note Holders, the transferee and/or
transferor shall have agreed to pay or reimburse the Trust for all reasonable
legal, filing, publication and other costs that the Trust reasonably incurs in
connection with the Transfer and the admission of the transferee as a Note
Holder with respect to the Transferred Note.

          (b) Tax Information. The transferor and transferee shall furnish to the
Trust the transferee’s taxpayer identification number and any other information
reasonably necessary to permit the Trust to file all required federal and state
tax returns and other legally required information statements or returns.
Without limiting the generality of the foregoing, the Trust shall not be
required to make any distribution otherwise provided for in this Agreement with
respect to any Transferred Note until it has received such information.

          (c) Securities Laws. Such Transfer will be exempt from all applicable
registration requirements under the Securities Act and any applicable state
securities law and will not violate any laws regulating the Transfer of
securities.

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          (d) Investment Company Act. Such Transfer will not cause the Trust to be
deemed to be an “investment company” under the Investment Company Act.

          (e) Tax Status. The Transfer will not cause the Trust to become taxable
as a corporation (including a publicly traded partnership) for federal income
tax purposes.

          SECTION 5.07 Prohibited Transfers.

          (a) Any purported Transfer of a Note that is not a Permitted Transfer
shall be null and void.

          (b) In the case of a Transfer or attempted Transfer of Notes that is not a
Permitted Transfer, the parties engaging or attempting to engage in such
Transfer shall indemnify and hold harmless the Trust and the Note Holders from
all costs, liability and damage that any of such parties may incur (including
incremental tax liability and attorneys’ fees and expenses) as a result of such
Transfer or attempted Transfer and efforts to enforce the indemnity granted
hereby.

          SECTION 5.08 Information.

          (a) So long as any of the Notes are “restricted securities” within the
meaning of Rule 144(a)(3) under the Securities Act, the Trustee shall, unless
the Trust becomes subject to and complies with the reporting provisions of
Section 13 or Section 15(d) of the Exchange Act provide to any Note Holder or
to any prospective purchaser of Notes designated by a Note Holder upon the
written request of such Note Holder or prospective purchaser, the information
required to be provided by Rule 144A(d)(4), as amended, under the Securities
Act provided the Trustee is in actual possession of such information. If the
Trust becomes subject to the foregoing reporting requirements, the Depositor
agrees to comply with such reporting requirements on behalf of the Trust.

          (b) The Trustee shall distribute to Note Holders any information that is
delivered by the Depositor to the Trustee pursuant to the Participation
Agreement.

          SECTION 5.09 Acts of Note Holders.

          (a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by Note Holders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Note Holders in person or by agents duly appointed
in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Trustee. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the “Act” of the Note Holders signing such instrument
or instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Agreement
and conclusive in favor of the Trustee and the Trust, if made in the manner
provided in this Section.

	 	(i)	 	The fact and date of the execution by any Person
of any such instrument or writing may be proved by the
affidavit of a witness of such execution or by a certificate
of a notary public or other officer authorized by law to take

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	 	 	 	acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a signer acting
in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient
proof of authority. The fact and date of the execution of any
such instrument or writing, or the authority of the Person
executing the same, may also be proved in any other manner
that the Trustee deems sufficient.
	 
	 	(ii)	 	The principal amount and serial numbers of Notes
held by any Person, and the date of holding the same, shall be
proved by the Note Register.
	 
	 	(iii)	 	If the Trust shall solicit from the Note Holders
any request, demand, authorization, direction, notice,
consent, waiver or other Act, the Trust may, at its option,
fix in advance a record date for the determination of Note
Holders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other Act, but the Trust
shall have no obligation to do so. Such record date shall be
the record date specified in a notice by the Trustee to the
Note Holders, which shall be a date not earlier than the date
30 days prior to the first solicitation of Note Holders
generally in connection therewith and not later than the date
such solicitation is completed. If such a record date is
fixed, such request, demand, authorization, direction, notice,
consent, waiver or other Act may be given before or after such
record date, but only the Note Holders of record at the close
of business on such record date shall be deemed to be Note
Holders for the purposes of determining whether Note Holders
of the requisite proportion of outstanding Notes have
authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other
Act, and for that purpose the outstanding Notes shall be
computed as of such record date; provided that no such
authorization, agreement or consent by the Note Holders on
such record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Agreement
not later than eleven months after the record date.
	 
	 	(iv)	 	The Trustee shall provide all Note Holders with
the notice received by it as Participant under Section 6.2 of
the Participation Agreement within one (1) Business Day of
such receipt.

          (b) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Note Holder of any Note shall bind every future Note Holder
of the same Note and the Note Holder of every Note issued upon the registration
of transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee in reliance
thereon, whether or not notation of such action is made upon such Note.

          SECTION 5.10 Action by Note Holders. Whenever in this Agreement it is
provided that the Note Holders of a specified percentage in principal amount of
Notes may take any action (including the making of any demand or request, the
giving of any notice, consent or

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waiver or the taking of any other action) the
fact that at the time of taking any such action the Note Holders of such
specified percentage have joined therein may be evidenced (a) by an instrument
or a number of instruments as provided in Section 5.09, or (b) by the record of
the Note Holders voting in favor thereof at any meeting of Note Holders duly
called and held in accordance with the provisions of Section 5.11 or (c) by a
combination of such instrument or instruments and any such record of such a
meeting of Note Holders.

          SECTION 5.11 Proof of Record of Note Holders’ Meeting. Subject to the
provisions of Sections 7.09 and 5.18, the record of any Note Holders’ meeting
shall be proved in the manner provided in Section 5.18.

          SECTION 5.12 Revocation of Consents; Future Note Holders Bound. At any
time prior to (but not after) the evidencing to the Trustee, as provided in
Section 5.10, of the taking of any action by the Note Holders of the percentage
in aggregate principal amount of the Notes specified in this Agreement in
connection with such action, any holder of a Note the serial number of which is
shown by the evidence to be included in the Notes the Note Holders of which
have consented to or are bound by consents to such action may, by filing
written notice with the Trustee within five (5) Business Days at its principal
office and upon proof of holding, revoke such action so far as concerns such
Note. Except as aforesaid any such action taken by the Note Holder of any Note
shall be conclusive and binding upon such Note Holder and upon all future Note
Holders and owners of such Note and of any Note issued on registration of
transfer thereof or in exchange or substitution therefor, irrespective of
whether or not any notation in regard thereto is made upon any such Note or
such other Note.

          SECTION 5.13 Purposes of Meeting. A meeting of the Note Holders may be
called at any time and from time to time pursuant to the provisions of this
Article Five for any of the following purposes:

	 	(i)	 	to give any notice to the Trust or to the Trustee,
or to give any directions to the Trustee or to take any other
action authorized to be taken by Note Holders pursuant to any
of the provisions of Article Five;
	 
	 	(ii)	 	to remove the Trustee and nominate a successor
trustee with respect to the Notes pursuant to the provisions
of Article Seven;
	 
	 	(iii)	 	to consent to the execution of an agreement or
agreements supplemental hereto pursuant to the provisions of
Section 6.11; or
	 
	 	(iv)	 	to take any other action authorized to be taken by
or on behalf of the Note Holders of any specified aggregate
principal amount of the Notes under any other provision of
this Agreement or under applicable law.

          SECTION 5.14 Call of Meetings by Trustee. The Trustee may at any time
call a meeting of Note Holders to take any action specified in Section 5.13, to
be held at such time and at such place as the Trustee shall determine. Notice
of every meeting of the Note Holders, setting forth the time and the place of
such meeting and in general terms the action proposed to be taken at such
meeting, shall be mailed to all Note Holders at their addresses as they shall

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appear on the Note Register. Such notice shall be mailed not less than 20 nor
more than 180 days prior to the date fixed for the meeting.

          SECTION
5.15 Call of Meetings by the Trust or Note Holders. In case at
any time the Trust or the Note Holders of at least 25% in aggregate principal
amount of the outstanding Notes, shall have requested the Trustee to call a
meeting of the Note Holders, by written request setting forth in reasonable
detail the action proposed to be taken at the meeting and the Trustee shall not
have mailed the notice of such meeting within 20 days after receipt of such
request, then the Trust or such Note Holders may determine the time and the
place for such meeting and may call such meeting to take any action authorized
in Section 5.13, by mailing notice thereof as provided in Section 5.14.

          SECTION 5.16 Qualifications for Voting. To be entitled to vote at any
meeting of Note Holders a Person shall (a) be a Note Holder of one or more
Notes or (b) be a Person appointed by an instrument in writing as proxy by a
Note Holder of one or more Notes. The only Persons who shall be entitled to be
present or to speak at any meeting of Note Holders shall be the Persons
entitled to vote at such meeting and their counsel and any representatives of
the Trust and its counsel.

          SECTION 5.17 Regulations. Notwithstanding any other provisions of this
Agreement, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Note Holders, in regard to proof of the holding of
Notes and of the appointment of proxies, and in regard to the appointment and
duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think fit. Except as
otherwise permitted or required by any such regulation, the appointment of any
proxy shall be proved in the manner specified in said Section 5.09 (a)(i) or by
having the signature of the Person executing the proxy witnessed or guaranteed
by any bank, broker or trust company.

          The Trustee shall act as a temporary chairman and temporary secretary of
the meeting, unless the meeting shall have been called by the Trust or by Note
Holders as provided
in Section 5.15, in which case the Trust or the Note Holders calling the
meeting, as-the case may be, shall in like manner appoint a temporary chairman
and a temporary secretary.

          Subject to the provisions of Section 5.16, at any meeting each Note Holder
or proxy shall be entitled to one vote for each $1,000 principal amount of
Notes held or represented by him; provided, however, that no vote shall be cast
or counted at any meeting in respect of any Note challenged as not outstanding
and ruled by the Trustee to be not outstanding. The Trustee shall not have the
right to vote other than by virtue of Notes held by him or instruments in
writing as aforesaid duly designating him as the Person to vote on behalf of
other Note Holders. Any meeting of Note Holders duly called pursuant to the
provisions of Section 5.14 or 5.15 may be adjourned from time to time by the
Majority Note Holders at the meeting, whether or not constituting a quorum, and
the meeting may be held as so adjourned without further notice.

          At any meeting of Note Holders, the presence of Persons holding or
representing Notes in an aggregate principal amount sufficient to take action
upon the business for the transaction of which such meeting was called shall be
necessary to constitute a quorum; but, if

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less than a quorum be present, the
Majority Note Holders at the meeting may adjourn such meeting with the same
effect for all intents and purposes, as though a quorum had been present.

          SECTION
5.18 Voting. The vote upon any resolutions submitted to any
meeting of Note Holders shall be by written ballots on which shall be
subscribed the signatures of the Note Holders or of their representatives by
proxy and the serial number or numbers of the Notes held or represented by
them. The Trustee shall appoint two inspectors of votes who shall count all
votes cast at the meeting for or against any resolution and who shall make and
file with the Trustee their verified written reports in duplicate of all votes
cast at the meeting. A record in duplicate of the proceedings of each meeting
of Note Holders shall be prepared by the Trustee and there shall be attached to
said record the original reports of the inspectors of votes on any vote by
ballot taken thereat and affidavits by one or more persons having knowledge of
the facts setting forth a copy of the notice of the meeting and showing that
said notice was mailed as provided in Section 5.14. The record shall show the
serial numbers of the Notes voting in favor of or against any resolution. The
record shall be signed and verified by the affidavit of the Trustee and one of
the duplicates shall be delivered to the Trust and the other preserved by the
Trustee, the latter to have attached thereto the ballots voted at the meeting.

          Any record so signed and verified shall be conclusive evidence of the
matters therein stated.

          SECTION
5.19 No Delay of Rights by Meeting. Nothing contained in this
Article Five contained shall be deemed or construed to authorize or permit, by
reason of any call of a meeting of Note Holders or any rights expressly or
impliedly conferred hereunder to make such call, any hindrance or delay in the
exercise of any right or rights conferred upon or reserved to the Trustee or to
the Note Holders under any of the provisions of this Agreement or of the Notes.

          SECTION
5.20 Obligations of the Depositor to Note Holders.

          (a) The Depositor hereby agrees for the benefit of the Note Holders that,
notwithstanding anything to the contrary in the Trust Indenture, when any vote
of the Depositor is permitted or required under the Trust Indenture in its
capacity as holder of all or any of the Underlying Debentures (excluding any
Underlying Debentures subject to a participation arrangement other than with
the Trust), the Depositor shall vote such Underlying Debentures in accordance
with the decision of the Majority Note Holders as such decision shall be
communicated to the Depositor by the Trustee in accordance with the procedures
set forth in Section 5.20(b) below.

