e6vk

4. The director(s) is/are:
     Administrateur(s):
     First name, middle names and
     surname
     Prénom, autres prénoms et nom
     de famille

Address for service, giving Street & No. or R.R. No., Municipality, Province, Country and Postal Code Domicile élu, y compris la rue et le numéro ou le numéro de la R.R. le nom de la municipalité, la province, le pays et le code postal

Resident Canadian State “Yes or No” Résident canadien Oui/Non

See attached page 1A

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L6e5Ap+qhB3yAwxK9+AgBUeIngOEPPw47q2HGb1WgngAN5PjAxfyx9Faz01Zh/jj dM9xZ5rNUULs/YAVLzAoZA== 0000909567-05-000688.txt : 20050330 0000909567-05-000688.hdr.sgml : 20050330 20050330132958 ACCESSION NUMBER: 0000909567-05-000688 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20050330 FILED AS OF DATE: 20050330 DATE AS OF CHANGE: 20050330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRASCAN CORP/ CENTRAL INDEX KEY: 0001001085 STANDARD INDUSTRIAL CLASSIFICATION: METAL MINING [1000] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-97038 FILM NUMBER: 05712999 BUSINESS ADDRESS: STREET 1: BCE PLACE 181 BAY ST STREET 2: STE 4400 PO BOX 762 CITY: TORONTO ONTARIO STATE: A6 BUSINESS PHONE: 4163639491 MAIL ADDRESS: STREET 1: HAYTHE & CURLEY STREET 2: 237 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: EDPERBRASCAN CORP DATE OF NAME CHANGE: 19970904 FORMER COMPANY: FORMER CONFORMED NAME: BRASCAN LTD DATE OF NAME CHANGE: 19950919 6-K 1 t16149e6vk.htm FORM 6-K e6vk

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934

For the month of March 2005

Commission File Number 033-97038

Brascan Corporation

BCE Place
Suite 300
181 Bay Street, P.O. Box 762
Toronto, Ontario, Canada M5J 2T3

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.


Form 20-F o		Form 40-F þ

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.


Yes o		No þ

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-

EXHIBIT LIST


Exhibit		Description
	99.1	Articles of Amalgamation of Brascan Corporation, as filed with the Ontario Ministry of Consumer and Business Services as of January 1, 2005

	99.2	Bylaws of Brascan Corporation

	99.3	Restated Trust Agreement, dated as of August 1, 1997 between Partners Limited, Edperbrascan Corporation and Montreal Trust Company of Canada

	99.4	Amending Agreement dated as of March 22, 2005, between Noranda Inc., Brascan Corporation and Brascade Corporation

	99.5	Purchase and Sale Agreement, dated as of May 18, 2004, by and between Orion Power Holdings, Inc., Reliant Energy, Inc., Great Lakes Power Inc. and Brascan Corporation

	99.6	Asset Purchase Agreement, dated February 17, 2005, between Coastal Acquisition Ltd. and Weyerhaeuser Company Limited

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: March 30, 2005

BRASCAN CORPORATION

By:   /s/ Alan Dean
Name:   Alan Dean
Title:   Senior Vice President and Secretary

EX-99.1 2 t16149exv99w1.htm EX-99.1 exv99w1

(SEAL)

Ontario Corporation Number
Numéro de la compagnie en Ontario

1644037

Form 4
Business
Corporations
Act

Formule
numéro 4
Loi sur les
compagnies

ARTICLES OF AMALGAMATION
STATUTS DE FUSION

1. The name of the amalgamated corporation is: (Set Out in BLOCK CAPITAL LETTERS)
Dénomination sociale de la societe issue de la fusion (écrire en LETTRES MAJUSCULES SEULEMENT):

2. The address of the registered office is:
Adresse du siêge social :

181 Bay Street, BCE Place, Suite 300

(Street & Number, or R.R. Number & if Multi-Office Building give Room No.)

(Rue et numéro, ou numéro de la R.R. et, s’il s’agit d’un édifice â bureaux, numéro du bureau)



Toronto	Ontario	M5J 2T3

(Name of Municipality or Post Office)		(Postal Code/
(Nom de la municipalité ou du bureau de poste)		Code postal)


3.	Number of directors is/are:	or	minimum and maximum number of directors is/are:
	Nombre d’administrateurs :	ou	nombres minimum et maximum d’administrateurs:

	Number	or	minimum and maximum
	Nombre	ou	nombres minimum et maximum


	16

The directors of the Corporation are:


Name	Address for Service	Resident Canadian
James J. Blanchard	181 Bay Street, BCE Place, Suite 300 Toronto, Ontario M5J 2T3	No

Julia E. Foster	181 Bay Street, BCE Place, Suite 300 Toronto, Ontario M5J 2T3	Yes

Philip B. Lind	181 Bay Street, BCE Place, Suite 300 Toronto, Ontario M5J 2T3	Yes

Roy MacLaren	181 Bay Street, BCE Place, Suite 300 Toronto, Ontario M5J 2T3	Yes

Wallace F. McCain	181 Bay Street, BCE Place, Suite 300 Toronto, Ontario M5J 2T3	Yes

Jack M. Mintz	181 Bay Street, BCE Place, Suite 300 Toronto, Ontario M5J 2T3	Yes

Saul Shulman	181 Bay Street, BCE Place, Suite 300 Toronto, Ontario M5J 2T3	Yes

George S. Taylor	181 Bay Street, BCE Place, Suite 300 Toronto, Ontario M5J 2T3	Yes

Jack L. Cockwell	181 Bay Street, BCE Place, Suite 300 Toronto, Ontario M5J 2T3	Yes

J. Trevor Eyton	181 Bay Street, BCE Place, Suite 300 Toronto, Ontario M5J 2T3	Yes

J. Bruce Flatt	181 Bay Street, BCE Place, Suite 300 Toronto, Ontario M5J 2T3	Yes

James K. Gray	181 Bay Street, BCE Place, Suite 300 Toronto, Ontario M5J 2T3	Yes

Robert J. Harding	181 Bay Street, BCE Place, Suite 300 Toronto, Ontario M5J 2T3	Yes

David W. Kerr	181 Bay Street, BCE Place, Suite 300 Toronto, Ontario M5J 2T3	Yes

George E. Myhal	181 Bay Street, BCE Place, Suite 300 Toronto, Ontario M5J 2T3	Yes

Lynda C. Hamilton	181 Bay Street, BCE Place, Suite 300 Toronto, Ontario M5J 2T3	Yes

5. Check a or B
Cocher A ou B

o A) The amalgamation agreement has been duly adopted by the shareholders of each of the amalgamating corporations as required by subsection 176 (4) of the Business Corporations Act on the date set out below.

A) Les actionnaires de chaque société qui fusionne ont dûment adopté la convention de fusion conformément au paragraphe 176 (4) de la Loi sur les sociétés par actions à la date mentionnée ci-dessous.

or
ou

þ B) The amalgamation has been approved by the directors of each amalgamating corporation by a resolution as required by section 177 of the Business Corporations Act on the date set out below.

(B) Les administrateurs de chaque société qui fusionne ont approuvé la fusion par voie de résolution conformément á I’article 177 de la Loi sur les sociétés par actions à la date mentionnée ci-dessous.

The articles of amalgamation in substance contain the provisions of the articles of incorporation of Les statuts de fusion reprennent essentiellement les dispositions des statuts constitutifs de

BRASCAN CORPORATION

and are more particularly set out in these articles.

et sont énoncés textuellement aux presents statuts.



Names of amalgamating corporations		Date of Adoption/Approval
Dénomination sociale des société qui	Ontario Corporation Number	Date d’adoption ou d’approbation
fusionnent	Numéro de la société en Ontario	Year / année Month / mois Day / jour

1644036 Ontario Limited		December 31, 2004

Brascan Corporation	1249197	December 3, 2004

3

6. Restrictions, if any, on business the corporation may carry on or on powers the corporation may exercise. Limites, s’il y a lieu, imposées aux activités commerciales ou aux pouvoirs de la société.

None

7. The classes and any maximum number of shares that the corporation is authorized to issue:
Categories et nombre maximal, s’il y a lieu, d’actions que la société est autorisée á émettre:

an unlimited number of Class A Preference Shares, issuable in series
23,391 Class A Preference Shares, Series 1
10,465,100 Class A Preference Shares, Series 2
2,000 Class A Preference Shares, Series 3
4,000,000 Class A Preference Shares, Series 4
2,600,000 Class A Preference Shares, Series 5
111,633 Class A Preference Shares, Series 6
4,000,000 Class A Preference Shares, Series 7
8,000,000 Class A Preference Shares, Series 8
8,000,000 Class A Preference Shares, Series 9
10,000,000 Class A Preference Shares, Series 10
31,500,000 Class A Preference Shares, Series 11
8,000,000 Class A Preference Shares, Series 12
9,999,000 Class A Preference Shares, Series 13
665,000 Class A Preference Shares, Series 14
4,000,000 Class A Preference Shares, Series 15
7,835,200 Class A Preference Shares, Series 16
an unlimited number of Class AA Preference Shares, issuable in series
an unlimited number of Class A Limited Voting Shares
85,120 Class B Limited Voting Shares

8. Rights, privileges, restrictions and conditions (if any) attaching to each class of shares and directors authority with respect to any class of shares which may be issued in series:
Droits, privilèges, restrictions et conditions, s’il y a lieu, rattachés à chaque catégorie d’actions et pouvoirs des administrateurs relatifs à chaque catégorie d’actions qui peut être émise en série:

See attached pages 4A to 4YYYYYYY

Schedule A

Rights, Privileges, Restrictions and Conditions
Attaching to Each Class of Shares of the
Amalgamated Corporation

Class A Preference Shares

The Class A Preference Shares shall, as a class, have attached thereto the following rights, privileges, restrictions and conditions:

1. Directors’ Right to Issue One or More Series

The Class A Preference Shares may, at any time or from time to time, be issued in one (1) or more series, each series to consist of such number of shares as may before the issue thereof be determined by the directors; the directors of the Corporation may (subject as hereinafter provided) by resolution fix from time to time before the issue thereof the designation of and the preferences, rights, conditions, restrictions, limitations or prohibitions attaching to the Class A Preference Shares of each series including, without limiting the generality of the foregoing, the rate of preferential dividends, the dates of payment thereof, the redemption price and terms and conditions of redemption, conversion rights (if any) and any sinking fund or other provisions, the whole subject to the issue of Articles of Amendment setting forth the number and designation of and the preferences, rights, conditions, restrictions, limitations or prohibitions attaching to the Class A Preference Shares of such series.

2. Ranking of Class A Preference Shares

The Class A Preference Shares of each series shall be entitled to preference over the Class AA Preference Shares, the Class A Limited Voting Shares and the Class B Limited Voting Shares of the Corporation, and any other shares ranking junior to the Class A Preference Shares, with respect to priority in payment of dividends and in the distribution of assets in the event of the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs and may also be given such other preferences over the Class AA Preference Shares, the Class A Limited Voting Shares and the Class B Limited Voting Shares of the Corporation and any other shares ranking junior to the Class A Preference Shares as may be determined as to the respective series authorized to be issued. The Class A Preference Shares of each series shall rank on a parity with the Class A Preference Shares of every other series with respect to priority in payment of dividends and in the distribution of assets in the event of the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs.

3. Amendment

The Corporation shall not delete or vary any preference, right, condition, restriction, limitation or prohibition attaching to the Class A Preference Shares as a class or create Preference Shares ranking in priority to or on a parity with the Class A Preference Shares except by special resolution passed by at least two-thirds (2/3) of the votes cast at a meeting of the holders of the Class A Preference Shares duly called for that purpose and held upon at least fifteen (15) days’ notice at which the holders of at least a majority of the outstanding Class A Preference Shares are present or represented by proxy; if at any such meeting the holders of a majority of the outstanding Class A Preference Shares are not present or represented by proxy within half an hour after the time appointed for such meeting, then the meeting shall be adjourned to such date being not less than twenty-one (21) days later and to such time and place as may be appointed by the chairman and not less than fifteen (15) days’ notice shall be given of such adjourned meeting but it shall not be necessary in such notice to specify the purpose for which the meeting was originally called; at such adjourned meeting the holders of Class A Preference Shares present or represented by proxy may transact the business for which the meeting was originally called and a resolution passed thereat by not less than two-thirds (2/3) of the votes cast at such meeting shall constitute the authorization of the holders of the Class A Preference Shares referred to above; the formalities to be observed in respect of the giving of notice of any such meeting or adjourned meeting and the

conduct thereof shall be those from time to time prescribed by the by-laws of the Corporation with respect to meetings of shareholders. On every poll taken at a meeting of the holders of Class A Preference Shares as a class, or at a joint meeting of the holders of two or more series of Class A Preference Shares, each holder of Class A Preference Shares entitled to vote thereat shall have one vote in respect of each $25.00 of the issue price of each Class A Preference Share held.

CLASS A PREFERENCE SHARES, SERIES 1 ATTRIBUTES

Number and Designation of
and Rights, Privileges, Restrictions and
Conditions Attaching to the Class A Preference Shares, Series 1

The first series of Class A Preference Shares of the Corporation shall consist of 23,391 Class A Preference Shares which shall be designated as Floating Rate Class A Preference Shares Series 1 (hereinafter referred to as the “Series 1 Preference Shares”) and which, in addition to the rights, privileges, restrictions and conditions attached to the Class A Preference Shares as a class, shall have attached thereto the following rights, privileges, restrictions and conditions:

1. Consideration for Issue

The consideration for the issue of each Series 1 Preference Share shall be $25.00.

2. Dividends

2.1. Payment of Dividends

The holders of the Series 1 Preference Shares shall be entitled to receive, and the corporation shall pay thereon, as and when declared by the Board of Directors of the Corporation, out of monies of the Corporation properly applicable to the payment of dividends, cumulative preferential cash dividends payable quarterly (the “Quarterly Dividends”) on the last day of each of the months of March, June, September and December in each year (the “Dividend Payment Dates”), each such Quarterly Dividend to be equal to the amount obtained when the applicable Quarterly Dividend Rate (as defined in Section 2.2) is multiplied by $25.00.

In any case where dividends are payable for a period (the “Dividend Payment Period”) that ends on a date other than a Dividend Payment Date, dividends shall be paid in the amount per Series 1 Preference Share obtained when:

(i) $25.00 multiplied by 65% of the Prime Rate for the period of 90 days ending on a date which is 30 days before the end of such Dividend Payment Period

is multiplied by

(ii) the result obtained when the number of days in such Dividend Payment Period is divided by 365.

Dividends shall accrue on a day-to-day basis.

2.2. Definitions

Where used in these share provisions, the following terms shall have the following meanings, respectively:

(a) “Quarterly Dividend Rate” means, in relation to any Dividend Payment Date, one-quarter of 65% of the Prime Rate for the three calendar months ending on the last day of the calendar month immediately preceding the month during which such Dividend Payment Date falls;

(b) “ranking as to capital” means ranking with respect to the distribution of assets in the event of a liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or in the event of any other distribution of assets of the Corporation among its shareholders for the purpose of winding up its affairs;

(c)   “Prime Rate” means, for any period, the arithmetic average (rounded to the nearest one-one-hundredth of one percent (0.01%)) of the Daily Prime Rate for each day during such period;

(d)   “Daily Prime Rate” means, for any day, the Daily Prime Rate for the Bank on such date; provided that if, on such day, there shall be no Daily Prime Rate for the Bank, the Daily Prime Rate for such day shall be 1.65% above the average yields at weekly tender on 91 day Government of Canada Treasury Bills as reported by the Bank of Canada for such day;

(e)   “Daily Prime Rate for the Bank” means, on any day, the annual prime commercial lending rate of interest established and announced as the reference rate of interest used by the Bank on such date to determine the rates of interest on Canadian dollar loans to customers in Canada and designated by the Bank as its prime rate; and

(f)   “Bank” means Bank of Montreal or its successors.

2.3. Method of Payment

Dividends (less any tax required to be withheld by the Corporation) on the Series 1 Preference Shares shall be paid by cheque payable in lawful money of Canada at par at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable. The mailing of such cheque from the Corporation’s registered office, or the principal office in Toronto of the registrar for the Series 1 Preference Shares, or the payment by such other reasonable means as the Corporation deems desirable, on or before the date on which such dividend is to be paid to a holder of Series 1 Preference Shares shall be deemed to be payment of the dividends represented thereby and payable on such date unless the cheque is not paid upon presentation or payment by such other means is not received. Dividends which are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed for a period of six years from the date on which they were declared to be payable shall be forfeited to the Corporation.

2.4. Cumulative Payment of Dividends

If on any date on which dividends are to be paid the dividends accrued to such date are not paid in full on all of the Series 1 Preference Shares then outstanding, such dividends, or the unpaid part thereof, shall be paid on a subsequent date or dates determined by the directors of the Corporation on which the Corporation shall have sufficient monies properly applicable to the payment of such dividends. The holders of Series 1 Preference Shares shall not be entitled to any dividends other than or in excess of the cumulative preferential cash dividends herein provided for.

3. Redemption

3.1. Optional Redemption

Subject to the provisions of Section 5 hereof, the Corporation may redeem at any time the whole or from time to time any part of the then outstanding Series 1 Preference Shares, on payment for each share to be redeemed of $25.00; together with all accrued and unpaid dividends thereon up to the date fixed for redemption which, for greater certainty, shall include dividends calculated in accordance with Section 2.1 hereof during the period from and including the immediately preceding Dividend Payment Date to but excluding the date fixed for redemption, the whole constituting and hereinafter referred to as the “Redemption Price”.

3.2. Partial Redemption

In case a part only of the Series 1 Preference Shares is at any time to be redeemed, the shares so to be redeemed shall be selected by lot or in such other manner as the directors of the Corporation, from time to time, so determine. If a part only of the Series 1 Preference Shares represented by any certificate shall be redeemed, a new certificate representing the balance of such shares shall be issued to the holder thereof at the expense of the Corporation upon presentation and surrender of the first mentioned certificate.

3.3. Method of Redemption

In any case of redemption of Series 1 Preference Shares, the Corporation shall not less than 30 days and not more than 60 days before the date specified for redemption send by prepaid mail or deliver to the registered address of each person who at the date of mailing or delivery is a registered holder of Series 1 Preference Shares to be redeemed a notice in writing of the intention of the Corporation to redeem such Series 1 Preference Shares. Accidental failure or omission to give such notice to one or more holders shall not affect the validity of such redemption, but upon such failure or omission being discovered notice shall be given forthwith to such holder or holders and shall have the same force and effect as if given in due time. Such notice shall set out the number of Series 1 Preference Shares held by the person to whom it is addressed which are to be redeemed, the Redemption Price, the date specified for redemption and the place or places within Canada at which holders of Series 1 Preference Shares may present and surrender such shares for redemption. On and after the date so specified for redemption, the Corporation shall pay or cause to be paid to or to the order of the registered holders of the Series 1 Preference Shares to be redeemed the Redemption Price of such shares on presentation and surrender, at the registered office of the Corporation or any other place or places within Canada specified in such notice of redemption, of the certificate or certificates representing the Series 1 Preference Shares called for redemption. Payment in respect of Series 1 Preference Shares being redeemed shall be made by cheque payable to the holders thereof in lawful money of Canada at par at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable. From and after the date specified for redemption in any such notice of redemption, the Series 1 Preference Shares called for redemption shall cease to be entitled to dividends or any other participation in the assets of the Corporation and the holders thereof shall not be entitled to exercise any of their other rights as shareholders in respect thereof unless payment of the Redemption Price shall not be made upon presentation and surrender of the certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected. The Corporation shall have the right at any time after the mailing or delivery of notice of its intention to redeem Series 1 Preference Shares to deposit the Redemption Price of the Series 1 Preference Shares so called for redemption, or of such of the Series 1 Preference Shares which are represented by certificates which have not at the date of such deposit been surrendered by the holders thereof in connection with such redemption, to a special account in any chartered bank or any trust company in Canada named in such notice or in a subsequent notice to the holders of the shares in respect of which the deposit is made, to be paid without interest to or to the order of the respective holders of Series 1 Preference Shares called for redemption upon presentation and surrender to such bank or trust company of the certificates representing such shares. Upon such deposit being made or upon the date specified for redemption in such notice, whichever is the later, the Series 1 Preference Shares in respect of which such deposit shall have been made shall be deemed to be redeemed and the rights of the holders thereof shall be limited to receiving, without interest, their proportionate part of the amount so deposited upon presentation and surrender of the certificate or certificates representing their Series 1 Preference Shares being redeemed. Any interest allowed on any such deposit shall belong to the Corporation. Redemption monies that are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed (including monies held on deposit to a special account as provided for above) for a period of six years from the date specified for redemption shall be forfeited to the Corporation.

3.4. Effect on Conversion Right

Notwithstanding anything contained in Section 3.3 hereof, the giving by the Corporation of a notice of redemption hereunder shall in no way impair the conversion right set out in Section 5 hereof as it pertains to the next following conversion date (or, if the notice of redemption is given less than 30 days prior to said next following conversion date, as it pertains to that conversion date and the next following conversion date) and if a holder receiving a notice of redemption wishes to exercise such conversion right with respect to said next following conversion date or dates, as the case may be, he may so do and, if he so does, and all or part of the Series 1 Preference Shares called for redemption are converted on such conversion date, then the notice of redemption given by the Corporation shall be of no force and effect whatsoever with respect to the Series 1 Preference Shares so converted but shall be effective with respect to such Series 1 Preference Shares as are not so converted.

4. Retraction Privilege

4.1. Privilege

A holder of Series 1 Preference Shares shall have the privilege (the “retraction privilege”) of requiring the Corporation to redeem all or any of his Series 1 Preference Shares on each July 1, October 1, January 1 and April 1 (each such date being referred to individually as a “retraction date”) at a price of $25.00 per share plus accrued and unpaid dividends to the applicable retraction date.

4.2. Method of Exercise

A holder of Series 1 Preference Shares desiring to exercise the retraction privilege shall present and surrender to the transfer agent of the Corporation at any of its offices in Canada at which the Series 1 Preference Shares may be transferred, at least 15 days prior to the next following retraction date (failing which redemption shall be effected on the retraction date next following such next following retraction date), the certificate or certificates representing the Series 1 Preference Shares to be redeemed, which certificates shall be accompanied by a duly dated, completed and signed election form provided by or on behalf of the Corporation for this purpose.

4.3. Certificates

If a part only of the Series 1 Preference Shares represented by any certificate shall be redeemed, a new certificate for the Series 1 Preference Shares not so redeemed shall be issued at the expense of the Corporation.

4.4. Revocability

The presentation and surrender of Series 1 Preference Shares for redemption hereunder shall be irrevocable except with the consent of the Corporation and with respect to the Series 1 Preference Shares not redeemed in accordance with the provisions of Section 4.6 below or unless the Corporation shall fail to make payment to the holder of the redemption price on the redemption of the Series 1 Preference Shares to be redeemed on a date within 14 days after the retraction date. Said irrevocability shall, for greater certainty, prevent the Series 1 Shares so presented and surrendered from being converted in accordance with Section 5 hereof.

4.5. Payment

Subject as provided in Section 4.6 below, the Corporation shall on each retraction date redeem all Series 1 Preference Shares in respect of which holders shall have exercised the retraction privilege in accordance with the provisions of this Section 4. Such payment shall be made by cheque payable at par at any branch of the Corporation’s bankers for the time being in Canada or by any other reasonable means the Corporation deems desirable. Upon mailing by the Corporation of a cheque in the amount of the redemption price or upon payment of such price by other reasonable means such Series 1 Preference Shares shall then be and be deemed to be redeemed, and the holder of such Series 1 Preference shares shall not be entitled to exercise any of the rights of a shareholder in respect thereof.

4.6. Inability to Redeem

If, on any retraction date (the “First Retraction Date”), the Corporation determines that it will not be permitted, under the provisions of any applicable law, to redeem all of the Series 1 Preference Shares tendered for redemption, the Corporation shall redeem, on the First Retraction Date, that number of Series 1 Preference Shares which it is then permitted to redeem in accordance with the aforementioned provisions of law (rounded to the next lower multiple of 1,000) and the shares so to be redeemed shall be selected pro rata (disregarding fractions). In such case, if a part only of the Series 1 Preference Shares represented by any certificate shall be redeemed, a new certificate for the Series 1 Preference Shares not so redeemed shall be issued at the expense of the Corporation and held on the terms hereinafter set out. The Series 1 Preference Shares to be redeemed on the First Retraction Date shall be redeemed in accordance with the provisions of this Section 4. If the Corporation shall fail to redeem, because of any of the aforementioned provisions of law, all Series 1 Preference Shares in respect of which the holders thereof shall have

exercised the retraction privilege (such shares not so redeemed being hereinafter referred to as the “Deposited Shares” and the holders who shall have exercised their retraction privilege in respect thereof being hereinafter referred to as the “Retracting Shareholders”) the Corporation shall continue to hold the Deposited Shares and shall, as soon as possible (but in any event within 14 days) after the First Retraction Date, send a notice to each Retracting Shareholder stating:

(i)   the number of Deposited Shares of such Retracting Shareholder held by the Corporation,

(ii)   the intention of the Corporation to redeem on each subsequent retraction date (the “Subsequent Retraction Dates”) thereafter from all Retracting Shareholders who tendered in respect of the First Retraction Date, on a pro rata basis, that number of Deposited Shares as it is then permitted by applicable law to redeem, and

(iii)   the right of such Retracting Shareholder to require the Corporation to return to him all of the Deposited Shares with the result that the obligation of the Corporation to redeem the Deposited Shares so returned on the First Retraction Date shall cease.

The same notice shall be sent, as soon as possible (but in any event within 14 days) after each Subsequent Retraction Date in respect of which the Corporation is unable because of any of the aforementioned provisions of law to redeem all Series 1 Preference Shares tendered for redemption hereunder, to holders of Series 1 Preference Shares who have tendered their Series 1 Preference Shares for redemption subsequent to the First Retraction Date and as of said Subsequent Retraction Date. The Corporation shall, on each Subsequent Retraction Date thereafter if it is permitted on such date by such applicable law, redeem, on a pro rata basis from all Retracting Shareholders who tendered in respect of the First Retraction Date, that number of Deposited Shares as it is then permitted by applicable law to redeem at the redemption price. The Series 1 Preference Shares to be redeemed on the Subsequent Retraction Date shall be redeemed in accordance with this Section 4 save and except that payment therefor shall be accompanied by a statement to each Retracting Shareholder setting out the number of Deposited Shares of such Retracting Shareholder to be redeemed and the number of Deposited Shares remaining in the name of such Retracting Shareholder. Except as otherwise provided herein, Retracting Shareholders shall continue to be entitled to exercise all of the rights of shareholders in respect of the Deposited Shares and to receive dividends thereon except that, in order to obtain possession of the share certificate or certificates representing the Deposited Shares, a Retracting Shareholder must give 10 days’ written notice to the Corporation (given not less than 20 days prior to any Subsequent Retraction Date) requiring the Corporation to return to him all of the Deposited Shares held in his name by the Corporation. Upon receipt of such written notice the Corporation shall promptly send to such Retracting Shareholder a share certificate or share certificates for that number of Series 1 Preference Shares which such Retracting Shareholder has requested the Corporation to return. Such shares shall then cease to be Deposited Shares and such Retracting Shareholder shall cease to have any right to receive any payment with respect thereto in connection with the First Retraction Date as provided in this Section 4.6 save and except to the extent that such arise by virtue of another exercise of the retraction privilege herein contained with respect to a subsequent Retraction Date.

Once all Deposited Shares arising in respect of the First Retraction Date have been either withdrawn by or redeemed from the Retracting Shareholders, the Corporation shall then, if permitted under the provisions of applicable law, redeem shares tendered for redemption on the Subsequent Retraction Date immediately following the First Retraction Date, which Subsequent Retraction Date shall then, for the purposes of this Section 4.6, be considered to be the First Retraction Date, and so on until all Series 1 Preference Shares tendered for redemption are redeemed or withdrawn.

Nothing contained herein shall be deemed to limit the right of a Retracting Shareholder who withdraws his shares from retraction in respect of a particular Retraction Date to exercise his right of retraction on a subsequent Retraction Date.

5. Conversion

5.1. Right of Conversion

Upon and subject to the terms and conditions hereinafter set forth, the Series 1 Preference Shares shall be convertible at any time, but effective on the next following October 1, January 1, April 1 or July 1 (the “conversion dates”) after the date upon which such conversion privilege is exercised in accordance with Section 5.2, at the option of the holder thereof, be convertible into Floating Rate Class A Preference Shares Series 2 of the Corporation (the “Series 2 Preference Shares”) upon the basis of one Series 2 Preference Share for each one Series 1 Preference Share in respect of which the conversion right is exercised.

5.2. Exercise of Right

The conversion right herein provided for may be exercised by deposit with the transfer agent of the Series 1 Preference Shares and Series 2 Preference Shares at any of its offices in Canada at which both such series of shares may be transferred, at least 15 days prior to the next following conversion date (failing which conversion shall be effected on the conversion date next following such next following conversion date), the certificate or certificates representing the Series 1 Preference Shares in respect of which the holder thereof desires to exercise such right of conversion which certificates shall be accompanied by a duly dated, completed and signed election form provided by or on behalf of the Corporation for these purposes. If less than all the Series 1 Preference Share represented by any certificate or certificates are to be converted, the holder shall be entitled to receive, at the expense of the Corporation, a new certificate representing the Series 1 Preference Shares comprised in the certificate or certificates surrendered as aforesaid which are not to be converted.

5.3. Entitlement to Dividends

The registered holder of Series 1 Preference Shares who has taken all steps required to effect conversion of such Shares effective as of a conversion date shall be entitled to receive the Quarterly Dividend in respect of the quarter immediately preceding the conversion date and the registered holder of a Series 2 Preference Share resulting from such conversion shall be entitled to rank equally per Series 2 Preference Share with the registered holders of all other Series 2 Preference Shares with respect to all dividends accruing due from and after the conversion date.

5.4. Shares Called or Tendered for Redemption

In the case of any Series 1 Preference Shares which are called or tendered for redemption, the right of conversion thereof shall be governed by the provisions of Section 3.4 or Section 4.4 hereof, as the case may be. In any case where the Corporation shall fail to redeem such Series 1 Preference Shares in accordance with Sections 3 or 4, as the case may be, the right of conversion shall continue as if such Shares had not been called or tendered for redemption subject, in the case of tender for redemption, to the provisions of Section 4.6 hereof.

5.5. Certificates

On any conversion of Series 1 Preference Shares, the certificate or certificates representing the Series 2 Preference Shares of the Corporation resulting therefrom shall be issued at the expense of the Corporation in the name of the holder of the Series 1 Preference Shares converted or in such name or names as such holder may direct in writing, provided that such holder shall pay any applicable security transfer taxes.

5.6. Timing

The right of a holder of Series 1 Preference Shares to convert the same into Series 2 Preference Shares shall be deemed to have been exercised, and the holder of Series 1 Preference Shares to be converted (or any person or persons in whose name or names such holder of Series 1 Preference Shares shall have directed a certificate or certificates representing Series 2 Preference Shares to be issued as provided in Section 5.5 hereof) shall be deemed to have become a holder of Series 2 Preference Share of the Corporation, for all purposes, on the applicable conversion date,

notwithstanding any delay in the delivery of the certificate or certificates representing the Series 2 Preference Shares into which such Series 1 Preference Shares have been converted.

5.7. Subdivision, Consolidation, etc.

Neither the Series 1 Preference Shares nor the Series 2 Preference Shares shall be subdivided, consolidated, reclassified or otherwise changed unless contemporaneously therewith the outstanding shares of the other series of shares are subdivided, consolidated, reclassified or otherwise changed in the same proportion and in the same manner.

5.8. Qualification and Listing

So long as the right of conversion referred to in this Section 5 remains outstanding, the Corporation shall:

(i)   use its best efforts to have the Series 1 Preference Shares and the Series 2 Preference Shares issuable upon the conversion of Series 1 Preference Shares listed and posted for trading on The Toronto Stock Exchange;

(ii)   make all requisite filings under applicable Canadian securities legislation including those necessary to remain a reporting issuer not in default; and

(iii)   give or cause to be given written notice of the issue of Series 2 Preference Shares pursuant to the exercise of the conversion rights appertaining to the Series 1 Preference Shares, in such detail as may be required, to each securities commission or similar regulatory authority in each jurisdiction in Canada in which there is legislation or regulation permitting or requiring the giving of any such notice in order that such issue of Series 2 Preference Shares and the subsequent disposition of the Series 2 Preference Shares so issued will not be subject to the prospectus qualification requirements of such legislation or regulation.

6. Purchase for Cancellation

Subject to the provisions of Section 7 hereof, the Corporation may at any time or from time to time purchase for cancellation all or any part of the outstanding Series 1 Preference Shares in the open market (including purchase through or from an investment dealer or a member of a recognized stock exchange) or by invitation for tenders addresses to all of the holders of record of Series 1 Preference Shares then outstanding, at the lowest price or prices at which, in the opinion of the directors of the Corporation, such shares are then obtainable but not exceeding a price per share equal to the applicable Redemption Price plus reasonable costs of purchase. If, in response to an invitation for tenders under the provisions of this Section 6, more Series 1 Preference Shares are tendered at a price or prices acceptable to the Corporation than the Corporation is prepared to purchase, then the Series 1 Preference Shares to be purchased by the Corporation shall be purchased as nearly as may be pro rata according to the number of shares tendered by each holder who submits a tender to the Corporation, provided that when shares are tendered at different prices, the pro rating shall be effected only with respect to the shares tendered at the price at which more shares were tendered than the Corporation is prepared to purchase after the Corporation has purchased all the shares tendered at lower prices.

7. Restriction on Dividends and Retirement of Shares

So long as any of the Series 1 Preference Shares are outstanding, the Corporation shall not, without the approval of the holders of the Series 1 Preference Shares given as hereinafter specified:

(a) declare, pay or set apart for payment any dividends (other than stock dividends in shares of the Corporation ranking as to capital and dividends junior to the Series 1 Preference Shares) on shares ranking as to dividends junior to the Series 1 Preference Shares;

(b)   call for redemption, redeem, purchase or otherwise pay off or retire for value any shares ranking as to capital junior to the Series 1 Preference Shares (except out of the net cash proceeds of a substantially concurrent issue of shares ranking as to capital and dividends junior to the Series 1 Preference Shares);

(c)   call for redemption, redeem, purchase or otherwise pay off or retire for value less than all of the Series 1 Preference Shares; or

(d)   except pursuant to any purchase obligation, sinking fund, retraction privilege or mandatory redemption provisions attaching to any series of preferred shares from time to time issued, call for redemption, redeem, purchase or otherwise pay off or retire for value any shares ranking as to capital on a parity with the Series 1 Preference Shares;

unless, in each such case, all dividends then payable on the Series 1 Preference Shares then outstanding and on all other shares of the Corporation ranking as to dividends on a parity with the Series 1 Preference Shares accrued up to and including the dividends payable on the immediately preceding respective date or dates for the payment of dividends thereon shall have been declared and paid or set apart for payment.

8. Voting Rights

The holders of the Series 1 Preference Shares shall not be entitled as such (except as hereinafter specifically provided) to receive notice of or to attend any meeting of the shareholders of the Corporation or to vote at any such meeting (but shall be entitled to receive notice of meetings of shareholders of the Corporation called for the purpose of authorizing the dissolution of the Corporation or the sale of its undertaking or a substantial part thereof), unless and until the Corporation from time to time shall fail to pay for a period of two years dividends at the rate specified by the board of directors on the Series 1 Preference Shares, Series 2 Preference Shares or Class A Preference Shares, Series 3 (“Series 3 Preference Shares”) whether or not such dividends have been declared and whether or not there are any moneys of the Corporation properly applicable to the payment of dividends; thereafter but only so long as any dividends on the Series 1 Preference Shares, Series 2 Preference Shares or Series 3 Preference Shares remain in arrears the holders of the Series 1 Preference Shares, Series 2 Preference Shares and Series 3 Preference Shares shall be entitled to receive notice of and to attend all meetings of shareholders of the Corporation and shall be entitled to one vote in respect of each Series 1 Preference Share, Series 2 Preference Share or Series 3 Preference Share held and in addition shall be entitled to elect two members of the board of directors of the Corporation if the board consists of seven or fewer directors or three members of the board of directors if the board consists of more than seven directors; subject to the foregoing, when entitled to vote in the election of directors, the holders of Series 1 Preference Shares will vote with the holders of Class A Limited Voting Shares in the election of one-half of the board of directors; nothing herein contained shall be deemed to limit the right of the Corporation from time to time to increase or decrease the number of its directors.

Notwithstanding anything contained in the by-laws of the Corporation, the term of office of all persons who may be directors of the Corporation at any time when the right to elect directors shall accrue to the holder of Series 1 Preference Shares, Series 2 Preference Shares and Series 3 Preference Shares as herein provided, or who may be appointed as directors thereafter and before a meeting of shareholders shall have been held, shall terminate upon the election of directors at the next annual meeting of shareholders or at a general meeting of shareholders which may be held for the purpose of electing directors at any time after the accrual of such right to elect directors upon not less than 20 days’ written notice and which shall be called by the secretary of the Corporation upon the written request of the holders of record of at least one-tenth (1/10) of the outstanding Series 1 Preference Shares, Series 2 Preference Shares or Series 3 Preference Shares; in default of the calling of such general meeting by the secretary, within five days after the making of such request, such meeting may be called by any holder of record of Series 1 Preference Shares, Series 2 Preference Shares or Series 3 Preference Shares.

but if there be no such remaining director or directors, the board may elect or appoint sufficient holders of Series 1 Preference Shares, Series 2 Preference Shares or Series 3 Preference Shares to fill the vacancy or vacancies; whether or not such vacancy or vacancies is or are so filled by the board, the holders of record of at least one-tenth (1/10) of the outstanding Series 1 Preference Shares, Series 2 Preference Shares and Series 3 Preference Shares shall have the right to require the secretary of the Corporation to call a meeting of the holders of Series 1 Preference Shares, Series 2 Preference Shares and Series 3 Preference Shares for the purpose of filling the vacancy or vacancies or replacing all or any of the persons elected or appointed to fill such vacancy or vacancies and the provisions of the last preceding paragraph shall apply with respect to the calling of any such meeting.

Notwithstanding anything contained in the by-laws of the Corporation: (i) upon any termination of the voting rights of the holders of the Series 1 Preference Shares, Series 2 Preference Shares and Series 3 Preference Shares the term of office of the directors elected or appointed to represent the holders of Series 1 Preference Shares, Series 2 Preference Shares and Series 3 Preference Shares shall forthwith terminate; and (ii) the holding of one Series 1 Preference Share, Series 2 Preference Share or Series 3 Preference Share shall be sufficient to qualify a person for election or appointment as a director of the Corporation to represent the holders of Series 1 Preference Shares, Series 2 Preference Shares and Series 3 Preference Shares.

9. Liquidation, Dissolution or Winding Up

In the event of the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or in the event of any distribution of assets of the Corporation among its shareholders for the purpose of winding up its affairs, the holders of the Series 1 Preference Shares shall be entitled to receive from the assets of the Corporation a sum equal to $25.00 per Series 1 Preference Share held by them respectively, plus an amount equal to all accrued and unpaid dividends thereon up to the date of payment which, for greater certainty, shall include dividends calculated in accordance with Section 2.1 during the period from and including the immediately preceding Dividend Payment Date to but excluding the date of payment before any amount shall be paid to, or assets of the Corporation distributed amongst the holders of any other shares of the Corporation ranking as to capital junior to the Series 1 Preference Shares. After payment to the holders of the Series 1 Preference Shares of the amounts so payable to them, they shall not be entitled to share in any further distribution of the assets of the Corporation.

10. Day Not a Business Day

In the event that any date on which any dividend on the Series 1 Preference Shares is payable by the Corporation, or on or by which any other action is required to be taken by the Corporation hereunder, is not a Business Day, then such dividend shall be payable, or such other action shall be required to be taken, on or by the next succeeding day that is a Business Day.

For the purposes of these share provisions “Business Day” means a day other than a Saturday, a Sunday or any other day that is treated as a statutory holiday in the jurisdiction in which the Corporation’s registered office is located.

11. Mail Service Interruption

If the directors of the Corporation determine that mail service is or is threatened to be interrupted at the time when the Corporation is required or elects to give any notice hereunder, or is required to send any cheque or any share certificate to the holder of any Series 1 Preference Share, whether in connection with the redemption of such share or otherwise, the Corporation may, notwithstanding the provisions hereof:

(a) give such notice by publication thereof once in a daily English language newspaper of general circulation published in each of Vancouver, Calgary, Regina, Winnipeg, Toronto and Montreal, and once in a daily French language newspaper published in Montreal and such notice shall be deemed to have been validly given on the day next succeeding its publication in all of such cities; and

(b) fulfil the requirement to send such cheque or such share certificate by arranging for the delivery thereof to such holder by the transfer agent for the Series 1 Preference Shares at its principal offices in the cities of Vancouver, Calgary, Regina, Winnipeg, Toronto and Montreal and such cheque and/or certificate shall be deemed to have been sent on the date on which such notice of such arrangement shall have been given as provided in (a) above, provided that as soon as the directors of the Corporation determine that mail service is no longer interrupted or threatened to be interrupted such cheque or share certificate, if not therefore delivered to such holder, shall be sent by mail as herein provided. In the event that the Corporation is required to mail such share certificate, such mailing shall be made by prepaid mail to the registered address of each person who at the date of mailing is a registered holder and who is entitled to receive such certificate.

12. Amendment

The rights, privileges, restrictions and conditions attached to the Series 1 Preference Shares may be added to, changed or removed by Articles of Amendment but only with the prior approval of the holders of the Series 1 Preference Shares given as hereinafter specified in addition to any vote or authorization required by law.

13. Approval of Holders of Series 1 Preference Shares

Any approval of the holders of the Series 1 Preference Shares with respect to any and all matters referred to herein or of any other matter requiring the consent of the holders of the Series 1 Preference Shares may be given in such manner as may then be required by law, subject to a minimum requirement that such approval be given by resolution signed by all the holders of outstanding Series 1 Preference Shares or passed by the affirmative vote of at least 66 2/3% of the votes cast by the holders of Series 1 Preference Shares who voted in respect of that resolution at a meeting of the holders of the Series 1 Preference Shares duly called for that purpose. The quorum requirement for, the proxy rules applicable to, the formalities to be observed in respect of the giving of notice of, and the formalities to be observed in respect of the conduct of, any such meeting or any adjourned meeting shall be those from time to time prescribed by the by-laws of the Corporation with respect to meetings of shareholders, or if not so prescribed, as required by the Business Corporations Act (Ontario). On every poll taken at every meeting of holders of Series 1 Preference Shares, each holder of Series 1 Preference Shares entitled to vote thereat shall have one vote in respect of each $25.00 of the issue price of each Series 1 Preference Share held.

CLASS A PREFERENCE SHARES, SERIES 2 ATTRIBUTES

Number and Designation of
and Rights, Privileges, Restrictions and
Conditions Attaching to the Class A Preference Shares, Series 2

The second series of Class A Preference Shares of the Corporation shall consist of 10,465,100 Class A Preference Shares which shall be designated as Floating Rate Class A Preference Shares Series 2 (hereinafter referred to as the “Series 2 Preference Shares”) and which, in addition to the rights, privileges, restrictions and conditions attached to the Class A Preference Shares as a class, shall have attached thereto the following rights, privileges, restrictions and conditions:

1. Consideration for Issue

The consideration for the issue of each Series 2 Preference Share shall be $25.00.

2. Dividends

2.1. Payment of Dividends

The holders of the Series 2 Preference Shares shall be entitled to receive, and the Corporation shall pay thereon, as and when declared by the Board of Directors of the Corporation, out of monies of the Corporation properly applicable to the payment of dividends, cumulative preferential cash dividends payable quarterly (the “Quarterly Dividends”) on the last day of each of the months of March, June, September and December in each year (the “Dividend Payment Dates”), each such Quarterly Dividend to be equal to the amount obtained when the applicable Quarterly Dividend Rate (as defined in section 2.2 is multiplied by $25.00.

In any case where dividends are payable for a period (the “Dividend Payment Period”) that ends on a date other than the Initial Dividend Payment Date or a Dividend Payment Date, dividends shall be paid in the amount per Series 2 Preference Share obtained when:

(i)   $25.00 multiplied by 70% of the Prime Rate for the period of 90 days ending on a date which is 30 days before the end of such Dividend Payment Period

    is multiplied by

(ii)   the result obtained when the number of days in such Dividend Payment Period is divided by 365.

Dividends shall accrue on a day-to-day basis.

2.2. Definitions

Where used in these share provisions, the following terms shall have the following meanings, respectively:

(a)   “Quarterly Dividend Rate” means, in relation to any Dividend Payment Date, one quarter of 70% of the Prime Rate for the three calendar months ending on the last day of the calendar month immediately preceding the month during which such Dividend Payment Date falls;

(b)   “Prime Rate” means, for any period, the arithmetic average (rounded to the nearest one-one-hundredth of one percent (0.01%)) of the Daily Prime Rate for each day during such period;

(c)   “Daily Prime Rate” means, for any day, the Daily Prime Rate for the Bank on such date; provided that, if, on such day, there shall be no Daily Prime Rate for the Bank, the Daily Prime Rate for such day

    shall be 1.65% above the average yields at weekly tender on 91 day Government of Canada Treasury Bills as reported by the Bank of Canada for such day;

(d)   “Daily Prime Rate for the Bank” means, on any day, the annual prime commercial lending rate of interest established and announced as the reference rate of interest used by the Bank on such date to determine the rates of interest on Canadian dollar loans to customers in Canada and designated by the Bank as its prime rate;

(e)   “Bank” means Bank of Montreal or its successors; and

(f)   “ranking as to capital” means ranking with respect to the distribution of assets in the event of a liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or in the event of any other distribution of assets of the Corporation among its shareholders for the purpose of winding up its affairs.

2.3. Method of Payment

Dividends (less any tax required to be withheld by the Corporation) on the Series 2 Preference Shares shall be paid by cheque payable in lawful money of Canada at par at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable. The mailing of such cheque from the Corporation’s registered office, or the principal office in Toronto of the registrar for the Series 2 Preference Shares, or the payment by such other reasonable means as the Corporation deems desirable, on or before the date on Which such dividend is to be paid to a holder of Series 2 Preference Shares shall be deemed to be payment of the dividends represented thereby and payable on such date unless the cheque is not paid upon presentation or payment by such other means is not received. Dividends which are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed for a period of six years from the date on which they were declared to be payable shall be forfeited to the Corporation.

2.4. Cumulative Payment of Dividends

If on any date on which dividends are to be paid the dividends accrued to such date are not paid in full on all of the Series 2 Preference Shares then outstanding, such dividends, or the unpaid part thereof, shall be paid on a subsequent date or dates determined by the directors of the Corporation on which the Corporation shall have sufficient monies properly applicable to the payment of such dividends. The holders of Series 2 Preference Shares shall not be entitled to any dividends other than or in excess of the cumulative preferential cash dividends herein provided for.

3. Redemption

3.1. Optional Redemption

Subject to the provisions of Section 5 hereof, the Corporation may redeem at any time the whole or from time to time any part of the then outstanding Series 2 Preference Shares, on payment for each share to be redeemed of $25.00; together with all accrued and unpaid dividends thereon up to the date fixed for redemption which, for greater certainty, shall include dividends calculated in accordance with Section 2.1 hereof during the period from and including the immediately preceding Dividend Payment Date to but excluding the date fixed for redemption, the whole constituting and hereinafter referred to as the “Redemption Price”.

3.2. Partial Redemption

In case a part only of the Series 2 Preference Shares is at any time to be redeemed, the shares so to be redeemed shall be selected by lot or in such other manner as the directors of the Corporation, from time to time so determine. If a part only of the Series 2 Preference Shares represented by any certificate shall be redeemed, a new certificate representing the balance of such shares shall be issued to the holder thereof at the expense of the Corporation upon presentation and surrender of the first mentioned certificate.

3.3. Method of Redemption

In any case of redemption of Series 2 Preference Shares, the Corporation shall not less than 30 days and not more than 60 days before the date specified for redemption send by prepaid mail or deliver to the registered address of each person who at the date of mailing or delivery is a registered holder of Series 2 Preference Shares to be redeemed a notice in writing of the intention of the Corporation to redeem such Series 2 Preference Shares. Accidental failure or omission to give such notice to one or more holders shall not affect the validity of such redemption, but upon such failure or omission being discovered notice shall be given forthwith to such holder or holders and shall have the same force and effect as if given in due time. Such notice shall set out the number of Series 2 Preference Shares held by the person to whom it is addressed which are to be redeemed, the Redemption Price, the date specified for redemption and the place or places within Canada at which holders of Series 2 Preference Shares may present and surrender such shares for redemption. On and after the date so specified for redemption, the Corporation shall pay or cause to be paid to or to the order of the registered holders of the Series 2 Preference Shares to be redeemed the Redemption Price of such shares on presentation and surrender, at the registered office of the Corporation or any other place or places within Canada specified in such notice of redemption, of the certificate or certificates representing the Series 2 Preference Shares called for redemption. Payment in respect of Series 2 Preference Shares being redeemed shall be made by cheque payable to the holders thereof in lawful money of Canada at par at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable. From and after the date specified for redemption in any such notice of redemption, the Series 2 Preference Shares called for redemption shall cease to be entitled to dividends or any other participation in the assets of the Corporation and the holders thereof shall not be entitled to exercise any of their other rights as shareholders in respect thereof unless payment of the Redemption Price shall not be made upon presentation and surrender of the certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected. The Corporation shall have the right at any time after the mailing or delivery of notice of its intention to redeem Series 2 Preference Shares to deposit the Redemption Price of the Series 2 Preference Shares so called for redemption, or of such of the Series 2 Preference Shares which are represented by certificates which have not at the date of such deposit been surrendered by the holders thereof in connection with such redemption, to a special account in any chartered bank or any trust company in Canada named in such notice or in a subsequent notice to the holders of the shares in respect of which the deposit is made, to be paid without interest to or to the order of the respective holders of Series 2 Preference Shares called for redemption upon presentation and surrender to such bank or trust company of the certificates representing such shares. Upon such deposit being made or upon the date specified for redemption in such notice, whichever is the later, the Series 2 Preference Shares in respect of which such deposit shall have been made shall be deemed to be redeemed and the rights of the holders thereof shall be limited to receiving, without interest, their proportionate part of the amount so deposited upon presentation and surrender of the certificate or certificates representing their Series 2 Preference Shares being redeemed. Any interest allowed on any such deposit shall belong to the Corporation. Redemption monies that are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed (including monies held on deposit to a special account as provided for above) for a period of 6 years from the date specified for redemption shall be forfeited to the Corporation.

4. Purchase for Cancellation

Subject to the provisions of Section 5 hereof, the Corporation may at any time or from time to time purchase for cancellation all or any part of the outstanding Series 2 Preference Shares in the open market (including purchase through or from an investment dealer or a member of a recognized stock exchange) or by invitation for tenders addressed to all of the holders of record of Series 2 Preference Shares then outstanding, at the lowest price or prices at which, in the opinion of the directors of the Corporation, such shares are then obtainable but not exceeding a price per share equal to the applicable Redemption Price plus reasonable costs of purchase. If, in response to an invitation for tenders under the provisions of this Section 4, more Series 2 Preference Shares are tendered at a price or prices acceptable to the Corporation than the Corporation is prepared to purchase, then the Series 2 Preference Shares to be purchased by the Corporation shall be purchased as nearly as may be pro rata according to the number of shares tendered by each holder who submits a tender to the Corporation, provided that when shares are tendered at different prices, the pro rating shall be effected only with respect to the shares tendered at the price at which more shares were tendered than the Corporation is prepared to purchase after the Corporation has purchased all the shares tendered at lower prices

5. Restrictions on Dividends and Retirement of Shares

So long as any of the Series 2 Preference Shares are outstanding, the Corporation shall not, without the approval of the holders of the Series 2 Preference Shares given as hereinafter specified:

(a)   declare, pay or set apart for payment any dividends (other than stock dividends in shares of the Corporation ranking as to capital and dividends junior to the Series 2 Preference Shares) on shares ranking as to dividends junior to the Series 2 Preference Shares;

(b)   call for redemption, redeem, purchase or otherwise pay off or retire for value, any shares ranking as to capital junior to the Series 2 Preference Shares (except out of the net cash proceeds of a substantially concurrent issue of shares ranking as to capital and dividends junior to the Series 2 Preference Shares);

(c)   call for redemption, redeem, purchase or otherwise pay off or retire for value less than all of the Series 2 Preference Shares; or

(d)   except pursuant to any purchase obligation, sinking fund, retraction privilege or mandatory redemption provisions attaching to any series of preferred shares from time to time issued, call for redemption, redeem, purchase or otherwise pay off or retire for value any shares ranking as to capital on a parity with the Series 2 Preference Shares,

unless, in each such case, all dividends then payable on the Series 2 Preference Shares then outstanding and on all other shares of the Corporation ranking as to dividends on a parity with the Series 2 Preference Shares accrued up to and including the dividends payable on the immediately preceding respective date or dates for the payment of dividends thereon shall have been declared and paid or set apart for payment.

6. Voting Rights

The holders of the Series 2 Preference Shares shall not be entitled as such (except as hereinafter specifically provided) to receive notice of or to attend any meeting of the shareholders of the Corporation or to vote at any such meeting (but shall be entitled to receive notice of meetings of shareholders of the Corporation called for the purpose of authorizing the dissolution of the Corporation or the sale of its undertaking or a substantial part thereof), unless and until the Corporation from time to time shall fail to pay for a period of two years dividends at the rate specified by the board of directors on the Class A Preference Shares, Series 1 (“Series 1 Preference Shares”), Series 2 Preference Shares or Class A Preference Shares, Series 3 (“Series 3 Preference Shares”) whether or not such dividends have been declared and whether or not there are any moneys of the Corporation properly applicable to the payment of dividends; thereafter but only so long as any dividends on the Series 1 Preference Shares, Series 2 Preference Shares or Series 3 Preference Shares remain in arrears the holders of the Series 1 Preference Shares, Series 2 Preference Shares and Series 3 Preference Shares shall be entitled to receive notice of and to attend all meetings of shareholders of the Corporation and shall be entitled to one vote in respect of each Series 1 Preference Share, Series 2 Preference Share or Series 3 Preference Share held and in addition shall be entitled to elect two members of the board of directors of the Corporation if the board consists of seven or fewer directors or three members of the board of directors if the board consists of more than seven directors; subject to the foregoing, when entitled to vote in the election of directors, the holders of Series 2 Preference Shares will vote with the holders of Class A Limited Voting Shares in election of one-half of the board of directors; nothing herein contained shall be deemed to limit the right of the Corporation from time to time increase or decrease the number of its directors.

holders of record of at least one-tenth (1/10) of the outstanding Series 1 Preference Shares, Series 2 Preference Shares or Series 3 Preference Shares; in default of the calling of such general meeting by the secretary, within five days after the making of such request, such meeting may be called by any holder of record of Series 1 Preference Shares, Series 2 Preference Shares or Series 3 Preference Shares.

Any vacancy or vacancies occurring among members of the board elected to represent the holders of Series 1 Preference Shares, Series 2 Preference Shares and Series 3 Preference Shares in accordance with the foregoing provisions may be filled by the board of directors with the consent and approval of the remaining director or directors elected to represent the holders of Series 1 Preference Shares, Series 2 Preference Shares and Series 3 Preference Shares but if there be no such remaining director or directors, the board may elect or appoint sufficient holders of Series 1 Preference Shares, Series 2 Preference Shares or Series 3 Preference Shares to fill the vacancy or vacancies; whether or not such vacancy or vacancies is or are so filled by the board, the holders of record of at least one-tenth (1/10) of the outstanding Series 1 Preference Shares, Series 2 Preference Shares and Series 3 Preference Shares shall have the right to require the secretary of the Corporation to call a meeting of the holders of Series 1 Preference Shares, Series 2 Preference Shares and Series 3 Preference Shares for the purpose of filling the vacancy or vacancies or replacing all or any of the persons elected or appointed to fill such vacancy or vacancies and the provisions of the last preceding paragraph shall apply with respect to the calling of any such meeting.

7. Liquidation, Dissolution or Winding Up

In the event of the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or in the event of any other distribution of assets of the Corporation among its shareholders for the purpose of winding up its affairs, the holders of the Series 2 Preference Shares shall be entitled to receive from the assets of the Corporation a sum equal to $25.00 per Series 2 Preference Share held by them respectively, plus an amount equal to all accrued and unpaid dividends thereon up to the date of payment which, for greater certainty, shall include dividends calculated in accordance with Section 2.1 during the period from and including the immediately preceding Dividend Payment Date to but excluding the date of payment, before any amount shall be paid to, or assets of the Corporation distributed amongst the holders of any other shares of the Corporation ranking as to capital junior to the Series 2 Preference Shares. After payment to the holders of the Series 2 Preference Shares of the amounts so payable to them, they shall not be entitled to share in any further distribution of the assets of the Corporation.

8. Day Not a Business Day

In the event that any date on which any dividend on the Series 2 Preference Shares is payable by the Corporation, or on or by which any other action is required to be taken by the Corporation hereunder, is not a Business Day, then such dividend shall be payable, or such other action shall be required to be taken, on or by the next succeeding day that is a Business Day.

9. Mail Service Interruption

share certificate to the holder of any Series 2 Preference Share, whether in connection with the redemption of such share or otherwise, the Corporation may, notwithstanding the provisions hereof:

10. Amendment

The rights, privileges, restrictions and conditions attached to the Series 2 Preference Shares may be added to, changed or removed by Articles of Amendment but only with the prior approval of the holders of the Series 2 Preference Shares given as hereinafter specified in addition to any vote or authorization required by law.

11. Approval of Holders of Series 2 Preference Shares

Any approval of the holders of the Series 2 Preference Shares with respect to any and all matters referred to herein or of any other matter requiring the consent of the holders of the Series 2 Preference Shares may be given in such manner as may then be required by law, subject to a minimum requirement that such approval be given by resolution signed by all the holders of outstanding Series 2 Preference Shares or passed by the affirmative vote of at least 66 2/3% of the votes cast by the holders of Series 2 Preference Shares who voted in respect of that resolution at a meeting of the holders of the Series 2 Preference Shares duly called for that purpose. The quorum requirement for, the proxy rules applicable to, the formalities to be observed in respect of the giving of notice of, and the formalities to be observed in respect of the conduct of, any such meeting or any adjourned meeting shall be those from time to time prescribed by the by-laws of the Corporation with respect to meetings of shareholders, or if not so prescribed, as required by the Business Corporations Act (Ontario). On every poll taken at every meeting of holders of Series 2 Preference Shares, each holder of Series 2 Preference Shares entitled to vote thereat shall have one vote in respect of each $25.00 of the issue price of each Series 2 Preference Share held.

CLASS A PREFERENCE SHARES. SERIES 3 ATTRIBUTES

Number and Designation of
and Rights, Privileges, Restrictions and
Conditions Attaching to the Class A Preference Shares Series 3

All terms used in Part I of these share provisions which are defined in Part II of these share provisions have the meaning in Part I ascribed hereto in Part II of these share provisions.

Part I

The third series of Class A Preference Shares of the Corporation shall consist of 2,000 Class A Preference Shares which shall be designated as “Class A Cumulative Redeemable Preference Shares Series 3” (the “Series 3 Preference Shares”) and which, in addition to the rights, privileges, restrictions and conditions attached to the Class A Preference Shares as a class, shall have attached thereto the following rights, privileges, restrictions and conditions:

1. Consideration for Issue

The consideration for the issue of each Series 3 Preference Share shall be $100.000.

2. Dividends

2.1. Definitions

In these share provisions:

(a)   “Dividend Payment Date” means the Thursday following the second Wednesday of each month, except that if such Thursday is not a Business Day, the Dividend Payment Date will be the first Business Day following such Thursday;

(b)   “Dividend Period” means the period from and including each Dividend Payment Date to but excluding the next succeeding Dividend Payment Date; and

(c)   “Dividend Rate” means the Current Dividend Rate determined in an Auction of the Series 3 Preference Shares conducted on the Business Day next preceding the commencement of each Dividend Period, as contemplated in Part II hereof; provided that, if the Corporation fails to pay the full amount of any dividend when due (whether or not declared) or fails to redeem any Series 3 Preference Shares after it has given notice of redemption in respect thereof (A) for any reason except as a result of an accidental or inadvertent error or omission on the part of the Corporation or the Trust Company, or (B) as a result of an accidental or inadvertent error or omission on the part of the Corporation or the Trust Company which is not remedied within three Business Days from the applicable Dividend Payment Date or Redemption Date (as defined in Article 3 of this Part), as the case may be, the Dividend Rate will no longer be based on the results of an Auction and will be, during each subsequent Dividend Period, a rate per annum equal to the Bankers’ Acceptance Rate in effect on the Business Day next preceding the commencement of such Dividend Period plus 0.40%.

2.2. Payment of Dividends

Except as otherwise provided in Section 2.4 of this Part, the holders of the Series 3 Preference Shares shall be entitled to receive, as and when declared by the Board of Directors of the Corporation, out of moneys of the Corporation properly applicable to the payment of dividends, cumulative, preferential cash dividends in the amount per share determined from time to time in accordance with the provisions of Section 2.5 of this Part to be paid on a Dividend Payment Date. Except as otherwise provided in Section 2.4 of this Part, the dividends on Series 3 Preference Shares

shall accrue from and include the original date of issue of Series 3 Preference Shares or shall accrue from and include the last Dividend Payment Date in respect of which dividends have been paid or made available for payment, whichever is later.

2.3. Method of Payment

The Corporation shall pay to, or cause to be paid to, or to the order of, the holders of Series 3 Preference Shares as they appear on the securities register of the Corporation on the Business Day next preceding the applicable Dividend Payment Date, dividends on such shares by cheques drawn on a Canadian chartered bank and payable at par at any branch of such bank in Canada unless any such holder requests, by notice in writing received by the Corporation or the Trust Company no less than seven Business Days prior to a Dividend Payment Date, to receive payment of all such dividends by wire transfer, and provides in such notice an account number at a specified branch in Canada of a Canadian chartered bank to which the Corporation may cause such dividends to be wire transferred. In such a case, the Corporation shall instruct its bankers, or cause instructions to be given to a Canadian chartered bank, to wire transfer the amount of all such dividends to the account designated by each such holder in his notice to the Corporation or the Trust Company. Any such notification by a registered holder shall remain in effect until such registered holder ceases to be a registered holder or until cancelled or superseded by subsequent notice in writing received by the Corporation or the Trust Company no less than seven Business Days prior to a Dividend Payment Date. The delivery or mailing of such cheques or the receipt of a confirmation from a Canadian chartered bank that such bank has carried out instructions with respect to the wire transfer of the amount of any such dividend, by the Corporation or the Trust Company, shall be a full and complete discharge of the Corporation’s obligation to pay the dividends unless, in the case of payment by cheque, the cheque is not honoured when presented for payment. Dividends which are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed for a period of six years from the date on which they were declared to be payable may be reclaimed and used by the Corporation for its own purposes.

2.4. Dividend on Redemption

In the event the Corporation exercises its option to redeem any of the Series 3 Preference Shares pursuant to Article 3 of this Part, the Board of Directors of the Corporation may declare (i) on all Series 3 Preference Shares out of the moneys properly applicable to the payment of dividends, a dividend in an amount per share equal to all accrued and unpaid dividends on each such share calculated (in accordance with Section 2.5 of this Part) to the Redemption Date (as defined in Article 3 of this Part) to be paid on such Redemption Date or on such other date as may be determined in accordance with Article 3 of this Part, and (ii) on the Series 3 Preference Shares which are not to be redeemed as a result of the Corporation exercising its option to redeem any of the Series 3 Preference Shares pursuant to Article 3 of this Part, out of the monies properly applicable to the payment of dividends, a dividend in an amount per share equal to all accrued and unpaid dividends on each such share calculated (in accordance with Section 2.5 of this Part) from and including the Redemption Date to but excluding the next succeeding Dividend Payment Date, to be paid on such next succeeding Dividend Payment Date. In such event, the provisions of Sections 2.2 and 2.3 and Article 3 of this Part, to the extent applicable, shall apply mutatis mutandis to the payment of any such dividend unless otherwise inconsistent.

2.5. Calculation of Dividend

The amount of the dividend payable on each outstanding Series 3 Preference Share shall be the amount (rounded to the nearest cent) equal to the product of (1) $100,000, (2) the Dividend Rate for the applicable Dividend Period, and (3) the number of days in such Dividend Period, all divided by 365.

Subject to the foregoing, for purposes of calculating an amount measured by reference to accrued and unpaid dividends,

(a) the amount of any accrued and unpaid dividend in respect of any Series 3 Preference Shares from the next preceding Dividend Payment Date to any particular date shall be the amount (rounded to the nearest cent) equal to the product of (1) $100,000, (2) the Dividend Rate for the applicable Dividend

Period had such Dividend Period not been interrupted by a particular date, and (3) the number of days from and including the next preceding Dividend Payment Date to but excluding such particular date, all divided by 365; and

(b) the amount of any accrued and unpaid dividend in respect of any Series 3 Preference Shares from the Redemption Date to the next succeeding Dividend Payment Date shall be the amount (rounded to the nearest cent) equal to the product of (1) $100,000, (2) the Dividend Rate for what would otherwise have been the applicable Dividend Period had the Corporation not exercised its option to redeem the Series 3 Preference Shares pursuant to Article 3 of this Part, and (3) the number of days from and including the Redemption Date to but excluding the next succeeding dividend Payment Date, all divided by 365.

3. Redemption

3.1. Optional Redemption

Subject to Article 4 of this Part and to applicable law, the Corporation may, at its option, redeem in whole, or from time to time in part, the Series 3 Preference Shares on the Business Day next preceding any Auction Date (the “Redemption Date”) at a redemption price of $100,000 per share, provided that the Corporation shall not redeem any Series 3 Preference Shares unless the board of directors of the Corporation shall have declared with respect to all Series 3 Preference Shares, out of the monies properly applicable to the payment of dividends, a dividend in an amount per share equal to all accrued and unpaid dividends on each such share to the Redemption Date (such $100.000 redemption price plus such per share dividend being herein referred to together as the “Redemption Price”).

3.2. Partial Redemption

In case a part only of the Series 3 Preference Shares is at any time to be redeemed, the number of shares so to be redeemed shall be determined by the board of directors of the Corporation and such shares shall be redeemed pro rata with adjustments at the discretion of the Corporation to avoid redemption of fractional shares.

3.3. Manner of Redemption

In the case of any redemption of Series 3 Preference Shares pursuant to Sections 3.1 or 3.2 of this Part, the Corporation shall, at least 10 days before the date specified for redemption, give notice in writing to each person who at the date of the giving of such notice is the registered holder of Series 3 Preference Shares to be redeemed, of the intention of the Corporation to redeem such Series 3 Preference Shares. Any such notice shall be validly and effectively given on the date it is delivered to the holder of Series 3 Preference Shares for whom it is intended or is sent by prepaid first class mail addressed to such holder at his address as it appears on the books of the Corporation, or in the event of the address of such holder not so appearing, then to the address of such holder last known to the Corporation, provided, however, that the accidental failure or omission to give such notice as aforesaid to one or more holders shall not affect the validity of the redemption but upon the failure or omission being discovered, notice shall be given forthwith to such holder or holders and shall have the same force and effect as if given in due time. Such notice shall set out the Redemption Date, the Redemption Price and, unless all the Series 3 Preference Shares held by the holder to whom it is addressed are to be redeemed, the number of Series 3 Preference Shares so held which are to be redeemed. On and after the Redemption Date, the Corporation shall pay or cause to be paid to, or to the order of, the holders of the Series 3 Preference Shares so called for redemption the Redemption Price therefor on presentation and delivery, at the registered office of the Corporation or at such other place or places within Canada designated in such notice, of the certificate or certificates representing the Series 3 Preference Shares so called for redemption. Payment of the Redemption Price may be made by cheque of the Corporation or its paying agent unless any holder of Series 3 Preference Shares being redeemed has requested pursuant to Section 2.3 of this Part to receive dividends by wire transfer in which case the Corporation shall instruct its bankers, or cause instructions to be given to a Canadian chartered bank, to wire transfer the amount of the Redemption Price to the account designated by each such holder in his notice to the Corporation or the Trust Company. Such payment or the receipt of a confirmation from a Canadian chartered bank that such bank has carried out instructions with respect to the wire transfer of the amount of such Redemption Price, by the Corporation or

the Trust Company, shall be a full and complete discharge of the Corporation’s obligation to pay the Redemption Price owed to the holders of Series 3 Preference Shares so called for redemption unless, in the case of payment by cheque, the cheque is not honoured when presented for payment. From and after the Redemption Date, the holders of Series 3 Preference Shares called for redemption shall not be entitled to exercise any of the rights of holders of Series 3 Preference Shares in respect of such shares except the right to receive the Redemption Price therefor, provided that if payment of such Redemption Price is not duly made by or on behalf of the Corporation in accordance with the provisions hereof, then the rights of such holders shall remain unaffected. If part only of the Series 3 Preference Shares represented by any certificate shall be redeemed, a new certificate for the balance of such shares shall be issued at the expense of the Corporation.

The Corporation shall have the right, at any time after giving notice of its intention to redeem any Series 3 Preference Shares, to deposit the aggregate Redemption Price of the Series 3 Preference Shares so called for redemption or of such of the Series 3 Preference Shares represented by certificates as have not at the date of such deposit been delivered by the holders thereof in connection with such redemption, in a special account in any chartered bank or any trust company in Canada (including any affiliate of the Corporation) to be paid without interest to or to the order of the respective holders of the Series 3 Preference Shares called for redemption, upon presentation and delivery to such bank or trust company of the certificates representing such Series 3 Preference Shares. Upon such deposit being made, the rights of the holders of the Series 3 Preference Shares in respect whereof such deposit shall have been made shall be limited to receiving without interest their proportionate part of the total Redemption Price so deposited upon presentation and delivery of the certificates representing the Series 3 Preference Shares held by them respectively, Any interest allowed on any such deposit shall belong to the Corporation. Redemption moneys in respect of any Redemption Date held on deposit to a special account for a period of three years from the applicable Redemption Date may be returned to the Corporation. Redemption moneys which remain unclaimed (including moneys returned to the Corporation from a special account after three years) for a period of six years from the Redemption Date may be reclaimed and used by the Corporation for its own purposes.

Series 3 Preference Shares which have been redeemed by the Corporation shall be cancelled.

4. Restrictions on Dividends, Retirement and Issue of Shares

So long as any Series 3 Preference Shares are outstanding, the Corporation shall not, without the approval of the holders of the Series 3 Preference Shares given as hereinafter specified:

(a)   declare, pay or set apart for payment any dividends (other than stock dividends in shares of the Corporation ranking as to capital and dividends junior to the Series 3 Preference Shares) on the Class AA Preference Shares, Class A Limited Voting Shares or Class B Limited Voting Shares or on shares of any other class of the Corporation ranking as to dividends junior to the Series 3 Preference Shares; or

(b)   call for redemption, redeem, purchase or otherwise pay off or retire for value any Class AA Preference Shares, Class A Limited Voting Shares or Class B Limited Voting Shares or shares of any other class of the Corporation ranking as to capital junior to the Series 3 Preference Shares (except out of the net cash proceeds of a substantially concurrent issue of shares ranking as to capital and dividends junior to the Series 3 Preference Shares); or

(c)   call for redemption redeem, purchase or otherwise pay off or retire for value less than all of the Series 3 Preference Shares; or

(d)   except pursuant to any purchase obligation, sinking fund, retraction privilege or mandatory redemption provisions attaching to any series of Class A Preference Shares from time to time issued, call for redemption, redeem, purchase or otherwise pay off or retire for value any shares of any other class or series of the Corporation ranking as to capital on a parity with the Series 3 Preference Shares;

unless, in each such case, all dividends then payable on the Series 3 Preference Shares then outstanding and on all other shares of the Corporation ranking as to dividends on a parity with the Series 3 Preference Shares accrued up to and including the dividends payable on the immediately preceding respective date or dates for the payment of dividends thereon shall have been declared and paid or set apart for payment.