          (b) Within two (2) Business Days of (i) Depositor’s knowledge of a right
to vote under the Trust Indenture, whether arising out of (i) a provision of
the Trust Indenture or the Underlying Debentures, or (ii) any notice of such
right that may be delivered from time to time to the Depositor in its capacity
as a holder of the Underlying Debentures, the Depositor shall provide written
notice to the Trustee (x) specifying the provision of the Trust Indenture or
Underlying Debenture pursuant to which such right arises, (y) including any
notice and accompanying materials the Depositor may have received with respect
thereto, and (z) setting forth the date by which the Depositor must exercise
such voting rights (the “Voting Due Date”).

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     Upon Trustee’s receipt of the
information contained in the preceding sentence, Trustee shall, within two (2)
Business Days, distribute copies of such information to each Note Holder. Each
Note Holder shall thereafter provide written notice to the Trustee of the
manner in which it elects to vote with respect to the matters submitted to the
Depositor. The Note Holders hereby acknowledge that if their votes are to be
counted, they must provide the Trustee with written notice thereof on or before
five (5) Business Days prior to the Voting Due Date. The Trustee shall use its
best reasonable efforts to compile the votes of the Note Holders and provide
written notice to the Depositor of the determination of the Majority Note
Holders on or before the Voting Due Date.

          (c) The provisions of this Section 5.20 are subject in all respects to the
following limitations, which are in addition to, and not in substitution or
modification of, all of the other provisions of this Agreement relating to the
Trustee:

	 	(i)	 	The Trustee shall have no obligation to
interpret, explain, or clarify any information provided to it
by the Depositor, but shall merely forward such information to
the Note Holders as provided in Section 5.20(b) above;
	 
	 	(ii)	 	Except in connection with its own gross
negligence or willful misconduct, the Trustee shall have no
liability for (x) the failure to deliver a determination of
the Majority Note Holders on or before the Voting Due Date,
including, without limitation, failures arising out of delays
necessitated by Trustee’s conferring with counsel pursuant to
Section 5.20(c)(iii) below, (y) mistabulating the votes of the
Note Holders, or (z) the failure of the Depositor to vote the
Underlying Debentures in accordance with the determination of
the Majority Note Holders pursuant to this Section 5.20;
	 
	 	(iii)	 	In the event the Trustee is unable to determine
how to interpret the votes it receives from the Note Holders,
Trustee shall be entitled to engage, at the expense of the
Depositor, legal counsel for assistance therewith, and Trustee
shall be entitled to rely conclusively upon any advice it
obtains therefrom; and
	 
	 	(iv)	 	The Trustee shall be entitled to compensation for
providing the services set forth in this Section 5.20, as more
particularly set forth in a letter agreement between the
Trustee and the Depositor.

ARTICLE VI

COLLECTIONS; DISTRIBUTIONS; REDEMPTIONS; REGISTRATION RIGHTS; FURTHER ISSUANCES

          SECTION 6.01 Payments from Trust Estate. All payments to be made by the
Trustee on behalf of the Trust, whether under this Agreement or any of the
other Operative Documents to which the Trust is a party or otherwise, shall be
made only from the Trust Estate

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and only to the extent that the Trust shall
have funds in the Trust Estate sufficient to make such payments in accordance
with the terms hereof.

          SECTION
6.02 Establishment of Trust Account.

          (a) The Trustee hereby acknowledges and agrees that it has established, on
the books and records of its office in the State of Delaware, an account (the
“Trust Account”) in the name of the Trust, and under the sole dominion and
control of the Trust. To the extent, if any, that the Trustee is deemed to
hold directly any financial asset (as defined under the UCC) held by the
Trustee for the Trust, the Trustee hereby agrees that it is holding such
financial asset as the agent of the Trust and hereby expressly acknowledges and
agrees that it has received notification of the Trust’s interest in such
financial asset and that it is holding possession of such financial asset for
the benefit of the Trust.

          (b) The Trust Account shall remain at all times with a financial
institution having a combined capital and surplus of at least $150,000,000 and
having a long-term debt rating of at least “A3” by Moody’s and at least “A-” by
S&P. The Trustee shall give notice to the Trust of the location of the Trust
Account prior to the use thereof, and shall make no change to such location
without the prior approval of the Trust. Any income received by the Trust with
respect to the balance from time to time on deposit in the Trust Account shall
be credited to the Trust Account. All right, title and interest in and to the
amounts on deposit from time to time in the Trust Account shall constitute part
of the Trust Estate and shall be held for the benefit of the Trust and shall
not constitute payment of any obligations to which such funds are to be applied
pursuant to the provisions hereof until applied thereto as hereinafter
provided.

          (c) Moneys deposited into the Trust Account shall not be commingled with,
and shall be segregated and kept apart from, other funds held by the Trust and
may be deposited under such general conditions as may be prescribed by law, and
the Trustee shall not be liable for any interest thereon.

          (d) The Trustee shall make, to the extent required or authorized
hereunder, withdrawals from the Trust Account: (i) to withdraw any amount
deposited in the Trust Account and not required to be deposited therein; (ii)
to make required payments to the parties entitled thereto pursuant to
Section 6.03; and (iii) to clear and terminate the Trust Account pursuant to the
instructions of the Super Majority Note Holders and in accordance with the
requirements of the Act in connection with the liquidation and winding up of
the Trust.

          (e) Only the Trustee, on behalf of and for the benefit of the Trust, shall
be entitled to withdraw funds from the Trust Account and only the Trustee shall
be an authorized signatory on the Trust Account. The Trustee shall withdraw
funds from the Trust Account only pursuant to and in accordance with this
Agreement.

          (f) The Trustee may invest amounts in the Trust Account in U.S. Government
Obligations.

          SECTION 6.03 Distributions from the Trust Account. The Trustee shall
withdraw and distribute all Available Funds held in the Trust Account pursuant
to and in

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accordance with this Section 6.03. Prior to the redemption of all
Notes pursuant to Section 6.07, all amounts in the Trust Account shall be
distributed by the Trustee as follows:

          (a) The Trust will duly and punctually pay the Payments in accordance with
the terms of the Notes and this Agreement. All Payments made to the Note
Holders on any Payment Date or other date shall be made to the Note Holders of
record as of the close of business on the last Business Day of the calendar
month immediately preceding such Payment Date (the “Regular Record Date”) in
accordance with each Note Holders’ Proportionate Interest.

          (b) Upon receipt of any cash Distributions, the Trustee shall make
Payments to Note Holders in accordance with each Note Holder’s Proportionate
Interest on any Payment Date by wire transfer to the account specified in
writing by the applicable Note Holder to the Trustee. The account must be
specified in writing no later than the Regular Record Date. Upon receipt of
the wire instructions from the Note Holders, the Trustee shall notify the
Depositary of such wire transfer instructions and the Depositary shall make
Payments to the Note Holders by immediately crediting participants’ accounts
with Payments in amounts proportionate to their respective beneficial interests
in the Global Note as shown on the records of the Depositary or its nominee.
The Trustee expects that Payments by participants to owners of beneficial
interests in such Global Note held through such participants will be governed
by the standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in the names of
nominees for such customers. Neither the Trustee nor the Depositary will be
responsible for any participant’s payment obligations to a Note Holder.

          (c) Upon receipt by the Trustee of any securities or other non-cash
payment from the Depositor, the Trustee shall, upon receipt of any such
securities or other non-cash payment from the Depositor, cooperate with the
Note Holders and use commercially reasonable efforts, at the Depositor’s
expense, to cause to be transferred to each Note Holder or its nominee(s) as
soon as practicable thereafter (without recourse to, or representation or
warranty by, the Trust), the beneficial and record ownership of such securities
or other non-cash payment from the Depositor. The Trustee’s obligation under
the immediately preceding sentence is conditioned upon the Note Holders, at
their own expense, executing all agreements, instruments and documents and
taking all other actions required to effect such transfer. If the Trustee is
prohibited by any law, rule or order from transferring any such securities or
other non-cash payment to the Note Holders as contemplated in this Section
6.03(c), or at any time before such securities or other non-cash payment shall
have been transferred to the Note Holders, such securities or other non-cash
payment will remain in the Trust for the benefit of the Note Holders and the
Trustee shall, subject to Section 7.09, exercise any rights in such securities
solely in accordance with the written directions of the Majority Note Holders.
Upon an increase of the Participated Principal Amount as a result of the
receipt of a non-cash Distribution being paid to the Depositor as interest on
the Underlying Debentures, the Trust shall, within five (5) Business Days,
issue additional Notes to the Note Holders in an amount equivalent to the
increase in the Participated Principal Amount. Each Note Holder shall receive
its Proportionate Interest of the aggregate principal amount of additional
Notes being issued. The aggregate principal amount of Notes issued shall be
the U.S. dollar equivalent of the value of the non-cash Distribution provided
to meet Interest Obligations rounded down to the nearest whole Note.

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          (d) The Depositor shall upon receipt of a non-cash Distribution provide
written notice to the Trustee stating the amount of the increase in the
Participated Principal Amount.

          (e) The Note Register shall be adjusted by the Note Registrar to reflect
the increase in the number of Notes held by each Note Holder in accordance with
its Proportionate Interest in the additional Notes issued pursuant to this
Section 6.03.

          SECTION
6.04 Payment Date Statements. On each Payment Date, the Trustee
shall prepare and deliver to the Note Holders a statement (the “Payment Date
Statement”) setting forth for the period since the preceding Payment Date, as
applicable, (i) the amount, nature and origin of all income, proceeds, payments
and collections received in the Trust Account and (ii) the amounts to be paid
or distributed pursuant to Section 6.03(b), (c) or (d).

          SECTION 6.05 Tax Allocations. All items of Trust income, gain, loss,
deduction and credit will be allocated for income tax purposes to the Note
Holders pro rata based on their respective ownership of Notes during each
taxable year of the Trust.

          SECTION 6.06 Withholding. Notwithstanding any other provision of this
Agreement to the contrary, each Note Holder hereby authorizes the Trustee to
withhold and to pay over any taxes (including any
interest or penalties related thereto) payable by the Trust as a result of
such Note Holder’s participation in the Trust; provided, however, that the
Trustee shall not be required to make any determination as to whether or not
such taxes are payable. The Trustee will give each such Note Holder at least
five (5) Business Days’ notice prior to any such withholding. If and to the
extent that the Trust shall be required to withhold any such taxes (including
any interest or penalties related thereto), such Note Holder shall pay the
amount of such withholding to the Trust within three (3) Business Days of being
notified in writing of the amount to be withheld by the Trust. The
withholdings referred to in this Section 7.06 shall be made at the maximum
applicable statutory rate under the applicable tax law unless the Trustee shall
have received an opinion of counsel or other evidence, satisfactory to the
Trustee, to the effect that a lower rate is applicable, or that no withholding
is applicable.

          SECTION
6.07 Redemptions. Upon the Underlying Debentures being redeemed
by the Issuer in accordance with the provisions of the Trust Indenture, the
Depositor shall deliver a redemption notice to the Trustee and the Trustee
shall deliver such redemption notice to Note Holders promptly after receipt.
The Depositor shall transfer the Distributions it receives to the Trust within
one (1) Business Days after receipt of immediately available funds or after the
funds become available for distribution after deposit of a check, draft or
other instrument. The Trustee shall promptly transfer on the Payment Date the
redemption amounts to the Note Holders according to their Proportionate
Interest in the Trust Estate. Upon redemption of the Notes and payment in full
of all amounts due in respect thereof to the Note Holders, the Notes so
redeemed shall be cancelled and the prior holders thereof shall cease to be
beneficial owners (within the meaning of the Delaware Business Trust Act) of
the Trust.

          If less than all the Notes are to be redeemed, the particular Notes to be
redeemed shall be selected not more than 60 days prior to the Redemption Date
by the Trustee pro rata in accordance with each Note Holder’s Proportionate
Interest in the aggregate principal amount of outstanding Notes not previously
called for redemption, provided, however, that no such partial

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redemption shall
reduce the portion of the principal amount of a Note not redeemed to less than
the minimum authorized denomination for Notes established pursuant to
Section
4.03.

          Any Note which is to be redeemed only in part (pursuant to the provisions
of this Article) shall be surrendered at a Place of Payment therefor (with, if
the Trustee so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Trustee duly executed by, the Note Holder
thereof or such Note Holder’s attorney duly authorized in writing), and the
Trustee shall execute and deliver to the Note Holder of such Notes without
service charge, a new Note or Notes, of any authorized denomination as
requested by such Note Holder, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Note so
surrendered.

          SECTION
6.08 Interest Rate Reset Request. On May 15, 2003, the Trustee
shall deliver a notice to all Note Holders requesting them to instruct the
Trustee as to whether the Note Holders would like to trigger an Interest Rate
Reset. If Super Majority Note Holders request the Interest Rate Reset, the
Trustee
will send a notice to the Depositor within five (5) Business Days
requesting that the Depositor deposit the number of Underlying Debentures
representing all of the Participation. Upon such deposit of Underlying
Debentures, the Underlying Debentures and the Notes will bear interest at the
Reset Rate of Interest. If the Interest Rate Reset is not triggered because
the Super Majority Note Holders did not approve the transaction, on each
anniversary date of the Elevation Date, Holders of an aggregate principal
amount of at least $25 million of the Notes may instruct the Trustee to solicit
the Note Holders again in order to trigger the Interest Rate Reset. In
addition, at any time after May 15, 2003, Super Majority Note Holders may make
a request to the Trustee to trigger the Interest Rate Reset. Once there has
occurred an Interest Rate Reset, it can no longer be reset again.

          SECTION 6.09 Registration Rights. On or after May 15, 2003 and prior to
an Elevation, Holders of an aggregate principal amount of at least $25 million
of the Notes may instruct the Trustee to deliver a notice to all Note Holders
requesting them to instruct the Trustee as to whether the Note Holders would
like to instruct the Depositor to demand registration of the Underlying
Debentures in the United States and Canada (“Registration”) pursuant to the
Depositor’s rights under an agreement entered into between the Depositor,
certain of its affiliates, the Issuer and CanWest on November 15, 2000. If
Majority Note Holders request the Registration, the Trustee will send a notice
to the Depositor within five (5) Business Days of such election, and the
Depositor shall demand Registration. Upon Registration, if a request for an
Elevation or Interest Rate Reset has been made by Super Majority Note Holders,
the Trustee will immediately effect an Elevation by accepting in further trust
the Underlying Debentures transferred to it by the Depositor and consequently
an Interest Rate Reset will occur. The right to Registration will be
terminated upon an Elevation or an Interest Rate Reset.

          SECTION 6.10 Further Issuances. Upon written notice by the Depositor to
the Trustee and an increase in the Participation deposited in the Trust not
associated with a Payment, Additional Notes ranking pari passu with the Notes
issued the date hereof shall be created and issued by the Trust without notice
or consent of the Note Holders within five (5) Business Days of receiving such
notice. The Additional Notes shall be consolidated with and form a single
series with the Notes initially issued and shall have the same terms as to
status, redemption or otherwise as the Notes originally issued, provided that,
the Trust’s ability to issue Additional

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Notes shall be subject to the Depositor
owning a sufficient amount of Underlying Debentures. Any Additional Notes
shall be issued with the benefit of an agreement supplemental to this
Agreement.

          SECTION 6.11 Supplemental Agreement. Without the consent of any Note
Holders, the Depositor, at any time and from time to time, may instruct the
Trustee to enter into one or more agreements supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:

		
	 	     (a) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein or therein, or to make
any other provisions with respect to matters or questions arising
under this Agreement; provided that, in each case, such provisions shall
not adversely affect the interests of the Note Holders in any material
respect;
	 
	 	     (b) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee pursuant to the requirements of Section
7.11; and
	 
	 	     (c) to issue Additional Notes as provided in Section 6.10.

          Upon the execution of any supplemental agreement under this Section 6.11,
this Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every Note
Holder theretofor or thereafter delivered hereunder shall be bound thereby.

          Promptly after the execution by the Depositor and the Trust of any
supplemental agreement pursuant to the provisions of Section 6.11 (a) and (b),
the Trust shall give notice thereof to the Note Holders of each outstanding
Note affected, in the manner provided for in Section 10.01, setting forth in
general terms the substance of such supplemental agreement.

ARTICLE VII

CONCERNING THE TRUSTEE AND THE DEPOSITOR

          SECTION 7.01 Accounting and Reports to Note Holders, Internal Revenue
Service and Others.

          (a) The Trustee shall (a) maintain (or cause to be maintained) the books
of the Trust on a calendar year basis on the accrual method of accounting, (b)
deliver (or cause to be delivered) to each Note Holder, as may be required by
the Code and applicable Treasury Regulations or otherwise, such information as
may be required to enable each Note Holder to prepare its federal income tax
returns, provided the Trustee is in actual possession of such information and
(c) file or cause to be filed such tax returns relating to the Trust and make
such elections as may from time to time be required or appropriate under any
applicable state or federal statute or rule or regulation thereunder. In no
event shall the Trustee or the Depositor be liable for any liabilities, costs
or expenses of the Trust or the Note Holders arising out of the

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application of
any tax law, including federal, state, foreign or local income or excise taxes
or any other tax imposed on or measured by income (or any interest, penalty or
addition with respect thereto or arising from a failure to comply therewith)
except as otherwise provided in Section 7.04 hereof.

          SECTION 7.02 Duties of Trustee.

          (a) The Trustee undertakes to perform such duties, and only such duties,
as are specifically set forth in this Agreement, including the administration
of the Trust in the interest of the Note Holders, subject to the Operative
Documents and in accordance with the provisions of this Agreement. In addition
to the foregoing, the Trustee is authorized, but shall not be obligated, to
take all actions required of the Trust pursuant to the Operative Documents.
The Trustee is further authorized from time to time to take such action as the
Note Holders recommend with respect to the Operative Documents. No implied
covenants or obligations shall be read into this Agreement.

          (b) In the absence of bad faith on its part, the Trustee may conclusively
rely upon certificates or opinions furnished to the Trustee and conforming to
the requirements of this Agreement in determining the truth of the statements
and the correctness of the opinions contained therein; provided,
however, that
the Trustee shall have examined such certificates or opinions so as to
determine compliance of the same with the requirements of this Agreement.

          (c) The Trustee may not be relieved from liability for its own gross
negligence, willful misconduct or bad faith, except that:

	 	(i)	 	this Section 7.02(c) shall not limit the effect
of Section 7.02(a) or (b);
	 
	 	(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 grossly 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
7.09.

          (d) The Trustee shall not take or be required to take any action that (i)
is inconsistent with the purposes of the Trust set forth in Section 2.04 or
(ii) would, to the actual knowledge of a Responsible Officer of the Trustee,
result in the Trust becoming taxable as a corporation and not as a grantor
trust for federal income tax purposes. In furtherance of the foregoing, the
Trust shall not at any time engage in or carry on any kind of business or any
kind of commercial or investment activity, except as otherwise provided by this
Agreement. In no event shall the Trustee or any other person have any power to
vary the investment of the Note Holders in the Notes or to substitute new
investments or reinvest so as to enable the Trust to take advantage of
variations in the market to improve the investment of the Note Holders in the
Notes.

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          (e) The Trustee is authorized and shall be obligated to cause the Trust to
take all actions required of the Trust pursuant to the Operative Documents
(including, but not limited to, all actions required of the Trust pursuant to
the Participation Agreement).

          (f) Except as provided in Section 7.04(g) and 7.14, the Trustee shall not
take any action which, in the Trustee’s opinion (based on the facts then
available to the Trustee), would or might cause the Trust or the Trustee to
incur costs, expenses or liabilities that constitute Extraordinary Expenses.

          (g) The Trustee shall not be under any obligation to appear in, prosecute
or defend any action that in its opinion may require it to incur any
out-of-pocket expense or any liability, unless it shall be furnished with
specific instruction from the Required Note Holders and such reasonable
security and indemnity against such expense or liability as it may require, and
any reasonable out-of-pocket costs of the Trustee as a result of such actions
shall be paid as aforesaid.

          (h) The recitals contained herein and in the Notes (other than the
signature and countersignature of the Trustee on the Notes) shall be taken as
the statements of the Depositor, and the Trustee assumes no responsibility for
the correctness thereof. The Trustee makes no representations as to the
validity or sufficiency of this Agreement, of any Operative Document or of the
Notes (other than the signature and countersignature of the Trustee on the
Notes) or of the Participation or related documents. The Trustee shall at no
time have any responsibility or liability for or with respect to the
sufficiency of the Trust Estate or its ability to generate the payments to be
distributed to Note Holders under this Agreement, including the compliance by
the Depositor or the Trust with any representation and warranty made under any
Operative Document or in any related document or the accuracy of such
representation and warranty.

          SECTION 7.03 Execution of Documents. The Trustee has the power to and is
authorized and directed to execute and deliver the Operative Documents on
behalf of the Trust and each certificate or other document attached as an
exhibit to or contemplated by the Operative Documents to which the Trust is to
be a party, as evidenced conclusively by the Trustee’s execution thereof.

          SECTION 7.04 Acceptance of Trusts and Duties. Except as otherwise
provided in this Article Seven, First Union Trust Company, National Association
acts solely as Trustee hereunder and not in its individual capacity and all
Persons having any claim against the Trustee by reason of the transactions
contemplated by this Agreement or any Operative Document shall look only to the
Trust Estate for payment or satisfaction thereof. The Trustee agrees to
perform its duties hereunder with respect to such trusts but only upon the
terms of this Agreement. The Trustee also agrees to disburse all moneys
actually received by it constituting part of the Trust Estate upon the terms of
the Operative Documents and this Agreement. The Trustee shall not be liable or
accountable hereunder or under any Operative Document under any circumstances,
except (i) for its own gross negligent action, its own grossly negligent
failure to act or its own willful misconduct or (ii) in the case of the
inaccuracy of any representation or warranty contained in Section 7.07 and
expressly made by the Trustee in its individual capacity. In particular, but
not by way of limitation (and subject to the exceptions set forth in the
preceding sentence):

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          (a) the Trustee shall at no time have any responsibility or liability for
or with respect to the legality, validity and enforceability of the
Participation or any action of the Depositor taken in the name of the Trustee
and the Trustee shall be deemed to have discharged its duties hereunder or
under the Operative Documents to the extent that the foregoing persons have
agreed to perform such duties;

          (b) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in accordance with the instructions of the Depositor
or any Note Holder in accordance with the provisions of this Agreement;

          (c) no provision of this Agreement or any Operative Document shall require
the Trustee to expend or risk funds or otherwise incur any financial liability
in the performance of any of its rights or powers hereunder or under any
Operative Document, if the Trustee shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured or provided to it;

          (d) under no circumstances shall the Trustee be liable for indebtedness
evidenced by or arising under any of the Operative Documents, including the
Participation Agreement or the Notes;

          (e) the Trustee shall not be responsible for or in respect of and makes no
representation as to the validity or sufficiency of any provision of this
Agreement or for the due execution hereof by the Depositor or for the form,
character, genuineness, sufficiency, value or validity of any of the Trust
Estate or for or in respect of the validity or sufficiency of the Operative
Documents, the Notes (other than the certificate of authentication on the
Notes) or of the Participation or any related documents, and the Trustee shall
in no event assume or incur any liability, duty or obligation to any Note
Holder, other than as expressly provided for herein and in the Operative
Documents;

          (f) the Trustee shall not be liable for the default or misconduct of the
Depositor under any of the Operative Documents or otherwise and the Trustee
shall have no obligation or liability to perform the obligations of the Trust
under this Agreement or the Operative Documents that are required to be
performed by the Depositor hereunder or under the other Operative Documents;

          (g) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement, or to institute, conduct or defend
any action under this Agreement or otherwise or in relation to this Agreement
or any Operative Document, at the request, order or direction of any of the
Note Holders, if in the opinion of the Trustee such action might cause the
Trustee to incur Extraordinary Expenses, unless such Note Holders have offered
to the Trustee security or indemnity satisfactory to it against the costs,
expenses and liabilities that may be incurred by the Trustee therein or
thereby. The right of the Trustee to perform any discretionary act enumerated
in this Agreement or in any Operative Document shall not be construed as a
duty, and the Trustee shall not be answerable for other than its gross
negligence or willful misconduct in the performance of any such act;

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          (h) the Trustee shall not have any duty or obligation to manage, control,
prepare, file or maintain any document (including financing statements and
continuation statements), report, license or regulation, use, sell, dispose of
or otherwise deal with the Trust Estate, or otherwise to take or refrain from
taking any action under or in connection with the Operative Documents, except
as expressly required by the terms of this Agreement and no implied duties or
obligations shall be read into this Agreement against the Trustee; and

          (i) the Trustee shall be under no obligation to appear in, prosecute or
defend any action, or to take any other action other than the giving of
notices, which in its opinion may require it to incur (i) any Extraordinary
Expenses or (ii) any liability unless it shall be furnished with such security
and indemnity against such expense or liability as it may reasonably require.