5. Voting Rights

The holders of the Series 3 Preference Shares shall not be entitled as such (except as hereinafter specifically provided) to receive notice of or to attend any meeting of the shareholders of the Corporation or to vote at any such meeting (but shall be entitled to receive notice of meetings of shareholders of the Corporation called for the purpose of authorizing the dissolution of the Corporation or the sale of its undertaking or a substantial part thereof), unless and until the Corporation from time to time shall fail to pay for a period of two years dividends at the rate specified by the board of directors on the Class A Preference Shares, Series 1 (“Series 1 Preference Shares”), Class A Preference Shares, Series 2 (“Series 2 Preference Shares”) or Series 3 Preference Shares whether or not such dividends have been declared and whether or not there are any moneys of the Corporation properly applicable to the payment of dividends; thereafter but only so long as any dividends on the Series 1 Preference Shares, Series 2 Preference Shares or Series 3 Preference Shares remain in arrears the holders of the Series 1 Preference Shares, Series 2 Preference Shares and Series 3 Preference Shares shall be entitled to receive notice of and to attend all meetings of shareholders of the Corporation and shall be entitled to one vote in respect of each Series 1 Preference Share, Series 2 Preference Share or Series 3 Preference Share held and in addition shall be entitled to elect two members of the board of directors of the Corporation if the board consists of seven or fewer directors or three members of the board of directors if the board consists of more than seven directors; subject to the foregoing, when entitled to vote in the election of directors, the holders of Series 3 Preference Shares will vote with the holders of Class A Limited Voting Shares in the election of one-half of the board of directors; nothing herein contained shall be deemed to limit the right of the Corporation from time to time to increase or decrease the number of its directors.

Notwithstanding anything contained in the by-laws of the Corporation, the term of office of all persons who may be directors of the Corporation at any time when the right to elect directors shall accrue to the holders of Series 1 Preference Shares, Series 2 Preference Shares and Series 3 Preference Shares as herein provided, or who may be appointed as directors thereafter and before a meeting of shareholders shall have been held, shall terminate upon the election of directors at the next annual meeting of shareholders or at a general meeting of shareholders which may be held for the purpose of electing directors at any time after the accrual of such right to elect directors upon not less than 20 days’ written notice and which shall be called by the secretary of the Corporation upon the written request of the holders of record of at least one-tenth (1/10) of the outstanding Series 1 Preference Shares, Series 2 Preference Shares or Series 3 Preference Shares; in default of the calling of such general meeting by the secretary, within five days after the making of such request, such meeting may be called by any holder of record of Series 1 Preference Shares, Series 2 Preference Shares or Series 3 Preference Shares.

Any vacancy or vacancies occurring among members of the board elected to represent the holders of Series 1 Preference Shares, Series 2 Preference Shares and Series 3 Preference Shares in accordance with the foregoing provisions may be filled by the board of directors with the consent and approval of the remaining director or directors elected to represent the holders of Series 1 Preference Shares, Series 2 Preference Shares and Series 3 Preference Shares but if there be no such remaining director or directors, the board may elect or appoint sufficient holders of Series 1 Preference Shares, Series 2 Preference Shares or Series 3 Preference Shares to fill the vacancy or vacancies; whether or not such vacancy or vacancies is or are so filled by the board, the holders of record of at least one-tenth (1/10) of the outstanding Series 1 Preference Shares, Series 2 Preference Shares and Series 3 Preference Shares shall have the right to require the secretary of the Corporation to call a meeting of the .holders of Series 1 Preference Shares, Series 2 Preference Shares and Series 3 Preference Shares for the purpose of filling the vacancy or vacancies or replacing all or any of the persons elected or appointed to fill such vacancy or vacancies and the provisions of the last preceding paragraph shall apply with respect to the calling of any such meeting.

Preference Shares and Series 3 Preference Shares shall forthwith terminate; and (ii) the holding of one Series 1 Preference Share, Series 2 Preference Share or Series 3 Preference Share shall be sufficient to qualify a person for election or appointment as a director of the Corporation to represent the holders of Series 1 Preference Shares, Series 2 Preference Shares and Series 3 Preference Shares.

6. Liquidation, Dissolution and Winding-Up

In the event of the liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or in the event of any other distribution of assets of the Corporation among its shareholders for the purpose of winding-up its affairs, the holders of the Series 3 Preference Shares shall be entitled to receive from the assets of the Corporation a sum equal to $100,000 per Series 3 Preference Share held by them respectively, plus an amount equal to all accrued and unpaid dividends thereon to but excluding the date of payment, before any amount shall be paid or any assets of the Corporation shall be distributed amongst the holders of shares of any other class of the Corporation ranking as to capital junior to the Series 3 Preference Shares. After payment to the holders of the Series 3 Preference Shares of the amounts so payable to them, they shall not be entitled to share in any further distribution of the assets of the Corporation.

7. Interpretation

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

In the event of the non-receipt of a cheque by the holder of Series 3 Preference Shares entitled to such cheque, or the loss or destruction thereof, the Corporation, upon being furnished with reasonable evidence of such non-receipt, loss or destruction and indemnity reasonably satisfactory to the Corporation, shall issue to such holder a replacement.

8. Mail Service Disruption

If the directors of the Corporation determine that mail service is or is threatened to be interrupted at the time when the Corporation is required or elects to give any notice hereunder, or is required to send any cheque or any share certificate to the holder of any Series 3 Preference Share, whether in connection with the redemption of such share or otherwise, the Corporation may, notwithstanding the provisions hereof:

(a) give such notice by means of telex, telecopier or telegraph or by means of publication once in each of two successive weeks in one daily English language newspaper of general circulation published in each of the Provinces of Canada and once in a daily French language newspaper of general circulation published in Montreal. Notice given by telex, telecopier or telegraph shall be deemed to have been given on the day on which it is sent and notice given by publication shall be deemed to have been given on the date on which the first publication has taken place in the last of the Provinces of Canada; and

(b) fulfil the requirement to send such cheque or such share certificate by arranging for the delivery thereof to such holder by the Transfer Agent at its principal office in Toronto and such cheque and/or certificate shall be deemed to have been sent on the date on which notice of such arrangement shall have been given as provided in (a) above, provided that as soon as the directors of the Corporation determine that mail service is no longer interrupted or threatened to be interrupted such cheque or share certificate, if not theretofore delivered to such holder, shall be sent by mail as herein provided. In the event that the Corporation is required to mail such share certificate, such mailing shall be made by prepaid mail to the registered address of each person who at the date of mailing is a registered holder and who is entitled to receive such certificate.

9. Amendment

The rights, privileges, restrictions and conditions attached to the Series 3 Preference Shares may be added to, changed or removed by Articles of Amendment but only with the prior approval of the holders of the Series 3 Preference Shares given as hereinafter specified in addition to any vote or authorization required by law.

10. Approval of Holders of Series 3 Preference Shares

The approval of the holders of Series 3 Preference Shares with respect to any and all matters referred to herein or of any other matter requiring the consent of the holders of the Series 3 Preference Shares may be given in such manner as may then be prescribed by law, subject to a minimum requirement that such approval be given by a resolution signed by all the holders of outstanding Series 3 Preference Shares or by the affirmative vote of at least 66-2/3% of the votes cast by the holders of Series 3 Preference Shares who voted in respect of that resolution at a meeting of the holders of Series 3 Preference Shares duly called for that purpose at which the holders of at least a majority of the outstanding Series 3 Preference Shares are present in person or represented by proxy and, if no quorum shall be present within thirty (30) minutes from the time fixed for holding any such meeting, such meeting shall be adjourned by the Chairman of the meeting to the same day in the next week (unless such day is not a Business Day in which case it shall be adjourned to the next Business Day thereafter) at the same time and place and the quorum for the adjourned meeting shall be the holders of the outstanding Series 3 Preference Shares present in person or represented by proxy. The proxy rules applicable to, the formalities to be observed in respect of the giving of notice of, and the formalities to be observed in respect of, any such meeting or adjourned meeting shall be those from time to time prescribed by the by-laws of the Corporation with respect to meetings of shareholders, or if not so prescribed, as required by the Business Corporations Act (Ontario). On every poll taken at every meeting of holders of Series 3 Preference Shares, each holder of Series 3 Preference Shares entitled to vote thereat shall have one vote in respect of each $25.00 of the issue price of each Series 3 Preference Share held.

Part II

All terms used in Part II of these share conditions which are defined in Part 1 of these share conditions have the meaning in Part II ascribed to them in Part I.

1. Certain Definitions

In these share conditions:

(a)   “Auction” means the periodic operation of the procedures set forth in this Part;

(b)   “Auction Date” means the Business Day next preceding a Dividend Payment Date;

(c)   “Available Shares” has the meaning specified in paragraph (i) of Article 4(a) of this Part;

(d)   “Bankers’ Acceptance Rate” means with respect to any Dividend, the rate per annum equal to: (A) the simple average of each rate per annum which is equal to the simple average of the bid and ask rates of the yields to maturity quoted by each of Dominion Securities Inc. (or any successor) and Merrill Lynch Canada Inc. (or any successor) (rounded upward to the nearest one thousandth of one percent),as at 10:00 a.m., Toronto time, on the Auction Date next preceding such Dividend Period, on 30-day bankers’ acceptances accepted by such of the Bank of Montreal, The Toronto-Dominion Bank, Canadian imperial Bank of Commerce, The Royal Bank of Canada and The Bank of Nova Scotia as are accepting 30-day bankers’ acceptances on such Auction Date; (B) in the event that one of Dominion Securities Inc. (or any successor) is unable or does not for any reason quote the bid and ask rates per annum referred to in (A) above, as at 10:00 a.m., Toronto time, on such Auction Date, the simple average of the bid and ask rates per annum referred to in (A) above quoted by the other; or (C)in the event that both Dominion Securities Inc. (or any successor) and Merrill Lynch Canada Inc. (or any successor) are unable to or do not for any reason quote rates, as at 10:00 a.m., Toronto time, on such Auction Date (including without limitation, where none of the Bank of Montreal, The Toronto-Dominion Bank, Canadian Imperial Bank of Commerce, The Royal Bank of Canada or The Bank of Nova Scotia is accepting 30-day bankers’ acceptances on such Auction Date) for the purpose of determining the Bankers’ Acceptance Rate in accordance with (A) or (B) above, the simple average of each rate per annum which is equal to the simple average of the bid and ask rates of the yields to maturity quoted by each of Dominion Securities Inc. (or any successor) and Merrill Lynch Canada inc.(or any successor) (rounded upward to the nearest one thousandth of one percent), as of 10:00 a.m.,Toronto time, on such Auction Date, on 91-day Government of Canada Treasury Bills maturing 30 days from such Auction Date plus 0.20%;

(e)   “Bid” and “Bids” have the respective meanings specified in Article 2(a) of this Part;

(f)   “Bidder” and “Bidders” have the respective meanings specified in Article 2(a) of this Part;

(g)   “Business Day” means a day on which The Toronto Stock Exchange or any successor stock exchange and the Trust Company are open for business;

(h)   “Current Dividend Rate” is the rate per annum which the Trust Company advises the Corporation has been determined in accordance with Article 4(b) of this Part;

(i)   “Dealer” means any registered investment dealer or other entity permitted by law to perform the functions required of a Dealer in this Part that has entered into a Dealer Agreement with the Trust Company that remains effective;

(j)   “Dealer Agreement” means an agreement between the Trust Company and a Dealer pursuant to which the Dealer agrees to participate in Auctions in compliance with the procedures set forth in this Part;

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(k)   “Existing Holder” means a person who has signed a Purchaser’s Letter to the Trust Company and is registered in the ledger maintained by the Trust Company in respect of such persons;

(l)   “held by” with respect to any Series 3 Preference Shares registered in the name of the Trust Company as permitted by the Trust Company Agreement includes such shares beneficially owned by an Existing Holder but does not include, with respect to such shares, the Trust Company;

(m)   “Hold Order” and “Hold Orders” have the respective meanings specified in Article 2(a) of this Part;

(n)   “Maximum Rate” with respect to any Dividend Period means the Bankers’ Acceptance Rate plus 0.40%;

(o)   “Order” and “Orders” have the respective meanings specified in Article 2(a) of this Part;

(p)   “Potential Holder” means any person, including any Existing Holder, (i) who has executed a Purchaser’s Letter and delivered or caused to be delivered such Purchaser’s Letter to the Trust Company and (ii) who may be interested in acquiring Series 3 Preference Shares (or, in the case of an Existing Holder, additional Series 3 Preference Shares);

(q)   “Purchaser’s Letter” means a letter addressed to the Trust Company and a Dealer in which a person agrees, among other things, to be bound by the procedures set forth in this Part in the event such person participates in an Auction;

(r)   “Remaining Shares” has the meaning specified in paragraph (iv) of Article 5(a) of this Part;

(s)   “Sell Order” and “Sell Orders” have the respective meanings specified in Article 2(a) of this Part;

(t)   “Submission Deadline” means 11:00 a.m., Toronto time, on any Auction Date or such later time on any Auction Date, as specified by the Trust Company from time to time, by which Dealers are required to submit Orders to the Trust Company;

(u)   “Submitted Bid” and “Submitted Bids” have the respective meanings specified in Article 4(a) of this Part;

(v)   “Submitted Hold Order” and “Submitted Hold Orders” have the respective meanings specified in Article 4(a) of this Part;

(w)   “Submitted Order” and “Submitted Orders” have the respective meanings specified in Article 4(a) of this Part;

(x)   “Submitted Sell Order” and “Submitted Sell Orders” have the respective meanings specified in Article 4(a) of this Part;

(y)   “Sufficient Clearing Bids” has the meaning specified in Article 4(a) of this Part;

(z)   “Trust Company” means Royal Trust Corporation of Canada or any successor trust company or other person entering into a Trust Company Agreement with the Corporation in respect of the Series 3 Preference Shares;

(aa)   “Trust Company Agreement” means an agreement made between the Trust Company and the Corporation which provides, among other things, that the Trust Company will follow the procedures set forth in this Part for the purposes of determining the Current Dividend Rate for the Series 3 Preference Shares so long as the Current Dividend Rate is to be based on the results of an Auction; and

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(bb) “Winning Bid Rate” is the rate per annum determined in accordance with Article 4(a) of this Part.

2. Orders by Existing Holders and Potential Holders

(a) Prior to the Submission Deadline on each Auction Date:

(i) each Existing Holder may submit to a Dealer information as to the number of Series 3 Preference Shares, if any, held by such Existing Holder which such Existing Holder:

(A)   desires to continue to hold without regard to the Current Dividend Rate for the next succeeding Dividend Period; and/or

(B)   desires to continue to hold, provided that the Current Dividend Rate for the next succeeding Dividend Period shall not be less than the rate per annum specified by such Existing Holder; and/or

(C)   offers to sell without regard to the Current Dividend Rate for the next succeeding Dividend Period;

and

(ii) Potential Holders may submit to a Dealer offers to purchase Series 3 Preference Shares, provided that the Current Dividend Rate for the next succeeding Dividend Period shall not be less than the rate per annum specified by such Potential Holder.

The communication to a Dealer of the information referred to in this Article 2(a) is an “Order” and, collectively, are “Orders”, and each Existing Holder and each Potential Holder placing an Order is a “Bidder” and, collectively, are “Bidders”; an Order containing the information referred to in subparagraph (i) (A) of this Article 2(a) is a “Hold Order” and, collectively, are “Hold Orders”; an Order containing the information referred to in subparagraph (i)(B) or paragraph (ii) of this Article 2(a) is a “Bid” and, collectively, are “Bids”; and an Order containing the information referred to in subparagraph (i)(c) of this Article 2(a) is a “Sell Order” and, collectively, are “Sell Orders”.

(b)

(i) A Bid by an Existing Holder shall constitute an irrevocable offer to sell:

(A)   the number of Series 3 Preference Shares specified in such Bid if the Winning Bid Rate determined on such Auction Date is less than the rate specified in such Bid; or

(B)   the specified number of Series 3 Preference Shares or a lesser number to be determined as set forth in paragraph (iv) of Article 5(a) of this Part if the Winning Bid Rate determined on such Auction Date is equal to the rate specified in such Bid: or

(C)   the number of Series 3 Preference Shares specified in such Bid if the rate specified in such Bid is higher than the Maximum Rate and Sufficient Clearing Bids do exist; or

(D)   a lesser number of Series 3 Preference Shares to be determined as set forth in paragraph (iii) of Article 5(b) of this Part if the rate specified in such Bid is higher than the Maximum Rate and Sufficient Clearing Bids do not exist.

(ii) A Sell Order by an Existing Holder shall constitute an irrevocable offer to sell:

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(A) the number of Series 3 Preference Shares specified in such Sell Order; or

(B) a lesser number of Series 3 Preference Shares to be determined as set forth in paragraph (iii) of Article 5(b) of this Part if Sufficient Clearing bids do not exist.

(iii) A Bid by a Potential Holder shall constitute an irrevocable offer to purchase:

(A)   the number of Series 3 Preference Shares specified in such Bid if the Winning Bid Rate determined on the applicable Auction Date is higher than the rate specified in such Bid; or

(B)   the specified number or a lesser number of Series 3 Preference Shares to be determined as set forth in paragraph (v) of Article 5(a) of this Part if the Winning Bid Rate determined on such Auction Date is equal to the rate specified in such Bid; or

(C)   the specified number of Series 3 Preference Shares if the rate specified in such Bid is equal to or lower than the Maximum Rate and Sufficient Clearing Bids do not exist.

3. Submission of Orders by Dealers to the Trust Company

(a) Each dealer shall submit to the Trust Company in writing in accordance with its Dealer Agreement prior to the Submission Deadline on each Auction Date all Orders obtained by such Dealer and specifying with respect to each Order:

(i)   the name of the Bidder placing such Order;

(ii)   the aggregate number of Series 3 Preference Shares that are the subject of the Order;

(iii)   to the extent that the Bidder is an Existing Holder, the number of Series 3 Preference Shares, if any, subject to any;

(A)   Hold Order placed by such Existing Holder;

(B)   Bid placed by such Existing Holder and the rate specified in such Bid; and/or

(C)   Sell Order placed by such Existing Holder; and

(iv) to the extent the Bidder is a Potential Holder, the rate specified in such Bid of such potential Holder.

(b)   If any rate specified in any Bid contains more than three figures to the right of the decimal point, the Trust Company shall round such rate up to the next highest one thousandth of one percent.

(c)   If for any reason an Order or Orders covering in the aggregate all the Series 3 Preference Shares held by any Existing Holder is not submitted to the Trust Company prior to the Submission Deadline, the Trust Company shall deem a Hold Order to have been submitted on behalf of such Existing Holder covering the number of Series 3 Preference Shares held by such Existing Holder and not subject to Orders submitted to the Trust Company.

(d)   If one or more Orders covering in the aggregate more than the number of Series 3 Preference Shares held by any Existing Holder are submitted to the Trust Company, such Orders shall be considered valid as follows and in the following order of priority;

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(i)   all Hold Orders shall be considered valid, but only up to and including, in the aggregate, the number of Series 3 Preference Shares held by such existing Holder, and, solely for purposes of allocating compensation among the Dealers submitting Hold Orders, if the number of Series 3 Preference Shares subject to such Hold Orders exceeds the number of Series 3 Preference Shares held by such Existing Holder, the number of Series 3 Preference Shares subject to each such Hold Order shall be reduced pro rata to cover the number of Series 3 Preference Shares held by such Existing Holder;

(ii)   (A) any Bid shall be considered valid up to and including the excess of the number of Series 3 Preference Shares held by such Existing Holder over the number of Series 3 Preference Shares subject to any Hold Order referred to in paragraph (i) of this Article 3(d), (B) subject to subparagraph (A) hereof, if more than one Bid with the same rate is submitted on behalf of such Existing Holder and the number of Series 3 Preference Shares subject to such Bids is greater than such excess, such Bids shall be considered valid up to the amount of such excess, and, solely for purposes of allocating compensation among the Dealers submitting Bids with the same rate, the number of Series 3 Preference Shares subject to each Bid with the same rate shall be reduced pro rata to cover the number of Series 3 Preference Shares equal to such excess, (C) subject to subparagraph (A) hereof, if more than one Bid with different rates is submitted on behalf of such Existing Holder, such Bids shall be considered valid in the ascending order of their respective rates up to the amount of such excess, and (D) in any event, the number, if any, of such Series 3 Preference Shares subject to Bids not valid under this paragraph (ii) shall be treated as the subject of a Bid by a Potential Holder; and

(iii)   all Sell Orders shall be considered valid but only up to and including in the aggregate the excess of the number of Series 3 Preference Shares held by such Existing Holder over the sum of the Series 3 Preference Shares subject to Hold Orders referred to in paragraph (i) of this Article 3(d) and valid Bids by Existing Holders referred to in paragraph (ii) of this Article 3(d).

(e) If more than one Bid is submitted on behalf of any Potential Holder, each Bid submitted shall be a separate Bid with the rate therein specified.

4. Determination of Sufficient Clearing Bids, Winning Bid Rate and Current Dividend Rate

(a) On the Submission Deadline on each Auction Date, the Trust Company shall assemble all Orders submitted or deemed submitted to it by the Dealers (each such Order as submitted or deemed submitted by a Dealer being individually a “Submitted Hold Order”, a “Submitted Bid” or a “Submitted Sell Order”, as the case may be, or a “Submitted Order” and collectively “Submitted Hold Orders”, “Submitted Bids” or “Submitted Sell Orders”, as the case may be, or “Submitted Orders”) and shall determine:

(i) the excess of (a) the total number of Series 3 Preference Shares held by Existing Holders issued and outstanding over (b) the number of Series 3 Preference Shares that are the subject of Submitted Hold Orders (such excess being the “Available Shares”);

(ii) from the Submitted Orders, whether:

(A) the number of Series 3 Preference Shares that are the subject of Submitted Bids by Potential Holders specifying one or more rates equal to or lower than the Maximum Rate;

exceeds or is equal to the sum of:

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(B) (I) the number of Series 3 Preference Shares that are the subject of Submitted Bids by Existing Holders specifying one or more rates higher than the Maximum Rate; and

(II) the number of Series 3 Preference Shares that are the subject of Submitted Sell Orders;

(if such excess or equality exists (other than because all of the Series 3 Preference Shares are the subject of Submitted Hold Orders), then such Submitted Bids in subparagraph (A) hereof shall be “Sufficient Clearing Bids”); and

(iii) if Sufficient Clearing Bids exist, the lowest rate specified in the Submitted Bids which if the Trust Company accepted:

(A)   (I) each Submitted Bid from Existing Holders specifying that lowest rate, and

    (II) all other Submitted Bids from Existing Holders specifying lower rates, thus entitling those Existing Holders to continue to hold the Series 3 Preference Shares that are the subject of those Submitted Bids; and

(B)   (I) each Submitted Bid from Potential Holders specifying that lowest rate, and

    (II) all other submitted Bids from Potential Holders specifying lower rates, thus entitling those Potential Holders to purchase the Series 3 Preference Shares that are the subject of those Submitted Bids,

would result in such Existing Holders described in subparagraph (A) hereof continuing to hold an aggregate number of Series 3 Preference Shares which, when added to the aggregate number of Series 3 Preference Shares to be purchased by such Potential Holders described in subparagraph (B) hereof, would equal not less than the number of Available Shares. This lowest rate is the “Winning Bid Rate”.

(b) Promptly after the Trust Company has made the determinations pursuant to Article 4(a) of this Part, the Trust Company shall advise the Corporation of the Bankers’ Acceptance Rate and, based on such determinations, of the dividend rate applicable to the Series 3 Preference Shares for the next succeeding Dividend Period (the “Current Dividend Rate”) as follows:

(i)   if Sufficient Clearing Bids exist, that the Current Dividend Rate for the next succeeding Dividend Period shall be equal to the Winning Bid Rate so determined;

(ii)   if Sufficient Clearing Bids do not exist (other than because all of the Series 3 Preference Shares are the subject of Submitted Hold Orders), that the Current Dividend Rate for the next succeeding Dividend Period shall be equal to the Maximum Rate; or

(iii)   if all of the Series 3 Preference Shares are the subject of Submitted Hold Orders that the Current Dividend Rate for the next succeeding Dividend Period shall be equal to 50% of the Bankers’ Acceptance Rate.

5. Acceptance and Rejection of Submitted Bids and Submitted Sell Orders and Allocation of Shares

Based on the determinations made pursuant to Article 4(a) of this Part, the Submitted Bids and Submitted Sell Orders shall be accepted or rejected and the Trust Company shall take such other action as set forth below:

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(a) If Sufficient Clearing Bids have been made, subject to the provisions of Articles 5(c) and 5(d) of this Part, Submitted Bids and Submitted Sell Orders shall be accepted and rejected in the following order of priority and all other submitted Bids shall be rejected:

(i)   (A) the Submitted Sell Order of each Existing Holder shall be accepted and (B) the Submitted Bid of each Existing Holder specifying any rate that is higher than the Winning Bid Rate shall be rejected, thus requiring each such Existing Holder to sell the Series 3 Preference Shares that are the subject of such Submitted Sell Order and such Submitted Bid;

(ii)   the Submitted Bid of each Existing Holder specifying any rate that is lower than the Winning Bid Rate shall be accepted, thus entitling each such Existing Holder to continue to hold the Series 3 Preference Shares that are the subject of such Submitted Bid;

(iii)   the Submitted Bid of each Potential Holder specifying any rate that is lower than the Winning Bid Rate shall be accepted, thus requiring each such Potential Holder to purchase the Series 3 Preference Shares that are the subject of such Submitted Bid;

(iv)   the Submitted Bid of each Existing Holder specifying a rate that is equal to the Winning Bid Rate shall be accepted, thus entitling each such Existing Holder to continue to hold the Series 3 Preference Shares that are the subject of such Submitted Bid, unless the number of Series 3 Preference Shares subject to all such Submitted Bids is greater than the total number of Available Shares minus the number of Series 3 Preference Shares subject to Submitted Bids described in paragraphs (ii) and (iii) of this Article 5(a) (the “Remaining Shares”). In this event, the Submitted Bids of each such Existing Holder described in this paragraph (iv) shall be rejected and each such Existing Holder shall be required to sell Series 3 Preference Shares, but only in an amount equal to the difference between (A) the number of Series 3 Preference Shares then held by such Existing Holder subject to such Submitted Bid and (B) the number of Series 3 Preference Shares obtained by multiplying (x) the number of Remaining Shares by (y) a fraction, the numerator of which shall be the number of Series 3 Preference Shares held by such Existing Holder subject to such Submitted Bid, and the denominator of which shall be the sum of the number of Series 3 Preference Shares subject to such Submitted Bids made by all such Existing Holders who specified a rate equal to the Winning Bid Rate; and

(v)   the Submitted Bid of each Potential Holder specifying a rate that is equal to the Winning Bid Rate shall be accepted but only in an amount equal to the number of Series 3 Preference Shares obtained by multiplying (A) the difference between the total number of Available Shares and the number of Series 3 Preference Shares subject to Submitted Bids described in paragraphs (ii), (iii) and (iv) of this Article 5(a) by (B) a fraction, the numerator of which shall be the number of Series 3 Preference Shares subject to such Submitted Bid and the denominator of which shall be the sum of the number of Series 3 Preference Shares subject to such Submitted Bids made by all Potential Holders who specified rates equal to the Winning Bid Rate;

(b) If Sufficient Clearing Bids have not been made (other than because all of the Series 3 Preference Shares are subject to Submitted Hold Orders), subject to the provisions of Articles 5(c) and 5(d) of this Part, Submitted Bids and Submitted Sell Orders shall be accepted or rejected in the following order of priority and all other Submitted Bids shall be rejected:

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(ii) the Submitted Bid of each Potential Holder specifying any rate that is equal to or lower than the Maximum Rate shall be accepted, thus requiring such Potential Holder to purchase the Series 3 Preference Shares that are the subject of such Submitted Bid; and

(iii) the Submitted Bid of each Existing Holder specifying any rate that is higher than the Maximum Rate shall be rejected and the Submitted Sell Order of each Existing Holder shall be accepted, in both cases only in an amount equal to the difference between (A) the number of Series 3 Preference Shares then held by such Existing Holder subject to such Submitted Bid or Submitted Sell Order and (B) the number of Series 3 Preference Shares obtained by multiplying (x) the difference between the total number of Available Shares and the aggregate number of Series 3 Preference Shares subject to Submitted Bids described in paragraphs (i) and (ii) of this Article 5(b) by (y) a fraction, the numerator of which shall be the number of Series 3 Preference Shares held by such Existing Holder subject to such Submitted Bid or Submitted Sell Order and the denominator of which shall be the number of Series 3 Preference Shares subject to all such Submitted Bids and Submitted Sell Orders:

(c)   If, as a result of the procedures described in Articles 5(a) or 5(b) of this Part, any Existing Holder would be entitled or required to sell, or any Potential Holder would be entitled or required to purchase, a fraction of a Series 3 Preference Share on any Auction Date, the Trust Company shall, in such manner as it shall determine in its sole discretion, round up or down the number of Series 3 Preference Shares to be purchased or sold by any Existing Holder or Potential Holder on such Auction Date so that the number of shares purchased or sold by each Existing Holder or Potential Holder on such Auction Date so that the number of shares purchased or sold by each Existing Holder or Potential Holder shall be whole Series 3 Preference Shares;

(d)   If, as a result of the procedures described in Article 5(a) of this Part, any Potential Holder would be entitled or required to purchase a fraction of a Series 3 Preference Share on any Auction Date, the Trust Company shall, in such manner as it shall determine in its sole discretion, allocate shares for purchase among Potential Holders so that only whole Series 3 Preference Shares are purchased on such Auction Date by any Potential Holder, even if such allocation results in one or more of such Potential Holders not purchasing Series 3 Preference Shares on such Auction Date; and

(e)   Based on the results of each Auction, the Trust Company shall determine to which Potential Holder or Potential Holders purchasing Series 3 Preference Shares an Existing Holder or Existing Holders shall sell Series 3 Preference Shares being sold by such Existing Holder or Existing Holders.

6. Miscellaneous

In the event that there is any inconsistency, ambiguity or uncertainty in the interpretation or application of the procedures set forth in this Part, the Board of Directors of the Corporation (or any person or persons designated by the Board of Directors) may, in such manner as they shall determine in their sole discretion, interpret such procedures in order to deal with any such inconsistency, ambiguity or uncertainty.

7. Headings of Sections

The headings of the various sections in this Part are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof.

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CLASS A PREFERENCE SHARES, SERIES 4 ATTRIBUTES

Number and Designation of
and Rights, Privileges, Restrictions and
Conditions Attaching to the Class A Preference Shares, Series 4

The fourth series of Class A Preference Shares of the Corporation shall consist of 4,000,000 Class A Preference Shares which shall be designated as Floating Rate Cumulative Redeemable Class A Preference Shares Series 4 (hereinafter referred to as the “Series 4 Preference Shares”) and which, in addition to the rights, privileges, restrictions and conditions attached to the Class A Preference Shares as a class, shall have attached thereto the following rights, privileges, restrictions and conditions:

1. Consideration for Issue

The consideration for the issue of each Series 4 Preference Share shall be $25.00.

2. Dividends

2.1. Payment of Dividends

Except as otherwise herein provided, holders of the Series 4 Preference Shares shall be entitled to receive, and the Corporation shall pay thereon, as and when declared by the Board of Directors of the Corporation, out of monies of the Corporation properly applicable to the payment of dividends, cumulative preferential cash dividends payable quarterly (the “Quarterly Dividends”) on the last day of each of the months of March, June, September and December in each year (the “Dividend Payment Dates”) commencing on December 31, 1984, each such Quarterly Dividend to be equal to the amount obtained when the applicable Quarterly Dividend Rate (as defined in Section 2.2) is multiplied by $25.00.

In any case where dividends are payable for a period (the “Dividend Payment Period”) that commences on a date other than a Dividend Payment Date, dividends shall be paid in the amount per Series 4 Preference Share obtained when:

(i)   $25.00 multiplied by 70% of the Average Prime Rate for the three calendar months ending on the last day of the calendar month immediately proceeding the month during which the first Dividend Payment date falls after the commencement of such Dividend Payment Period

    is multiplied by

(ii)   the result obtained when the number of days in such Dividend Payment Period from and including the first day of such Dividend Payment Period to and including the last day of such Dividend Payment Period is divided by 365.

In any case where dividends are payable in respect of a Series 4 Preference Share for a period (the “Short Payment Period”) that ends on a date other than a Dividend Payment Date, a dividend shall be paid in respect of that Series 4 Preference Share for that Short Payment Period in the amount obtained when

(i)   $25.00 multiplied by 70% of the Average Prime Rate for the period of 90 days ending on a date which is 30 days before the end of such Short Payment Period

    is multiplied by

(ii)   the result obtained when the number of days in such Short Payment Period is divided by 365.

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Dividends in respect of each Series 4 Preference Share shall accrue from the date of issue of such Series 4 Preference Share and thereafter shall accrue on a day-to-day basis.

2.2. Definitions

Where used in these share provisions, the following terms shall have the following meanings, respectively:

(a)   “Quarterly Dividend Rate” means, in relation to any Dividend Payment Date, one-quarter of 70% of the Average Prime Rate for the three calendar months ending on the last day of the calendar month immediately preceding the month during which such Dividend Payment Date falls;

(b)   “Average Prime Rate” means, for any period, the arithmetic average (rounded to the nearest one-one-hundredth of one percent (0.01%)) of the Average Daily Prime Rate for each day during such period;

(c)   “Average Daily Prime Rate” means, for any day, the arithmetic average (rounded to the nearest one-one-hundredth of one percent (0.01%)) of the Daily Prime Rates of the Banks on such day; provided that, if, on such day, there shall be no Daily Prime Rate for one (but not both) of the Banks, the Average Daily Prime Rate of the other of such Banks and further provided that if, on such day, there shall be no Daily Prime Rate for both of the Banks, the Average Daily Prime Rate for such day shall be 1.65% above the average yields at weekly tender on 91 day Government of Canada Treasury Bills as reported by the Bank of Canada for such day;

(d)   “Daily Prime Rate” means, for either Bank on any day, the annual prime commercial lending rate of interest established and announced as the reference rate of interest used by such Bank on such date to determine the rates of interest on Canadian dollar loans to customers in Canada and designated by such Bank as its prime rate; and

(e)   “Banks” means The Toronto-Dominion Bank and the Bank of Montreal, collectively, and the term “Bank” means one of the Banks.

2.3. Method of Payment

Dividends (less any tax required to be withheld by the Corporation) on the Series 4 Preference Shares shall be paid by cheque payable in lawful money of Canada at par at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable. The mailing of such cheque from the Corporation’s registered office, or the principal office in Toronto of the registrar for the Series 4 Preference Shares, or the payment by such other reasonable means as the Corporation deems desirable, on or before the date on which such dividend is to be paid to a holder of Series 4 Preference Shares shall be deemed to be payment of the dividends represented thereby and payable on such date unless the cheque is not paid upon presentation or payment by such other means is not received. Dividends which are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed for a period of six years from the date on which they were declared to be payable shall be forfeited to the Corporation.

2.4. Cumulative Payment of Dividends

If on any date on which dividends are to be paid the dividends accrued to such date are not paid in full on all of the Series 4 Preference Shares then outstanding, such dividends, or the unpaid part thereof, shall be paid on a subsequent date or dates determined by the directors of the Corporation on which the Corporation shall have sufficient monies properly applicable to the payment of such dividends. The holders of Series 4 Preference Shares shall not be entitled to any dividends other than or in excess of the cumulative preferential cash dividends herein provided for.

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3. Redemption

3.1. Optional Redemption

Subject to the provisions of Section 5 hereof, the Corporation may redeem at any time the whole or from time to time any part of the then outstanding Series 4 Preference Shares, on payment for each share to be redeemed of $25.00; together with all accrued and unpaid dividends thereon up to the date fixed for redemption which, for greater certainty, shall include dividends calculated in accordance with Section 2.1 hereof during the period from and including the immediately preceding Dividend Payment Date to but excluding the date fixed for redemption, the whole constituting and hereinafter referred to as the “Redemption Price”.

3.2. Partial Redemption

In case a part only of the Series 4 Preference Shares is at any time to be redeemed, the shares so to be redeemed shall be selected by lot or in such other manner as the directors of the Corporation, from time to time, so determine. If a part only of the Series 4 Preference Shares represented by any certificate shall be redeemed, a new certificate representing the balance of such shares shall be issued to the holder thereof at the expense of the Corporation upon presentation and surrender of the first mentioned certificate.