          SECTION 7.05 Refrain from Certain Actions. The Trustee shall not be
required to take any action hereunder or under any Operative Document if the
Trustee shall have reasonably determined, or shall have been advised by
counsel, that such action is likely to result in liability on the part of the
Trustee or is contrary to the terms hereof or of any Operative Document (as
amended, modified or supplemented from time to time) or is otherwise contrary
to law.

          SECTION 7.06 Furnishing of Documents. The Trustee shall furnish to the
Note Holders, promptly upon receipt of a written request therefor, duplicates
or copies of all reports, notices, requests, demands, certificates, financial
statements and any other instruments furnished to the Trustee under the
Operative Documents.

          SECTION 7.07 Representations and Warranties of Trustee. The Trustee
hereby represents and warrants to the Depositor, for the benefit of the Note
Holders, that:

          (a) It is a banking association duly organized, validly existing and in
good standing under the laws of the state of its organization or formation.

          (b) It has full power, authority and legal right to execute, deliver and
perform its duties and obligations under this Agreement, and has taken all
necessary action to authorize the execution, delivery and performance by it of
this Agreement.

          (c) The execution and delivery of this Agreement by it and its performance
and compliance with the terms of this Agreement (i) shall not violate any
provision of the corporate charter or by-laws of the Trustee, or (ii) shall not
violate any provision of, or constitute, with or without notice or lapse of
time, a default under, or result in the creation or imposition of any
Encumbrance on any properties included in the Trust pursuant to the provisions
of any mortgage, indenture, contract, agreement or other undertaking to which
it is a party, which violation, default or Encumbrance could reasonably be
expected to have a materially adverse effect on the Trustee’s performance or
ability to perform its duties as Trustee under this Agreement or on the
transactions contemplated in this Agreement.

          (d) It is not in violation, and the execution and delivery of this
Agreement by it, and its performance and compliance with the terms hereof will
not constitute a violation, of any order or decree of any court or any order or
regulation of the State of Delaware or the United States governing its banking
and trust powers, which violation would reasonably be expected to

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have a
material adverse effect on the condition (financial or otherwise) or operations
of the Trustee or its properties or on the performance of its duties hereunder.

          (e) There are no actions or proceedings against, or investigations of, the
Trustee pending, or, to the knowledge of the Trustee, threatened, before any
court, administrative agency or other tribunal (A) that could reasonably be
expected to prohibit its entering into this Agreement, (B) seeking to prevent
the issuance of the Notes contemplated by this Agreement or (C) that could
reasonably affect the performance by the Trustee of its obligations under, or
the validity or enforceability against the Trustee of, this Agreement.

          (f) The execution, delivery and performance by the Trustee of this
Agreement shall not require the authorization, consent or approval of, the
giving of notice to, the filing or registration with, or the taking of any
other action in respect of, any governmental authority or agency regulating the
banking and corporate trust activities of banks or trust companies in the
jurisdiction in which the Trust was formed, other than the filing of the
Certificate of Trust with the Secretary of State of the State of Delaware.

          (g) This Agreement has been duly executed and delivered by the Trustee and
assuming due authorization, execution and delivery hereof by the Depositor,
constitutes the legal, valid and binding agreement of the Trustee, enforceable
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other similar laws affecting the
enforcement of creditors’ rights in general and by general principles of
equity, regardless of whether such enforceability is considered in a proceeding
in equity or at law.

          (h) Notwithstanding anything contained herein to the contrary, the Trustee
shall not be required to take any action in any jurisdiction other than in the
State of Delaware if the taking of such action will (i) require the consent or
approval or taking of any other action in respect of, any state or other
governmental authority or agency of any other jurisdiction other than the State
of Delaware; (ii) result in any fee, tax or other governmental charge under the
laws of any jurisdiction or any political subdivisions thereof in existence on
the date hereof other than the State of Delaware for causes of action arising
from acts unrelated to the consummation of the transactions by the Trustee
contemplated hereby.

          SECTION 7.08 Reliance; Advice of Counsel.

          (a) The Trustee shall incur no liability to anyone in acting upon any
signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper reasonably
believed by it to be genuine and reasonably believed by it to be signed by the
proper party or parties and need not investigate any fact or matter in any such
document. The Trustee may accept a certified copy of a resolution of the board
of directors or other governing body of any corporate party as conclusive
evidence that such resolution has been duly adopted by such body and that the
same is in full force and effect. As to any fact or matter the method of the
determination of which is not specifically prescribed herein, the Trustee may
for all purposes hereof rely on a certificate, signed by the president or any
vice president or by the treasurer or other authorized officers of the relevant
party, as to such fact or matter, and such

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certificate shall constitute full
protection to the Trustee for any action taken or omitted to be taken by it in
good faith in reliance thereon.

          (b) In the exercise or administration of the trusts hereunder and in the
performance of its duties and obligations under this Agreement or the Operative
Documents, the Trustee:

	 	(i)	 	may act directly or through its agents,
attorneys, custodians or nominees (including the granting of a
power of attorney to Responsible Officers of the Trustee to
execute and deliver any Operative Documents, certificate or
other documents related thereto on behalf of the Trustee)
pursuant to agreements entered into with any of them, and
although the Trustee shall be responsible for all obligations
of the Trustee hereunder, the Trustee shall not be liable for
the conduct or misconduct of such agents, attorneys,
custodians or nominees if such agents, attorneys, custodians
or nominees shall have been selected by the Trustee in good
faith; and
	 
	 	(ii)	 	may consult with counsel, accountants and other
skilled professionals to be selected in good faith and
employed by it. The Trustee shall not be liable for anything
done, suffered or omitted in good faith by it in accordance
with the opinion or advice of any such counsel, accountants or
other such persons.

          SECTION 7.09 Action upon Instruction. Whenever the Trustee is unable to
decide between alternative courses of action permitted or required by the terms
of this Agreement or under any other Operative Document or the Trustee is
unsure as to the application of any provision of this Agreement or any other
Operative Document or any such provision is ambiguous as to its application, or
is, or appears to be, in conflict with any other applicable provision or is
silent or is incomplete as to the course of action that the Trustee is required
to take with respect to a particular set of facts, the Trustee shall promptly
give notice (in such form as shall be appropriate under the circumstances) to
the Note Holders requesting instruction as to the course of action to be
adopted, and to the extent the Trustee acts in good faith in accordance with
any instructions consented to by the Majority Note Holders, the Trustee shall
not be liable on account of such action to any Person. If the Trustee shall
not have received appropriate instruction within ten days of such notice (or
within such shorter period of time as reasonably may be specified in such
notice or may be necessary under the circumstances) it may, but shall be under
no duty to, take or refrain from taking such action not inconsistent with this
Agreement or the other Operative Documents, as it shall deem to be in the best
interests of the Note Holders, and shall have no liability to the Note Holders
for such action or inaction. Any Note Holder will not direct the Trustee to
take any action contrary to the Operative Documents, as amended, modified or
supplemented from time to time.

          SECTION 7.10 Trustee May Not Own Notes. The Trustee in its individual or
any other capacity shall not become the owner or pledgee of Notes; provided,
however, the Trustee may own and deal in obligations of the same issue and
maturity as the Participation; provided, further, the Trustee may deal with the
Depositor in transactions in the same manner as it would have if it were not
the Trustee.

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          SECTION 7.11 Resignation and Removal of the Trustee; Appointment of a
Successor Trustee.

          (a) The Trustee may at any time resign as Trustee hereunder by written
notice of its election so to do, delivered to the Note Holders, and such
resignation shall take effect upon the appointment of a successor Trustee and
its acceptance of such appointment as hereinafter provided. The Note Holders
may at any time remove the Trustee as Trustee hereunder by written notice
delivered to the Trustee, and such removal shall take effect upon the
appointment of the successor trustee and its acceptance of such appointment as
provided in the succeeding paragraph. Upon the designation of a successor
Trustee, following either resignation or removal of the Trustee, the Trustee
shall deliver to the successor Trustee all records relating to the Notes in the
form and manner then maintained by the Trustee, which shall include a hard copy
thereof upon written request of the successor Trustee. The Depositor and the
predecessor Trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for fully and certainly vesting and
confirming in the successor Trustee all such predecessor’s rights, powers,
duties and obligations under the Operative Documents. Upon the appointment and
acceptance of a successor Trustee, such successor shall file a Certificate of
Amendment with the Secretary of State identifying the name and address of such
successor Trustee in the State of Delaware.

          (b) If at any time the Trustee shall become incapable of acting or shall
be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, the Depositor shall petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee. In the event the Trustee resigns or is removed, the Trustee
shall reimburse the Depositor for any fees or charges previously paid to the
Trustee in respect of duties not yet performed under this Agreement which
remain to be performed by a successor Trustee.

          (c) In case at any time the Trustee acting hereunder notifies the Note
Holders that it elects to resign or the Note Holders notify the Trustee of the
election to remove the Trustee as trustee, the Depositor shall (with the
consent of the Majority Note Holders, which shall not be unreasonably
withheld), within thirty (30) days after the delivery of the notice of
resignation or removal, appoint a successor Trustee, which shall satisfy the
requirements for a trustee under Section 7.13. If no successor Trustee has
been appointed within sixty (60) days after the Trustee has given written
notice of its election to resign or the Note Holders have given written notice
to the Trustee of the election to remove the Trustee, as the case may be, the
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Trustee. Every successor Trustee shall execute and deliver to its
predecessor and to the Depositor an instrument in writing accepting its
appointment hereunder, and thereupon such successor Trustee, without any
further act or deed, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor and for all purposes shall be the
Trustee under this Agreement, and such predecessor, upon payment of all sums
due it and on the written request of the Depositor, shall execute and deliver
an instrument transferring to such successor all rights, obligations and powers
of such predecessor hereunder, and shall duly assign, transfer and deliver all
right, title
and interest in the Trust Estate and parts thereof to such successor. Any
successor Trustee shall

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promptly give notice of its appointment to the Note
Holders in the manner provided in Section 10.01 hereof.

          SECTION 7.12 Merger or Consolidation of Trustee. Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder, provided such corporation
shall be eligible pursuant to Section 7.13, and without the execution or filing
of any instrument or any further act on the part of any of the parties hereto;
provided, however, that the Trustee shall mail notice of such merger or
consolidation to the Note Holders. The parties hereby acknowledge that any
successor entity in the First Union Corp. and Wachovia Corp. merger to which
the corporate trust business of First Union Trust Company, National Association
is transferred shall become the Trustee hereunder without the necessity of
providing notice to each of the Note Holders; provided that such entity must be
eligible pursuant to Section 7.13 hereof.

          SECTION 7.13 Eligibility Requirements for Trustee. The Trustee shall at
all times: (a) be a corporation satisfying the provisions of Section 3807(a) of
the Delaware Business Trust Act; (b) be authorized to exercise corporate trust
powers; (c) have a combined capital and surplus of at least $50,000,000 and be
subject to supervision or examination by federal or state authorities; and (d)
have (or have a parent which has) an actual or implied long-term unsecured debt
rating of at least “A3” by Moody’s or “A-” by S&P. If such corporation shall
publish reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purpose of this Section 7.13, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. The Trustee shall at all
times satisfy the requirements for a trustee under Section 26(a)(1) of the
Investment Company Act and shall not be affiliated (within the meaning of Rule
405 under the Securities Act) with the Depositor or the Trust, or any person
involved in the organization or operation of the Depositor or the Trust. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 7.13, the Trustee shall resign immediately in the
manner and with the effect specified in Section 7.11.

          SECTION 7.14 Trustee’s Fees and Expenses; Indemnification. The Trustee
shall receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between the Depositor and the
Trustee. The Depositor shall be liable for, and shall indemnify the Trustee
(including, without limitation, in its capacities as Note Registrar and
Exchange Rate Agent) and its successors, assigns, agents and servants
(collectively, the “Indemnified Trustee Parties”) from and against, any and all
liabilities, obligations, losses, damages, taxes, claims, actions and suits,
and any and all reasonable costs, expenses and disbursements (including
reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, “Expenses”) which may at any time be imposed
on, incurred by, or asserted against the Trustee or any Indemnified
Trustee Party in any way relating to or arising out of this Agreement, the
other Operative Documents, the Trust Estate or the administration of the Trust
Estate, except only that the Depositor shall not be liable for or required to
indemnify any Indemnified Trustee Party from and against Expenses arising or
resulting from such Indemnified Trustee Party’s willful misfeasance, bad faith
or gross negligence in the

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performance of its duties, or by reason of reckless
disregard of its duties under the Operative Documents; provided, however, that
if at any time the Trustee has not been compensated for its services, the
Trustee shall still continue to perform all its duties under this Agreement.
The indemnities contained in this Section shall survive the resignation or
termination of the Trustee or the termination of this Agreement. In the event
of any claim, action or proceeding for which indemnity will be sought pursuant
to this Section, the Trustee’s choice of legal counsel shall be subject to the
approval of the Depositor, which approval shall not be unreasonably withheld.

          SECTION 7.15 Obligations of the Depositor.

          (a) Neither the Depositor nor any of its directors, officers or employees
will assume any obligation or shall be subject to any liability under this
Agreement to Note Holders, other than by reason of willful misconduct, bad
faith or gross negligence, in the performance of such duties as are
specifically set forth in this Agreement or the Participation Agreement.

          (b) The Depositor shall not be liable to any Note Holder for any action or
non-action by it in reliance upon the advice of or information from legal
counsel, accountants, any Note Holder or any other person believed by it in
good faith to be competent to give such advice or information. The Depositor
may rely and shall be protected in acting upon any written notice, request,
direction or other document believed by it to be genuine and to have been
signed or presented by the proper party or parties.

          (c) Under no circumstances shall the Depositor be liable for indebtedness
evidenced by or arising under any of the Operative Documents.

          SECTION 7.16 Prevention or Delay in Performance by the Trustee. The
Trustee shall not incur any liability to any Note Holder, if by reason of any
provision of any present or future law, or regulation thereunder, or any
governmental authority, or by any reason of any act of God or war or other
circumstance beyond its control, the Trustee shall be prevented or forbidden
from doing or performing any act or thing which the terms of this Agreement
provide shall be done or performed; and the Trustee shall not incur any
liability to any Note Holder by reason of any non-performance or delay, caused
as aforesaid, in the performance of any act or thing which the terms of this
Agreement provide shall or may be done or performed, or by reason of any
exercise of, or failure to exercise, any discretion provided for in this
Agreement.

ARTICLE VIII

DISSOLUTION, LIQUIDATION AND TERMINATION OF THE TRUST

          SECTION 8.01 Dissolution of the Trust.

          (a) The Trust shall be dissolved, wound up and terminated and be of no
further force or effect upon (i) the filing by the Trustee, pursuant to
instruction of the Super Majority Note Holders, of a Certificate of
Cancellation or its equivalent with respect to the Trust; (ii) the failure of
the Trust to revive its Certificate of Trust within 10 days following the
revocation of

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the Trust’s Certificate of Trust; (iii) the entry of a decree of
judicial dissolution of the Trust; (iv) the date when all of the Trust’s assets
shall have been disposed of and distributed as provided herein, or (v) the
expiration of the term set forth in Section 2.08.

          (b) Upon liquidation of the Trust, the Trust’s assets shall be applied in
the following order of priority: (i) first, (A) to pay the costs and expenses
of winding up, liquidation and termination of the Trust, including amounts owed
to the Trustee, (B) to creditors of the Trust (other than, to the extent the
holding of its Note makes it a creditor of the Trust, any Note Holder) or (C)
to establish reserves reasonably adequate to meet any and all contingent or
unforeseen liabilities or obligations of the Trust as reasonably determined by
the Trustee in accordance with laws, in each case, in the order of priority
provided by law; and (ii) second, to the Note Holders, in accordance with their
respective Proportionate Interests, until they have received payments in an
aggregate amount equal to the aggregate principal amount of all Notes plus all
accrued and unpaid Payments, and any other amounts due and payable to the Note
Holders under this Agreement. The Trustee shall distribute any amounts
remaining in the Trust after making the foregoing payments to the Depositor.

          (c) Upon the winding up of the Trust and its termination, the Trustee
shall cause the Certificate of Trust to be cancelled by filing a Certificate of
Cancellation with the Secretary of State in accordance with the provisions of
Section 3810 of the Delaware Business Trust Act. Upon such termination, all
Notes shall be cancelled.

ARTICLE IX

CURRENCY EXCHANGE

          SECTION 9.01 Appointment of Exchange Rate Agent. The Depositor hereby
initially appoints itself as exchange rate agent (in such capacity, the
“Exchange Rate Agent”) under this Agreement. The Depositor may subsequently
appoint the Trustee to act as exchange rate agent under this Agreement by
providing notice of such appointment at least ten (10) Business Days prior to a
Payment Date. If the Trustee is appointed the Exchange Rate Agent, it shall be
reimbursed by the Depositor for any amounts set forth in Section 9.03 hereof;
however, in the event of any currency differentials between the
Fixed Exchange Rate and the then existing market exchange rates, the
Trustee as Exchange Rate Agent shall notify the Depositor in writing of the
shortfall, if any, and the Depositor shall be obligated to advance to the Trust
the amount of such shortfall in sufficient time to permit the Trustee to make
any payment on the related Payment Date, it being agreed that if the Depositor
shall fail in whole or in part to pay such shortfall, the Trustee shall have no
obligation or duty to expend its own funds therefore. The parties hereto and
the Note Holders hereby agree that, subject to the preceding sentence, the
Trustee as Exchange Rate Agent shall use its best reasonable efforts to
complete all currency exchanges in sufficient time to make any payments on the
related Payment Dates, and that the Trustee as Exchange Rate Agent shall have
no liability to any party in connection with delays in such currency exchanges
unless resulting from its own gross negligence or willful misconduct.

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          SECTION 9.02 Payments in US Dollars. All payments made by the Depositor
to the Trust under the Participation Agreement in respect of Distributions
received by the Depositor shall be made in Canadian dollars. Such amounts will
then be converted into US dollars using the Fixed Exchange Rate. All Payments
to Note Holders will be made in US dollars.

          SECTION 9.03 Fees and Expenses. If the Trustee is appointed Exchange Rate
Agent, it shall be entitled to such compensation for its services under this
Agreement as may be agreed upon with the Depositor, and the Depositor shall pay
such compensation and shall reimburse the Exchange Rate Agent for all
reasonable expenses, disbursements, advances and any shortfalls incurred or
made by the Exchange Rate Agent in connection with the services rendered by it
under this Agreement, including reasonable legal fees and expenses, upon
receiving an accounting therefor from the Exchange Rate Agent.

ARTICLE X

NOTICES

          SECTION 10.01 Notices. Except as otherwise expressly provided herein in
any particular case, all notices and other communications provided for
hereunder shall be in writing (including telecopy communication) and mailed,
telecopied or delivered to the address for each party hereto set forth below
such party’s name on Schedule I to the Purchase Agreement or, as to each party,
at such other address as shall be designed by such party in a written notice to
the other parties. Any such notices and communications shall be deemed to be
delivered, given, and received for all purposes as of the date so delivered, if
delivered personally, or otherwise as of the date on which the same was
received or when the appropriate answer back or other evidence of receipt is
given, if telecopied or otherwise transmitted, respectively (if a Business Day
or, if not, on the next succeeding Business Day).

ARTICLE XI

MISCELLANEOUS PROVISIONS

          SECTION 11.01 Entire Agreement. This Agreement (including, without
limitation, the exhibits hereto), the Purchase Agreement and the other
Operative Documents, constitute the entire agreement among the parties hereto
relating to the transactions contemplated hereby.

          SECTION 11.02 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE;
PROVIDED THAT THERE SHALL NOT BE APPLICABLE TO THE TRUST, THE PARTIES HEREUNDER
OR THIS AGREEMENT, ANY PROVISION OF THE LAWS (COMMON OR STATUTORY) OF THE STATE
OF DELAWARE PERTAINING TO TRUSTS (OTHER THAN THE ACT) THAT RELATE TO

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OR
REGULATE, IN A MANNER INCONSISTENT WITH THE TERMS HEREOF, (A) THE FILING WITH
ANY COURT OR GOVERNMENTAL BODY OR AGENCY OF TRUSTEE ACCOUNTS OR SCHEDULES OF
TRUSTEE FEES AND CHARGES, (B) AFFIRMATIVE REQUIREMENTS TO POST BONDS FOR
TRUSTEES, OFFICERS, AGENTS OR EMPLOYEES OF A TRUST, (C) THE NECESSITY FOR
OBTAINING COURT OR OTHER GOVERNMENTAL APPROVAL CONCERNING THE ACQUISITION,
HOLDING OR DISPOSITION OF REAL OR PERSONAL PROPERTY, (D) FEES OR OTHER SUMS
PAYABLE TO TRUSTEES, OFFICERS, AGENTS OR EMPLOYEES OF A TRUST, (E) THE
ALLOCATION OF RECEIPTS AND EXPENDITURES TO INCOME OR PRINCIPAL, (F)
RESTRICTIONS OR LIMITATIONS ON THE PERMISSIBLE NATURE, AMOUNT OR CONCENTRATION
OF TRUST INVESTMENTS OR REQUIREMENTS RELATING TO THE TITLING, STORAGE OR OTHER
MANNER OF HOLDING OR INVESTING TRUST ASSETS OR (G) THE ESTABLISHMENT OF
FIDUCIARY OR OTHER STANDARDS OF RESPONSIBILITY OR LIMITATIONS ON THE ACTS OR
POWERS OF THE TRUSTEE THAT ARE INCONSISTENT WITH THE LIMITATIONS ON AUTHORITIES
AND POWERS OF THE TRUSTEE HEREUNDER AS SET FORTH OR REFERENCED IN THIS
AGREEMENT. SECTION 3540 OF TITLE 12 OF THE DELAWARE CODE SHALL NOT APPLY TO
THE TRUST.

          SECTION 11.03 Consent to Jurisdiction and Service of Process. The parties
hereto hereby (a) consent to the non-exclusive jurisdiction of (i) the courts
of the State of Delaware and (ii) the United States District Court for the
District of Delaware sitting in Wilmington, Delaware and (b) consent to the
service of process delivered by certified mail to its corporate secretary,
managing member or other correlative official. This Section 11.03 shall not be
construed as limiting a party’s ability to bring an action in any other
jurisdiction or to serve process by any other legal means. Notwithstanding the
foregoing to the contrary, to the fullest extent of the law, the parties agree
that any action brought in any court of the State of Delaware shall be brought
in a court sitting in New Castle County, Delaware.

          SECTION 11.04 Severability of Provisions. If any provision hereof shall
be held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provision
hereof. To the extent permitted by law, the parties hereto hereby agree that
any provision hereof that renders any other term or provision hereof invalid or
unenforceable in any respect shall be modified, but only to the extent
necessary to avoid rendering such other term or provision invalid or
unenforceable, and such modification shall be accomplished in the manner that
most nearly preserves the benefit of all the parties’ bargain hereunder.

          SECTION 11.05 Amendment or Waiver; Effect on Agreement. Any provision of
this Agreement may be amended or waived by an amendment or waiver that is in
writing and signed by the Trustee, the Required Note Holders. Promptly after
the execution by all required parties of any such amendment to, or waiver of,
this Agreement, the Trustee shall furnish a copy of any such amendment or
waiver to each Note Holder.

          SECTION 11.06 Binding Upon Assigns. Except as otherwise provided herein,
the provisions of this Agreement (including any amendments, modification and
waivers hereof

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properly adopted) shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.

          SECTION 11.07 Survival. All agreements, representations, warranties and
indemnities contained in this Agreement and in any agreement, document or
certificate delivered pursuant hereto, or in connection herewith, shall survive
and continue in effect following the execution and delivery of this Agreement
and the Closing Date. Upon the repayment in full of the Notes, this Agreement
shall terminate except as to those provisions, including without limitation
Section 7.14 hereof, expressly intended to survive such termination.

          SECTION 11.08 Tax Characterization.