3.3. Method of Redemption

In any case of redemption of Series 4 Preference Shares, the Corporation shall not less than 30 days and not more than 60 days before the date specified for redemption send by prepaid mail or deliver to the registered address of each person who at the date of mailing or delivery is a registered holder of Series 4 Preference Shares to be redeemed a notice in writing of the intention of the Corporation to redeem such Series 4 Preference Shares. Accidental failure or omission to give such notice to one or more holders shall not affect the validity of such redemption, but upon such failure or omission being discovered notice shall be given forthwith to such holder or holders and shall have the same force and effect as if given in due time. Such notice shall set out the number of Series 4 Preference Shares held by the person to whom it is addressed which are to be redeemed, the Redemption Price, the date specified for redemption and the place or places within Canada at which holders of Series 4 Preference Shares may present and surrender such shares for redemption. On and after the date so specified for redemption, the Corporation shall pay or cause to be paid to or to the order of the registered holders of the Series 4 Preference Shares to be redeemed the Redemption Price of such shares on presentation and surrender, at the registered office of the Corporation or any other place or places within Canada specified in such notice of redemption, of the certificate or certificates representing the Series 4 Preference Shares called for redemption. Payment in respect of Series 4 Preference Shares being redeemed shall be made by cheque payable to the holders thereof in lawful money of Canada at par at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable. From and after the date specified for redemption in any such notice of redemption, the Series 4 Preference Shares called for redemption shall cease to be entitled to dividends or any other participation in the assets of the Corporation and the holders thereof shall not be entitled to exercise any of their other rights as shareholders in respect thereof unless payment of the Redemption Price shall not be made upon presentation and surrender of the certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected. The Corporation shall have the right at any time after the mailing or delivery of notice of its intention to redeem Series 4 Preference Shares to deposit the Redemption Price of the Series 4 Preference Shares so called for redemption, or of such of the Series 4 Preference Shares which are represented by certificates which have not at the date of such deposit been surrendered by the holders thereof in connection with such redemption, to a special account in any chartered bank or any trust company in Canada named in such notice or in a subsequent notice to the holders of the shares in respect of which the deposit is made, to be paid without interest to or to the order of the respective holders of Series 4 Preference Shares called for redemption upon presentation and surrender to such bank or trust company of the certificates representing such shares. Upon such deposit being made or upon the date specified for redemption in such notice, whichever is the later, the Series 4 Preference Shares in respect of which such deposit shall have been made shall be deemed to be redeemed and the rights of the holders thereof shall be limited to receiving, without interest, their proportionate part of the amount so deposited upon presentation and surrender of the certificate or certificates representing their Series 4 Preference Shares being redeemed. Any interest allowed on any such deposit shall belong to the Corporation. Redemption monies that are represented by a cheque which has not been

4KK

presented to the Corporation’s bankers for payment or that otherwise remain unclaimed (including monies held on deposit to a special account as provided for above) for a period of six years from the date specified for redemption shall be forfeited to the Corporation.

4. Purchase for Cancellation

Subject to the provisions of Section 5 hereof, the Corporation may at any time or from time to time purchase for cancellation all or any part of the outstanding Series 4 Preference Shares in the open market (including purchase through or from an investment dealer or a member of a recognized stock exchange) or by invitation for tenders addressed to all of the holders of record of Series 4 Preference Shares then outstanding, at the lowest price or prices at which, in the opinion of the directors of the Corporation, such shares are then obtainable but not exceeding a price per share equal to the applicable Redemption Price plus costs of purchase. If, in response to an invitation for tenders under the provisions of this Section 4, more Series 4 Preference Shares are tendered at a price or prices acceptable to the Corporation than the Corporation is prepared to purchase, then the Series 4 Preference Shares to be purchased by the Corporation shall be purchased as nearly as may be pro rata according to the number of shares tendered by each holder who submits a tender to the Corporation, provided that when shares are tendered at different prices, the pro rating shall be effected only with respect to the shares tendered at the price at which more shares were tendered than the Corporation is prepared to purchase after the Corporation has purchased all the shares tendered at lower prices.

5. Restrictions on Dividends and Retirement of Shares

So long as any of the Series 4 Preference Shares are outstanding, the Corporation shall not without the approval of the holders of the Series 4 Preference Shares given as hereinafter specified:

(a)   declare, pay or set apart for payment any dividends (other than stock dividends in shares of the Corporation ranking as to capital and dividends junior to the Series 4 Preference Shares) on Junior Shares;

(b)   call for redemption, redeem, purchase or otherwise pay off or retire for value, any Junior Shares (except out of the net cash proceeds of a substantially concurrent issue of shares ranking as to capital and dividends junior to the Series 4 Preference Shares);

(c)   call for redemption, redeem, purchase or otherwise pay off or retire for value less than all of the Series 4 Preference Shares; or

(d)   except pursuant to any purchase obligation, sinking fund, retraction privilege or mandatory redemption provisions attaching to any series of preferred shares from time to time issued, call for redemption, redeem, purchase or otherwise pay off or retire for value any shares ranking as to capital on a parity with the Series 4 Preference Shares,

unless, in each such case, all dividends then payable on the Series 4 Preference Shares then outstanding and on all other shares of the Corporation ranking as to dividends on a parity with the Series 4 Preference Shares accrued up to and including the dividends payable on the immediately preceding respective date or dates for the payment of dividends thereon shall have been declared and paid or set apart for payment.

6. Voting Rights

The holders of the Series 4 Preference Shares shall not be entitled (except as specifically provided by law or as otherwise provided herein) to receive notice of or to attend or to vote at any meetings of shareholders of the Corporation unless and until the Corporation from time to time shall fail to pay in the aggregate eight Quarterly Dividends on the Series 4 Preference Shares on the dates on which the same should be paid according to the terms hereof whether or not consecutive and whether or not such dividends have been declared and whether or not there are any monies of the Corporation properly applicable to the payment of dividends. Thereafter, but only so long as any dividends on the Series 4 Preference Shares remain in arrears, the holders of the Series 4 Preference Shares shall be

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entitled to receive notice of and to attend all meetings of shareholders of the Corporation at which directors are to be elected, other than any meetings of the holders of any other class or series of shares of the Corporation held separately as a class or series, and to vote at any such meeting on the basis of one vote for each Series 4 Preference Share held: provided that, when entitled to vote in the election of directors, holders of Series 4 Preference Shares shall vote together with holders of Class A Limited Voting Shares in the election of one-half of the board of directors.

7. Liquidation, Dissolution or Winding Up

In the event of the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or in the event of any other distribution of assets of the Corporation among its shareholders for the purpose of winding up its affairs, the holders of the Series 4 Preference Shares shall be entitled to receive from the assets of the Corporation a sum equal to $25.00 per Series 4 Preference Share held by them respectively, plus an amount equal to all accrued and unpaid dividends thereon up to the date of payment which, for greater certainty, shall include dividends calculated in accordance with Section 2.1 during the period from and including the immediately preceding Dividend Payment Date to but excluding the date of payment, before any amount shall be paid to, or assets of the Corporation distributed amongst the holders of any other shares of the Corporation ranking as to capital junior to the Series 4 Preference Shares. After payment to the holders of the Series 4 Preference Shares of the amounts so payable to them, they shall not be entitled to share in any further distribution of the assets of the Corporation.

8. Interpretation

In the event that any date on which any dividend on the Series 4 Preference Shares is payable by the Corporation, or on or by which any other action is required to be taken by the Corporation hereunder, is not a Business Day, then such dividend shall be payable, or such other action shall be required to be taken, on or by the next succeeding day that is a Business Day.

For the purposes of these share provisions:

(a)   “Business Day” means a day other than a Saturday, a Sunday or any other day that is treated as a statutory holiday in the jurisdiction in which the Corporation’s registered office is located;

(b)   “Junior Share” means a share of the Corporation ranking as to capital or dividends junior to the Series 4 Preference Shares; and

(c)   “ranking as to capital” means ranking with respect to the distribution of assets in the event of a liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or in the event of any other distribution of assets of the Corporation among its shareholders for the purpose of winding up its affairs.

9. Mail Service Interruption

If the directors of the Corporation determine that mail service is or is threatened to be interrupted at the time when the Corporation is required or elects to give any notice hereunder, or is required to send any cheque or any share certificate to the holder of any Series 4 Preference Share, whether in connection with the redemption of such share or otherwise, the Corporation may, notwithstanding the provisions hereof:

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such arrangement shall have been given as provided in (a) above, provided that as soon as the directors of the Corporation determine that mail service is no longer interrupted or threatened to be interrupted such cheque or share certificate, if not theretofore delivered to such holder, shall be sent by mail as herein provided. In the event that the Corporation is required to mail such share certificate, such mailing shall be made by prepaid mail to the registered address of each person who at the date of mailing is a registered holder and who is entitled to receive such certificate.

10. Amendment

The rights, privileges, restrictions and conditions attached to the Series 4 Preference Shares may be added to, changed or removed by Articles of Amendment but only with the prior approval of the holders of the Series 4 Preference Shares given as hereinafter specified in addition to any vote or authorization required by law.

11. Approval of Holders of Series 4 Preference Shares

Any approval of the holders of the Series 4 Preference Shares with respect to any and all matters referred to herein or of any other matter requiring the consent of the holders of the Series 4 Preference Shares may be given in such manner as may then be required by law, subject to a minimum requirement that such approval be given by resolution signed by all the holders of outstanding Series 4 Preference Shares or passed by the affirmative vote of at least 66 2/3% of the votes cast by the holders of Series 4 Preference Shares who voted in respect of that resolution at a meeting of the holders of the Series 4 Preference Shares duly called for that purpose. The quorum requirement for, the proxy rules applicable to, the formalities to be observed in respect of the giving of notice of, and the formalities to be observed in respect of the conduct of, any such meeting or any adjourned meeting shall be those from time to time prescribed by the by-laws of the Corporation with respect to meetings of shareholders, or if not so prescribed, as required by the Business Corporations Act (Ontario). On every poll taken at every meeting of holders of Series 4 Preference Shares, each holder of Series 4 Preference Shares entitled to vote thereat shall have one vote in respect of each $25.00 of the issue price of each Series 4 Preference Share held.

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CLASS A PREFERENCE SHARES, SERIES 5 ATTRIBUTES

Number and Designation of
and Rights, Privileges, Restrictions and
Conditions Attaching to the Class A Preference Shares, Series 5

The fifth series of Class A Preference Shares of the Corporation shall consist of 2,600,000 Class A Preference Shares which shall be designated as Floating Rate Cumulative Redeemable Class A Preference Shares Series 5 (hereinafter referred to as the “Series 5 Preference Shares”) and which, in addition to the rights, privileges, restrictions and conditions attached to the Class A Preference Shares as a class, shall have attached thereto the following rights, privileges, restrictions and conditions:

1. Consideration for Issue

The consideration for the issue of each Series 5 Preference Share shall be $25.00.

2. Dividends

2.1. Payment of Dividends

Except as otherwise herein provided, holders of the Series 5 Preference Shares shall be entitled to receive, and the Corporation shall pay thereon, as and when declared by the Board of Directors of the Corporation, out of monies of the Corporation properly applicable to the payment of dividends, cumulative preferential cash dividends payable quarterly (the “Quarterly Dividends”) on the last day of each of the months of March, June, September and December in each year (the “Dividend Payment Dates”) commencing on September 30, 1985, each such Quarterly Dividend to be equal to the amount obtained when the applicable Quarterly Dividend Rate (as defined in Section 2.2) is multiplied by $25.00.

In any case where dividends are payable in respect of a Series 5 Preference Share for a period (the “Short Payment Period”) that ends on a date other than a Dividend Payment Date, a dividend shall be paid in respect of that Series 5 Preference Share in the amount obtained when:

(i)   $25.00 multiplied by 65% of the Average Prime Rate for the period of 90 days ending on a date which is 30 days before the end of such Short Payment Period

    is multiplied by

(ii)   the result obtained when the number of days in such Short Payment Period is divided by 365.

Dividends in respect of each Series 5 Preference Share shall accrue from the date of issue of such Series 5 Preference Share and thereafter shall accrue on a day-to-day basis.

2.2. Definitions

Where used in these share provisions, the following terms shall have the following meanings, respectively:

(a) “Quarterly Dividend Rate” means, in relation to any Dividend Payment Date, one-quarter of 65% of the Average Prime Rate for the three calendar months ending on the last day of the calendar month immediately preceding the month during which such Dividend Payment Date falls;

(b) “Average Prime Rate” means, for any period, the arithmetic average (rounded to the nearest one-one- hundredth of one percent (0.01%)) of the Prime Rate for each day during such period;

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(c) “Prime Rate” means, for any day, the annual prime commercial lending rate of interest established and announced by the Bank as the reference rate of interest used by the Bank on such date to determine the rates of interest on Canadian dollar loans to customers in Canada and designated by the Bank as its prime rate; provided that if, on such day, there shall be no Prime Rate for the Bank, the Prime Rate for such day shall be the Prime Rate of any other bank chosen by the Corporation which has such a rate on such day provided that such bank is listed in Schedule A of the Bank Act (Canada); and

(d) “Bank” means Canadian Imperial Bank of Commerce.

2.3. Method of Payment

Dividends (less any tax required to be withheld by the Corporation) on the Series 5 Preference Shares shall be paid by cheque payable in lawful money of Canada at par at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable. The mailing of such cheque from the Corporation’s registered office, or the principal office in Toronto of the registrar for the Series 5 Preference Shares, or the payment by such other reasonable means as the Corporation deems desirable, on or before the date on which such dividend is to be paid to a holder of Series 5 Preference Shares shall be deemed to be payment of the dividends represented thereby and payable on such date unless the cheque is not paid upon presentation or payment by such other means is not received. Dividends which are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed for a period of six years from the date on which they were declared to be payable shall be forfeited to the Corporation.

2.4. Cumulative Payment of Dividends

If on any date on which dividends are to be paid the dividends accrued to such date are not paid in full on all of the Series 5 Preference Shares then outstanding, such dividends, or the unpaid part thereof, shall be paid on a subsequent date or dates determined by the directors of the Corporation on which the Corporation shall have sufficient monies properly applicable to the payment of such dividends. The holders of Series 5 Preference Shares shall not be entitled to any dividends other than or in excess of the cumulative preferential cash dividends herein provided for.

3. Redemption

3.1. Optional Redemption

The Corporation may redeem the Series 5 Preference Shares or any of them at any time or from time to time on payment for each share to be redeemed of $25.00 together with all accrued and unpaid dividends thereon up to the date fixed for redemption which, for greater certainty, shall include dividends calculated in accordance with Section 2.1 hereof during the period from and including the immediately preceding Dividend Payment Date to but excluding the date fixed for redemption, the whole constituting and hereinafter referred to as the “Redemption Price”.

3.2. Partial Redemption

In case a part only of the Series 5 Preference Shares is at any time to be redeemed, the shares so to be redeemed shall be selected by lot or in such other manner as the directors of the Corporation, from time to time so determine. If a part only of the Series 5 Preference Shares represented by any certificate shall be redeemed, a new certificate representing the balance of such shares shall be issued to the holder thereof at the expense of the Corporation upon presentation and surrender of the first mentioned certificate.

3.3. Method of Redemption

In any case of redemption of Series 5 Preference Shares, the Corporation shall not less than 30 days and not more than 60 days before the date specified for redemption send by prepaid mail or deliver to the registered address of each person who at the date of mailing or delivery is a registered holder of Series 5 Preference Shares to be redeemed a notice in writing of the intention of the Corporation to redeem such Series 5 Preference Shares. Accidental

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failure or omission to give such notice to one or more holders shall not affect the validity of such redemption, but upon such failure or omission being discovered notice shall be given forthwith to such holder or holders and shall have the same force and effect as if given in due time. Such notice shall set out the number of Series 5 Preference Shares held by the person to whom it is addressed which are to be redeemed, the Redemption Price, the date specified for redemption and the place or places within Canada at which holders of Series 5 Preference Shares may present and surrender such shares for redemption. On and after the date so specified for redemption, the Corporation shall pay or cause to be paid to or to the order of the registered holders of the Series 5 Preference Shares to be redeemed the Redemption Price of such shares on presentation and surrender, at the registered office of the Corporation or any other place or places within Canada specified in such notice of redemption, of the certificate or certificates representing the Series 5 Preference Shares called for redemption. Payment in respect of Series 5 Preference Shares being redeemed shall be made by cheque payable to the holders thereof in lawful money of Canada at par at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable. From and after the date specified for redemption in any such notice of redemption, the Series 5 Preference Shares called for redemption shall cease to be entitled to dividends or any other participation in the assets of the Corporation and the holders thereof shall not be entitled to exercise any of their other rights as shareholders in respect thereof unless payment of the Redemption Price shall not be made upon presentation and surrender of the certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected. The Corporation shall have the right at any time after the mailing or delivery of notice of its intention to redeem Series 5 Preference Shares to deposit the Redemption Price of the Series 5 Preference Shares so called for redemption, or of such of the Series 5 Preference Shares which are represented by certificates which have not at the date of such deposit been surrendered by the holders thereof in connection with such redemption, to a special account in any chartered bank or any trust company in Canada named in such notice or in a subsequent notice to the holders of the shares in respect of which the deposit is made, to be paid without interest to or to the order of the respective holders of Series 5 Preference Shares called for redemption upon presentation and surrender to such bank or trust company of the certificates representing such shares. Upon such deposit being made or upon the date specified for redemption in such notice, whichever is the later, the Series 5 Preference Shares in respect of which such deposit shall have been made shall be deemed to be redeemed and the rights of the holders thereof shall be limited to receiving, without interest, their proportionate part of the amount so deposited upon presentation and surrender of the certificate or certificates representing their Series 5 Preference Shares being redeemed. Any interest allowed on any such deposit shall belong to the Corporation. Redemption monies that are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed (including monies held on deposit to a special account as provided for above) for a period of six years from the date specified for redemption shall be forfeited to the Corporation.

4. Purchase for Cancellation

Subject to the provisions of Section 6 hereof, the Corporation may at any time or from time to time purchase for cancellation all or any part of the outstanding Series 5 Preference Shares in the open market (including purchase through or from an investment dealer or a member of a recognized stock exchange) or by invitation for tenders addressed to all of the holders of record of Series 5 Preference Shares then outstanding, at the lowest price or prices at which, in the opinion of the directors of the Corporation, such shares are then obtainable but not exceeding a price per share of $25.00, together with accrued and unpaid dividends thereon up to the date of purchase which, for greater certainty, shall include dividends calculated in accordance with Section 2.1 hereof during the period from and including the immediately preceding Dividend Payment Date to but excluding the date of purchase plus costs of purchase. If, in response to an invitation for tenders under the provisions of this Section 4, more Series 5 Preference Shares are tendered at a price or prices acceptable to the Corporation than the Corporation is prepared to purchase, then the Series 5 Preference Shares to be purchased by the corporation shall be purchased as nearly as may be pro rata according to the number of shares tendered by each holder who submits a tender to the Corporation, provided that when shares are tendered at different prices, the pro rating shall be effected only with respect to the shares tendered at the price at which more shares were tendered than the Corporation is prepared to purchase after the Corporation has purchased all the shares tendered at lower prices.

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5. Retraction at the Option of the Holder

5.1. Right to Require Redemption

Subject as hereinafter provided, a holder of Series 5 Preference Shares shall be entitled to require the Corporation to redeem on December 1, 1986 and on any March 1, June 1, September 1 and December 1 thereafter (a “Retraction Date”) any or all of the Series 5 Preference Shares registered in his name at a price per share equal to $25.00 together with an amount equal to all accrued and unpaid dividends thereon to but excluding the Retraction Date (the whole constituting and being herein referred to as the “Retraction Price”).

5.2. Retraction Procedure

Each holder of Series 5 Preference Shares who desires to have the Corporation redeem any or all of the Series 5 Preference Shares registered in his name must, not less than 15 days prior to a Retraction Date, present and surrender to the transfer agent (the “Transfer Agent”) for the Series 5 Preference Shares, the certificate or certificates representing the Series 5 Preference Shares which the holder wishes to have the Corporation redeem, which certificates shall be accompanied by a duly dated, completed and signed election form provided by or on behalf of the Corporation for this purpose, specifying the number of Series 5 Preference Shares represented by such certificate that are to be redeemed by the Corporation on the Retraction Date. Upon such presentation and surrender of Series 5 Preference Shares, the Corporation may, at its option, elect, in lieu of redeeming such shares, to arrange for their purchase by a person designated by the Corporation as hereinafter provided in this Section 5. Such presentation and surrender of Series 5 Preference Shares for redemption shall be irrevocable by the holder except with respect to those Series 5 Preference Shares which are not redeemed by the Corporation on the applicable Retraction Date or are not redeemed by the Corporation on the applicable Retraction Date or are not then purchased by a person designated by the Corporation as hereinafter provided in this Section 5.

If the Corporation elects to arrange for the purchase of any Series 5 Preference Shares which have been tendered for redemption on any Retraction Date (hereinafter called “Shares Available for Purchase”), it shall, prior to the Retraction Date, deliver to the Transfer Agent a commitment letter (a “commitment”) obligating a party designated by the Corporation (the “Purchaser”) to purchase from holders of Shares Available for Purchase all or some of the Shares Available for Purchase. If the number of shares to be purchased on Retraction Date by the Purchaser as specified in a commitment is less than all the Shares Available for Purchase on such Retraction Date, any purchase by the Purchaser of Series 5 Preference Shares shall be as nearly as may be pro rata (disregarding fractions) in proportion to the number of Series 5 Preference Shares held by the holders respectively which comprise the Shares Available for Purchase. The Shares Available for Purchase which are specified in a commitment to be purchased by the Purchaser on a Retraction Date as aforesaid are herein referred to as the “Purchased Shares”. Payment of the Purchase Price by the Purchaser for the Purchased Shares shall be made by the delivery to the Transfer Agent on or prior to the applicable Retraction Date of one or more bank drafts payable to the Transfer Agent. Upon such delivery, the Corporation shall cause the Transfer Agent to transfer the Purchased Shares to the Purchaser, to note on the share records for the Series 5 Preference Shares the right of the Purchaser or its assigns to receive all dividends on the Purchased Shares declared but unpaid as of the applicable Retraction Date, to deliver to the Purchaser certificates for the Purchased Shares duly registered in the name of the Purchaser or as the Purchaser may direct and to pay the Purchaser Price of the purchased Shares to the holders of Series 5 Preference Shares which have been purchased in the manner, mutatis mutandis, in which payment is made by the Corporation for Series 5 Preference Shares redeemed by the Corporation pursuant to this Section 5.

The Corporation shall, on the applicable Retraction Date, redeem, at a price per Series 5 Preference Share equal to the Retraction Price, the Series 5 Preference Shares in respect of which the certificates have been surrendered for redemption in accordance with the provisions of this Section 5 and which have not been purchased by the Purchaser in accordance with the provisions of this Section 5. Payment of the Retraction Price may be made by cheque of the Corporation or by any other reasonable means the Corporation deems desirable and such payment of the Retraction Price shall be a full and complete discharge of the Corporation’s obligation to pay the Retraction Price owed to the holders of the Series 5 Preference Shares so presented and surrendered for redemption. Subject as hereinafter provided, the Series 5 Preference Shares so presented and surrendered for redemption and not purchased by the

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Purchaser shall be and be deemed to be redeemed on the applicable Retraction Date. From and after the applicable Retraction Date, a holder of any Series 5 Preference Shares presented and surrendered for redemption and not purchased by the Purchaser shall not be entitled to dividends or to exercise any of the rights of a holder of Series 5 Preference Shares in respect thereof except the right to receive the Retraction Price, provided that if payment of the Retraction Price is not duly made by or on behalf of the Corporation in accordance with the provisions hereof, then the rights of such holder shall remain unaffected. Notwithstanding the foregoing and for greater certainty, the Corporation shall have no obligation to redeem on a Retraction Date any Purchased Shares which are purchased by the Purchaser in accordance with the provisions of this Section 5.

If part only of the Series 5 Preference Shares represented by any certificate are redeemed or purchased as aforesaid, a new certificate for the balance of such shares shall be issued at the expense of the Corporation.

5.3. Retraction Subject to Applicable Law

If the Corporation is unable by reason of the provisions of the Business Corporations Act (Ontario) or its Articles or other applicable law to redeem all Series 5 Preference Shares duly presented and surrendered to the Corporation for redemption on any Retraction Date and which are not Purchased Shares, it will redeem such number thereof (rounded to the next lower multiple of $1,000 shares) as it is then permitted to redeem, which shall be selected as nearly as may be pro rata (disregarding fractions) in proportion to the total number of Series 5 Preference Shares so presented and surrendered for redemption by each holder thereof and which are not Purchased Shares. If all Series 5 Preference Shares duly presented and surrendered to the Corporation for redemption on any Retraction Date are not redeemed or purchased as aforesaid on such date, the Corporation shall continue to hold the Series 5 Preference Shares not so redeemed or purchased and shall, as soon as possible thereafter, give to each holder thereof a notice stating:

(i)   the number of Series 5 Preference Shares of such holder then held by the Corporation;

(ii)   the intention of the Corporation to redeem on each Retraction Date thereafter, that number of the Series 5 Preference Shares presented and surrendered to the Corporation for redemption on a Retraction Date and not theretofore redeemed, purchased or withdrawn as the Corporation is then permitted to redeem; and

(iii)   the right of such holder to require the Corporation to return to him all or any part of his Series 5 Preference Shares held by the Corporation, with the result that the obligation of the Corporation to redeem the shares so returned shall cease.

Thereafter on each Retraction Date, to the extent it is permitted to do so by the Business Corporations Act (Ontario) and by its Articles and by other applicable law, the Corporation shall redeem such number (rounded, except for the final redemption of any number of shares less than 1,000, to the next lower multiple of 1,000 shares) of the Series 5 Preference Shares presented and surrendered to the Corporation for redemption on a Retraction Date and not theretofore redeemed, purchased or withdrawn as the Board of Directors of the Corporation determines the Corporation is permitted to redeem on such Retraction Date until all such Series 5 Preference Shares have been so redeemed. The Series 5 Preference Shares redeemed on any Retraction Date shall be selected as nearly as may be pro rata (disregarding fractions) in the manner aforesaid. Payment of the Retraction Price therefore shall be made as aforesaid and shall be accompanied by a statement addressed to the holder of Series 5 Preference Shares to be redeemed setting out the number of shares so redeemed and the number then held by the Corporation. Upon such payment, the Series 5 Preference Shares to be redeemed shall then be and be deemed to be redeemed and such holder shall cease to be entitled to dividends and shall not be entitled to exercise any of the rights of a shareholder in respect thereof. Except as otherwise provided herein, a holder of Series 5 Preference Shares presented and surrendered to the Corporation for redemption on a Retraction Date which are not so redeemed shall continue to be entitled to exercise all of the rights of a shareholder in respect of such Series 5 Preference Shares and to receive dividends thereon until such shares are redeemed except that, in order to obtain possession of the share certificate or certificates representing such Series 5 Preference Shares, a holder thereof must give 10 days’ prior written notice to the Corporation (given not less than 20 days prior to any Dividend Payment Date) requiring the Corporation to return to him any or all said Series 5 Preference Shares held by the Corporation. Upon receipt of such written notice, the Corporation shall promptly send to such holder a share certificate

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or share certificates for that number of Series 5 Preference Shares which such holder has requested the Corporation to return and thereupon the Corporation shall cease to have any obligation to redeem any such shares under this Section 5.

6. Restrictions on Dividends and Retirement of Shares

So long as any of the Series 5 Preference Shares are outstanding, the Corporation shall not, without the approval of the holders of the Series 5 Preference Shares given as hereinafter specified:

(a)   declare, pay or set apart for payment any dividends (other than stock dividends in shares of the Corporation ranking as to capital and dividends junior to the Series 5 Preference Shares) on Junior Shares;

(b)   call for redemption, redeem, purchase or otherwise pay off or retire for value, any Junior Shares (except out of the net cash proceeds of a substantially concurrent issue of shares ranking as to capital and dividends junior to the Series 5 Preference Shares);

(c)   call for redemption, redeem, purchase or otherwise pay off or retire for value less than all of the Series 5 Preference Shares; or

(d)   except pursuant to any purchase obligation, sinking fund, retraction privilege or mandatory redemption provisions attaching to any series of preferred shares from time to time issued, call for redemption, redeem, purchase or otherwise pay off or retire for value any shares ranking as to capital on a parity with the Series 5 Preference Shares,

unless, in each such case, all dividends then payable on the Series 5 Preference Shares then outstanding and on all other shares of the Corporation ranking as to dividends on a parity with the Series 5 Preference Shares accrued up to and including the dividends payable on the immediately preceding respective date or dates for the payment of dividends thereon shall have been declared and paid or set apart for payment.

7. Creation or Issue of Additional Shares

So long as any of the Series 5 Preference Shares are outstanding, the Corporation shall not, without the prior approval of the holders of the Series 5 Preference Shares given as hereinafter specified, create or issue any shares ranking as to capital or dividends prior to or on a parity with the Series 5 Preference Shares; provided, however, that the Corporation may without such approval issue additional series of Class A Preference Shares if all dividends then payable on the Series 5 Preference Shares then outstanding and on all other shares of the Corporation ranking as to dividends prior to or on a parity with the Series 5 Preference Shares accrued up to and including the dividends payable on the immediately preceding respective date or dates for the payment of dividends thereon shall have been declared and paid or set apart for payment.

8. Voting Rights

The holders of the Series 5 Preference Shares shall not be entitled (except as specifically provided by law or as otherwise provided herein) to receive notice of or to attend or to vote at any meetings of shareholders of the Corporation unless and until the Corporation from time to time shall fail to pay in the aggregate eight Quarterly Dividends on the Series 5 Preference Shares on the dates on which the same should be paid according to the terms hereof whether or not consecutive and whether or not such dividends have been declared and whether or not there are any monies of the Corporation properly applicable to the payment of dividends. Thereafter, but only so long as any dividends on the Series 5 Preference Shares remain in arrears, the holders of the Series 5 Preference Shares shall be entitled to receive notice of and to attend all meetings of shareholders of the Corporation at which directors are to be elected, other than any meetings of the holders of any other class or series of shares of the Corporation held separately as a class or series, and to vote at any such meeting and to one vote for each Series 5 Preference Share held; provided that when entitled to vote in the election of directors, holders of Series 5 Preference Shares shall vote together with holders of Class A Limited Voting Shares in the election of one-half of the board of directors.

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9. Liquidation, Dissolution or Winding Up

In the event of the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or in the event of any other distribution of assets of the Corporation among its shareholders for the purpose of winding up its affairs, the holders of the Series 5 Preference Shares shall be entitled to receive from the assets of the Corporation a sum equal to $25.00 per Series 5 Preference Share held by them respectively, plus an amount equal to all accrued and unpaid dividends thereon up to the date of payment which, for greater certainty, shall include dividends calculated in accordance with Section 2.1 during the period from and including the immediately preceding Dividend Payment Date to but excluding the date of payment before any amount shall be paid to, or assets of the Corporation distributed amongst the holders of any other shares of the Corporation ranking as to capital junior to the Series 5 Preference Shares. After payment to the holders of the Series 5 Preference Shares of the amounts so payable to them, they shall not be entitled to share in any further distribution of the assets of the Corporation.

10. Interpretation

In the event that any date on which any dividend on the Series 5 Preference Shares is payable by the Corporation, or on or by which any other action is required to be taken by the Corporation hereunder, is not a Business Day, then such dividend shall be payable, or such other action shall be required to be taken, on or by the next succeeding day that is a Business Day.

For the purposes of these share provisions:

(a)   “Business Day” means a day other than a Saturday, a Sunday or any other day that is treated as a statutory holiday in the jurisdiction in which the Corporation’s registered office is located;

(b)   “Junior Share” means a share of the Corporation ranking as to capital or dividends junior to the Series 5 Preference Shares; and

(c)   “ranking as to capital” means ranking with respect to the distribution of assets in the event of a liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or in the event of any other distribution of assets of the Corporation among its shareholders for the purpose of winding up its affairs.

11. Mail Service Interruption

If the directors of the Corporation determine that mail service is or is threatened to be interrupted at the time when the Corporation is required or elects to give any notice hereunder, or is required to send any cheque or any share certificate to the holder of any Series 5 Preference Share, whether in connection with the redemption of such share or otherwise, the Corporation may, notwithstanding the provisions hereof:

(a) give such notice by publication thereof once in a daily English language newspaper of general circulation published in each of Vancouver, Calgary, Winnipeg, Toronto, Montreal and Halifax, and once in a daily French language newspaper published in Montreal and such notice shall be deemed to have been validly given on the day next succeeding its publication in all of such cities; and

(b) fulfil the requirement to send such cheque or such share certificate by arranging for the delivery thereof to such holder by the transfer agent for the Series 5 Preference Shares at its principal offices in the cities of Vancouver, Calgary, Winnipeg, Toronto, Montreal and Halifax, and such cheque and/or certificate shall be deemed to have been sent on the date on which notice of such arrangement shall have been given as provided in (a) above, provided that as soon as the directors of the Corporation determine that mail service is no longer interrupted or threatened to be interrupted such cheque or share certificate, if not theretofore delivered to such holder, shall be sent by mail as herein provided. In the event that the Corporation is required to mail such share certificate, such mailing shall be made

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by prepaid mail to the registered address of each person who at the date of mailing is a registered holder and who is entitled to receive such certificate.

12. Amendment

The rights, privileges, restrictions and conditions attached to the Series 5 Preference Shares may be added to, changed or removed by Articles of Amendment but only with the prior approval of the holders of the Series 5 Preference Shares given as hereinafter specified in addition to any vote or authorization required by law.

13. Approval of Holders of Series 5 Preference Shares

Any approval of the holders of the Series 5 Preference Shares with respect to any and all matters referred to herein or of any other matter requiring the consent of the holders of the Series 5 Preference Shares may be given in such manner as may then be required by law, subject to a minimum requirement that such approval be given by resolution signed by all the holders of outstanding Series 5 Preference Shares or passed by the affirmative vote of at least 66 2/3% of the votes cast by the holders of Series 5 Preference Shares who voted in respect of that resolution at a meeting of the holders of the Series 5 Preference Shares duly called for that purpose. The quorum requirement for, the proxy rules applicable to, the formalities to be observed in respect of the giving of notice of, and the formalities to be observed in respect of the conduct of, any such meeting or any adjourned meeting shall be those from time to time prescribed by the by-laws of the Corporation with respect to meetings of shareholders, or if not so prescribed, as required by the Business Corporations Act (Ontario). On every poll taken at every meeting of holders of Series 5 Preference Shares, each holder of Series 5 Preference Shares entitled to vote thereat shall have one vote in respect of each $25.00 of the issue price of each Series 5 Preference Share held.

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CLASS A PREFERENCE SHARES, SERIES 6 ATTRIBUTES

Number and Designation of
and Rights, Privileges, Restrictions and
Conditions Attaching to the Class A Preference Shares, Series 6

The sixth series of Class A Preference Shares of the Corporation shall consist of 111,633 Class A Preference Shares which shall be designated as $1.875 Cumulative Redeemable Class A Preference Shares Series 6 (hereinafter referred to as the “Series 6 Preference Shares”) and which, in addition to the rights, privileges, restrictions and conditions attached to the Class A Preference Shares as a class, shall have attached thereto the following rights, privileges, restrictions and conditions:

1. Consideration for Issue

The consideration for the issue of each Series 6 Preference Share shall be $25.00.

2. Dividends

2.1. Payment of Dividends

The holders of the Series 6 Preference Shares shall be entitled to receive, and the Corporation shall pay thereon, as and when declared by the Board of Directors of the Corporation, out of monies of the Corporation properly applicable to the payment of dividends, fixed cumulative preferential cash dividends at the rate of $1.875 per share per annum payable quarterly in equal quarterly amounts in lawful money of Canada, on the last day of each of the months of March, June, September and December in each year (the “Dividend Payment Dates”) the first Dividend Payment Date to be September 30, 1986. Dividends on the Series 6 Preference Shares shall accrue on a day-to-day basis from their respective dates of issue thereof.

The amount of the dividend for any period which is less than a full quarter with respect to any Series 6 Preference Share:

(i) which is issued, redeemed or purchased; or

(ii) where assets of the Corporation are distributed to the holders of the Series 6 Preference Shares pursuant to Section 7 hereof;

shall be equal to the amount calculated by multiplying $1.875 by a fraction of which the numerator is the number of days in such quarter that such share has been outstanding and the denominator is the number of days in the calendar year in which the quarter ends.