          (a) Each of the parties hereto recognizes and intends that, solely for
United States federal, state and local income tax purposes,

	 	(i)	 	the Trust will not be treated as a trust or as an
association taxable as a corporation but will be treated as a
grantor trust (or alternatively, as a partnership); and
	 
	 	(ii)	 	the Notes will be treated as undivided beneficial
ownership interests in the assets of the Trust (or
alternatively, as partnership interests) rather than as debt
obligations of the Trust or the Depositor.

          (b) To the extent that any of the parties hereto is required to report any
item of income, gain, loss, deduction or credit relating to the Trust for
United States federal, state or local income tax purposes, such party shall
report such item in a manner consistent with the characterization intended by
this Section 11.08 and shall not take any contrary position on any tax return
or report relating to the United States federal, state, local or foreign income
taxes or take any other action which is inconsistent with such
characterization.

          (c) Notwithstanding anything to the contrary herein, no party shall be
obligated to take a position as required by this Section 11.08 subsequent to
(A) a final determination by a court of competent jurisdiction to the contrary
that is binding on the Trust or on any Note Holder or (B) the provision by any
Note Holder to the Trustee and each other Note Holder of a written opinion of
independent, nationally-recognized tax counsel selected by such party (such
counsel and form of opinion to be reasonably satisfactory to all of the Note
Holders) that no reasonable basis exists to take such position.

          (d) The Trustee shall make on behalf of the Note Holders the
identification allowed pursuant to section 1.988-5(a)(8) of the Treasury
Regulations to treat the Notes as a “qualifying hedging transaction.” Such
information shall be furnished by the Depositor to the Trustee in sufficient
time to allow the Trustee to make such entries.

          SECTION 11.09 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement.

41

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          SECTION 11.10 Waiver of Jury Trial. EACH NOTE HOLDER, THE TRUSTEE AND THE
DEPOSITOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR OTHER DOCUMENT OR INSTRUMENT FURNISHED PURSUANT HERETO OR IN
CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED THEREBY.

42

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IN WITNESS WHEREOF, each of the undersigned has executed this Agreement as
of the date above first written.

	 	 	 	 	 
	 	 	FIRST
UNION TRUST COMPANY, NATIONAL ASSOCIATION

not in its individual capacity, but solely as
Trustee and Note Registrar
	 
	 
	 	 	By:	 	 
	 	 	 	 	

Name: 

Title:   

 

 

 

 

THIS IS A SIGNATURE PAGE TO THE TRUST AGREEMENT

AND IS EXECUTED BY THE PARTY NAMED ABOVE.

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          IN WITNESS WHEREOF, each of the undersigned has executed this Agreement as
of the date above first written.

	 	 	 	 	 
	 	 	HOLLINGER INTERNATIONAL INC.,

as Depositor
	 
	 
	 	 	By:	 	 
	 	 	 	 	

Name: 

Title:   

 

 

 

 

THIS IS A SIGNATURE PAGE TO THE TRUST AGREEMENT

AND IS EXECUTED BY THE PARTY NAMED ABOVE.

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EXHIBIT A

CERTIFICATE OF TRUST

OF

HOLLINGER PARTICIPATION TRUST

          The undersigned, being the sole Trustee of Hollinger Participation Trust,
desiring to form a business trust pursuant to the Delaware Business Trust Act,
12 Del. C. §§3810, et seq., hereby certify as follows:

          (a) The name of the business trust being formed hereby (the “Trust”) is
Hollinger Participation Trust.

          (b) The name and business address of the trustee of the Trust which has
its principal place of business in the State of Delaware are as follows:

	 	 
	 	First Union Trust Company, National Association

One Rodney Square, 1st Floor

920 King Street

Wilmington, DE 19801

Attention: Corporate Trust Administration

          (c) This Certificate of Trust shall be effective as of the date of filing
and may be executed in counterparts.

     DATED: August      , 2001

	 	 	 	 	 
	 	 	First Union Trust Company, National Association,

not in its individual capacity, but solely as Trustee
	 
	 
	 	 	By:	 	 
	 	 	 	 	

	 	 	Name:	 	 
	 	 	 	 	

	 	 	Title:	 	 
	 	 	 	 	

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EXHIBIT B

[Form of Note]

HOLLINGER PARTICIPATION TRUST

		
	 	THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE OR
OTHER SECURITIES LAWS, AND THE TRUST HAS NOT BEEN REGISTERED UNDER THE
UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “1940 ACT”).
	 
	 	THE NOTES MAY NOT BE OFFERED, REOFFERED, SOLD, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED (WHETHER ON THE DATE HEREOF OR AT ANY OTHER TIME AND FROM TIME
TO TIME HEREAFTER), EXCEPT (A) IN ACCORDANCE WITH AND SUBJECT TO THE TERMS
AND CONDITIONS OF THE OFFERING CIRCULAR, THE TRUST AGREEMENT AND ALL
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER
APPLICABLE JURISDICTION AND (B) ONLY (1) TO A PERSON WHO HAS REPRESENTED AND
WARRANTED THAT IT IS, AND WHOM THE SELLER REASONABLY BELIEVES TO BE, A
QUALIFIED INSTITUTIONAL BUYER (WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT) OR (2) TO THE DEPOSITOR. EACH OFFEREE WILL BE DEEMED TO
HAVE MADE THE REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS SET
FORTH IN THE “NOTICE TO INVESTORS” CONTAINED IN THE OFFERING CIRCULAR AND
SECTION 5.05 OF THE TRUST AGREEMENT (INCLUDING THE REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS THAT SUCH OFFEREE WILL TRANSFER SUCH
NOTES, IF EVER, ONLY IN ACCORDANCE WITH THE PRECEDING SENTENCE AND THE
REMAINDER OF THIS LEGEND AND ONLY TO A TRANSFEREE WHO WILL UNDERTAKE TO
SUBJECT ITS TRANSFER OF NOTES IN THE MANNER DESCRIBED HEREIN AND THAT (i)
SUCH OFFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”) (AN “ERISA
PLAN”) OR OTHER PLAN, AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE THE ASSETS
OF ANY SUCH ERISA PLAN OR OTHER PLAN, OR A GOVERNMENTAL PLAN THAT IS SUBJECT
TO ANY FEDERAL, STATE OR LOCAL LAW THAT IS SUBSTANTIALLY SIMILAR TO THE
PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE “CODE”), OR (ii) THE PURCHASE BY SUCH OFFEREE
OF THE NOTE EVIDENCED HEREBY WILL NOT RESULT IN A PROHIBITED TRANSACTION
UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE (OR IN THE CASE OF A
GOVERNMENTAL PLAN, ANY SUBSTANTIALLY SIMILAR FEDERAL, STATE OR LOCAL LAW)
FOR WHICH AN EXEMPTION IS NOT AVAILABLE).

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	 	ANY TRANSFER IN VIOLATION OF THE FOREGOING WILL BE OF NO FORCE AND EFFECT,
WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE TRANSFEREE AND WILL BE VOID
AB INITIO, NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE TRUST,
THE TRUSTEE OR ANY INTERMEDIARY.
	 
	 	EACH OFFEREE AGREES TO INDEMNIFY AND HOLD HARMLESS EACH OF THE DEPOSITOR,
THE TRUSTEE AND THE INITIAL PURCHASERS, THEIR RESPECTIVE SHAREHOLDERS AND
PARTNERS AND THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND ADVISORS (EACH
AN “INDEMNIFIED PARTY”) FROM AND AGAINST ALL CLAIMS, DAMAGES, LOSSES,
LIABILITIES AND EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE FEES AND
EXPENSES OF COUNSEL) THAT MAY BE INCURRED BY OR ASSERTED OR AWARDED AGAINST
ANY INDEMNIFIED PARTY, IN EACH CASE ARISING OUT OF OR IN CONNECTION WITH
(INCLUDING, WITHOUT LIMITATION, IN CONNECTION WITH ANY INVESTIGATION,
LITIGATION OR PROCEEDING OR PREPARATION OF A DEFENSE IN CONNECTION
THEREWITH) OR AS A RESULT OF (A) THE BREACH OF ANY OF THE REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS MADE BY SUCH OFFEREE PURSUANT TO THE
NOTICE TO INVESTORS, THE OFFERING CIRCULAR, ANY NOTE OR ANY TRANSFER
CERTIFICATE (INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS RELATING TO ANY IMMEDIATE TRANSFEREE OF (OR TO THE
CONDITIONS FOR THE TRANSFER TO ANY IMMEDIATE TRANSFEREE OF) THE NOTES HELD
BY OR FOR SUCH OFFEREE); OR (B) THE FAILURE BY SUCH OFFEREE TO PERFORM OR
OBSERVE ANY OF THE COVENANTS AND AGREEMENTS PURPORTED TO BE PERFORMED OR
OBSERVED BY IT PURSUANT TO THE NOTICE TO INVESTORS, ALL AS AT THE TIMES, IN
THE MANNER AND TO THE EXTENT SET FORTH IN THE NOTICE TO INVESTORS.
	 
	 	ANY TRANSFER, PLEDGE OR OTHER USE OF THIS NOTE FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL, UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (“DTC”), NEW YORK, NEW YORK
TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR OF SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO.).
	 
	 	TRANSFERS OF THIS NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN
PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS NOTE SHALL BE LIMITED TO TRANSFERS
MADE IN ACCORDANCE WITH

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	 	THE RESTRICTIONS SET FORTH IN THE TRUST AGREEMENT REFERRED TO HEREIN.
	 
	 	PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT
SHOWN ON THE FACE HEREOF. ANY PERSON ACQUIRING THIS NOTE MAY ASCERTAIN ITS
CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE.

Note No.: ______________________________

Principal Amount: $_________________________

          THIS CERTIFIES
THAT __________________________________________________ is the
registered holder of __________________________________________________ United
States Dollars ($_______________) of nonassessable, fully-paid, undivided
beneficial interests in Hollinger Participation Trust (the “Trust”), a Delaware
statutory business trust formed pursuant to a Trust Agreement dated as of
August      , 2001, (the “Trust Agreement”) between Hollinger International Inc.,
as Depositor and First Union Trust Company, National Association, as Trustee
(the “Trustee”).

          The terms of this Note include those stated in the Trust Agreement. The
Notes are subject to all such terms, and Note Holders are referred to the Trust
Agreement for a statement of such terms. To the extent any provision of this
Note conflicts with the express provisions of the Trust Agreement, the
provisions of the Trust Agreement shall govern and be controlling. Capitalized
terms used herein shall have the meanings assigned to them in the Trust
Agreement unless otherwise indicated.

          1. Distributions and Other Amounts. The Trust promises to pay on each
Payment Date from the amounts on deposit in the Trust Account, to the extent
funds are available therefor, accrued and unpaid Payments in accordance with
the Trust Agreement and the Participation Agreement. In addition, the Trustee
also promises to pay from the remaining amounts on deposit in the Trust
Account, to the extent funds are available therefor, all other amounts due and
payable to the Note Holders pursuant to the Trust Agreement and the
Participation Agreement.

          (a) Method of Payment. All payments made to the Note Holders on any
Payment Date will be made to the Note Holders of record as of the close of
business on the last Business Day of the calendar month immediately preceding
such Payment Date (the “Regular Record Date”). The Trust will make all
Payments to the Note Holders on any Payment Date by wire transfer to the
account specified in writing by the applicable Note Holder to the Trustee. In
each case, the account shall have been specified in writing to the Trustee no
later than the Regular Record Date for the applicable Payment Date. Upon
receipt of the wire instructions from the Note Holders, the Trustee shall
notify the Depositary of such wire transfer instructions and the Depositary
shall make Payments to the Note Holders by immediately crediting participants’
accounts with Payments in amounts proportionate to their respective beneficial
interests in the Global Note as shown on the records of the Depositary or its
nominee. The

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Trustee expects that Payments by participants to owners of beneficial
interests in such Global Note held through such participants will be governed
by the standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in the names of
nominees for such customers. Neither the Trustee nor the Depositary will be
responsible for any participant’s payment obligations to a Note Holder. In the
case of non-cash Distributions, the Trustee shall transfer such non-cash
Distribution to each Note Holder immediately after the Elevation Date.

          2. Transfer, Exchange. The Notes will initially be in the form of one or
more fully registered permanent Global Notes. The transfer of Notes may be
registered and Notes may be exchanged as provided in the Trust Agreement and
the Participation Agreement. Each Note surrendered for registration of
transfer or exchange will be cancelled and subsequently disposed of by the
Trustee in accordance with its customary practice. The Trust Agreement and the
Participation Agreement contain transfer restrictions in addition to those
contained in the legends set forth on the face of this Note. The minimum
denomination of each Note is $1,000.

          Except as described in the Trust Agreement, the Notes will be deposited
with, or on behalf of, the Depositary, and registered in the name of the
Depositary or the nominee of the Depository in the form of one or more Global
Notes, for credit to the respective accounts of the beneficial owners of the
Notes represented thereby. The Global Notes shall bear the legend set forth on
the face of this Note.

          3. Persons Deemed Holders. Prior to the due presentation of a Note for
registration of transfer, the Trustee, the Note Registrar, and any agent of the
Trustee or the Note Registrar may treat the Person in whose name any Note is
registered as the holder of such Note for all purposes.

          4. Amendment, Supplement and Waiver. Subject to certain exceptions, any
provision of the Trust Agreement may be amended or waived, provided that the
Trustee shall consent to any amendment or waiver only upon instruction by the
Majority Note Holders; provided, further, that, if such amendment or waiver
constitutes a Reserved Action, the Trustee shall not consent to such amendment
or waiver without the consent of all Note Holders.

          5. Limitation on Liability. The Trustee will not incur any liability to
any Person except as set forth in the Trust Agreement.

          6. Governing Law. This Note will be governed by and construed in
accordance with the laws of the State of Delaware.

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          The Trust will furnish to any Note Holder upon written request and without
charge a copy of the Trust Agreement. Requests may be made to:

	 	 
	 	Hollinger Participation Trust

c/o First Union Trust Company, National Association

One Rodney Square, 1st Floor

920 King Street

Wilmington, DE 19801

Attention: Corporate Trust Administration

          IN WITNESS WHEREOF, the Trustee has caused this Note to be duly executed.

Dated: _______________

	 	 	 	 	 
	 	 	HOLLINGER PARTICIPATION TRUST
	 
	 
	 	 	By:	 	First Union Trust Company, National

Association, not in its individual

capacity, but solely in its capacity

as Trustee
	 
	 
	 	 	By:	 	 
	 	 	 	 	

Name: 

Title:   

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ASSIGNMENT FORM

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

(Insert assignee’s soc. sec. or tax I.D. no.)

 

 

(print or type assignee’s name, address and zip code)

and irrevocably appoint the Note Registrar under the Trust Agreement to
transfer this Note on the books of Hollinger Participation Trust.

 

	 	 
	 	Date: _______________
	 
	 	Your Signature: ______________________________

(Sign exactly as your name appears on the face of this Note)
	 
	 	Signature Guarantee

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EXHIBIT C

DRAFT: August 21, 2001

[TORYS LETTERHEAD]

	 	 	 
	August 24, 2001

 

Credit Suisse First Boston Corporation

RBC Dominion Securities Corporation
	 
	c/o	 	Credit Suisse First Boston Corporation

Eleven Madison Avenue

New York, New York 10010-3629

U. S. A.

First Union Trust Company, National Association

Dear Sirs/Mesdames:

1.   SCOPE OF OPINION

	 	 	 	Introduction
	 
	 	1.1.	 	We have acted as Ontario and New York counsel to Hollinger
International Inc. (“Hollinger") in connection with the transaction
contemplated by the purchase agreement (the “Purchase Agreement")
dated August 17, 2001 between Hollinger and Hollinger Participation
Trust (the “Trust") and Credit Suisse First Boston Corporation and
RBC Dominion Securities Corporation (collectively, the “Purchasers")
in respect of:
	 
	 	 	 	1.1.1.   the sale by Hollinger to the Trust of a participation
interest in 12.125% Fixed Rate Subordinated Debentures due November
15, 2010 of 3815668 Canada Inc. pursuant to a participation
agreement (the “Participation Agreement") dated August 17, 2001;
and
	 
	 	 	 	1.1.2.   the issue and sale by the Trust today of US$350,000,000
principal amount of its 12-1/8% Senior Notes due 2010 (the “Offered
Notes") at a purchase price of 85% of the principal amount,

(collectively, the “Notes Transaction").

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	 	1.2.	 	We also acted for Hollinger in connection with the
transactions contemplated by the CanWest Transaction Agreements (as
defined below).
	 
	 	1.3.	 	This opinion is given to you pursuant to section 6(b) of the
Purchase Agreement. Capitalized terms used but not defined in this
opinion have the respective meanings given to those terms in the
Purchase Agreement, or, if not defined in that agreement, the
Participation Agreement.
	 
	 	 	 	Examination of Documents
	 
	 	1.4.	 	We have participated in the preparation of and, where
applicable, have examined an executed copy of each of the following:
	 
	 	 	 	1.4.1.   the Purchase Agreement;
	 
	 	 	 	1.4.2.   the Participation Agreement;
	 
	 	 	 	1.4.3.   the Transaction Agreement dated July 30, 2000 between
Hollinger, XSTM Holdings (2000) Inc. (formerly called Southam Inc.,
“XSTM”), Hollinger Canadian Newspapers, Limited Partnership, HCN
Publications Company and CanWest Global Communications Corp.
(“CanWest"), as amended by an agreement dated November 15, 2000
among those parties (as amended, the “Transaction Agreement");
	 
	 	 	 	1.4.4.   the Securities Purchase Agreement dated November 15, 2000
between Hollinger and XSTM;
	 
	 	 	 	1.4.5.   the Indenture dated as of November 15, 2000 between 3815668
Canada Inc., as Issuer, and The Bank of Nova Scotia Trust Company
of New York, as Trustee, under which the Underlying Debentures were
issued (the “Debenture Trust Indenture");
	 
	 	 	 	1.4.6.   the Fixed Rate Subordinated Debentures due November 15, 2010
Nos. 1, PIK 1 and PIK 3 in the principal amounts of $526,985,935,
$18,381,342 and $27,718,479, respectively;
	 
	 	 	 	1.4.7.   the Fixed Rate Subordinated Debentures Guarantee dated as of
November 15, 2000 made by CanWest to and in favour of The Bank of
Nova Scotia Trust Company of New York, as trustee for the benefit
of and on behalf of the Initial Purchasers (as defined in the
Debenture Trust Indenture) (the “Guarantee");
	 
	 	 	 	1.4.8.   the amended and restated trust agreement of the Trust dated
August 24, 2001 (the “Trust Agreement"); and
	 
	 	 	 	1.4.9.   the (final) Confidential Offering Circular dated August 24,
2001 in respect of up to US$350,000,000 of Offered Notes (the
“Offering Circular").

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The agreements noted above in sections 1.4.1 through 1.4.8 inclusive are
collectively referred to as the “Agreements". The agreements noted in sections
1.4.3 through 1.4.7 inclusive are collectively referred to as the “CanWest
Transaction Agreements". The agreements noted in sections 1.4.1, 1.4.2 and
1.4.8 are collectively referred to as the “Notes Transaction Agreements".

	 	1.5.	 	We have also made those investigations and examined originals
or copies, certified or otherwise identified to our satisfaction, of
those certificates of public officials and of those other
certificates, documents and records as we considered necessary or
relevant for purposes of the opinions expressed below, including:
	 
	 	 	 	1.5.1.   the certificate of incorporation and by-laws of Hollinger;
	 
	 	 	 	1.5.2. resolutions of the board of directors of Hollinger
authorizing the transactions contemplated by the CanWest
Transaction Agreements and resolutions of the executive committee
of the board of directors of Hollinger authorizing the transactions
contemplated by the Notes Transaction Agreements;
	 
	 	 	 	1.5.3.   a certificate of good standing issued by the Delaware
Secretary of State in respect of Hollinger;
	 
	 	 	 	1.5.4.   a certificate of a senior officer of Hollinger with respect
to certain factual matters, a copy of which has been delivered to
the Purchasers;
	 
	 	 	 	1.5.5.   the articles of CanWest filed with Industry Canada;
	 
	 	 	 	1.5.6.   the management proxy circular of CanWest dated December 19, 2000;
	 
	 	 	 	1.5.7.   the Annual Report of CanWest for 2000; and
	 
	 	 	 	1.5.8.   all material change reports and interim financial reports
filed by, or in respect of, CanWest with the Ontario Securities
Commission since September 1, 2000 and made available on the SEDAR
web site as of the date of this opinion and all insider reports
filed in respect of CanWest with the Ontario Securities Commission
since September 1, 2000 and publicly available as of the date of
this opinion.
	 
	 	 	 	Assumptions
	 
	 	1.6.	 	We have made the following assumptions:
	 
	 	 	 	1.6.1.   with respect to all documents examined by us, the
genuineness of all signatures, the legal capacity of individuals
signing any documents, the authenticity of all documents submitted
to us as originals and the conformity to
authentic original documents of all documents submitted to us as
certified, conformed, telecopied or photocopied copies;

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	 	 	 	1.6.2. the certificate of good standing referred to in section 1.5.3 continues to be accurate as of the date of this opinion as if
issued on that date;
	 
	 	 	 	1.6.3.   each of the parties to each of the Agreements (other than
Hollinger) is existing under the laws of its jurisdiction of
incorporation or formation, has the corporate or other power and
capacity to enter into, and to perform its obligations under, each
Agreement to which it is a party and has duly authorized, executed
and delivered each Agreement to which it is a party; and
	 
	 	 	 	1.6.4.   the Offered Notes have been and will be offered and sold in
accordance with the procedures, undertakings, agreements and
representations set out in the Purchase Agreement, the Offering
Circular and the U.S. Purchaser’s Letters and Canadian Purchaser’s
Letters contemplated therein (collectively, the “Purchaser’s
Letters").
	 
	 	 	 	Laws Addressed
	 
	 	1.7.	 	This opinion is limited to the laws of the Province of
Ontario and the federal laws of Canada applicable therein, the laws
of the State of New York, the federal laws of the United States of
America and the General Corporation Law of the State of Delaware, as
applicable. For the purposes of this opinion letter, “Ontario
Securities Laws” means the securities laws, regulations, rules and
policies applicable in the Province of Ontario.

2.   OPINIONS

          Based upon and subject to the foregoing, and to the qualifications
expressed below, we are of the opinion that:

	 	 	 	Corporate Opinions
	 
	 	2.1.	 	Hollinger is a corporation validly existing and in good
standing under the laws of the State of Delaware.
	 
	 	2.2.	 	Hollinger has the corporate power and capacity to carry on
its business as presently conducted, to own its properties and
assets, and to execute, deliver and perform its obligations under
the Agreements to which it is a party.
	 
	 	2.3.	 	Hollinger has taken all necessary corporate action to
authorize the execution, delivery and performance by it of the
Agreements to which it is a party and has duly executed and
delivered those Agreements.
	 
	 	 	 	Non-Contravention and No Breach Opinions
	 
	 	2.4.	 	The execution, delivery and performance by Hollinger of the
Agreements to which it is a party and the issuance and sale of the
Offered Notes and compliance with the terms and provisions thereof
did not or do not, as the case may be,

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	 	 	 	contravene, result in a
breach or violation of any of the terms or provisions of, or
constitute a default under:
	 
	 	 	 	2.4.1.   the certificate of incorporation or by-laws of Hollinger;
	 
	 	 	 	2.4.2.   any statute, law, writ, order, rule or regulation of any
Governmental Authority to which Hollinger or its subsidiaries is
subject and which may affect the legality, validity or
enforceability of the Agreements;
	 
	 	 	 	2.4.3.   to our knowledge, any judgment, injunction, decree or
determination applicable to Hollinger or its subsidiaries; or
	 
	 	 	 	2.4.4.   to our knowledge, any contract, agreement, mortgage, loan
agreement, note, lease or other instrument by which Hollinger or
its subsidiaries is bound or to which any of its assets are subject
and which may affect the legality, validity or enforceability of
the Agreements.
	 
	 	2.5.	 	The execution, delivery and performance by Hollinger of the
Notes Transaction Agreements:
	 
	 	 	 	2.5.1.   do not contravene, result in a breach or violation of any of
the terms or provisions of, or constitute a default under the
CanWest Transaction Agreements including, without limitation, the
Debenture Trust Indenture and section 2.08 thereof and the
Transaction Agreement and section 9.19 thereof;
	 
	 	 	 	2.5.2.   except in respect of a Participation Interest upon an
Elevation, will not result in any loss or diminishment of any
rights or benefits under the Guarantee available to Hollinger prior
to Hollinger’s execution and delivery of the Notes Transaction
Agreements and the performance of its obligations under those
agreements; and
	 
	 	 	 	2.5.3.   do not, as of the date of this opinion letter, result in a
recalculation of the Interest Rate (as defined in the Debenture
Trust Indenture) pursuant to section 2.06(d) of the Debenture Trust
Indenture.
	 