2.2. Method of Payment

Dividends (less any tax required to be withheld by the Corporation) on the Series 6 Preference Shares shall be paid by cheque payable in lawful money of Canada at par at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable. The mailing of such cheque from the Corporation’s registered office, or the principal office in Toronto of the registrar for the Series 6 Preference Shares, or the payment by such other reasonable means as the Corporation deems desirable, on or before the date on which such dividend is to be paid to a holder of Series 6 Preference Shares shall be deemed to be payment of the dividends represented thereby and payable on such date unless the cheque is not paid upon presentation or payment by such other means is not received. Dividends which are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed for a period of six years from the date on which they were declared to be payable shall be forfeited to the Corporation.

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2.3. Cumulative Payment of Dividends

If on any date on which dividends are to be paid the dividends accrued to such date are not paid in full on all of the Series 6 Preference Shares then outstanding, such dividends, or the unpaid part thereof, shall be paid on a subsequent date or dates determined by the directors of the Corporation on which the Corporation shall have sufficient monies properly applicable to the payment of such dividends. The holders of Series 6 Preference Shares shall not be entitled to any dividends other than or in excess of the cumulative preferential cash dividends herein provided for.

3. Redemption

3.1. Optional Redemption

Subject to applicable law, to the provisions of Section 5 hereof, the Corporation may, upon giving notice as hereinafter specified, redeem at any time the whole or from time to time any part of the then outstanding Series 6 Preference Shares, on payment for each share to be redeemed of $25.00; together with all accrued and unpaid dividends thereon up to but excluding the date fixed for redemption (the whole constituting and hereinafter referred to as the “Redemption Price”).

3.2. Partial Redemption

In case a part only of the Series 6 Preference Shares is at any time to be redeemed, the shares so to be redeemed shall be selected by lot or in such other manner as the directors of the Corporation, from time to time so determine. If a part only of the Series 6 Preference Shares represented by any certificate shall be redeemed, a new certificate representing the balance of such shares shall be issued to the holder thereof at the expense of the Corporation upon presentation and surrender of the first mentioned certificate.

3.3. Method of Redemption

In any case of redemption of Series 6 Preference Shares, the Corporation shall not less than 30 days and not more than 60 days before the date specified for redemption send by prepaid mail or deliver to the registered address of each person who at the date of mailing or delivery is a registered holder of Series 6 Preference Shares to be redeemed a notice in writing of the intention of the Corporation to redeem such Series 6 Preference Shares. Accidental failure or omission to give such notice to one or more holders shall not affect the validity of such redemption, but upon such failure or omission being discovered notice shall be given forthwith to such holder or holders and shall have the same force and effect as if given in due time. Such notice shall set out the number of Series 6 Preference Shares held by the person to whom it is addressed which are to be redeemed, the Redemption Price, the date specified for redemption and the place or places within Canada at which holders of Series 6 Preference Shares may present and surrender such shares for redemption. On and after the date so specified for redemption, the Corporation shall pay or cause to be paid to or to the order of the registered holders of the Series 6 Preference Shares to be redeemed the Redemption Price of such shares on presentation and surrender, at the registered office of the Corporation or any other place or places within Canada specified in such notice of redemption, of the certificate or certificates representing the Series 6 preference Shares called for redemption. Payment in respect of Series 6 Preference Shares being redeemed shall be made by cheque payable to the holders thereof in lawful money of Canada at par at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable. From and after the date specified for redemption in any such notice of redemption, the Series 6 Preference Shares called for redemption shall cease to be entitled to dividends or any other participation in the assets of the Corporation and the holders thereof shall not be entitled to exercise any of their other rights as shareholders in respect thereof unless payment of the Redemption Price shall not be made upon presentation and surrender of the certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected. The Corporation shall have the right at any time after the mailing or delivery of notice of its intention to redeem Series 6 Preference Shares to deposit the Redemption Price of the Series 6 Preference Shares so called for redemption, or of such of the Series 6 Preference Shares which are represented by certificates which have not at the date of such deposit been surrendered by the holders thereof in connection with such redemption, to a special account in any chartered bank or any trust company in Canada named in such notice or in a subsequent notice to the holders of the shares in respect of which the deposit is made, to be paid without interest to or to

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the order of the respective holders of Series 6 Preference Shares called for redemption upon presentation and surrender to such bank or trust company of the certificates representing such shares. Upon such deposit being made or upon the date specified for redemption in such notice, whichever is the later, the Series 6 Preference Shares in respect of which such deposit shall have been made shall be deemed to be redeemed and the rights of the holders thereof shall be limited to receiving, without interest, their proportionate part of the amount so deposited upon presentation and surrender of the certificate or certificates representing their Series 6 Preference Shares being redeemed. Any interest allowed on any such deposit shall belong to the Corporation. Redemption monies that are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed (including monies held on deposit to a special account as provided for above) for a period of six years from the date specified for redemption shall be forfeited to the Corporation.

4. Purchase for Cancellation

Subject to the provisions of Section 5 hereof and to the rights, privileges, restrictions and conditions attaching to any other shares of the Corporation, the Corporation may at any time or from time to time purchase for cancellation all or any part of the outstanding Series 6 Preference Shares at any price by tender to all of the holders of record of Series 6 Preference Shares then outstanding or through the facilities of a stock exchange on which the Series 6 Preference Shares are listed, or in any other manner, provided that in the case of a purchase for cancellation in any other manner such Series 6 Preference Shares shall be purchased for cancellation at the lowest price or prices at which, in the opinion of the directors of the Corporation, such shares are then obtainable but not exceeding a price per share equal to the applicable Redemption Price plus reasonable costs of purchase. If, in response to an invitation for tenders under the provisions of this Section 4, more Series 6 Preference Shares are tendered at a price or prices acceptable to the Corporation than the Corporation is prepared to purchase, then the Series 6 Preference Shares to be purchased by the Corporation shall be purchased as nearly as may be pro rata according to the number of shares tendered by each holder who submits a tender to the Corporation, provided that when shares are tendered at different prices, the pro rating shall be effected only with respect to the shares tendered at the price at which more shares were tendered than the Corporation is prepared to purchase after the Corporation has purchased all the shares tendered at lower prices. If part only of the Series 6 Preference Shares represented by a certificate shall be purchased, a new certificate for the balance of such shares shall be issued at the expense of the Corporation.

5. Restrictions on Dividends, Retirement and Issue of Shares

So long as any of the Series 6 Preference Shares are outstanding, the Corporation shall not, without the approval of the holders of the Series 6 Preference Shares in accordance with Section 11 hereof:

(a)   declare, pay or set apart for payment any dividends on shares ranking as to dividends junior to the Series 6 Preference Shares (other than stock dividends in shares of the Corporation ranking as to capital and dividends junior to the Series 6 Preference Shares);

(b)   except out of the net cash proceeds of a substantially concurrent issue of shares ranking as to capital and dividends junior to the Series 6 Preference Shares, redeem or call for redemption, purchase or otherwise reduce or make any return of capital in respect of shares of the Corporation ranking as to capital junior to the Series 6 Preference Shares;

(c)   redeem or call for redemption, purchase or otherwise reduce or make any return of capital in respect of less than all of the Series 6 Preference Shares;

(d)   except pursuant to any purchase obligation, sinking fund, retraction privilege or mandatory redemption provisions attaching thereto, redeem or call for redemption, purchase or otherwise reduce or make any return of capital in respect of any shares ranking as to capital on a parity with the Series 6 Preference Shares; or

(e)   issue any additional Series 6 Preference Shares or any shares ranking as to dividends or capital on a parity with the Series 6 Preference Shares;

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unless, at the date of such declaration, payment, setting apart for payment, redemption, call for redemption, purchase or reduction, return of capital or issuance, as the case may be, all accrued and unpaid cumulative dividends up to and including the dividend payment for the last completed period for which such dividends shall be payable, shall have been declared and paid or set apart for payment on the Series 6 Preference Shares and any accrued and unpaid cumulative dividends which have become payable and any declared and unpaid non-cumulative dividends shall have been paid or set apart for payment on all other shares ranking as to dividends prior to or on a parity with the Series 6 Preference Shares.

So long as any Series 6 Preference Shares are outstanding, the Corporation shall not, without the prior approval of the holder of such outstanding Series 6 Preference Shares given in accordance with Section 11 hereof, issue any shares ranking as to dividends or capital prior to the Series 6 Preference Shares.

6. Voting Rights

The holders of the Series 6 Preference Shares shall not, except as entitled under applicable law, be entitled to receive notice of or to attend or to vote at any meetings of shareholders of the Corporation unless and until the Corporation from time to time shall fail to pay in the aggregate eight (8) quarterly dividends on the Series 6 Preference Shares on the dates on which the same should be paid according to the terms hereof whether or not consecutive and whether or not such dividends have been declared and whether or not there are any monies of the Corporation properly applicable to the payment of dividends. Thereafter, but only so long as any dividends on the Series 6 Preference Shares remain in arrears, the holders of the Series 6 Preference Shares shall be entitled to receive notice of and to attend all annual and other general meetings of shareholders of the Corporation, other than any meetings of the holders of any other class or series of shares of the Corporation held separately as a class or series, but shall not be entitled to vote thereat except in the election of directors in which case the holders of the Series 6 Preference Shares shall be entitled to one vote in respect of each Series 6 Preference Share held and shall vote together with holders of Class A Limited Voting Shares in the election of one-half of the board of directors .

7. Liquidation, Dissolution or Winding Up

In the event of the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or in the event of any other distribution of assets of the Corporation among its shareholders for the purpose of winding up its affairs, the holders of the Series 6 Preference Shares shall be entitled to receive from the assets of the Corporation a sum equal to the then prevailing Redemption Price calculated to but excluding the date of payment before any amount shall be paid to, or assets of the Corporation distributed amongst the holders of any other shares of the Corporation ranking as to capital junior to the Series 6 Preference Shares. After payment to the holders of the Series 6 Preference Shares of the amounts so payable to them, they shall not be entitled to share in any further distribution of the assets of the Corporation.

8. Interpretation

In the event that any date on which any dividend on the Series 6 Preference Shares is payable by the Corporation, or on or by which any other action is required to be taken by the Corporation hereunder, is not a Business Day, then such dividend shall be payable, or such other action shall be required to be taken, on or by the next succeeding day that is a Business Day.

For the purposes of these share provisions:

(a) “Business Day” means a day other than a Saturday, a Sunday or any other day that is treated as a statutory holiday in the jurisdiction in which the Corporation’s registered office is located;

(b) “ranking as to capital” means ranking with respect to the distribution of assets in the event of a liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or in the event of any other distribution of assets of the Corporation among its shareholders for the purposes of winding up its affairs; and

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(c) “quarter” means a period commencing on a Dividend Payment Date and ending on the date preceding the next succeeding Dividend Payment Date.

9. Mail Service Interruption

If the directors of the Corporation determine that mail service is or is threatened to be interrupted at the time when the Corporation is required or elects to give any notice hereunder, or is required to send any cheque or any share certificate to the holder of any Series 6 Preference Share, whether in connection with the redemption of such share or otherwise, the Corporation may, notwithstanding the provisions hereof:

(a) give such notice by publication thereof once in a daily English language newspaper of general circulation published in each of Vancouver, Calgary, Winnipeg, Toronto, Montreal and Halifax and once in a daily French language newspaper published in Montreal and such notice shall be deemed to have been validly given on the day next succeeding its publication in all of such cities; and

(b) fulfil the requirement to send such cheque or such share certificate by arranging for the delivery thereof to such holder by the transfer agent for the Series 6 Preference Shares at its principal offices in the cities of Vancouver, Calgary, Winnipeg, Toronto, Montreal and Halifax, and such cheque and/or certificate shall be deemed to have been sent on the date on which notice of such arrangement shall have been given as provided in (a) above, provided that as soon as the directors of the Corporation determine that mail service is no longer interrupted or threatened to be interrupted such cheque or share certificate, if not theretofore delivered to such holder, shall be sent by mail as herein provided. In the event that the Corporation is required to mail such share certificate, such mailing shall be made by prepaid mail to the registered address of each person who at the date of mailing is a registered holder and who is entitled to receive such certificate.

10. Amendment

The rights, privileges, restrictions and conditions attached to the Series 6 Preference Shares may be added to, changed or removed by Articles of Amendment but only with the prior approval of the holders of the Series 6 Preference Shares given as specified in Section 11 and as may be required by law.

11. Approval of Holders of Series 6 Preference Shares

11.1. Approval

Any approval of the holders of the Series 6 Preference Shares with respect to any and all matters referred to herein or of any other matter requiring the consent of the holders of the Series 6 Preference Shares may be given in such manner as may then be required by law, subject to a minimum requirement that such approval be given by resolution signed by all the holders of outstanding Series 6 Preference Shares or passed by the affirmative vote of at least 66 2/3% of the votes cast by the holders of Series 6 Preference Shares who voted in respect of that resolution at a meeting of the holders of the Series 6 Preference Shares duly called for that purpose and at which a quorum as required by the by-laws of the Corporation is present subject to a minimum requirement that the quorum at the meeting (other than an adjourned meeting) be at least two persons entitled to vote thereat.

11.2. Formalities

The proxy rules applicable to, the formalities to be observed in respect of the giving of notice of, and the formalities to be observed in respect of the conduct of, any such meeting or any adjourned meeting shall be those from time to time prescribed by the by-laws of the Corporation with respect to meetings of shareholders, or if not so prescribed, as required by law. On every poll taken at every meeting of holders of Series 6 Preference Shares, each holder of Series 6 Preference Shares entitled to vote thereat shall have one vote in respect of each $25.00 of the issue price of each Series 6 Preference Share held.

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CLASS A PREFERENCE SHARES, SERIES 7 ATTRIBUTES

Number and Designation of
and Rights, Privileges, Restrictions and
Conditions Attaching to the Class A Preference Shares, Series 7

The seventh series of Class A Preference Shares of the Corporation shall consist of 4,000,000 Class A Preference Shares which shall be designated as Fixed Rate Cumulative Class A Preference Shares Series 7 (hereinafter referred to as the “Series 7 Preference Shares”) and which, in addition to the rights, privileges, restrictions and conditions attached to the Class A Preference Shares as a class, shall have attached thereto the following rights, privileges, restrictions and conditions:

1. Consideration for Issue

The consideration for the issue of each Series 7 Preference Share shall be $25.00.

2. Dividends

2.1. Payment of Dividends

The holders of the Series 7 Preference Shares shall be entitled to receive, and the Corporation shall pay thereon, as and when declared by the Board of Directors of the Corporation, out of monies of the Corporation properly applicable to the payment of dividends, fixed cumulative preferential cash dividends at the rate of 8 1/2% per annum such rate to be applied to $25.00 per Series 7 Preference Share payable each calendar quarter (the “Quarterly Dividends”) on the last day of each of the months of March, June, September and December in each year (the “Dividend Payment Dates”) commencing on September 30, 1994. Dividends in respect of such Series 7 Preference Shares shall accrue on a day-to-day basis, and shall be calculated on a 365 or 366 day basis.

2.2. Method of Payment

Dividends (less any tax required to be withheld by the Corporation) on the Series 7 Preference Shares shall be paid by cheque payable in lawful money of Canada at par at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable. The mailing of such cheque from the Corporation’s registered office, or the principal office in Toronto of the registrar for the Series 7 Preference Shares, or the payment by such other reasonable means as the Corporation deems desirable, on or before the date on which such dividend is to be paid to a holder of Series 7 Preference Shares shall be deemed to be payment of the dividends represented thereby and payable on such date unless the cheque is not paid upon presentation or payment by such other means is not received. Dividends which are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed for a period of six years from the date on which they were declared to be payable shall be forfeited to the Corporation.

2.3. Cumulative Payment of Dividends

If on any date on which dividends are to be paid the dividends accrued to such date are not paid in full on all of the Series 7 Preference Shares then outstanding, such dividends, or the unpaid part thereof, shall be paid on a subsequent date or dates determined by the directors of the Corporation on which the Corporation shall have sufficient monies properly applicable to the payment of such dividends. The holders of Series 7 Preference Shares shall not be entitled to any dividends other than or in excess of the fixed cumulative preferential cash dividends herein provided for.

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3. Redemption

3.1. Optional Redemption

Subject to applicable law, to the provisions of Section 6 hereof and to the rights, privileges, restrictions and conditions attaching to any other shares of the Corporation, the Corporation may, upon giving notice as hereinafter specified, redeem at any time the whole or from time to time any part of the then outstanding Series 7 Preference Shares, on payment for each share to be redeemed of $25.00 together, in each case, with all accrued and unpaid dividends thereon up to but excluding the date fixed for redemption, (the whole constituting and hereinafter referred to as the “Redemption Price”).

3.2. Partial Redemption

In case a part only of the Series 7 Preference Shares is at any time to be redeemed, the shares so to be redeemed shall be selected by lot or in such other manner as the directors of the Corporation, from time to time so determine. If a part only of the Series 7 Preference Shares represented by any certificate shall be redeemed, a new certificate representing the balance of such shares shall be issued to the holder thereof at the expense of the Corporation upon presentation and surrender of the first mentioned certificate.

3.3. Method of Redemption

In any case of redemption of Series 7 Preference Shares, the Corporation shall not less than 30 days and not more than 60 days before the date specified for redemption send by prepaid mail or deliver to the registered address of each person who at the date of mailing or delivery is a registered holder of Series 7 Preference Shares to be redeemed a notice in writing of the intention of the Corporation to redeem such Series 7 Preference Shares. Accidental failure or omission to give such notice to one or more holders shall not affect the validity of such redemption, but upon such failure or omission being discovered notice shall be given forthwith to such holder or holders and shall have the same force and effect as if given in due time. Such notice shall set out the number of Series 7 Preference Shares held by the person to whom it is addressed which are to be redeemed, the Redemption Price, the date specified for redemption and the place or places within Canada at which holders of Series 7 Preference Shares may present and surrender such shares for redemption. On and after the date so specified for redemption, the Corporation shall pay or cause to be paid to or to the order of the registered holders of the Series 7 Preference Shares to be redeemed the Redemption Price of such shares on presentation and surrender, at the registered office of the Corporation or any other place or places within Canada specified in such notice of redemption, of the certificate or certificates representing the Series 7 Preference Shares called for redemption. Payment in respect of Series 7 Preference Shares being redeemed shall be made by cheque payable to the holders thereof in lawful money of Canada at par at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable. From and after the date specified for redemption in any such notice of redemption, the Series 7 Preference Shares called for redemption shall cease to be entitled to dividends or any other participation in the assets of the Corporation and the holders thereof shall not be entitled to exercise any of their other rights as shareholders in respect thereof unless payment of the Redemption Price shall not be made upon presentation and surrender of the certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected. The Corporation shall have the right at any time after the mailing or delivery of notice of its intention to redeem Series 7 Preference Shares to deposit the Redemption price of the Series 7 Preference Shares so called for redemption, or of such of the Series 7 Preference Shares which are represented by certificates which have not at the date of such deposit been surrendered by the holders thereof in connection with such redemption, to a special account in any chartered bank or any trust company in Canada named in such notice or in a subsequent notice to the holders of the shares in respect of which the deposit is made, to be paid without interest to or to the order of the respective holders of Series 7 Preference Shares called for redemption upon presentation and surrender to such bank or trust company of the certificates representing such shares. Upon such deposit being made or upon the date specified for redemption in such notice, whichever is the later, the Series 7 Preference Shares in respect of which such deposit shall have been made shall be deemed to be redeemed and the rights of the holders thereof shall be limited to receiving, without interest, their proportionate part of the amount so deposited upon presentation and surrender of the certificate or certificates representing their Series 7 Preference Shares being redeemed. Any interest allowed on any such deposit shall belong to the Corporation. Redemption monies that are represented by a cheque which has not been

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4. Purchase for Cancellation

Subject to the provisions of Section 6 hereof and to the rights, privileges, restrictions, and conditions attaching to any other shares of the Corporation, the Corporation may at any time or from time to time purchase for cancellation all or any part of the outstanding Series 7 Preference Shares at any price by tender to all of the holders of record of Series 7 Preference Shares then outstanding or through the facilities of any stock exchange on which the Series 7 Preference Shares are listed, or in any other manner, provided that in the case of a purchase for cancellation in any other manner, such Series 7 Preference Shares shall be purchased for cancellation at the lowest price or prices at which, in the opinion of the directors of the Corporation, such shares are then obtainable but not exceeding a price per share equal to $25.00 per share together with all accrued and unpaid dividends thereon to but excluding the date of purchase, plus reasonable costs of purchase. If, in response to an invitation for tenders under the provisions of this Section 4, more Series 7 Preference Shares are tendered at a price or prices acceptable to the Corporation than the Corporation is prepared to purchase, then the Series 7 Preference Shares to be purchased by the Corporation shall be purchased as nearly as may be pro rata according to the number of shares tendered by each holder who submits a tender to the Corporation, provided that when shares are tendered at different prices, the pro rating shall be effected only with respect to the shares tendered at the price at which more shares were tendered than the Corporation is prepared to purchase after the Corporation has purchased all the shares tendered at lower prices. If part only of the Series 7 Preference Shares represented by a certificate shall be purchased, a new certificate for the balance of such shares shall be issued at the expense of the Corporation.

5. Exchange

5.1. Right to Exchange

Subject to the provisions of this Section 5, the holders of Series 7 Preference Shares shall have the right (“Exchange Right”), on each date on which a closing (a “Closing”) occurs of:

(a)   a distribution (a “Public Offering”) by the Corporation of its Class A Limited Voting Shares pursuant to a prospectus or other similar document (“prospectus”) filed with any appropriate securities regulatory agency or stock exchange;

(b)   a rights offering (a “Rights Offering”) by the Corporation; or

(c)   a private placement (a “Private Placement”) by the Corporation;

to exchange Series 7 Preference Shares held by them for up to the aggregate number of Class A Limited Voting Shares of the Corporation set forth in Subsection 5.2 at the Exchange Rate determined in accordance with Subsection 5.8.

For the purpose of this Section 5, Class A Limited Voting Shares include any shares of any other class of shares of the Corporation resulting from the reclassification or change of the Class A Limited Voting Shares.

5.2. Number of Class A Limited Voting Shares to which the Exchange Right Relates

The maximum number of Class A Limited Voting Shares for which a holder of Series 7 Preference Shares may exercise his Exchange Right on the day of a Closing shall be equal to that number of Class A Limited Voting Shares which, when added to the Class A Limited Voting Shares then held by such holder will result in such holder, after giving effect to the Closing and the exercise of the Exchange Right contemplated hereby, holding the same percentage of the outstanding Class A Limited Voting Shares as such holder held on the Business Day immediately preceding the day on which the Closing occurs. Nothing in this Subsection 5.2 requires a particular holder to exchange

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Series 7 Preference Shares for the maximum number of Class A Limited Voting Shares to which such holder is otherwise entitled.

5.3. Exercise of Right to Exchange

The Exchange Right may be exercise by any holder of Series 7 Preference Shares, by notice in writing given to the Corporation on the Business Day immediately prior to the day on which the Closing occurs accompanied by the certificate or certificates representing the Series 7 Preference Shares in respect of which the holder thereof desires to exercise such Exchange Right. Such notice shall be signed by such holder or by a duly authorized agent and shall specify the number of Series 7 Preference Shares that the holder desires to have exchanged. If less than all the Series 7 Preference Shares represented by any certificate or certificates accompanying any notice are to be exchanged, the holder shall be entitled to receive, at the expense of the Corporation, a new certificate representing the Series 7 Preference Shares comprised in the certificate or certificates surrendered as aforesaid which are not to be exchanged. A holder of Series 7 Preference Shares who has given a notice to the Corporation as herein provided shall be deemed to have become a holder of the number of Class A Limited Voting Shares in respect of which the Exchange Right has been exercised on the day on which the Closing occurs.

5.4. Entitlement to Dividends

The registered holder of any Series 7 Preference Share on the record date for any dividend payable on such share shall be entitled to such dividend notwithstanding that such share has been exchanged into Class A Limited Voting Shares after such record date and before the payment date of such dividend, and the registered holder of a Class A Limited Voting Share resulting from such exchange shall be entitled to rank equally per Class A Limited Voting Share with the registered holders of all other Class A Limited Voting Shares of record on any date on or after the date of such exchange.

Subject to the foregoing, upon exchange of any Series 7 Preference Shares there shall be no adjustment by the Corporation or by any holder of Series 7 Preference Shares on account of any dividends either on the Series 7 Preference Shares so exchanged or on the Class A Limited Voting Shares resulting from such exchange.

5.5. Shares Called for Redemption

In the case of any Series 7 Preference Shares which are called for redemption, the Exchange Right thereof shall, notwithstanding anything herein contained, terminate at the close of business on the Business Day immediately preceding the date fixed for redemption, provided, however, that if the Corporation fails to redeem such Series 7 Preference Shares in accordance with the notice of redemption the Exchange Right shall thereupon be restored and continue as if such Series 7 Preference Shares had not been called for redemption.

5.6. Certificates

On any exchange of Series 7 Preference Shares, the certificate or certificates representing the Class A Limited Voting Shares of the Corporation resulting therefrom shall be issued at the expense of the Corporation in the name of the holder of the Series 7 Preference Shares exchanged or in such nominee name or names as such holder may direct in writing (either in the notice referred to in Subsection 5.3 or otherwise) provided that such holder shall pay any applicable security transfer taxes.

5.7. No Fractional Shares

The Corporation shall not issue fractional shares in satisfaction of the Exchange Right herein provided for but in lieu thereof may, in respect of any fractional interest resulting from the exercise of Exchange Rights, pay a cash adjustment by cheque payable in lawful money of Canada at par at any branch in Canada of the Corporation’s bankers for the time being. The amount of any cash adjustment shall equal the current market value of such fractional interest computed on the basis of the last board lot sale price (or average of the bid and asked prices if there were no sales) per share for the Class A Limited Voting Shares that are subject of the Public Offering, Rights Offering or Private

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Placement on The Toronto Stock Exchange (or, if such Class A Limited Voting Shares are not then listed on The Toronto Stock Exchange, on such other stock exchange on which such Class A Limited Voting Shares are listed as selected by the directors of the Corporation) on the Business Day immediately preceding the exchange date. If such Class A Limited Voting Shares are not listed on any stock exchange, their current market value shall be determined by the directors. If a cash adjustment is to be paid pursuant to the provisions of this Subsection 5.7, the mailing from the Corporation’s registered office to the holder of Series 7 Preference Shares who has exercised his Exchange Right shall be deemed to be payment of the cash adjustment unless the cheque is not paid upon due presentation. Cash adjustments represented by cheques which have not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed for a period of 6 years from the date on which the same became payable shall be forfeited to the Corporation.

5.8. Exchange Rate

The number of Series 7 Preference Shares to be exchanged for each Class A Limited Voting Share of the Corporation shall be equal to the number of Series 7 Preference Shares to be exchanged divided by the Exchange Rate. The Exchange Rate is A divided by B, where A is the price per Class A Limited Voting Share which would have been payable by the holder exercising the Exchange Right to acquire Class A Limited Voting Shares of the Corporation in connection with the Public Offering, Rights Offering or Private Placement and B is $25.00.

5.9. Disputes

If any question at any time arises with respect to the determination of the number of Class A Limited Voting Shares issuable by the Corporation pursuant to Subsection 5.8, the right of the holder of Series 7 Preference Shares to exercise the Exchange Right or with respect to the amount of any cash payment made in lieu of issuing a fractional share, such question shall be conclusively determined by the auditors from time to time of the Corporation and shall be binding upon the Corporation and all shareholders, transfer agents and registrars of Series 7 Preference Shares and of Class A Limited Voting Shares. In making any such determination, the auditors will be entitled to rely on an opinion of legal counsel or other expert retained by them.

6. Restrictions on Dividends, Retirement and Issue of Shares

So long as any of the Series 7 Preference Shares are outstanding, the Corporation shall not, without the approval of the holders of the Series 7 Preference Shares given in accordance with Section 12 hereof:

(a)   declare, pay or set apart for payment any dividends on shares of the Corporation ranking as to dividends junior to the Series 7 Preference Shares (other than stock dividends in shares of the Corporation ranking as to capital and dividends junior to the Series 7 Preference Shares);

(b)   except out of the net cash proceeds of a substantially concurrent issue of shares ranking as to capital and dividends junior to the Series 7 Preference Shares, redeem or call for redemption, purchase or otherwise reduce or make any return of capital in respect of shares of the Corporation ranking as to capital junior to the Series 7 Preference Shares;

(c)   except pursuant to any purchase obligation, sinking fund, retraction privilege or mandatory redemption provision attaching thereto, redeem or call for redemption, purchase of otherwise reduce or make any return of capital in respect of any shares of the Corporation ranking as to capital on a parity with the Series 7 Preference Shares; or

(d)   issue any additional Class A Preference Shares or any shares ranking as to dividends or capital on a parity with the Series 7 Preference Shares;

unless at the date of such declaration, payment, setting apart for payment, redemption, call for redemption, purchase or reduction, return of capital or issuance, as the case may be, all accrued and unpaid cumulative dividends up to and including the dividend payment for the last completed period for which such dividends shall be payable, shall have been

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declared and paid or set apart for payment on the Series 7 Preference Shares and any accrued and unpaid cumulative dividends which have become payable and any declared and unpaid non-cumulative dividends shall have been paid or set apart for payment on all other shares ranking as to dividends prior to or on a parity with the Series 7 Preference Shares.

7. Voting Rights

The holders of the Series 7 Preference Shares shall not, except as entitled under applicable law, be entitled to receive notice of or to attend or to vote at any meetings of shareholders of the Corporation unless and until the Corporation from time to time shall fail to pay in the aggregate eight (8) quarterly dividends on the Series 7 Preference Shares on the dates on which the same should be paid according to the terms hereof whether or not consecutive and whether or not such dividends have been declared and whether or not there are any monies of the Corporation properly applicable to the payment of dividends. Thereafter, but only so long as any dividends on the Series 7 Preference Shares remain in arrears, the holders of the Series 7 Preference Shares shall be entitled to receive notice of and to attend all annual and other general meetings of shareholders of the Corporation, other than any meetings of the holders of any other class or series of shares of the Corporation held separately as a class or series, but shall not be entitled to vote thereat except in the election of directors in which case the holders of the Series 7 Preference Shares shall be entitled to one vote in respect of each Series 7 Preference Share held and shall vote together with holders of Class A Limited Voting Shares in the election of one-half of the board of directors.

8. Liquidation, Dissolution or Winding Up

In the event of the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or in the event of any other distribution of assets of the Corporation among its shareholders for the purpose of winding up its affairs, the holders of the Series 7 Preference Shares shall be entitled to receive from the assets of the Corporation an amount per share equal to the Redemption Price calculated to but excluding the date of payment, before any amount shall be paid to, or assets of the Corporation distributed amongst, the holders of any other shares of the Corporation ranking as to capital junior to the Series 7 Preference Shares. After payment to the holders of the Series 7 Preference Shares of the amounts so payable to them, they shall not be entitled to share in any further distribution of the assets of the Corporation.

9. Interpretation

In the event that any date on which any dividend on the Series 7 Preference Shares is payable by the Corporation, or on or by which any other action is required to be taken by the Corporation hereunder, is not a Business Day, then such dividend shall be payable, or such other action shall be required to be taken, on or by the next succeeding day that is a Business Day.

For the purposes of these share provisions:

(a)   “Business Day” means a day other than a Saturday, a Sunday or any other day that is treated as a statutory holiday in the jurisdiction in which the Corporation’s registered office is located;

(b)   “ranking as to capital” means ranking with respect to the distribution of assets in the event of a liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or in the event of any other distribution of assets of the Corporation among its shareholders for the purposes of winding up its affairs; and

(c)   “quarter” means a period commencing on a Dividend Payment Date and ending on the date preceding the next succeeding Dividend Payment Date.

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10. Mail Service Interruption

If the directors of the Corporation determine that mail service is or is threatened to be interrupted at the time when the Corporation is required or elects to give any notice hereunder, or is required to send any cheque or any share certificate to the holder of any Series 7 Preference Share, whether in connection with the redemption of such share or otherwise, the Corporation may, notwithstanding the provisions hereof:

(a) give such notice by publication thereof once in a daily English language newspaper of general circulation published in each of Vancouver, Calgary, Winnipeg, Toronto, Montreal and Halifax and once in a daily French language newspaper published in Montreal and such notice shall be deemed to have been validly given on the day next succeeding its publication in all of such cities; and

(b) fulfil the requirement to send such cheque or such share certificate by arranging for the delivery thereof to such holder by the transfer agent for the Series 7 Preference Shares at its principal offices in the cities of Vancouver, Calgary, Winnipeg, Toronto, Montreal and Halifax, and such cheque and/or certificate shall be deemed to have been sent on the date on which notice of such arrangement shall have been given as provided in (a) above, provided that as soon as the directors of the Corporation determine that mail service is no longer interrupted or threatened to be interrupted such cheque or share certificate, if not theretofore delivered to such holder, shall be sent by mail as herein provided. In the event that the Corporation is required to mail such share certificate, such mailing shall be made by prepaid mail to the registered address of each person who at the date of mailing is a registered holder and who is entitled to receive such certificate.

11. Amendment

The rights, privileges, restrictions and conditions attached to the Series 7 Preference Shares may be added to, changed or removed by Articles of Amendment but only with the prior approval of the holders of the Series 7 Preference Shares given as specified in Section 12 and as may then be required by law.

12. Approval of Holders of Series 7 Preference Shares

12.1. Approval

Any approval of the holders of the Series 7 Preference Shares with respect to any matters requiring the consent of the holders of the Series 7 Preference Shares may be given in such manner as may then be required by law, subject to a minimum requirement that such approval be given by resolution signed by all the holders of outstanding Series 7 Preference Shares or passed by the affirmative vote of at least 66 2/3% of the votes cast by the holders of Series 7 Preference Shares who voted in respect of that resolution at a meeting of the holders of the Series 7 Preference Shares duly called for that purpose and at which a quorum as required by the by-laws of the Corporation is present, subject to a minimum requirement that the quorum at the meeting (other than an adjourned meeting) be at least two persons entitled to vote thereat.

12.2. Formalities, etc.

The proxy rules applicable to, the formalities to be observed in respect of the giving of notice of, and the formalities to be observed in respect of the conduct of, any meeting or any adjourned meeting of holders of Series 7 Preference Shares shall be those from time to time prescribed by the by-laws of the Corporation with respect to meetings of shareholders, or if not so prescribed, as required by law. On every poll taken at every meeting of holders of Series 7 Preference Shares, each holder of Series 7 Preference Shares entitled to vote thereat shall have one vote in respect of each $25.00 of the issue price of each Series 7 Preference Share held.

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CLASS A PREFERENCE SHARES, SERIES 8 ATTRIBUTES

Number and Designation of
and Rights, Privileges, Restrictions and
Conditions Attaching to the Class A Preference Shares, Series 8

The eighth series of Class A Preference Shares of the Corporation shall consist of 8.000,000 Class A Preference Shares designated as Cumulative Redeemable Class A Preference Shares Series 8 (“Series 8 Preference Shares”) and, in addition to the rights, privileges, restrictions and conditions attaching to the Class A Preference Shares as a class, shall have attached thereto the following rights, privileges, restrictions and conditions:

1. Consideration for Issue

The consideration for the issue of each Series 8 Preference Share shall be $25.00 or its equivalent in property for past services.

2. Dividends

2.1. Definitions

For the purposes hereof, the following capitalized terms shall have the following meanings, unless the context otherwise requires:

(a) “Adjustment Factor” for any Month means the percentage per annum, positive or negative, based on the Calculated Trading Price of the Series 8 Preference Shares for the preceding Month, determined in accordance with the following table:


		The Adjustment Factor as a Percentage of
If Calculated Trading Price Is		Prime Shall Be:
$25.50 or more		-4.00%
$25.375 and less than $25.50		-3.00%
$25.25 and less than $25.375		-2.00%
$25.125 and less than $25.25		-1.00%
Greater than $24.875 and less than $25.125		nil
Greater than $24.75 to $24.875		1.00%
Greater than $24.625 to $24.75		2.00%
Greater than $24.50 to $24.625		3.00%
$24.50 or less		4.00%

The maximum Adjustment Factor for any Month will be ±4.00%.