	 	 	 	Regulatory Approval Opinions
	 
	 	2.6.	 	No authorization, consent, permit or approval of, or other
action by, or filing with or notice to, any governmental agency or
authority, regulatory body, court, tribunal or other similar entity
having jurisdiction was required in connection with the execution,
delivery and performance by Hollinger of the CanWest Transaction
Agreements except as may have been made or obtained under the
Competition Act (Canada) in respect of the Transaction Agreement and
any consent required in connection with the assignment of a Contract
(as defined in the Transaction Agreement).
	 
	 	2.7.	 	No authorization, consent, permit or approval of, or other
action by, or filing with or notice to, any governmental agency or
authority, regulatory body, court,

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	 	 	 	tribunal or other similar entity
having jurisdiction is required in connection with the execution,
delivery and performance by Hollinger of the Notes Transaction
Agreements, other than the filing of the report referred to in
section 2.9 below and except for filings required to be made under
applicable United States federal and state securities laws on and
after the date of this opinion.
	 
	 	 	 	Enforceability Opinion
	 
	 	2.8.	 	Each of the Agreements (other than the Trust Agreement) to
which either of Hollinger or the Trust is a party constitutes a
legal, valid and binding obligation of that party, enforceable
against that party in accordance with its terms.
	 
	 	 	 	Securities Opinions
	 
	 	2.9.	 	The offer, sale and delivery of the Offered Notes by the
Trust to the Purchasers or the initial resales of the Offered Notes
by the Purchasers, all in accordance with the Notes Transaction
Agreements, the Offering Circular and the Purchaser’s Letters is
exempt, either by statute, regulation, rule or order, from the
prospectus requirements of Ontario Securities Laws. No prospectus
or other documents are required to be filed, proceedings taken or
approvals, permits, consents or authorizations of regulatory
authorities obtained under Ontario Securities Laws in respect
thereof, except for the filing by Hollinger within the prescribed
time period after the date of this opinion letter of a report of the
sale of the Offered Notes prepared in accordance with Ontario
Securities Laws.
	 
	 	2.10,	 	Based in part upon the representations and warranties made
in the Purchaser’s Letters and by the Purchasers in the Purchase
Agreement, no registration of the Offered Notes under the United
States Securities Act of 1933, as amended, is required in connection
with the offer, sale and delivery of the Offered Notes by the Trust
to the Purchasers or the initial resales of the Offered Notes by the
Purchasers, all in accordance with the Notes Transaction Agreements,
the Offering Circular and the Purchaser’s Letters.
	 
	 	2.11.	 	No qualification of the Trust Agreement under the United
States Trust Indenture Act of 1939, as amended, is required.
	 
	 	2.12.	 	Each of the Trust and Hollinger is not, and after giving
effect to the offer and sale of the Offered Notes and the
application of the proceeds thereof as described in the Offering
Circular will not be, an “investment company” as defined in the
United States Investment Company Act of 1940, as amended.
	 
	 	2.13.	 	Hollinger does not exercise legal or effective (i.e., de
facto) control or direction over CanWest by reason of its
shareholding in CanWest or its ability to nominate two directors to
the Board of Directors of CanWest, nor does Hollinger have any
contractual right to exercise control or direction over CanWest
pursuant to the
CanWest Transaction Agreements or, to our knowledge, under any
other agreement or arrangement, and, accordingly, Hollinger is not
an “affiliate” (as

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	 	 	 	that term is defined in Rule 405 under the
United States Securities Act of 1933, as amended) of CanWest or any
of its subsidiaries, including 3815668 Canada Inc.
	 
	 	 	 	Tax Opinion
	 
	 	2.14.	 	For the purpose of the United States Internal Revenue Code
of 1986, as amended, the Trust is not, and will not be following the
completion of the Notes Transaction, taxable as a corporation.
	 
	 	 	 	Pending Litigation Opinion
	 
	 	2.15.	 	We have not been retained to represent Hollinger or its
subsidiaries in respect of any:
	 
	 	 	 	2.15.1.   court, administrative, regulatory or similar proceeding
(whether civil, quasi-criminal or criminal),
	 
	 		 	2.15.2.   arbitration or other dispute settlement procedure, or
	 
	 	 	 	2.15.3.   investigation or inquiry by any governmental,
administrative, regulatory or other similar body,

that, if determined adversely to Hollinger, would prohibit Hollinger from
executing, delivering or performing any of its obligations under the Agreements
to which it is a party.

	 	 	 	Offering Circular Contents
	 
	 	2.16.	 	We have participated in the preparation of the Offering
Circular and in conferences with officers and other representatives
of Hollinger, representatives of the Purchasers and Canadian and
United States counsel for the Purchasers, at which the contents of
the Offering Circular and related matters were discussed and,
although we have not independently verified or checked or undertaken
to do so, and are not passing upon and do not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Offering Circular except as set out in
sections 2.17 and 2.18 and subject to the qualifications in respect
of those sections set out below, on the basis of the foregoing, no
facts have come to our attention that cause us to believe that the
Offering Circular, as of its date and as of the date of this opinion
letter, (i) does not accurately describe the Notes Transaction and
(ii) contained or contains an untrue statement of a material fact
regarding the Notes Transaction or omitted or omits to state a
material fact regarding the Notes Transaction required to be stated
in the Offering Circular or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading.
	 
	 	2.17.	 	The descriptions in the Offering Circular of contracts and
other documents are accurate in all material respects.

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	 	2.18.	 	The disclosure contained in the Offering Circular under the
heading “Certain Income Tax Considerations” is a fair summary in all
material respects of the applicable United States and Canadian
federal income tax consequences of an investment in the Offered
Notes. The descriptions in the Offering Circular of statutes (other
than the disclosure contained under the heading “Certain Income Tax
Considerations”), is, to the extent it discusses matters of law in
the United States and Canada, a fair summary of that law in all
material respects.

3.   QUALIFICATIONS

          The foregoing opinions are subject to the following qualifications:

	 	3.1.	 	The enforceability of each of the Agreements to which
Hollinger or the Trust is a party is subject to bankruptcy,
insolvency, reorganization, arrangement, winding-up, moratorium and
other similar laws of general application affecting the enforcement
of creditors’ rights generally.
	 
	 	3.2.	 	The enforceability of each of the Agreements to which
Hollinger or the Trust is a party is subject to general equitable
principles, including the fact that the availability of equitable
remedies, such as injunctive relief and specific performance, is in
the discretion of a court.
	 
	 	3.3.	 	The opinion in section 2.8 insofar as it relates to the
Transaction Agreement is subject to the provisions of the Bulk Sales
Act (Ontario) which state that if the terms of that Act have not
been complied with, an action or proceeding may be brought or taken
by a creditor or by the trustee in bankruptcy of a vendor to have
the sale set aside or declared void, in which event the purchaser
may be personally liable to account to the creditors of the vendor.
	 
	 	3.4.	 	We express no opinion as to the enforceability of any
provision of any Agreement which states that amendments or waivers
of or with respect to that Agreement that are not in writing will
not be effective.
	 
	 	3.5.	 	Provisions contained in an Agreement which purport to sever
from that Agreement any provision which is prohibited or
unenforceable under applicable law without affecting the
enforceability or validity of the remainder of that Agreement may be
enforced only in the discretion of a court.
	 
	 	3.6.	 	We express no opinion as to the enforceability of any
provision of an Agreement which requires Hollinger or the Trust to
pay, or to indemnify another party for, the costs and expenses of
that other party in connection with judicial proceedings, since
those provisions may derogate from a court’s discretion to determine
by whom and to what extent those costs should be paid.
	 
	 	3.7.	 	The enforceability of the indemnity and contribution
provisions contained in the Purchase Agreement may be limited by
applicable law or principles of public policy.

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	 	3.8.	 	We have relied solely upon the certificate referred to in
section 1.5.4 with respect to the accuracy of the factual matters
contained in that certificate. We have not performed any
independent check or verification of those factual matters.
	 
	 	3.9.	 	We have relied solely upon the certificate referred to in
section 1.5.4 with respect to the accuracy of the factual matters
contained in that certificate. We have not performed any
independent check or verification of those factual matters.
	 
	 	3.10.	 	Our opinion in section 2.13 is based on our review of the
documents set out in sections 1.5.5 through 1.5.8, inclusive, and,
in particular, the following facts:
	 
	 	 	 	3.10.1.   CanWest Communications Corporation holds 76,785,976
Multiple Voting Shares of CanWest which entitles it to exercise
approximately 86.4% of the voting power attached to all shares of
CanWest outstanding as of December 7, 2000 subject only to section
3.10.3 below;
	 
	 	 	 	3.10.2.   CanWest Communications Corporation is indirectly owned and
controlled by Mr. I. H. Asper and trusts for the benefit of members
of his family;
	 
	 	 	 	3.10.3.   Hollinger holds, directly and indirectly through
affiliates, 2,700,000 Series 1 Preference Shares of CanWest which
entitles it to cast 50.0001% of the total votes attributed to all
shares of CanWest for purposes only of voting for the election of
two directors of CanWest and otherwise entitles Hollinger to cast
19 votes per share or approximately 5.8% of the voting power of all
shares of CanWest outstanding as of December 7, 2000;
	 
	 	 	 	3.10.4.   at the most recent annual general meeting of CanWest
shareholders held on February 6, 2001 a Board of Directors
comprised of eleven members was elected including two individuals,
Messrs. Conrad M. Black and F. David Radler, designated by
Hollinger (the “Hollinger Nominees"), as well as Mr. I. H. Asper
and three of his children; and
	 
	 	 	 	3.10.5.   no CanWest executive offices are held by the Hollinger
Nominees nor, to our knowledge, are they members of the Executive
Committee of the CanWest Board of Directors or do they otherwise
exercise any management authority over CanWest other than pursuant
to the terms of a management services agreement dated November 15,
2000 made between The Ravelston Corporation Limited and CanWest
pursuant to which The Ravelston Corporation Limited provides
certain management services in respect of newspaper properties
owned by CanWest.

4.   RELIANCE

	 	4.1.	 	The information set out in this opinion letter is as of the
date of this opinion letter, and you should infer no obligation on
our part to advise you of changes, material or otherwise, arising
from matters subsequently brought to our attention and you should
infer no obligation on our part to provide you with supplemental
information as of a later date.

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	 	4.2.	 	This opinion may be relied upon only by the addressees for
the purposes of the transaction contemplated by this opinion. It
may not be relied upon by any other person or for any other purpose,
nor may it be quoted in whole or in part or otherwise referred to,
without our prior written consent.

	 	 
	 	Yours truly,

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EXHIBIT D

LETTER OF INSTRUCTION AND AUTHORIZATION

Dated as of

First Union Trust Company, National Association

One Rodney Square, 1st Floor

920 King Street

Wilmington, DE 19801

Attention: Corporate Trust Administration

          Re:   Hollinger
Participation Trust

Ladies and Gentlemen:

          This Letter of Instruction and Authorization is issued in connection with
the Amended and Restated Trust Agreement, dated as of August 24, 2001 (the
“Trust Agreement”), between First Union Trust Company, National Association
(the “Trustee”) and Hollinger International Inc., as depositor. Pursuant to
the Trust Agreement, the Depositor, hereby authorizes the Trustee to take the
following action:

	 	1.	 	Issue US$           aggregate principal amount of 12 1/8%
Senior Notes due 2010 in certificated form and exchange all Global
Notes for Notes that are not Global Notes.
	 
	 	2.	 	Take any and all additional action as may be required by the
paragraph 1 identified above or otherwise required in connection
with the transaction.

          The undersigned confirms (1) that all action taken by the Trustee in
connection with this authorization and direction is covered by the fee and
indemnification provisions set forth in the Trust Agreement, and (2) the
instructions contained herein are not in violation of the Trust Agreement.
Capitalized terms used herein and not otherwise defined are used as defined in
the Trust Agreement.

	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	HOLLINGER INTERNATIONAL INC.

	 
	 
	 	 	By:	 	 
	 	 	 	 	

Name: 

Title:

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