If in any Month there is no trade on the Exchange of Series 8 Preference Shares of a board lot or more, the Adjustment Factor for the following Month shall be nil;

(b)   “Annual Dividend Rate” means the Annual Fixed Dividend Rate or the Annual Floating Dividend Rate, whichever is provided by this Section 2 to be applicable at the relevant time;

(c)   “Annual Fixed Dividend Rate” means 6.25% per annum;

(d)   “Annual Floating Dividend Rate” means for any Month the rate of interest expressed as a percentage per annum (rounded to the nearest one-thousand (1/1000) of one percent (1%)) which is equal to Prime multiplied by the Designated Percentage for such Month;

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(e)   “Banks” means any two of Royal Bank of Canada, Bank of Montreal, The Bank of Nova Scotia, The Toronto-Dominion Bank and Canadian Imperial Bank of Commerce and any successor of any of them as may be designated from time to time by the Board of Directors by notice given to the transfer agent for the Series 8 Preference Shares, such notice to take effect on, and to be given at least two business days prior to, the commencement of a particular Dividend Period and, until such notice is first given, means Canadian Imperial Bank of Commerce and The Bank of Nova Scotia.

(f)   “Board of Directors” means the board of directors of the Corporation;

(g)   “Calculated Trading Price” for any Month means:

(i)   the aggregate of the Daily Adjusted Trading Value for all Trading Days in such Month

    divided by

(ii)   the aggregate of the Daily Trading Volume for all Trading Days in such Month;

(h) “Daily Accrued Dividend Deduction” for any Trading Day means:

(i)   the product obtained by multiplying the dividend accrued on a Series 8 Preference Share in respect of the Month in which the Trading Day falls by the number of days elapsed from but excluding the day prior to the Ex-Dividend Date immediately preceding such Trading Day to and including such Trading Day (or if such Trading Day is an Ex-Dividend Date, by one day)

    divided by

(ii)   the number of days from and including such Ex-Dividend Date to but excluding the following Ex-Dividend Date;

(i) “Daily Adjusting Trading Value” for any Trading Day means:

(i)   the aggregate dollar value of all transactions of Series 8 Preference Shares on the Exchange (made on the basis of the normal settlement period in effect on the Exchange) occurring during such Trading Day

    less

(ii)   the Daily Trading Volume for such Trading Day multiplied by the Daily Accrued Dividend Deduction for such Trading Day;

(j)   “Daily Trading Volume” for any Trading Day means the aggregate number of Series 8 Preference Shares traded in all transactions (made on the basis of the normal settlement period in effect on the Exchange) occurring during such Trading Day on the Exchange;

(k)   “Deemed Record Date” means the last Trading Day of a Month with respect to which no dividend is declared by the Board of Directors;

(l)   “Designated Percentage” for the Month of November, 2001 means eighty-five percent (85%) and for each Month thereafter means the Adjustment Factor for such Month plus the Designated Percentage for the preceding Month, provided that the Annual Floating Dividend Rate for any Month shall in no event be less than 50% of Prime for such Month or more than 100% of Prime for such Month;

(m)   “Dividend Payment Date” means:

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(i) during the Fixed Rate Period, the first day of each of February, May, August and November in each year; and

(ii) during the Floating Rate Period, the 12th day of each Month commencing with the Month of December, 2001;

and the first Dividend Payment Date shall be February 1,1997;

(n) “Dividend Period” means

(i) during the Fixed Rate Period, the period from and including a Dividend Payment Date to but not including the next succeeding Dividend Payment Date; and

(ii) during the Floating Rate Period, a Month;

(o) “Ex-Dividend Date” means

(i) the Trading Day which, under the rules or normal practices of the Exchange, is designated or recognized as the Ex-Dividend Date relative to any dividend record date for the Series 8 Preference Shares; or

(ii) if the Board of Directors fails to declare a dividend in respect of a Month, the Trading Day which, under the rules or normal practices of the Exchange, would be recognized as the Ex-Dividend to any Deemed Record Date for the Series 8 Preference Shares;

(p)   “Exchange” means The Toronto Stock Exchange or the Montreal Exchange or such other exchange or trading market in Canada as may be determined from time to time by the Corporation as being the principal trading market for the Series 8 Preference Shares;

(q)   “Fixed Rate Period” means the period commencing with the date of issue of the Series 8 Preference Shares and ending on and including October 31, 2001;

(r)   “Floating Rate Period” means the period commencing immediately after the end of the Fixed Rate Period and continuing for so long as any of the Series 8 Preference Shares shall be outstanding;

(s)   “Month” means a calendar month;

(t)   “Prime” for a Month means the average (rounded to the nearest one-thousandth (1/1000) of one percent (1%)) of the Prime Rate in effect on each day of such Month;

(u)   “Prime Rate” for any day means the average (rounded to the nearest one-thousandth (1/1000) of one percent (1%)) of the annual rates of interest announced from time to time by the Banks as the reference rates then in effect for such day for determining interest rates on Canadian dollar commercial loans made to prime commercial borrowers in Canada. If one of the Banks does not have such an interest rate in effect on a day, the Prime Rate for such day shall be such interest rate in effect for that day of the other Bank; if both Banks do not have such interest rate in effect on a day, the Prime Rate for that day shall be equal to one and a half percent (1.5%) per annum plus the average yield expressed as a percentage per annum on 91-day Government of Canada Treasury Bills, as reported by the Bank of Canada, for the weekly tender for the week immediately preceding that day; and if both of such Banks do not have such an interest rate in effect on a day and the Bank of Canada does not report such average yield per annum, the Prime Rate for that day shall be equal to the Prime Rate for the next preceding day. The Prime Rate and Prime shall be determined from time to time by an officer of the Corporation from quotations supplied by the Banks or otherwise publicly available. Such

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determination shall, in the absence of manifest error, be final and binding upon the Corporation and upon all holders of Series 8 Preference Shares;

(v) “Trading Day” means, if the Exchange is a stock exchange in Canada, a day on which the Exchange is open for trading, or, in any other case, a business day.

2.2. General

The holders of the Series 8 Preference Shares shall be entitled to receive cumulative preferred cash dividends, as and when declared by the Board of Directors, out of moneys of the Corporation properly applicable to the payment of dividends, at the rates and times herein provided. Dividends on the Series 8 Preference Shares shall accrue on a daily basis from and including the date of issue hereof, and shall be payable quarterly during the Fixed Rate Period and monthly during the Floating Rate Period and shall be calculated on a 365 or 366 day basis, being the actual number of days in the year in which the amount is to be ascertained. Payment of the dividend on the Series 8 Preference Shares payable on any Dividend Payment Date (less any tax required to be deducted) shall be made by cheque at par in lawful money of Canada payable at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems available.

Dividends declared on the Series 8 Preference Shares shall (except in case of redemption in which case payment of dividends shall be made on surrender of the certificate representing the Series 8 Preference Shares to be redeemed) be paid by posting in a postage paid envelope addressed to each holder of the Series 8 Preference Shares at the last address of such holder as it appears on the securities register of the Corporation, or, in the case of joint holders, to the address of that one whose name appears first in the securities register of the Corporation as one of such joint holders, or, in the event of the address of any holder not so appearing, then to the address of such holder last known to the Corporation, a cheque for such dividends (less any tax required to be deducted) payable to the order of such holder, or in the case of joint holders, to the order of all such holders failing written instructions from them to the contrary. Notwithstanding the foregoing, any dividend cheque may be delivered by the Corporation to a holder of Series 8 Preference Shares at his address as aforesaid. The posting or delivery of such cheque on or before the date on which such dividend is to be paid to a holder of Series 8 Preference Shares shall be deemed to be payment and shall satisfy and discharge all liabilities for the payment of such dividend to the extent of the sum represented thereby (plus the amount of any tax required to be deducted as aforesaid) unless such cheque is not paid on due presentation. Subject to applicable law, dividends which are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed for a period of six years from the date on which they were declared to be payable shall be forfeited to the Corporation.

If on any date on which dividends are to be paid, the dividends accrued to such date are not paid in full on all of the Series 8 Preference Shares then outstanding, such dividends, or the unpaid part thereof, shall be paid on a subsequent date or dates determined by the Board of Directors on which the Corporation shall have sufficient monies properly applicable to the payment of such dividends.

The holders of Series 8 Preference Shares shall not be entitled to any dividends other than or in excess of the cumulative preferential cash dividends herein provided for.

2.3. Fixed Rate Period

During the Fixed Rate Period, the dividends in respect of the Series 8 Preference Shares shall be payable quarterly at the Annual Fixed Dividend Rate. Accordingly, on each Dividend Payment Date during the Fixed Rate Period, other than February 1, 1997, but including November 1, 2001, the dividend payable per Series 8 Preference Share shall be calculated by multiplying the annual amount of $1.5625 by the number of days in the quarter and dividing by 365 or 366, being the actual number of days in the year in which the amount is to be ascertained. The amount of the first quarterly dividend payable on each Series 8 Preference Share on February 1, 1997, shall be $0.3082 per share.

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2.4. Floating Rate Period

During the Floating Rate Period, the dividends in respect of the Series 8 Preference Shares shall be payable monthly at the Annual Floating Dividend Rate as calculated from time to time. Accordingly, on each Dividend Payment Date during the Floating Rate Period, the dividend payable on the Series 8 Preference Shares shall be the amount (rounded to the nearest one-thousandth (1/1000) of one cent) obtained by multiplying $25.00 by the Annual Floating Dividend Rate applicable to the Month preceding such Dividend Payment Date and by dividing the product by twelve. The record date for the purpose of determining holders of Series 8 Preference Shares entitled to receive dividends on each Dividend Payment Date during the Floating Rate Period shall be the last Trading Day of the next preceding Month. In the event of the redemption or purchase of the Series 8 Preference Shares during the Floating Rate Period as contemplated by Section 3 hereof, the amount of the dividend which has accrued during the Month in which such redemption, purchase or distribution occurs shall be the amount (rounded to the nearest one-thousandth (1/1000) of one cent) calculated by multiplying:

(a) the amount obtained by multiplying $25.00 by one-twelve (1/12) of the Annual Floating Dividend Rate applicable to the preceding Month

by

(b) a fraction of which the numerator is the number of days elapsed in the Month in which such redemption, purchase or distribution occurs up to but not including the date of such event and the denominator of which the number of days in that Month.

2.5. Calculation of Designated Percentage

The Corporation shall as promptly as practicable calculate the Designated Percentage for each Month and give notice thereof to all stock exchanges in Canada on which the Series 8 Preference Shares are listed for trading or if the Series 8 Preference Shares are not listed on a stock exchange in Canada to the Investment Dealers Association of Canada.

3. Rights on Liquidation

In the event of the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or any other distribution of assets of the Corporation for the purpose of winding up its affairs, the holders of the Series 8 Preference Shares shall be entitled to receive $25.00 per Series 8 Preference Share together with all dividends accrued and unpaid up to but excluding the date of payment or distribution, before any amounts shall be paid or any assets of the Corporation distributed to the holders of any shares ranking junior to the Series 8 Preference Shares. Upon payment of such amounts, the holders of the Series 8 Preference Shares shall not be entitled to share in any further distribution of the assets of the Corporation.

4. Redemption at the Option of the Corporation

The Corporation may not redeem any of the Series 8 Preference Shares prior to November 1, 2001. Subject to applicable law and Section 6 hereof, upon giving notice as hereinafter provided, the Corporation may: (i) on November 1, 2001 redeem all, but not less than all, of the outstanding Series 8 Preference Shares, on payment of $25.00 for each such share to be redeemed; and (ii) subsequent to November 1, 2001 redeem at any time all, but not less than all, the outstanding Series 8 Preference Shares, on payment of $25.50 for each such share to be redeemed, in each case, together with accrued and unpaid dividends up to but excluding the date fixed for redemption, the whole constituting the redemption price.

The Corporation shall give notice in writing not less than 45 days not more than 60 days prior to the date on which the redemption is to take place to each person who at the date of giving such notice is the holder of Series 8 Preference Shares to be redeemed of the intention of the Corporation to redeem such shares. Any such notice shall be validly and effectively given on the date on which it is sent and such notice shall be given and sent by posting the same

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in a postage paid envelope addressed to each holder of Series 8 Preference Shares to be redeemed at the last address of such holder as it appears on the securities register of the Corporation, or in the case of joint holders, to the address of that one whose name appears first in the securities register of the Corporation as one of such joint holders or, in the event of the address of any holder not so appearing, then to the address of such holder as known to the Corporation, provided that the accidental failure or omission to give any such notices as aforesaid to one or more of such holders shall not affect the validity of the redemption as to the other holders of the Series 8. Preference Shares to be redeemed. Such notice shall set out the number of such Series 8 Preference Shares held by the person to whom it is addressed which are to be redeemed and the redemption price and shall also set out the date on which the redemption is to take place, and on and after the date so specified for redemption the Corporation shall pay or cause to be paid to the holders of such Series 8 Preference Shares to be redeemed the redemption price on presentation and surrender at any place or places within Canada designated by such notice, of the certificate or certificates for such Series 8 Preference Shares so called for redemption; such payment shall be made by cheque payable at par at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable; from and after the date specified in any such notice, the Series 8 Preference Shares called for redemption shall cease to be entitled to dividends and the holders thereof shall not be entitled to exercise any of the rights of shareholders in respect thereof unless payment of the redemption price shall not be duly made by the Corporation; at any time after notice of redemption is given as aforesaid, the Corporation shall have the right to deposit the redemption price of any or all Series 8 Preference Shares called for redemption with a chartered bank or banks or with any trust company or trust companies in Canada named in the notice of redemption to the credit of a special account or accounts in trust for the respective holders of such shares, to be paid to them respectively upon surrender to such bank or banks or trust company or trust companies of the certificate or certificates representing the same, and upon such deposit or deposits being made, such shares shall be redeemed on the redemption date specified in the notice of redemption; after the Corporation has made a deposit as aforesaid with respect to any shares, the holders thereof shall not, from and after the redemption date, be entitled to exercise any of the rights of shareholders in respect thereof and the rights of the holders thereof shall be limited to receiving the proportion of the amounts so deposited applicable to such shares, without interest, any interest allowed on such deposit shall belong to the Corporation. Subject to applicable law, redemption monies that are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed (including monies held on deposit as provided for above) for a period of six years from the date specified for redemption shall be forfeited to the Corporation.

5. Conversion of Series 8 Preference Shares

5.1. Conversion at the Option of the Holder

Holders of Series 8 Preference Shares shall have the right, at their option, on November 1, 2001 and on November 1 in every fifth year thereafter (a “Conversion Date”), to convert, subject to the terms and conditions hereof, all or any Series 8 Preference Shares registered in their name into Series 9 Preference Shares of the Corporation on the basis of one (1) Series 9 Preference Share for each Series 8 Preference Share. The Corporation shall give notice in writing to the then holders of the Series 8 Preference Shares of the Selected Percentage (as defined in Section 2.1 of the articles of the Corporation relating to the Series 9 Preference Shares) determined by the Board of Directors to be applicable for the next succeeding Fixed Dividend Rate Period (as defined in Section 2.1 of the articles of the Corporation relating to the Series 9 Preference Shares) and of the conversion right provided for herein; such notice shall be given by posting the same in a postage paid envelope addressed to each holder of the Series 8 Preference Shares at the last address of such holder as it appears on the securities register of the Corporation, or in the case of joint holders, to the address of that one whose name appears first in the securities register of the Corporation as one of such joint holders or, in the event of the address of any holder not so appearing, then to the address of such holder last known to the Corporation. Such notice shall set out the Conversion Date and shall be given not less than 45 days nor more than 60 days prior to the applicable Conversion Date.

If the Corporation gives notice as provided in Section 4 to the holders of the Series 8 Preference Shares of the redemption of all the Series 8 Preference Shares, the Corporation shall not be required to give notice as provided in this Section 5.1 to the holders of the Series 8 Preference Shares of a Selected Percentage (as defined in Section 2.1 of the articles of the Corporation relating to the Series 9 Preference Shares) for the Series 9 Preference

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Shares, of the conversion right or of the Conversion Date and the right of any holder of Series 8 Preference Shares to convert such Series 8 Preference Shares as herein provided shall cease and terminate in that event.

Holders of Series 8 Preference Shares shall not be entitled to convert their shares into Series 9 Preference Shares if, following the close of business on the 14th day preceding a Conversion Date, the Corporation determines that there would remain outstanding on the Conversation Date less than 500,000 Series 9 Preference Shares, after taking into account all Series 8 Preference Shares tendered for conversion into Series 9 Preference Shares and all Series 9 Preference Shares tendered for conversion into Series 8 Preference Shares. The Corporation shall give notice in writing thereof, in accordance with the provisions of the first paragraph of this Section l(e)(i), to all affected holders of Series 8 Preference Shares at least seven days prior to the applicable Conversion Date and will issue and deliver, or cause to be delivered, prior to such Conversion Date, at the expense of the Corporation, to such holders of Series 8 Preference Shares, who have surrendered for conversion any certificate or certificates representing Series 8 Preference Shares, new certificates representing the Series 8 Preference Shares represented by any certificate or certificates surrendered as aforesaid.

5.2. Automatic Conversion

Subject to applicable law, if following the close of business on the 14th day preceding a Conversion Date the Corporation determines that there would remain outstanding on the Conversion Date less than 500,000 Series 8 Preference Shares after taking “into account all Series 8 Preference Shares tendered for conversion into Series 9 Preference Shares and all Series 9 Preference Shares tendered for conversion into Series 8 Preference Shares, then, ali, but not part, of the remaining outstanding Series 8 Preference Shares shall automatically be converted into Series 9 Preference Shares on the basis of one (1) Series 9 Preference Share for each Series 8 Preference Share on the applicable Conversion Date and the Corporation shall give notice in writing thereof, in accordance with the provisions of Section 5.1, to the holders of such remaining Series 8 Preference Shares at least seven days prior to the Conversion Date.

5.3. Manner of Exercise of Conversion Privilege

The conversion of Series 8 Preference Shares may be effected by surrender of the certificate or certificates representing the same not earlier than 45 days prior to a Conversion Date but not later than the close of business on the 14th day preceding a Conversion Date during usual business hours at any office of any transfer agent of the Corporation at which the Series 8 Preference Shares are transferable accompanied by: (i) payment or evidence of payment of the tax (if any) payable as provided in this Section 5.3; and (ii) a written instrument of surrender in form satisfactory to the Corporation duly executed by the holder, or his attorney duly authorized in writing, in which instrument such holder may also elect to convert part only of the Series 8 Preference Shares represented by such certificate or certificates not theretofore called for redemption in which event the Corporation shall issue and deliver or cause to be delivered to such holder, at the expense of the Corporation, a new certificate representing the Series 8 Preference Shares represented by such certificate or certificates which have not been converted.

In the event the Corporation is required to convert all remaining outstanding Series 8 Preference Shares into Series 9 Preference Shares on the applicable Conversion Date as provided for in Section 5.2, the Series 8 Preference Shares, in respect of which the holders have not previously elected to convert, shall be converted on the Conversion Date into Series 9 Preference Shares and the holders thereof shall be deemed to be holders of Series 9 Preference Shares at the close of business on the Conversion Date and shall be entitled, upon surrender during usual business hours at any office of any transfer agent of the Corporation at which the Series 8 Preference shares were transferable of the certificate or certificates representing Series 8 Preference Shares not previously surrendered for conversion, to receive a certificate or certificates representing the same number of Series 9 Preference Shares in the manner and subject to the terms and provisions as provided in this Section 5.3.

As promptly as practicable after the applicable Conversion Date, the Corporation shall issue and deliver, or cause to be delivered to or upon the written order of the holder of the Series 8 Preference Shares so surrendered, a certificate or certificates, issued in the name of, or in such name or names as may be directed by, such holder representing the number of fully-paid and non-assessable Series 9 Preference Shares and the number of remaining Series 8 Preference Shares, if any, to which such holder is entitled. Such conversion shall be deemed to have been made

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at the close of business on the Conversion Date, so that the rights of the holder of such Series 8 Preference Shares as the holder thereof shall cease at such time and the person or persons entitled to receive Series 9 Preference Shares upon such conversion shall be treated for all purposes as having become the holder or holders of record of such Series 9 Preference Shares at such time.

The holder of any Series 8 Preference Share on the record date for any dividend declared payable on such share shall be entitled to such dividend notwithstanding that such share is converted into Series 9 Preference Shares after such record date and on or before the date of the payment of such dividend.

The issuance of certificates for the Series 9 Preference Shares upon the conversion of Series 8 Preference Shares shall be made without charge to the converting holders of Series 8 Preference Shares for any fee or tax in respect of the issuance of such certificates or the Series 9 Preference Shares represented thereby; provided, however, that the Corporation shall not be required to pay any tax which may be imposed upon the person or persons to whom such Series 9 Preference Shares are issued in respect of the issuance of such Series 9 Preference Shares or the certificate therefor or which may be payable in respect of any transfer involved in the issuance and delivery of any such certificate in a name or names other than that of the holder of the Series 8 Preference Shares converted, and the Corporation shall not be required to issue or deliver such certificate unless the person or persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid.

5.4. Status of Converted Series 8 Preference Shares

All Series 8 Preference Shares converted into Series 9 Preference Shares on a Conversion Date shall not be cancelled but shall be restored to the status of authorized but unissued shares of the Corporation as at the close of business on the Conversion Date.

6. Restrictions on Dividends and Retirement of Shares

Without the approval of the holders of the outstanding Series 8 Preference Shares:

(a)   the Corporation shall not declare, pay or set apart for payment any dividends (other than stock dividends payable in shares of the Corporation ranking junior to the Series 8 Preference Shares) on any shares of the Corporation ranking junior to the Series 8 Preference Shares;

(b)   the Corporation shall not redeem, purchase or otherwise retire or make any capital distribution on or in respect of any shares of the Corporation ranking junior to the Series 8 Preference Shares (except out of the net cash proceeds of a substantially concurrent issue of shares of the Corporation ranking junior to the Series 8 Preference Shares);

(c)   the Corporation shall not purchase or otherwise retire less than all of the Series 8 Preference Shares then outstanding;

(d)   the Corporation shall not redeem, purchase or otherwise retire (except in connection with the exercise of any retraction privilege or mandatory redemption or purchase obligation attaching thereto) any shares of any class or series ranking on a parity with the Series 8 Preference Shares provided that, for greater certainty, the covenant in this Section (d) shall not limit or affect any such action in respect of any class of shares ranking in priority to the Series 8 Preference Shares; or

(e)   the Corporation shall not issue any additional Class A Preference Shares or any shares ranking on a parity with the Series 8 Preference Shares;

unless, in each such case, all dividends on outstanding Series 8 Preference Shares accrued up to and including the dividend payable for the last completed period for which dividends were payable shall have been declared and paid. Any approval of the holders of the Series 8 Preference Shares required to be given pursuant to this Section 6 may be

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given in accordance with Section 10. Notwithstanding the provisions of Section 10, any approval required to be given pursuant to this Section 6 may be given by the affirmative vote of the holders of the majority of the Series 8 Preference Shares present or represented at a meeting or adjourned meeting of the holders of Series 8 Preference Shares duly called for that purpose and at which a quorum is present.

7. Purchase for Cancellation

The Corporation may at any time purchase for cancellation the whole or any part of the Series 8 Preference Shares outstanding from time to time, in the open market through or from an investment dealer or any firm holding membership on a recognized stock exchange, or by private agreement or otherwise, at the lowest price or prices at which in the opinion of the Board of Directors such shares are obtainable plus in each case all accrued and unpaid dividends and costs of purchase.

8. Voting Rights

The holders of Series 8 Preference Shares will not be entitled (except as otherwise permitted by law) to receive notice of, attend at, or vote at any meeting of shareholders of the Corporation unless the Corporation fails to pay (i) during the Fixed Rate Period, eight dividends on the Series 8 Preference Shares or (ii) during the Floating Rate Period, 24 dividends on the Series 8 Preference Shares, in each case whether or not consecutive, the holders of the Series 8 Preference Shares shall have the right to receive notice of, and to attend, each meeting of shareholders of the Corporation which takes place more than 60 days after the date on which the failure first occurs (other than a separate meeting of the holders of another series or class of shares) and such holders shall also have the right, at any such meeting, to one vote for each Series 8 Preference Share held (provided that when entitled to vote in the election of directors, holders of Series 8 Preference Shares shall vote together with holders of Class A Limited Voting Shares in the election of one-half of the board of directors), until all such arrears of dividends on the Series 8 Preference Shares shall have been paid whereupon such rights shall cease unless and until the same default shall again arise under the provisions of this Section 8.

9. Modifications

The provisions attaching to the Series 8 Preference Shares as a series may be repealed, altered, modified or amended from time to time with such approval as may then be required by the Business Corporations Act (Ontario), any such approval to be given in accordance with Section 10.

None of the series provisions of the articles of the Corporation relating to the Series 8 Preference Shares shall be amended or otherwise changed unless, contemporaneously therewith, the series provisions, if any, relating to the Series 9 Preference Shares are, to the extent deemed required by the Corporation, amended or otherwise changed in the same proportion and in the same manner.

10. Approval of Holders of Series 8 Preference Shares

Except as otherwise provided herein, any approval of the holders of the outstanding Series 8 Preference Shares with respect to any matters requiring the consent of the holders of the Series 8 Preference Shares with respect to any matters requiring the consent of the holders of the Series 8 Preference Shares may be given in such manner as may then be required by law, subject to a minimum requirement that such approval be given by resolution signed by all the holders of outstanding series 8 Preference Shares or passed by the affirmative vote of at least 66-2/3% of the votes cast by the holders of Series 8 Preference Shares who voted in respect of that resolution at a meeting of the holders of the Series 8 Preference Shares duly called for that purpose and at which a quorum as required by the by-laws of the Corporation is present, subject to a minimum requirement that the quorum at the meeting (other than an adjourned meeting), be at least two persons entitled to vote thereat.

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of shareholders or, if not so prescribed, as required by law. On every poll taken at every meeting of holders of Series 8 Preference Shares, each holder of Series 8 Preference Shares entitled to vote thereat shall have one vote in respect of each $25.00 of the issue price of each Series 8 Preference Share held:

11. Tax Election

The Corporation shall elect, in the manner and within the time provided under the Income Tax Act (Canada), under Subsection 191.2(1) of the said Act, or any successor or replacement provision of similar effect, and take all other necessary action under such Act, to pay tax at a rate such that no holder of the Series 8 Preference Shares will be required to pay tax on dividends received on the Series 8 Preference Shares under Section 187.2 of Part IV.I of such Act or any successor or replacement provision of similar effect.

12. Mail Service Interruption

If the Board of Directors determines that mail service is, or is threatened to be, interrupted at the time when the Corporation is required or elects to give any notice hereunder by mail, or is required to send any cheque or any share certificate to the holder of any Series 8 Preference Share, whether in connection with the redemption or conversion of such share or otherwise, the Corporation may, notwithstanding the provisions hereof:

(a) give such notice by publication thereof once in a daily English language newspaper of general circulation published in each of Vancouver, Calgary, Winnipeg, Toronto, Montreal and Halifax, and once in a daily French language newspaper published in Montreal and such notice shall be deemed to have been validly given on the day next succeeding its publication in all of such cities; and

(b) fulfil the requirement to send such cheque or such share certificate by arranging for the delivery thereof to such holder by the transfer agent for the Series 8 Preference Shares at its principal offices in the cities of Vancouver, Toronto and Montreal, and such cheque and/or share certificate shall be deemed to have been sent on the date on which notice of such arrangement shall have been given as provided in (a) above, provided that as soon as the Board of Directors determines that mail service is no longer interrupted or threatened to be interrupted, such cheque or share certificate, if not theretofore delivered to such holder, shall be sent by mail as herein provided. In the event that the Corporation is required to mail such cheque or share certificate such mailing shall be made by prepaid mail to the registered address of each person who at the date of mailing is a registered holder and who is entitled to receive such cheque or share certificate.

13. Notice of Annual Dividend Rate Applicable to the Series 9 Preference Shares

Within three business days of the determination of the Annual Dividend Rate (as defined in Section 2.1 of the articles of the Corporation relating to the Series 9 Preference Shares) the Corporation shall give notice thereof to the holders of the Series 8 Preference Shares by publication once in the national edition of the Globe and Mail in the English language and once in the City of Montreal, Québec in both the French and English languages Acute in a daily newspaper of general circulation in Montréal; provided that if any such newspaper is not being generally circulated at that time, such notice shall be published in another equivalent publication.

14. Interpretation

In the provisions herein contained attaching to the Series 8 Preference Shares:

(a) “accrued and unpaid dividends” means: (i) during the Fixed Rate Period, the aggregate of (A) all unpaid dividends on the Series 8 Preference Shares for any Dividend Period and (B) the amount calculated as though dividends on each Series 8 Preference Share had been accruing on a day-to-day basis from and including the date on which the last quarterly dividend was payable to but excluding the date to which the computation of accrued dividends is to be made; and (ii) during the Floating Rate Period, the aggregate of (A) all unpaid dividends on the Series 8 Preference Shares for any Dividend

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Period and (B) the amount calculated as though dividends on each Series 8 Preference Share had been accruing on a day-to-day basis from and including the first day of the Month immediately following the Month with respect to which the dividend was or will be, as the case may be, payable to but excluding the date to which the computation of accrued dividends is to be made;

(b) “in priority to”, “on a parity with” and “junior to” have reference to the order of priority in payment of dividends and in the distribution of assets in the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs; and

(c) in the event that any date on which any dividend on the Series 8 Preference Shares is payable by the Corporation, or any date on or by which any other action is required to be taken by the Corporation or the holders of Series 8 Preference Shares hereunder, is not a business day (as hereinafter defined), then such dividend shall be payable, or such other action shall be required to be taken, on or by the next succeeding day that is a business day. A “business day” shall be a day other than a Saturday, a Sunday or any other day that is treated as a holiday at the Corporation’s principal office in Canada.

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CLASS A PREFERENCE SHARES, SERIES 9 ATTRIBUTES

Number and Designation of
and Rights, Privileges, Restrictions and
Conditions Attaching to the Class A Preference Shares, Series 9

The ninth series of Class A Preference Shares of the Corporation shall consist of 8,000,000 Class A Preference Shares designated as Cumulative Redeemable Class A Preference Shares, Series 9 (“Series 9 Preference Shares”) and, in addition to the rights, privileges, restrictions and conditions attaching to the Class A Preference Shares as a class, shall have attached thereto the following rights, privileges restrictions and conditions:

1. Consideration for Issue

The consideration for the issue of each Series 9 Preference Share shall be $25.00 or its equivalent in property or past services.

2. Dividends

2.1. Definitions

For the purposes hereof, the following capitalized terms shall have the following meanings, unless the context otherwise requires:

(a)   “Annual Dividend Rate” means for any Fixed Dividend Rate Period the rate of interest expressed as a percentage per annum (rounded to the nearest one-thousandth (1/1000) of one percent (1%)) which is equal to the Government of Canada Yield multiplied by the Selected Percentage for such Fixed Dividend Rate Period;

(b)   “Dividend Payment Date” means the first day of each of February, May, August and November in each year;

(c)   “Fixed Dividend Rate Period” means for the initial Fixed Dividend Rate Period, the period commencing on November 1, 2001 and ending on the including October 31, 2006, and for each succeeding Fixed Dividend Rate Period, the period commencing on the day immediately following the end of the immediately preceding Fixed Dividend Rate Period and ending on and including October 31, in the fifth year immediately thereafter;

(d)   “Government of Canada Yield” on any date shall mean the average of the yields determined by two registered Canadian investment dealers, selected by the Board of Directors, as being the yield to maturity on such date compounded semi-annually and calculated in accordance with generally accepted financial practice, which a non-callable Government of Canada Bond would carry if issued in Canadian dollars in Canada at 100% of its principal amount on such date with a term to maturity of five years; and

(e)   “Selected Percentage” for each Fixed Dividend Rate Period means that percentage determined by the Board of Directors as set forth in the notice of the holders of the Series 9 Preference Shares given in accordance with the provisions of Section 5.1, which rate of interest shall be not less than 80% of the Government of Canada Yield.

2.2. General

The holders of the Series 9 Preference Shares shall be entitled to receive fixed, cumulative, preferred cash dividends, as and when declared by the Board of Directors, out of moneys of the corporation properly applicable to the payment of dividends, in the amount per share per annum determined by multiplying the Annual Dividend Rate by

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$25.00, payable quarterly in respect of each 12 month period on the Dividend Payment Date (less any tax required to be deducted) and shall be calculated on a 365 or 366 day basis, being the actual number of days in the year in which the amount is to be ascertained, by cheque at par in lawful money of Canada at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable.

Dividends declared on the Series 9 Preference Shares shall (except in case of redemption in which case payment of dividends shall be made on surrender of the certificate representing the Series 9 Preference Shares to be redeemed) be paid by posting in a postage paid envelope addressed to each holder of the Series 9 Preference Shares at the last address of such holder as it appears on the securities register of the Corporation or, in the case of joint holders, to the address of that one whose name appears first in the securities register of the Corporation as one of such joint holders, or, in the event of the address of any holder not so appearing, then to the address of such holder last known to the Corporation, a cheque for such dividends (less any tax required to be deducted) payable to the order of such holder or, in the case of joint holders, to the order of all such holders failing written instructions from them to the contrary. Notwithstanding the foregoing, any dividend cheque may be delivered by the Corporation to a holder of Series 9 Preference Shares at his address as aforesaid. The posting or delivery of such cheque on or before the date on which such dividend is to be paid to a holder of Series 9 Preference Shares shall be deemed to be payment and shall satisfy and discharge all liabilities for the payment of such dividends to the extent of the sum represented thereby (plus the amount of any tax required to be deducted as aforesaid) unless such cheque is not paid on due presentation. Subject to applicable law, dividends which are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed for a period of six years from the date on which they were declared to be payable shall be forfeited to the Corporation.

If on any date on which dividends are to be paid, the dividends accrued to such date are not paid in full on all of the Series 9 Preference Shares then outstanding, such dividends, or the unpaid part thereof, shall be paid on a subsequent date or dates determined by the Board of Directors on which the Corporation shall have sufficient monies properly applicable to the payment of such dividends.

The holders of Series 9 Preference Shares shall not be entitled to any dividends other than or in excess of the cumulative preferential cash dividends herein provided for.

2.3. Calculation of Annual Dividend Rate

The Corporation shall calculate on the 21st day prior to the first day of each Fixed Dividend Rate Period the Annual Dividend Rate for each Fixed Dividend Rate Period based upon the Selected Percentage and the Government of Canada Yield in effect at 10:00 a.m. (Toronto, Ontario time) on the said 21st day prior to the first day of each Fixed Dividend Rate Period and give notice thereof: (i) within one (1) business day to all stock exchanges in Canada on which the Series 9 Preference Shares are listed for trading or if the Series 9 Preference Shares are not listed on a stock exchange in Canada, to the Investment Dealers Association of Canada; and (ii) within three (3) business days to, except in relation to the initial Fixed Dividend Rate Period, the holders of the Series 9 Preference Shares by publication once in the national edition of the Globe and Mail in the English language and once in the City of Montréal, Québec in both the French and English languages in a daily newspaper of general circulation in Montreal; provided that if any such newspaper is not being generally circulated at that time, such notice shall be published in another equivalent publication.

3. Rights on Liquidation

In the event of the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or any other distribution of assets of the Corporation for the purpose of winding up its affairs, the holders of the Series 9 Preference Shares shall be entitled to receive $25.00 per Series 9 Preference Share together with all dividends accrued and unpaid up to but excluding the date of payment or distribution, before any amounts shall be paid or any assets of the Corporation distributed to the holders of any shares ranking junior to the Series 9 Preference Shares. Upon payment of such amounts, the holders of the Series 9 Preference Shares shall not be entitled to share in any further distribution of the assets of the Corporation.

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4. Redemption at the Option of the Corporation

The Corporation may not redeem any of the Series 9 Preference Shares prior to November 1, 2006. Subject to applicable law and Section 6 hereof, upon giving notice as hereinafter provided, the Corporation may, on November 1, 2006 or on November 1 in every fifth year thereafter, redeem at any time all, but not less than all, the outstanding Series 9 Preference Shares on payment of $25.00 for each such share to be redeemed together with accrued and unpaid dividends up to but excluding the date fixed for redemption, the whole constituting the redemption price.

The Corporation shall give notice in writing not less than 45 days nor more than 60 days prior to the date on which the redemption is to take place to each person who at the date of giving such notice is the holder of Series 9 Preference Shares to be redeemed of the intention of the Corporation to redeem such shares; any such notice shall be validly and effectively given on the date on which it is sent and such notice shall be given and sent by posting the same in a postage paid envelope addressed to each holder of Series 9 Preference Shares to be redeemed at the last address of such holder as it appears on the securities register of the Corporation, or in the case of joint holders, to the address of that one whose name appears first in the securities register of the Corporation as one of such joint holders or, in the event of the address of any holder not so appearing, then to the address of such holder last known to the Corporation, provided that the accidental failure or omission to give any such notices as aforesaid to one or more of such holders shall not affect the validity of the redemption as to the other holders of the Series 9 Preference Shares to be redeemed. Such notice shall set out the number of such Series 9 Preference Shares held by the person to whom it is addressed which are to be redeemed and the redemption price and shall also set out the date on which the redemption is to take place, and on and after the date so specified for redemption the Corporation shall pay or cause to be paid to the holders of such Series 9 Preference Shares to be redeemed the redemption price on presentation and surrender, at any place within Canada designated by such notice, of the certificate or certificates for such Series 9 Preference Shares so called for redemption; such payment shall be made by cheque payable at par at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable; from and after the date specified in any such notice, the Series 9 Preference Shares called for redemption shall cease to be entitled to dividends and the holders thereof shall not be entitled to exercise any of the rights of shareholders in respect thereof unless payment of the redemption price shall not be duly made by the Corporation; at any time after notice of redemption is given as aforesaid, the Corporation shall have the right to deposit the redemption price of any or all Series 9 Preference Shares called for redemption with any chartered bank or banks or with any trust company or trust companies in Canada named in the notice of redemption to the credit of a special account or accounts in trust for the respective holders of such shares, to be paid to them respectively upon surrender to such bank or banks or trust company or trust companies of the certificate or certificates representing the same, and upon such deposit or deposits being made, such shares shall be redeemed on the redemption date specified in the notice of redemption; after the Corporation has made a deposit as aforesaid with respect to any shares, the holders thereof shall not, from and after the redemption date, be entitled to exercise any of the rights of shareholders in respect thereof and the rights of the holders thereof shall be limited to receiving a proportion of the amounts so deposited applicable to such shares, without interest; any interest allowed on such deposit shall belong to the Corporation. Subject to applicable law, redemption monies that are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed (including monies held in deposit as provided for above) for a period of six years from the date specified for redemption shall be forfeited to the Corporation.

5. Conversion of Series 9 Preference Shares

5.1. Conversion at the Option of the Holder

Holders of Series 9 Preference shares shall have the right, at their option, on November 1, 2006 and on November 1 in every fifth year thereafter (a “Conversion Date”), to convert, subject to the terms and provisions hereof, all or any Series 9 Preference Shares registered in their name into Series 8 Preference Shares of the Corporation on the basis of one (1) Series 8 Preference Share for each Series 9 Preference Share. The Corporation shall give notice in writing to the then holders of the Series 9 Preference Shares of the Selected Percentage determined by the Board of Directors to be applicable for the next succeeding Fixed Dividend Rate Period and of the conversion right provided for herein; such notice shall be given by posting the same in a postage paid envelope addressed to each holder of the Series 9 Preference Shares at the last address of such holder as it appears on the securities register of the Corporation, or in the

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case of joint holders, to the address of that one whose name appears first in the securities register of the Corporation as one of such joint holders or, in the event of the address of any holder not so appearing then to the address of such holder last known to the Corporation. Such notice shall set out the Conversation Date and shall be given not less than 45 days nor more than 60 days prior to the applicable Conversation Date.

If the Corporation gives notice as provided in Section 4 to the holders of the Series 9 Preference Shares of the redemption of all the Series 9 Preference Shares, the Corporation shall not be required to give notice as provided in this Section 5.1 to the holders of the Series 9 Preference Shares of a Selected Percentage, of the conversion right or of the Conversion Date and the right of any holder of Series 9 Preference Shares to convert such Series 9 Preference Shares as herein provided shall cease and terminate in that event.

Holders of Series 9 Preference Shares shall not be entitled to convert their shares into Series 8 Preference Shares if, following the close of business on the 14th day preceding a Conversation Date, the Corporation determines that there would remain outstanding on the Conversion Date less than 500,000 Series 8 Preference Shares after taking into account all Series 9 Preference Shares tendered for conversion into Series 8 Preference Shares and all Series 8 Preference Shares tendered for conversion into Series 9 Preference Shares. The Corporation shall give notice in writing thereof, in accordance with the provisions of the first paragraph of this Section 5.1, to all affected holders of Series 9 Preference Shares at least seven (7) days prior to the applicable Conversion Date and will issue and deliver, or cause to be delivered, prior to such Conversion Date, at the expense of the Corporation, to such holders of Series 9 Preference Shares who have surrendered for conversion any certificate or certificates representing Series 9 Preference Shares, new certificates representing the Series 9 Preference Shares represented by any certificate or certificates surrendered as aforesaid.

5.2. Automatic Conversion

Subject to applicable law, if following the close of business on the 14th day preceding a Conversion Date the Corporation determines that there would remain outstanding on the Conversion Date less than 500,000 Series 9 Preference Shares after taking into account all Series 9 Preference Shares tendered for conversion into Series 8 Preference Shares and all Series 8 Preference Shares tendered for conversion into Series 9 Preference Shares, then, all, but not part, of the remaining outstanding Series 9 Preference Shares shall automatically be converted into Series 8 Preference Shares on the basis of one (1) Series 8 Preference Share for each Series 9 Preference Share on the applicable Conversion Date and the Corporation shall give notice in writing thereof, in accordance with the provisions of Section 5.1, to the holders of such remaining Series 9 Preference Shares at least seven (7) days prior to the Conversion Date.

5.3. Manner of Exercise of Conversion Privilege

The conversion of Series 9 Preference Shares may be effected by surrender of the certificate or certificates representing the same not earlier than 45 days prior to a Conversion Date but not later than the close of business on the 14th day prior to a Conversion Date during usual business hours at any office of any transfer agent of the Corporation at which the Series 9 Preference Shares are transferable accompanied by: (i) payment or evidence of payment of the tax (if any) payable as provided in this Section 5.3; and (ii) a written instrument of surrender in form satisfactory to the Corporation duly executed by the holder, or his attorney duly authorized in writing, in which instrument such holder may also elect to convert part only of the Series 9 Preference Shares represented by such certificate or certificates not theretofore called for redemption in which event the Corporation shall issue and deliver or cause to be delivered to such holder, at the expense of the Corporation, a new certificate representing the Series 9 Preference Shares represented by such certificate or certificates which have not been converted.

In the event the Corporation is required to convert all remaining outstanding Series 9 Preference Shares into Series 8 Preference Shares on the applicable Conversion Date as provided for in Section 5.2, the Series 9 Preference Shares in respect of which the holders have not previously elected to convert, shall be converted on the Conversion Date into Series 8 Preference Shares and the holders thereof shall be deemed to be holders of Series 8 Preference Shares at the close of business on the Conversion Date and shall be entitled, upon surrender during usual business hours at any office of any transfer agent of the Corporation at which the Series 9 Preference Shares were transferable of the certificate or certificates representing Series 9 Preference Shares not previously surrendered for

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conversion, to receive a certificate or certificates representing the same number of Series 8 Preference Shares in the manner and subject to the terms and provisions as provided in this Section 5.3.

As promptly as practicable after the Conversion Date, the Corporation shall issue and deliver, or cause to be delivered to or upon the written order of the holder of the Series 9 Preference Shares so surrendered, a certificate or certificates, issued in the name of, or in such name or names as may be directed by, such holder representing the number of fully-paid and non-assessable Series 8 Preference Shares and the number of remaining Series 9 Preference Shares, if any, to which such holder is entitled. Such conversion shall be deemed to have been made at the close of business on the Conversion Date, so that the rights of the holder of such Series 9 Preference Shares as the holder thereof shall cease at such time and the person or persons entitled to receive Series 8 Preference Shares upon such conversion shall be treated for all purposes as having become the holder or holders of record of such Series 8 Preference Shares at such time.

The holder of any Series 9 Preference Share on the record date for any dividend declared payable on such share shall be entitled to such dividend notwithstanding that such share is converted into Series 8 Preference Shares after such record date and on or before the date of the payment of such dividend.

The issuance of certificates for the Series 8 Preference Shares upon the conversion of Series 9 Preference Shares shall be made without charge to the converting holders of Series 9 Preference Shares for any fee or tax in respect of the issuance of such certificates or the Series 8 Preference Shares represented thereby; provided, however, that the Corporation shall not be required to pay any tax which may be imposed upon the person or persons to whom such Series 8 Preference Shares are issued in respect of the issuance of such Series 8 Preference Shares or the certificate therefor or which may be payable in respect of any transfer involved in the issuance and delivery of any such certificate in the name or names other than that of the holder of the Series 9 Preference Shares converted, and the Corporation shall not be required to issue or deliver such certificate unless the person or persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid.

5.4. Status of Converted Series 9 Preference Shares

All Series 9 Preference Shares converted into Series 8 Preference Shares on a Conversion Date shall not be cancelled but shall be restored to the status of authorized but unissued shares of the Corporation as at the close of business on the Conversion Date.

6. Restrictions on Dividends and Retirement of Shares

Without the approval of the holders of outstanding Series 9 Preference Shares:

(a)   the Corporation shall not declare, pay or set apart for payment any dividends (other than stock dividends payable in shares of the Corporation ranking junior to the Series 9 Preference Shares) on any shares of the Corporation ranking junior to the Series 9 Preference Shares;

(b)   the Corporation shall not redeem, purchase or otherwise retire or make any capital distribution on or in respect of any shares of the Corporation ranking junior to the Series 9 Preference Shares (except out of the net cash proceeds of a substantially concurrent issue of shares of the Corporation ranking junior to the Series 9 Preference Shares);

(c)   the Corporation shall not purchase or otherwise retire less than all of the Series 9 Preference Shares then outstanding;

(d)   the Corporation shall not redeem, purchase or otherwise retire (except in connection with the exercise of any retraction privilege or any mandatory redemption or purchase obligation attaching thereto) any shares of any class or series ranking on a parity with the Series 9 Preference Shares provided that, for greater certainty, the covenant in this Section (d) shall not limit or affect any such action in respect of any class of shares ranking in priority to the Series 9 Preference Shares; or

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(e) the Corporation shall not issue any additional Class A Preference Shares or any shares ranking on a parity with the Series 9 Preference Shares;

unless, in each such case, all dividends on outstanding Series 9 Preference Shares accrued up to and including the dividend payable for the last completed period for which dividends were payable shall have been declared and paid. Any approval of the holders of the Series 9 Preference Shares required to be given pursuant to Section 6 may be given in accordance with Section 10. Notwithstanding the provisions of Section 10, any approval required to be given pursuant to this Section 6 may be given by the affirmative vote of the holders of the majority of the Series 9 Preference Shares present or represented at a meeting or adjourned meeting of the holders of Series 8 Preference Shares duly called for that purpose and at which a quorum is present.

7. Purchase for Cancellation

The Corporation may at any time purchase for cancellation the whole or any part of the Series 9 Preference Shares outstanding from time to time, in the open market through or from an investment dealer or any firm holding membership on a recognized stock exchange, or by private agreement or otherwise, at the lowest price or prices at which in the opinion of the Board of Directors such shares are obtainable plus in each case all accrued and unpaid dividends and costs of purchase.

8. Voting Rights

The holders of Series 9 Preference Shares will not be entitled (except as otherwise permitted by law) to receive notice of, attend at, or vote at any meeting of shareholders of the Corporation unless the Corporation fails to pay eight (8) dividends on the Series 9 Preference Shares, whether or not consecutive, the holders of the Series 9 Preference Shares shall have the right to receive notice of, and to attend, each meeting of shareholders of the Corporation which takes place more than 60 days after the date on which the failure first occurs (other than a separate meeting of the holders of another series or class of shares) and such holders shall have the right, at any such meeting, to one (1) vote for each Series 9 Preference Shares held (provided that when entitled to vote in the election of directors, holders of Series 9 Preference Shares shall vote together with holders of Class A Limited Voting Shares in the election of one-half of the board of directors), until all such arrears of dividends on the Series 9 Preference Shares shall have been paid whereon such rights shall cease unless and until the same default shall again arise under the provisions of this Section 8.

9. Modifications

The provisions attaching to the Series 9 Preference Shares as a series may be repealed, altered, modified or amended from time to time with such approval as may then be required by the Business Corporations Act (Ontario), any such approval to be given in accordance with Section 10.

None of the series provisions of the articles of the Corporation relating to the Series 9 Preference Shares shall be amended or otherwise changed unless, contemporaneously therewith, the series provisions, if any, relating to the Series 8 Preference Shares are, to the extent deemed required by the Corporation, amended or otherwise changed in the same proportion and in the same manner.

10. Approval of Holders of Series 9 Preference Shares

10.1. Approval

Except as otherwise provided herein, any approval of the holders of the outstanding Series 9 Preference Shares with respect to any matters requiring the consent of the holders of the Series 9 Preference Shares may be given in such manner as may then be required by law, subject to a minimum requirement that such approval be given by a resolution signed by all the holders of outstanding Series 9 Preference Shares or passed by the affirmative vote of at least 66 2/3% of the votes cast by the holders of Series 9 Preference Shares who voted in respect of that resolution at a meeting of the holders of the Series 9 Preference Shares duly called for that purpose and at which a quorum as required

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by the by-laws of the Corporation is present, subject to a minimum requirement that the quorum at the meeting (other than an adjourned meeting) be at least two persons entitled to vote thereat.

102. Formalities, etc.

The proxy rules applicable to, the formalities to be observed in respect of the giving notice of, and the formalities to be observed in respect of the conduct of, any meeting or any adjourned meeting of holders of Series 9 Preference Shares shall be those from time to time prescribed by the by-laws of the Corporation with respect to meetings of shareholders or, if not so prescribed, as required by law. On every poll taken at every meeting of holders of Series 9 Preference Shares, each holder of Series 9 Preference Shares entitled to vote thereat shall have one vote in respect of each $25.00 of the issue price of each Series 9 Preference Share held.

11. Tax Election

The Corporation shall elect, in the manner and within the time provided under the Income Tax Act (Canada), under Subsection 191.2(1) of the said Act, or any successor or replacement provision of similar effect, and take all other necessary action under such Act, to pay tax at a rate such that no holder of the Series 9 Preference Shares will be required to pay tax on dividends received on the Series 9 Preference Shares under Section 187.2 of Part IV.l of such Act or any successor or replacement provision of similar effect.

12. Mail Service Interruption

If the Board of Directors determines that mail service is or is threatened to be interrupted at the time when the Corporation is required or elects to give any notice hereunder by mail, or is required to send any cheque or any share certificate to the holder of any Series 9 Preference Share, whether in connection with the redemption or conversion of such share or otherwise, the Corporation may, notwithstanding the provisions hereof:

(a) give such notice by publication thereof once in a daily English language newspaper of general circulation published in each of Vancouver, Calgary, Winnipeg, Toronto, Montreal and Halifax, and once in a daily French language newspaper published in Montreal and such notice shall be deemed to have been validly given on the day next succeeding its publication in all of such cities; and

(b) fulfil the requirement to send such cheque or such share certificate by arranging for the delivery thereof to such holder by the transfer agent for the Series 9 Preference Shares at its principal offices in the cities of Vancouver, Toronto and Montreal, and such cheque and/or share certificate shall be deemed to have been sent on the date on which notice of such arrangement shall have been given as provided in (i) above, provided that as soon as the Board of Directors determines that mail service is no longer interrupted or threatened to be interrupted, such cheque or share certificate, if not theretofore delivered to such holder, shall be sent by mail as herein provided. In the event that the Corporation is required to mail such cheque or share certificate, such mailing shall be made by prepaid mail to the registered address of each person who at the date of mailing is a registered holder and who is entitled to receive such cheque or share certificate.

13. Interpretation

In the provisions herein contained attaching to the Series 9 Preference Shares:

(a) “accrued and unpaid dividends” means the aggregate of: (i) all unpaid dividends on the Series 9 Preference Shares for any quarterly period; and (ii) the amount calculated as though dividends on each Series 9 Preference Share had been accruing on a day-to-day basis from and including the date on which the last quarterly dividend was payable to but excluding the date to which the computation of accrued dividends is to be made;

(b) “in priority to”, “on a parity with” and “junior to” have reference to the order of priority in payment of

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dividends and in the distribution of assets in the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs; and

(c) in the event that any date on which any dividend on the Series 9 Preference Shares is payable by the Corporation, or any date on or by which any other action is required to be taken by the Corporation or the holders of Series 9 Preference Shares hereunder, is not a business day (as hereinafter defined), then such dividend shall be payable, or such other action shall be required to be taken, on or by the next succeeding day that is a business day. A “business day” shall be a day other than a Saturday, a Sunday , or any other day that is treated as a holiday at the Corporation’s principal office in Canada.

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Number and Designation of
and Rights, Privileges, Restrictions and
Conditions Attaching to the Class A Preference Shares, Series 10

The tenth series of Class A Preference Shares of the Corporation shall consist of 10,000,000 Class A Preference Shares designated as Class A Preference Shares, Series 10 (“Series 10 Preference Shares”) and, in addition to the rights, privileges, restrictions and conditions attaching to the Class A Preference Shares as a class, shall have attached thereto the following rights, privileges, restrictions and conditions:

1. Consideration for Issue

The consideration for the issue of each Series 10 Preference Share shall be $25.00 or its equivalent in property or past services.

2. Dividends

2.1. Definitions

For the purposes hereof, the following capitalized terms shall have the following meanings, unless the context otherwise requires:

(a)   “Dividend Payment Date” in respect of the dividends payable on the Series 10 Preference Shares means the last day of each of March, June, September and December in each year.

(b)   “Dividend Period” means the period from and including the date of initial issue of the Series 10 Preference Shares up to but excluding September 30, 2001 and, thereafter, the period from and including a Dividend Payment Date up to but excluding the next succeeding Dividend Payment Date.

2.2.   Cumulative Preferential Dividends

The holders of Series 10 Preference Shares (the “Holders”) shall be entitled to receive, and the Corporation shall pay thereon, if, as and when declared by the Board of Directors, out of moneys of the Corporation properly applicable to the payment of dividends, fixed cumulative preferential cash dividends (the “Series 10 Dividends”) payable quarterly, with respect to each Dividend Period, on the Dividend Payment Date immediately following each such Dividend Period at the rate of $1.4375 per Series 10 Preference Share per annum accruing daily from the date of issue (less any tax required to be deducted) which shall be calculated on a 365 or 366 day basis, being the actual number of days in the year in which the amount is to be ascertained, by cheque at par in lawful money of Canada at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable.

Series 10 Dividends shall (except in case of redemption in which case payment of Series 10 Dividends shall be made on surrender of the certificate representing the Series 10 Preference

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Shares to be redeemed) be paid by posting in a postage paid envelope addressed to each Holder at the last address of such Holder as it appears on the securities register of the Corporation or, in the case of joint Holders, to the address of that one whose name appears first in the securities register of the Corporation as one of such joint Holders, or, in the event of the address of any Holder not so appearing, then to the address of such Holder last known to the Corporation, a cheque for such Series 10 Dividends (less any tax required to be deducted) payable to the order of such Holder or, in the case of joint Holders, to the order of all such Holders failing written instructions from them to the contrary. Notwithstanding the foregoing, any dividend cheque may be delivered by the Corporation to a Holder at his address as aforesaid. The posting or delivery of such cheque on or before the date on which such dividend is to be paid to a Holder shall be deemed to be payment and shall satisfy and discharge all liabilities for the payment of such dividends to the extent of the sum represented thereby (plus the amount of any tax required to be deducted as aforesaid) unless such cheque is not paid on due presentation. Subject to applicable law, dividends which are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed for a period of six years from the date on which they were declared to be payable shall be forfeited to the Corporation.

If on any Dividend Payment Date, the Series 10 Dividends accrued to such date are not paid in full on all of the Series 10 Preference Shares then outstanding, such Series 10 Dividends, or the unpaid part thereof, shall be paid on a subsequent date or dates determined by the Board of Directors on which the Corporation shall have sufficient monies properly applicable to the payment of such Series 10 Dividends.

The Holders shall not be entitled to any dividends other than or in excess of the cumulative preferential cash dividends herein provided for.

2.3. Dividend for Other than a Full Dividend Period

The Holders shall be entitled to receive, and the Corporation shall pay thereon, if, as and when declared by the Board of Directors, out of moneys of the Corporation properly applicable to the payment of dividends, cumulative preferential cash dividends for any period which is more or less than a full Dividend Period as follows:

(a) in respect of the period beginning on and including the date of initial issue of the Series 10 Preference Shares to but excluding September 30, 2001 (the “Initial Dividend Period”), a dividend in an amount per Series 10 Preference Share equal to the amount obtained (rounded to four decimal places) when $1.4375 is multiplied by a fraction, the numerator of which is the number of calendar days from and including the date of issue of the Series 10 Preference Shares up to but excluding September 30, 2001 and the denominator of which is 365. The Series 10 Dividend payable for the Initial Dividend Period, payable as of September 30, 2001, as calculated by this method shall be $0.0512 per Series 10 Preference Share; and

(b) in respect of any period other than the Initial Dividend Period that is more or less than a full Dividend Period, a dividend in an amount per Series 10 Preference

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Share equal to the amount obtained (rounded to four decimal places) when $1.4375 is multiplied by a fraction, the numerator of which is the number of calendar days in the relevant period (which shall include the first day of such period but exclude the last day of such period) and the denominator of which is the number of calendar days in the year in which such period falls.

3. Rights on Liquidation

In the event of the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or any other distribution of assets of the Corporation for the purpose of winding up its affairs, the Holders shall be entitled to receive $25.00 per Series 10 Preference Share, together with all Series 10 Dividends accrued and unpaid up to the date of payment or distribution, before any amounts shall be paid or any assets of the Corporation distributed to the holders of any shares ranking junior to the Series 10 Preference Shares. Upon payment of such amounts, the Holders shall not be entitled to share in any further distribution of the assets of the Corporation.

4. Redemption at the Option of the Corporation

The Corporation may not redeem any of the Series 10 Preference Shares prior to September 30, 2008. On or after this date, the Corporation may, subject to applicable law and to the provisions described under Section 6 below, upon giving notice as hereinafter provided, at its option, at any time redeem all, or from time to time any part, of the outstanding Series 10 Preference Shares by the payment of an amount in cash for each such Series 10 Preference Share so redeemed of:

(a)   $25.75 if redeemed before September 30, 2009;

(b)   $25.50 if redeemed on or after September 30, 2009, but before September 30, 2010;

(c)   $25.25 if redeemed on or after September 30, 2010, but before September 30, 2011; and

(d)   $25.00 if redeemed on or after September 30, 2011;

in each case, together with all accrued and unpaid Series 10 Dividends up to but excluding the date fixed for redemption (less any tax required to be deducted and withheld by the Corporation) (the “Redemption Price”).

If less than all of the then outstanding Series 10 Preference Shares are at any time to be redeemed, then the particular Series 10 Preference Shares to be redeemed shall be selected on a pro rata basis.

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10 Preference Shares to be redeemed; any such notice shall be validly and effectively given on the date on which it is sent and such notice shall be given and sent by posting the same in a postage paid envelope addressed to each Holder of Series 10 Preference Shares to be redeemed at the last address of such Holder as it appears on the securities register of the Corporation, or in the case of joint Holders, to the address of that one whose name appears first in the securities register of the Corporation as one of such joint Holders or, in the event of the address of any Holder not so appearing, then to the address of such Holder last known to the Corporation, provided that the accidental failure or omission to give any such notices as aforesaid to one or more of such Holders shall not affect the validity of the redemption as to the other Holders of the Series 10 Preference Shares to be redeemed. Such notice shall set out the number of such Series 10 Preference Shares held by the person to whom it is addressed which are to be redeemed and the Redemption Price and shall also set out the date on which the redemption is to take place, and on and after the date so specified for redemption the Corporation shall pay or cause to be paid to the Holders to be redeemed the Redemption Price on presentation and surrender, at any place within Canada designated by such notice, of the certificate or certificates for such Series 10 Preference Shares so called for redemption; such payment shall be made by cheque payable at par at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable; from and after the date specified in any such notice, the Series 10 Preference Shares called for redemption shall cease to be entitled to Series 10 Dividends and the Holders thereof shall not be entitled to exercise any of the rights of shareholders in respect thereof, except to receive the Redemption Price therefor, unless payment of the Redemption Price shall not be duly made by the Corporation; at any time after notice of redemption is given as aforesaid, the Corporation shall have the right to deposit the Redemption Price of any or all Series 10 Preference Shares called for redemption with any chartered bank or banks or with any trust company or trust companies in Canada named in the notice of redemption to the credit of a special account or accounts in trust for the respective Holders of such shares, to be paid to them respectively upon surrender to such bank or banks or trust company or trust companies of the certificate or certificates representing the same, and upon such deposit or deposits being made, such shares shall be redeemed on the redemption date specified in the notice of redemption; after the Corporation has made a deposit as aforesaid with respect to any shares, the Holders thereof shall not, from and after the redemption date, be entitled to exercise any of the rights of shareholders in respect thereof and the rights of the Holders thereof shall be limited to receiving a proportion of the amounts so deposited applicable to such shares, without interest; any interest allowed on such deposit shall belong to the Corporation. Subject to applicable law, redemption monies that are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed (including monies held in deposit as provided for above) for a period of six years from the date specified for redemption shall be forfeited to the Corporation.

5. Conversion of Series 10 Preference Shares

5.1. Conversion at the Option of the Corporation

The Series 10 Preference Shares shall not be convertible at the option of the Corporation prior to September 30, 2008. On and after September 30, 2008, the Corporation may, subject, if required, to the receipt of stock exchange and other regulatory approvals, and upon notice as

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hereinafter described, convert all, or from time to time any part, of the then outstanding Series 10 Preference Shares into that number of freely-tradable Class A Limited Voting Shares determined (per Series 10 Preference Share) by dividing the Redemption Price that would be applicable on the Corporation’s Conversion Date (as hereinafter defined), together with accrued and unpaid dividends up to but excluding the Corporation’s Conversion Date, by the greater of $2.00 or 95% of the weighted average trading price of the Class A Limited Voting Shares on The Toronto Stock Exchange for the 20 consecutive trading days ending on: (i) the fourth day prior to the date specified for conversion, or (ii) if such fourth day is not a trading day, the immediately preceding trading day (the “Current Market Price”). Fractional Class A Limited Voting Shares will not be issued on any conversion of Class A Preference Shares, Series 10 but in lieu thereof the Corporation will make cash payments in the manner set out in Section 5.3 below. Such conversion shall be deemed to have been made at the close of business on the Corporation’s Conversion Date, so that the rights of the Holder of such Series 10 Preference Shares as the Holder thereof shall cease at such time and the person or persons entitled to receive Class A Limited Voting Shares upon such conversion shall be treated for all purposes as having become the holder or holders of record of such Class A Limited Voting Shares at such time.

Upon exercise by the Corporation of its right to convert Series 10 Preference Shares into Class A Limited Voting Shares, the Corporation is not required to issue Class A Limited Voting Shares to any person whose address is in, or whom the Corporation or its transfer agent has reason to believe is a resident of, any jurisdiction outside of Canada, to the extent that such issue would require compliance by the Corporation with the securities or other laws of such jurisdiction.

The Corporation shall give written notice to each Holder whose shares are to be converted, which notice (the “Corporation’s Conversion Notice”) shall specify the number of Series 10 Preference Shares held by such Holder that will be converted and the date fixed by the Corporation for conversion (the “Corporation’s Conversion Date”), and which shall be given not more than 60 calendar days and not less than 30 calendar days prior to such Corporation’s Conversion Date.

If less than all of the then outstanding Series 10 Preference Shares are at any time to be converted at the option of the Corporation, then the particular Series 10 Preference Shares to be so converted shall be selected on a pro rata basis.

Series 10 Preference Shares that are the subject of a Corporation’s Conversion Notice shall be converted effective on the Corporation’s Conversion Date.

The Corporation cannot exercise its conversion rights hereunder in respect of any Series 10 Preference Shares that are the subject of a Holder’s Conversion Notice under Section 5.2 below.

5.2. Conversion at the Option of the Holder

Subject to applicable law and to the option of the Corporation in Section 5.4, on each Dividend Payment Date on or after March 31, 2012, Holders, upon notice as hereinafter

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described, may convert all or any part of the then outstanding Series 10 Preference Shares registered in the name of the Holder into that number of freely-tradable Class A Limited Voting Shares determined (per Series 10 Preference Share) by dividing $25.00, together with all accrued and unpaid Series 10 Dividends up to but excluding the Holder’s Conversion Date (as hereinafter defined), by the greater of $2.00 or 95% of the Current Market Price. Fractional Class A Limited Voting Shares will not be issued on any conversion of Series 10 Preference Shares but in lieu thereof the Corporation will make cash payments in the manner set out in Section 5.3 below. Such conversion shall be deemed to have been made at the close of business on the Holder’s Conversion Date, so that the rights of the Holder of such Series 10 Preference Shares as the Holder thereof shall cease at such time and the person or persons entitled to receive Class A Limited Voting Shares upon such conversion shall be treated for all purposes as having become the holder or holders of record of such Class A Limited Voting Shares at such time.

In order to exercise its conversion rights, the Holder shall give written notice to the Corporation at the registered office of the Corporation or the principal transfer office of the transfer agent for the Series 10 Preference Shares in the City of Toronto (the “Holder’s Conversion Notice”), which Holder’s Conversion Notice shall specify the number of Series 10 Preference Shares (the “Subject Shares”) held by such Holder which shall be converted on the Dividend Payment Date chosen by the Holder for conversion (the “Holder’s Conversion Date”).’ The Holder’s Conversion Notice shall be given at least 30 calendar days prior to such Holder’s Conversion Date and shall be irrevocable.

Upon exercise by the Holder of its right to convert Series 10 Preference Shares into Class A Limited Voting Shares, the Corporation is not required to issue Class A Limited Voting Shares to any person whose address is in, or whom the Corporation or its transfer agent has reason to believe is a resident of, any jurisdiction outside of Canada, to the extent that such issue would require compliance by the Corporation with the securities or other laws of such jurisdiction.

If the Corporation gives notice as provided in Section 4 to a Holder of the redemption of Series 10 Preference Shares prior to that Holder giving a Holder’s Conversion Notice to the Corporation, the right of that Holder to convert such Series 10 Preference Shares as herein provided shall cease and terminate in that event.

5.3. Delivery of Certificates Representing Class A Limited Voting Shares

The Corporation shall, on presentation and surrender at the head office of the Corporation, the principal transfer office of the transfer agent for the Series 10 Preference Shares in the City of Toronto, or such other place or places in Canada as the Corporation may agree, of the certificate or certificates representing the Series 10 Preference Shares being converted by the Corporation or the Holder, give or cause to be given, on the applicable Corporation’s Conversion Date or Holder’s Conversion Date, as the case may be, to each Holder of Series 10 Preference Shares being converted or as such Holder may have otherwise directed:

(a) a certificate representing the whole number of Class A Limited Voting Shares into which such Series 10 Preference Shares being converted are to be converted,

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registered in the name of the Holder, or as such Holder may have otherwise directed; and

(b) in lieu of the issuance of a fractional Class A Limited Voting Share, a cheque in an amount equal to the product of the fractional remainder, if any (rounded to four decimal places), produced by the conversion formula set forth in Section 5.1 or Section 5.2 above, as the case may be, multiplied by the greater of $2.00 or 95% of the then Current Market Price.

If on any conversion under Section 5.1 or 5.2, less than all of the Series 10 Preference Shares represented by any certificate are to be converted, a new certificate representing the balance of such Series 10 Preference Shares shall be issued by the Corporation without cost to the Holder.

The Holder of any Series 10 Preference Share on the record date for any dividend declared payable on such share shall be entitled to such dividend notwithstanding that such share is converted into Class A Limited Voting Shares after such record date and on or before the date of the payment of such dividend.

The issuance of certificates for the Class A Limited Voting Shares upon the conversion of Series 10 Preference Shares shall be made without charge to the Holders for any fee or tax in respect of the issuance of such certificates or the Class A Limited Voting Shares represented thereby; provided, however, that the Corporation shall not be required to pay any tax which may be imposed upon the person or persons to whom such Class A Limited Voting Shares are issued in respect of the issuance of such Class A Limited Voting Shares or the certificate therefor or which may be payable in respect of any transfer involved in the issuance and delivery of any such certificate in the name or names other than that of the Holder or deliver such certificate unless the person or persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid.

5.4. Option of the Corporation

If a Holder gives a Holder’s Conversion Notice to the Corporation, subject to the provisions described in Section 6 below, as applicable, the Corporation may, at its option, on notice to such Holder in the manner described in this Section 5.4, either (i) redeem on the first business day after the Holder’s Conversion Date all or any part of the Subject Shares, or (ii) cause the Holder to sell on the first business day after the Holder’s Conversion Date all or any part of the Subject Shares to another purchaser or purchasers in the event that a purchaser or purchasers willing to purchase any or all of such Subject Shares is or are found by the Corporation pursuant to this Section 5.4. The proportion of the Subject Shares which are either redeemed, purchased or converted on that Conversion Date shall, to the extent practicable, be the same for each holder delivering a Conversion Notice.

If the Corporation elects to redeem for cash or arrange for the purchase of any Subject Shares, then the Corporation shall, not less than 20 calendar days prior to the Holder’s

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Conversion Date, give written notice to all Holders of the Subject Shares stating the number of Subject Shares to be redeemed for cash by the Corporation, the number of Subject Shares to be sold to another purchaser, and the number of Subject Shares to be converted into Class A Limited Voting Shares pursuant to the Holder’s Conversion Notice, such that all of the Subject Shares are either redeemed, purchased or converted on the Holder’s Conversion Date.

If the Corporation elects to redeem for cash or arrange for the purchase of any Subject Shares, then the Corporation shall pay or cause to be paid, in respect of those Subject Shares to be redeemed for cash or purchased, on presentation and surrender at the head office of the Corporation, the principal transfer office of the transfer agent for the Series 10 Preference Shares in the City of Toronto, or such other place or places in Canada as the Corporation may agree, of the certificate or certificates representing such Subject Shares, on the Holder’s Conversion Date, to the Holder of the Subject Shares or as such Holder may have otherwise directed, an amount equal to $25.00 plus all accrued and unpaid Series 10 Dividends up to but excluding the Holder’s Conversion Date for each Subject Share being redeemed or purchased, and each such Subject Share shall be deemed to have been redeemed or purchased, but not converted, as the case may be, on the Holder’s Conversion Date. Payment under this Section 5.4 shall be made by cheque in accordance with Section 5.5 hereof.

If the Corporation elects to redeem for cash or arrange for the purchase of some, but not all, of the Subject Shares, then the Corporation shall, in respect of those Subject Shares to be converted into Class A Limited Voting Shares, give or cause to be given to the Holder of such Subject Shares the certificate or certificates representing such Class A Limited Voting Shares and, if applicable, a cheque in lieu of a fractional Class A Limited Voting Share, all in accordance with the procedures set forth in Section 5.3.

5.5. Payment by Cheque

Any amounts that are paid by the Corporation to Holders in respect of the payment of (i) a redemption or purchase amount under Section 5.4, or (ii) a cash amount in lieu of the issuance of a fractional Class A Limited Voting Share under Sections 5.1 or 5.2, shall be paid by cheques drawn on a Canadian chartered bank and payable in lawful money of Canada at any branch of such bank in Canada, and the delivery or mailing of any such cheque to a Holder shall constitute a full and complete discharge of the Corporation’s obligation to pay such amounts (plus any tax required to be and in fact deducted and withheld therefrom and remitted to the proper taxing authority), unless such cheque is not honoured when presented for payment.

6. Restrictions on Dividends and Retirement and Issue of Shares

So long as any of the Class A Preference Shares, Series 10 are outstanding, the Corporation shall not, without the approval of the Holders:

(a) declare, pay or set apart for payment any dividends (other than stock dividends payable in shares of the Corporation ranking as to capital and dividends junior to the Series 10 Preference Shares) on any shares of the Corporation ranking as to dividends junior to the Series 10 Preference Shares;

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(b)   except out of the net cash proceeds of a substantially concurrent issue of shares of the Corporation ranking as to return of capital and dividends junior to the Series 10 Preference Shares, redeem or call for redemption, purchase or otherwise pay off or retire any shares of the Corporation ranking as to capital junior to the Series 10 Preference Shares;

(c)   redeem or call for redemption, purchase or otherwise retire for value less than all of the Series 10 Preference Shares then outstanding;

(d)   except pursuant to any purchase obligation, sinking fund, retraction privilege or mandatory redemption provisions attaching thereto, redeem or call for redemption, purchase or otherwise pay off or retire any Class A Preference Shares, ranking as to the payment of dividends or return of capital on a parity with the Series 10 Preference Shares; or

(e)   issue any additional Series 10 Preference Shares or any shares ranking as to the payment of dividends or the return of capital prior to or on a parity with the Series 10 Preference Shares;

unless, in each such case, all accrued and unpaid dividends up to and including the dividend payable for the last completed period for which dividends were payable on the Series 10 Preference Shares and on all other shares of Brascan ranking prior to or on a parity with the Series 10 Preference Shares with respect to the payment of dividends have been declared paid or set apart for payment.

7. Purchase for Cancellation

Subject to applicable law and to the provisions described in Section 6 above, the Corporation may at any time purchase for cancellation the whole or any part of the Series 10 Preference Shares outstanding from time to time, in the open market through or from an investment dealer or any firm holding membership on a recognized stock exchange, or by private agreement or otherwise, at the lowest price or prices at which, in the opinion of the Board of Directors of the Corporation such shares are obtainable.

8. Voting Rights

The Holders will not be entitled (except as otherwise permitted by law) to receive notice of, attend at, or vote at any meeting of shareholders of the Corporation unless the Corporation fails to pay eight (8) Series-10-Dividends, whether or not consecutive, and whether or not such dividends have been declared and whether or not there are any monies of the Corporation properly applicable to the payment of Series 10 Dividends. In the event of such non-payment, the Holders shall have the right to receive notice of, and to attend, each meeting of shareholders of the Corporation which takes place more than 60 days after the date on which the failure first occurs (other than a separate meeting of the holders of another series or class of shares) and such Holders shall have the right, at any such meeting, to one (1) vote for each Series 10 Preference Share held (provided that when entitled to vote in the election of directors, holders shall vote

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together with holders of Class A Limited Voting Shares in the election of one-half of the board of directors), until all such arrears of Series 10 Dividends shall have been paid whereon such rights shall cease unless and until the same default shall again arise under the provisions of this Section 8.

9. Modifications

The provisions attaching to the Series 10 Preference Shares as a series may be repealed, altered, modified or amended from time to time with such approval as may then be required by the Business Corporations Act (Ontario), any such approval to be given in accordance with Section 10.

10. Approval of Holders of Series 10 Preference Shares

10.1. Approval

Except as otherwise provided herein, any approval of the Holders with respect to any matters requiring the consent of the Holders may be given in such manner as may then be required by law, subject to a minimum requirement that such approval be given by a resolution signed by all the Holders or passed by the affirmative vote of at least 66 2/3% of the votes cast by the Holders who voted in respect of that resolution at a meeting of the Holders duly called for that purpose and at which the Holders of a majority of the outstanding Series 10 Preference Shares are present or represented by proxy. If at any such meeting the Holder(s) of a majority of the outstanding Series 10 Preference Shares are not present or represented by proxy within one-half hour after the time appointed for such meeting, then the meeting shall be adjourned to such date not less than 15 days thereafter and to such time and place as may be designated by the chairman of such meeting, and not less than 10 days’ written notice shall be given of such adjourned meeting. At such adjourned meeting, the Holders(s) of Series 10 Preference Shares represented in person or by proxy may transact the business for which the meeting was originally called.

10.2. Formalities, etc.

The proxy rules applicable to, the formalities to be observed in respect of the giving notice of, and the formalities to be observed in respect of the conduct of, any meeting or any adjourned meeting of holders shall be those from time to time prescribed by the by-laws of the Corporation with respect to meetings of shareholders or, if not so prescribed, as required by law. On every poll taken at every meeting of Holders, each Holder entitled to vote thereat shall have one vote in respect of each $25.00 of the issue price of each Series 10 Preference Share held.

11. Tax Election

The Corporation shall elect, in the manner and within the time provided under the Income Tax Act (Canada), under Subsection 191.2(1) of the said Act, or any successor or replacement provision of similar effect, and take all other necessary action under such Act, to pay tax at a rate such that no Holder will be required to pay tax on dividends received on the Series 10 Preference

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Shares under Section 187.2 of Part IV.I of such Act or any successor or replacement provision of similar effect.

12. Mail Service Interruption

If the Board of Directors determines that mail service is or is threatened to be interrupted at the time when the Corporation is required or elects to give any notice hereunder by mail, or is required to send any cheque or any share certificate to a Holder, whether in connection with the redemption or conversion of such share or otherwise, the Corporation may, notwithstanding the provisions hereof:

(a) give such notice by publication thereof once in a daily English language newspaper of general circulation published in each of Vancouver, Calgary, Winnipeg, Toronto, Montreal and Halifax, and once in a daily French language newspaper published in Montreal and such notice shall be deemed to have been validly given on the day next succeeding its publication in all of such cities; and

(b) fulfill the requirement to send such cheque or such share certificate by arranging for the delivery thereof to such Holder by the transfer agent for the Series 10 Preference Shares at its principal offices in the cities of Vancouver, Toronto and Montreal, and such cheque and/or share certificate shall be deemed to have been sent on the date on which notice of such arrangement shall have been given as provided in (i) above, provided that as soon as the Board of Directors determines that mail service is no longer interrupted or threatened to be interrupted, such cheque or share certificate, if not theretofore delivered to such Holder, shall be sent by mail as herein provided. In the event that the Corporation is required to mail such cheque or share certificate, such mailing shall be made by prepaid mail to the registered address of each person who at the date of mailing is a registered Holder and who is entitled to receive such cheque or share certificate.

13. Interpretation

In the provisions herein contained attaching to the Series 10 Preference Shares:

(a) “accrued and unpaid dividends” means the aggregate of: (i) all unpaid dividends on the Series 10 Preference Shares for any quarterly period; and (ii) the amount calculated as though dividends on each Series 10 Preference Share had been accruing on a day-to-day basis from and including the date on which the last quarterly dividend was payable up to and including the date to which the computation of accrued dividends is to be made;

(b) “in priority to”, “on a parity with” and “junior to” have reference to the order of priority in payment of dividends and in the distribution of assets in the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs; and

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(c) in the event that any date on which any dividend on the Series 10 Preference Shares is payable by the Corporation, or any date on or by which any other action is required to be taken by the Corporation or the Holders hereunder, is not a business day (as hereinafter defined), then such dividend shall be payable, or such other action shall be required to be taken, on or by the next succeeding day that is a business day. A “business day” shall be a day other than a Saturday, a Sunday or any other day that is treated as a holiday in the province of Ontario.

14. Book-Entry Only System

If the Series 10 Preference Shares are held through the book-entry only system of the Canadian Depository for Securities (“CDS”), then the beneficial owner thereof shall provide instructions only by such beneficial owner providing instructions to the CDS Participant through whom such beneficial owner holds such Series 10 Preference Shares. Beneficial owners of Series 10 Preference Shares will not have the right to receive share certificates representing their ownership of the shares.

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Number and Designation of and Rights, Privileges, Restrictions and Conditions
Attaching to the Non-Cumulative Class A Preference Shares, Series 11

The eleventh series of Class A Preference Shares of the Corporation shall consist of 31,500,000 Class A Preference Shares designated as Class A Preference Shares, Series 11 (“Series 11 Preference Shares”) and, in addition to the rights, privileges, restrictions and conditions attaching to the Class A Preference Shares as a class, shall have attached thereto the following rights, privileges, restrictions and conditions:

1. Consideration for Issue

The consideration for the issue of each Series 11 Preference Share shall be $25.00 or its equivalent in property or past services.

2. Dividends

2.1. Definitions

For the purposes hereof, the following capitalized terms shall have the following meanings, unless the context otherwise requires:

(a) “Dividend Payment Date” in respect of the dividends payable on the Series 11 Preference Shares means the last day of each of March, June, September and December in each year.

(b) “Dividend Period” means the period from and including the date of initial issue of the Series 11 Preference Shares up to but excluding the later of (a) the date of a certificate of amendment under the Business Corporations Act (Ontario) in respect of these articles of amendment, and (b) September 30, 2002 and, thereafter, the period from and including a Dividend Payment Date up to but excluding the next succeeding Dividend Payment Date.

2.2. Non-Cumulative Preferential Dividends

The holders of Series 11 Preference Shares (the “Holders”) shall be entitled to receive, and the Corporation shall pay thereon, if, as and when declared by the Board of Directors, out of moneys of the Corporation properly applicable to the payment of dividends, fixed non- cumulative preferential cash dividends (the “Series 11 Dividends”) payable, with respect to each Dividend Period, on the Dividend Payment Date immediately following the end of each such Dividend Period in an amount per Series 11 Preference Share per annum equal to $1.375, accruing daily from the date of issue (less any tax required to be deducted) which shall be calculated on a 365 or 366 day basis, being the actual number of days in the year in which the amount is to be ascertained, by cheque at par in lawful money of Canada at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable.

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Series 11 Dividends shall (except in case of redemption in which case payment of Series 11 Dividends shall be made on surrender of the certificate representing the Series 11 Preference Shares to be redeemed) be paid by posting in a postage paid envelope addressed to each Holder at the last address of such Holder as it appears on the securities register of the Corporation or, in the case of joint Holders, to the address of that one whose name appears first in the securities register of the Corporation as one of such joint Holders, or, in the event of the address of any Holder not so appearing, then to the address of such Holder last known to the Corporation, a cheque for such Series 11 Dividends (less any tax required to be deducted) payable to the order of such Holder or, in the case of joint Holders, to the order of all such Holders failing written instructions from them to the contrary. Notwithstanding the foregoing, any dividend cheque may be delivered by the Corporation to a Holder at his address as aforesaid. The posting or delivery of such cheque on or before the date on which such dividend is to be paid to a Holder shall be deemed to be payment and shall satisfy and discharge all liabilities for the payment of such dividends to the extent of the sum represented thereby (plus the amount of any tax required to be deducted as aforesaid) unless such cheque is not paid on due presentation. Subject to applicable law, dividends which are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed for a period of six years from the date on which they were declared to be payable shall be forfeited to the Corporation.

If in any Dividend Period the board of directors in its discretion does not declare the Series 11 Dividends or part thereof on the Series 11 Preference Shares, then the rights of the holders thereof to such dividends or to any greater dividend than the dividend actually declared for such Dividend Period shall be forever extinguished.

The Holders shall not be entitled to any dividends other than or in excess of the non-cumulative preferential cash dividends herein provided for.

2.3. Dividend for Other than a Full Dividend Period

The Holders shall be entitled to receive, and the Corporation shall pay thereon, if, as and when declared by the Board of Directors, out of moneys of the Corporation properly applicable to the payment of dividends, non-cumulative preferential cash dividends for any period which is more or less than a full Dividend Period as follows:

(a) in respect of the period beginning on and including the date of initial issue of the Series 11 Preference Shares to but excluding the later of (a) the date of a certificate of amendment under the Business Corporations Act (Ontario) in respect of these articles of amendment, and (b) September 30, 2002 (the “Initial Dividend Period”), a dividend in an amount per Series 11 Preference Share equal to the amount obtained (rounded to four decimal places) when $1.375 is multiplied by a fraction, the numerator of which is the number of calendar days from and including the date of issue of the Series 11 Preference Shares up to but excluding the later of (a) the date of a certificate of amendment under the Business Corporations Act (Ontario) in respect of these articles of amendment, and (b) September 30,2002, and the denominator of which is 365.

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(b) in respect of any period other than the Initial Dividend Period that is more or less than a full Dividend Period, a dividend in an amount per Series 11 Preference Share equal to the amount obtained (rounded to four decimal places) when $1.375 is multiplied by a fraction, the numerator of which is the number of calendar days in the relevant period (which shall include the first day of such period but exclude the last day of such period) and the denominator of which is the number of calendar days in the year in which such period falls.

3. Rights on Liquidation

In the event of the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or any other distribution of assets of the Corporation among its shareholders for the purpose of winding up its affairs, the Holders shall be entitled to receive $25.00 per Series 11 Preference Share, together with all Series 11 Dividends declared and unpaid up to but excluding the date of payment or distribution (less any tax required to be deducted or withheld by the Corporation), before any amounts shall be paid or any assets of the Corporation distributed to the holders of any shares ranking junior as to capital to the Series 11 Preference Shares. Upon payment of such amounts, the Holders shall not be entitled to share in any further distribution of the assets of the Corporation.

4. Redemption at the Option of the Corporation

The Corporation may not redeem any of the Series 11 Preference Shares prior to June 30, 2009. On or after this date, the Corporation may, subject to applicable law and to the provisions described under Section 6 below, upon giving notice as hereinafter provided, at its option, at any time redeem all, or from time to time any part, of the then outstanding Series 11 Preference Shares by the payment of an amount in cash for each Series 11 Preference Share so redeemed equal to:

(a)   $25.75 if redeemed before June 30, 2010;

(b)   $25.50 if redeemed on or after June 30, 2010, but before June 30, 2011;

(c)   $25.25 if redeemed on or after June 30, 2011, but before June 30, 2012; and

(d)   $25.00 if redeemed on or after June 30, 2012;

in each case, together with all declared and unpaid Series 11 Dividends up to but excluding the date fixed for redemption (less any tax required to be deducted and withheld by the Corporation) (the “Redemption Price”).

If less than all of the then outstanding Series 11 Preference Shares are at any time to be redeemed, then the particular Series 11 Preference Shares to be redeemed shall be selected in such a manner as the Corporation may determine.

The Corporation shall give notice in writing not less than 30 days nor more than 60 days prior to the date on which the redemption is to take place of its intention to redeem such Series

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11 Preference Shares to each person who at the date of giving such notice is the Holder of Series 11 Preference Shares to be redeemed. Any such notice shall be validly and effectively given on the date on which it is sent and such notice shall be given and sent by posting the same in a postage paid envelope addressed to each Holder of Series 11 Preference Shares to be redeemed at the last address of such Holder as it appears on the securities register of the Corporation, or in the case of joint Holders, to the address of that one whose name appears first in the securities register of the Corporation as one of such joint Holders or, in the event of the address of any Holder not so appearing, then to the address of such Holder last known to the Corporation, provided that the accidental failure or omission to give any such notices as aforesaid to one or more of such Holders shall not affect the validity of the redemption as to the other Holders of the Series 11 Preference Shares to be redeemed. Such notice shall set out the number of such Series 11 Preference Shares held by the person to whom it is addressed which are to be redeemed and the Redemption Price and shall also set out the date on which the redemption is to take place. On and after the date so specified for redemption, the Corporation shall pay or cause to be paid to the Holders to be redeemed the Redemption Price on presentation and surrender, at any place within Canada designated by such notice, of the certificate or certificates for such Series 11 Preference Shares so called for redemption. Such payment shall be made by cheque payable at par at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable and shall be a full and complete discharge of the Corporation’s obligation to pay the Redemption Price owed to the holders of Series 11 Preference Shares so called for redemption unless the cheque is not honoured when presented for payment. From and after the date specified in any such notice, the Series 11 Preference Shares called for redemption shall cease to be entitled to Series 11 Dividends and the Holders thereof shall not be entitled to exercise any of the rights of shareholders in respect thereof, except to receive the Redemption Price therefor, provided that if payment of the Redemption Price shall not be duly made by the Corporation. At any time after notice of redemption is given as aforesaid, the Corporation shall have the right to deposit the Redemption Price of any or all Series 11 Preference Shares called for redemption (less any tax required to be deducted and withheld by the Corporation), or such part thereof as at the time of deposit has not been claimed by the holders entitled thereto, with any chartered bank or banks or with any trust company or trust companies in Canada named in the notice of redemption to the credit of a special account or accounts in trust for the respective Holders of such shares, to be paid to them respectively upon surrender to such bank or banks or trust company or trust companies of the certificate or certificates representing the same. Upon such deposit or deposits being made, such shares shall be deemed to be redeemed on the redemption date specified in the notice of redemption. After the Corporation has made a deposit as aforesaid with respect to any shares, the Holders thereof shall not, from and after the redemption date, be entitled to exercise any of the rights of shareholders in respect thereof and the rights of the Holders thereof shall be limited to receiving a proportion of the amounts so deposited applicable to such shares, without interest. Any interest allowed on such deposit shall belong to the Corporation. Subject to applicable law, redemption monies that are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed (including monies held in deposit as provided for above) for a period of six years from the date specified for redemption shall be forfeited to the Corporation.

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5. Conversion of Series 11 Preference Shares

5.1. Conversion at the Option of the Corporation

The Series 11 Preference Shares shall not be convertible at the option of the Corporation prior to June 30, 2009. On and after June 30, 2009, the Corporation may, subject, if required, to applicable law and other regulatory approvals, and upon notice as hereinafter described, convert all, or from time to time any part, of the then outstanding Series 11 Preference Shares into that number of Class A Shares determined (per Series 11 Preference Share) by dividing the Redemption Price that would be applicable on the Corporation’s Conversion Date (as hereinafter defined), together with all declared and unpaid dividends up to but excluding the Corporation’s Conversion Date, by the greater of $2.00 or 95% of the weighted average trading price of the Class A Shares on The Toronto Stock Exchange (or any successor exchange or trading system) for the 20 consecutive trading days ending on: (i) the fourth day prior to the date specified for conversion, or (ii) if such fourth day is not a trading day, the immediately preceding trading day (the “Current Market Price”). Fractional Class A Shares will not be issued on any conversion of Class A Preference Shares, Series 11, but in lieu thereof the Corporation will make cash payments in the manner set out in Section 5.3 below. Such conversion shall be deemed to have been made at the close of business on the Corporation’s Conversion Date, so that the rights of the Holder of such Series 11 Preference Shares as the Holder thereof shall cease at such time and the person or persons entitled to receive Class A Shares upon such conversion shall be treated for all purposes as having become the holder or holders of record of such Class A Shares at such time.

Upon exercise by the Corporation of its right to convert Series 11 Preference Shares into Class A Shares, the Corporation is not required to issue Class A Shares to any person whose address is in, or whom the Corporation or its transfer agent has reason to believe is a resident of, any jurisdiction outside of Canada, to the extent that such issue would require compliance by the Corporation with the securities or other laws of such jurisdiction.

The Corporation shall give written notice to each Holder whose shares are to be converted, which notice (the “Corporation’s Conversion Notice”) shall specify the number of Series 11 Preference Shares held by such Holder that will be converted and the date fixed by the Corporation for conversion (the “Corporation’s Conversion Date”), and which notice shall be given not more than 60 calendar days and not less than 30 calendar days prior to such Corporation’s Conversion Date.

If less than all of the then outstanding Series 11 Preference Shares are at any time to be converted at the option of the Corporation, then the particular Series 11 Preference Shares to be so converted shall be selected in such manner as the Corporation may determine.

Series 11 Preference Shares that are the subject of a Corporation’s Conversion Notice shall be converted effective on the Corporation’s Conversion Date.

The Corporation cannot exercise its conversion rights hereunder in respect of any Series 11 Preference Shares that are the subject of a Holder’s Conversion Notice under Section 5.2 below.

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5.2. Conversion at the Option of the Holder

Subject to applicable law and to the option of the Corporation in Section 5.4, on each Dividend Payment Date on or after December 31, 2013, a Holder, upon notice as hereinafter described, may convert all or any part of the then outstanding Series 11 Preference Shares registered in the name of the Holder into that number of Class A Shares determined (per Series 11 Preference Share) by dividing $25.00, together with all declared and unpaid Series 11 Dividends up to but excluding the Holder’s Conversion Date (as hereinafter defined), by the greater of $2.00 or 95% of the Current Market Price. Fractional Class A Shares will not be issued on any conversion of Series 11 Preference Shares, but in lieu thereof the Corporation will make cash payments in the manner set out in Section 5.3 below. Such conversion shall be deemed to have been made at the close of business on the Holder’s Conversion Date, so that the rights of the Holder of such Series 11 Preference Shares as the Holder thereof shall cease at such time and the person or persons entitled to receive Class A Shares upon such conversion shall be treated for all purposes as having become the holder or holders of record of such Class A Shares at such time.

In order to exercise its conversion rights, the Holder shall give written notice to the Corporation at the registered office of the Corporation or the principal transfer office of the transfer agent for the Series 11 Preference Shares in the City of Toronto (the “Holder’s Conversion Notice”), which Holder’s Conversion Notice shall specify the number of Series 11 Preference Shares (the “Subject Shares”) held by such Holder which shall be converted on the Dividend Payment Date chosen by the Holder for conversion (the “Holder’s Conversion Date”). The Holder’s Conversion Notice shall be given at least 30 calendar days prior to such Holder’s Conversion Date and shall be irrevocable.

Upon exercise by the Holder of its right to convert Series 11 Preference Shares into Class A Shares, the Corporation is not required to issue Class A Shares to any person whose address is in, or whom the Corporation or its transfer agent has reason to believe is a resident of, any jurisdiction outside of Canada, to the extent that such issue would require compliance by the Corporation with the securities or other laws of such jurisdiction.

If the Corporation gives notice as provided in Section 4 to a Holder of the redemption of Series 11 Preference Shares prior to that Holder giving a Holder’s Conversion Notice to the Corporation, the right of that Holder to convert such Series 11 Preference Shares as herein provided shall cease and terminate in that event.

5.3. Delivery of Certificates Representing Class A Shares

The Corporation shall, on presentation and surrender at the head office of the Corporation, the principal transfer office of the transfer agent for the Series 11 Preference Shares in the City of Toronto, or such other place or places in Canada as the Corporation may agree, of the certificate or certificates representing the Series 11 Preference Shares being converted by the Corporation or the Holder, give or cause to be given, on the applicable Corporation’s Conversion Date or Holder’s Conversion Date, as the case may be, to each Holder of Series 11 Preference Shares being converted or as such Holder may have otherwise directed:

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(a) a certificate representing the whole number of Class A Shares into which such Series 11 Preference Shares being converted are to be converted, registered in the name of the Holder, or as such Holder may have otherwise directed; and

(b) in lieu of the issuance of a fractional Class A Share, a cheque in an amount equal to the product of the fractional remainder, if any (rounded to four decimal places), produced by the conversion formula set forth in Section 5.1 or Section 5.2 above, as the case may be, multiplied by the greater of $2.00 or 95% of the then Current Market Price.

If on any conversion under Section 5.1 or 5.2, less than all of the Series 11 Preference Shares represented by any certificate are to be converted, a new certificate representing the balance of such Series 11 Preference Shares shall be issued by the Corporation without cost to the Holder.

The Holder of any Series 11 Preference Share on the record date for any dividend declared payable on such share shall be entitled to such dividend notwithstanding that such share is converted into Class A Shares after such record date and on or before the date of the payment of such dividend.

The issuance of certificates for the Class A Shares upon the conversion of Series 11 Preference Shares shall be made without charge to the Holders for any fee or tax in respect of the issuance of such certificates or the Class A Shares represented thereby; provided, however, that the Corporation shall not be required to pay any tax which may be imposed upon the person or persons to whom such Class A Shares are issued in respect of the issuance of such Class A Shares or the certificate therefor or which may be payable in respect of any transfer involved in the issuance and delivery of any such certificate in the name or names other than that of the Holder or deliver such certificate unless the person or persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid.

5.4. Option of the Corporation

If a Holder gives a Holder’s Conversion Notice to the Corporation, subject to the provisions described in Section 6 below, as applicable, the Corporation may, at its option, on notice to such Holder in the manner described in this Section 5.4, either (i) redeem on the first business day after the Holder’s Conversion Date all or any part of the Subject Shares, or (ii) cause the Holder to sell on the first business day after the Holder’s Conversion Date all or any part of the Subject Shares to another purchaser or purchasers in the event that a purchaser or purchasers willing to purchase all or any part of such Subject Shares is or are found by the Corporation pursuant to this Section 5.4. The proportion of the Subject Shares which are either redeemed, purchased or converted on that Conversion Date shall, to the extent practicable, be the same for each holder delivering a Conversion Notice.

If the Corporation elects to redeem for cash or arrange for the purchase of any Subject Shares, then the Corporation shall, not less than 20 calendar days prior to the Holder’s

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Conversion Date, give written notice to all Holders of the Subject Shares stating the number of Subject Shares to be redeemed for cash by the Corporation, the number of Subject Shares to be sold to another purchaser, and the number of Subject Shares to be converted into Class A Shares pursuant to the Holder’s Conversion Notice, such that all of the Subject Shares are either redeemed, purchased or converted on or before the first business day after Holder’s Conversion Date.

If the Corporation elects to redeem for cash or arrange for the purchase of any Subject Shares, then the Corporation shall pay or cause to be paid, in respect of those Subject Shares to be redeemed for cash or purchased, on presentation and surrender at the head office of the Corporation, the principal transfer office of the transfer agent for the Series 11 Preference Shares in the City of Toronto, or such other place or places in Canada as the Corporation may agree, of the certificate or certificates representing such Subject Shares, on the Holder’s Conversion Date, to the Holder of the Subject Shares or as such Holder may have otherwise directed, an amount in cash equal to $25.00 plus all declared and unpaid Series 11 Dividends up to but excluding the Holder’s Conversion Date for each Subject Share being redeemed or purchased (less any tax required to be deducted and withheld by the Corporation), and each such Subject Share shall be deemed to have been redeemed or purchased, but not converted, as the case may be, on the Holder’s Conversion Date. Payment under this Section 5.4 shall be made by cheque in accordance with Section 5.5 hereof.

If the Corporation elects to redeem for cash or arrange for the purchase of some, but not all, of the Subject Shares, then the Corporation shall, in respect of those Subject Shares to be converted into Class A Shares, give or cause to be given to the Holder of such Subject Shares the certificate or certificates representing such Class A Shares and, if applicable, a cheque in lieu of a fractional Class A Share, all in accordance with the procedures set forth in Section 5.3.

5.5. Payment by Cheque

Any amounts that are paid by the Corporation to Holders in respect of the payment of (i) a redemption or purchase amount under Section 5.4, or (ii) a cash amount in lieu of the issuance of a fractional Class A Share under Sections 5.1 or 5.2, shall be paid by cheques drawn on a Canadian chartered bank and payable in lawful money of Canada at any branch of such bank in Canada, and the delivery or mailing of any such cheque to a Holder shall constitute a full and complete discharge of the Corporation’s obligation to pay such amounts (plus any tax required to be and in fact deducted and withheld therefrom and remitted to the proper taxing authority), unless such cheque is not honoured when presented for payment.

6. Restrictions on Dividends and Retirement and Issue of Shares

So long as any of the Series 11 Preference Shares are outstanding, the Corporation shall not, without the approval of the Holders:

(a) declare, pay or set apart for payment any dividends (other than stock dividends payable in shares of the Corporation ranking as to capital and dividends junior to

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    the Series 11 Preference Shares) on any shares of the Corporation ranking as to dividends junior to the Series 11 Preference Shares;

(b)   except out of the net cash proceeds of a substantially concurrent issue of shares of the Corporation ranking as to return of capital and dividends junior to the Series 11 Preference Shares, redeem or call for redemption, purchase or otherwise pay off, retire or make any return of capital in respect of any shares of the Corporation ranking as to capital junior to the Series 11 Preference Shares;

(c)   redeem or call for redemption, purchase or otherwise retire for value or make any return of capital in respect of less than all of the Series 11 Preference Shares then outstanding;

(d)   except pursuant to any purchase obligation, sinking fund, retraction privilege or mandatory redemption provisions attaching thereto, redeem or call for redemption, purchase or otherwise pay off, retire or make any return of capital in respect of any Class A Preference Shares, ranking as to the payment of dividends or return of capital on a parity with the Series 11 Preference Shares; or

(e)   issue any additional Series 11 Preference Shares or any shares ranking as to the payment of dividends or the return of capital prior to or on a parity with the Series 11 Preference Shares, except for an issue of Series 11 Preference Shares pursuant to (i) the offer to purchase Class A Shares and Class B Non-Voting Shares of Trilon Financial Corporation made by the Corporation and dated April 11, 2002, as amended from time to time (the “Offer”); (ii) any Compulsory Acquisition (as that term is defined in the Offer); or (iii) any Subsequent Acquisition Transaction (as that term is defined in the Offer);

unless, in each such case, all declared and unpaid dividends up to and including the dividend payable for the last completed period for which dividends were payable on the Series 11 Preference Shares and on all other shares of the Corporation ranking prior to or on a parity with the Series 11 Preference Shares with respect to the payment of dividends have been declared paid or set apart for payment.

7. Purchase for Cancellation

Subject to applicable law and to the provisions described in Section 6 above, the Corporation may at any time purchase (if obtainable) for cancellation the whole or any part of the Series 11 Preference Shares outstanding from time to time, in the open market through or from an investment dealer or any firm holding membership on a recognized stock exchange, or by private agreement or otherwise, at the lowest price or prices at which, in the opinion of the Board of Directors of the Corporation, such shares are obtainable.

8. Voting Rights

The Holders will not (except as otherwise provided by law and except for meetings of the holders of Class A Preference Shares as a class and meetings of the holders of the Series 11 Preference

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Shares as a series) be entitled to receive notice of, attend, or vote at any meeting of shareholders of the Corporation unless and until the Corporation shall have failed to pay eight quarterly Series 11 Dividends on the Series 11 Preference Shares, whether or not consecutive and whether or not such dividends have been declared and whether or not there are any monies of the Corporation properly applicable to the payment of Series 11 Dividends. In the event of such non-payment, until such time as the Corporation pays the whole amount of a quarterly dividend, the Holders will be entitled to receive notice of and to attend each meeting of shareholders of the Corporation (other than any meetings at which only holders of another specified class or series are entitled to vote) and such Holders shall have the right, at any such meeting, to one vote for each Series 11 Preference Share held, provided that Holders will vote with holders of Class A Shares and, in certain circumstances, with the holders of certain other series of the Class A Preference Shares only in the election of one-half of the board of directors (less the number of directors which the holders of the Class A Preference Shares, Series 1, Class A Preference Shares, Series 2 and Class A Preference Shares, Series 3 may be entitled to elect). No other voting rights shall attach to the Series 11 Preference Shares in any circumstances. The voting rights of the Holders shall forthwith cease (unless and until the same default shall again arise under the provisions of this section 8) upon payment by the Corporation of the whole amount of a quarterly dividend on the Series 11 Preference Shares subsequent to the time such voting right first arose.

9. Modifications

The provisions attaching to the Series 11 Preference Shares as a series may be repealed, altered, modified or amended from time to time with such approval as may then be required by the Business Corporations Act (Ontario), any such approval to be given in accordance with Section 10.

10. Approval of Holders of Series 11 Preference Shares

10.1. Approval

Except as otherwise provided herein, any approval of the Holders with respect to any matters requiring the consent of the Holders may be given in such manner as may then be required by law, subject to a minimum requirement that such approval be given by a resolution signed by all the Holders or passed by the affirmative vote of at least 66 2/3% of the votes cast by the Holders who voted in respect of that resolution at a meeting of the Holders duly called for that purpose and at which the Holders of a majority of the outstanding Series 11 Preference Shares are present or represented by proxy. If at any such meeting the Holder(s) of a majority of the outstanding Series 11 Preference Shares are not present or represented by proxy within one- half hour after the time appointed for such meeting, then the meeting shall be adjourned to such date not less than 15 days thereafter and to such time and place as may be designated by the chairman of such meeting, and not less than 10 days’ written notice shall be given of such adjourned meeting. At such adjourned meeting, the Holders(s) of Series 11 Preference Shares represented in person or by proxy may transact the business for which the meeting was originally called and the Holders represented in person or by proxy shall form the necessary quorum.

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10.2. Formalities, etc.

The proxy rules applicable to, the formalities to be observed in respect of the giving notice of, and the formalities to be observed in respect of the conduct of, any meeting or any adjourned meeting of Holders shall be those from time to time prescribed by the by-laws of the Corporation with respect to meetings of shareholders or, if not so prescribed, as required by law. On every poll taken at every meeting of Holders, each Holder entitled to vote thereat shall be entitled to one vote in respect of each Series 11 Preference Share held.

11. Tax Election

The Corporation shall elect, in the manner and within the time provided under the Income Tax Act (Canada), under subsection 191.2(1) of the said Act, or any successor or replacement provision of similar effect, and take all other necessary action under such Act, to pay or cause payment of the tax under Part VI. 1 of such Act at a rate such that the corporate Holders will not be required to pay tax on dividends received on the Series 11 Preference Shares under Section 187.2 of Part IV.I of such Act or any successor or replacement provision of similar effect.

12. Notices

(a) If the Board of Directors determines that mail service is or is threatened to be interrupted at the time when the Corporation is required or elects to give any notice hereunder by mail, or is required to send any cheque or any share certificate to a Holder, whether in connection with the redemption or conversion of such share or otherwise, the Corporation may, notwithstanding the provisions hereof:

(ii) fulfill the requirement to send such cheque or such share certificate by arranging for the delivery thereof to such Holder by the transfer agent for the Series 11 Preference Shares at its principal offices in the cities of Vancouver, Toronto and Montreal, and such cheque and/or share certificate shall be deemed to have been sent on the date on which notice of such arrangement shall have been given as provided in (a) above, provided that as soon as the Board of Directors determines that mail service is no longer interrupted or threatened to be interrupted, such cheque or share certificate, if not theretofore delivered to such Holder, shall be sent by mail as herein provided. In the event that the Corporation is required to mail such cheque or share certificate, such mailing shall be made by prepaid mail to the registered address of each person who at the

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date of mailing is a registered Holder and who is entitled to receive such cheque or share certificate.

(b) Any notice, cheque, invitation for tenders or other communication from the Corporation herein provided for shall be sufficiently given if delivered or if sent by first class unregistered mail, postage prepaid, to the holders of the Series 11 Preference Shares at their respective addresses appearing on the books of the Corporation or, in the event of the address of any of such holders not so appearing, then at the last address of such holder known to the Corporation. Accidental failure to give such notice, invitation for tenders or other communication to one or more holders of the Series 11 Preference Shares shall not affect the validity of the notices, invitations for tenders or other communications properly given or any action taken pursuant to such notice, invitation for tender or other communication but, upon such failure being discovered, the notice, invitation for tenders or other communication, as the case may be, shall be sent forthwith to such holder or holders.

(c) If any notice, cheque, invitation for tenders or other communication from the Corporation given to a holder of Series 11 Preference Shares pursuant to paragraph (b) is returned on three consecutive occasions because the holder cannot be found, the Corporation shall not be required to give or mail any further notices, cheques, invitations for tenders or other communications to such shareholder until the holder informs the Corporation in writing of such holder’s new address.

13. Interpretation

In the provisions herein contained attaching to the Series 11 Preference Shares:

(a)   “in priority to”, “on a parity with” and “junior to” have reference to the order of priority in payment of dividends and in the distribution of assets in the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs;

(b)   in the event that any date on which any dividend on the Series 11 Preference Shares is payable by the Corporation, or any date on or by which any other action is required to be taken by the Corporation or the Holders hereunder, is not a business day (as hereinafter defined), then such dividend shall be payable, or such other action shall be required to be taken, on or by the next succeeding day that is a business day. A “business day” shall be a day other than a Saturday, a Sunday or any other day that is treated as a holiday in the province of Ontario;

(c)   “Class A Shares” means Class A Limited Voting Shares of the Corporation, as constituted from time to time and any shares resulting from a reclassification of the Class A Limited Voting Shares of the Corporation or which result from a

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capital reorganization of the Corporation or a consolidation, amalgamation or merger of the Corporation with or into any other corporation (other than a capital reorganization, consolidation, amalgamation or merger which does not result in any reclassification of the Class A Limited Voting Shares into other shares or securities); and

(d) all references herein to a holder of Series 11 Preference Shares shall be interpreted as referring to a registered holder of the Series 11 Preference Shares.

14. Book-Entry Only System

If the Series 11 Preference Shares are held through the book-entry only system of the Canadian Depository for Securities (“CDS”), then the beneficial owner thereof shall provide instructions only by such beneficial owner providing instructions to the CDS participant through whom such beneficial owner holds such Series 11 Preference Shares.

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Number and Designation of and Rights, Privileges, Restrictions and Conditions
Attaching to the Cumulative Class A Preference Shares, Series 12

The twelfth series of Class A Preference Shares of the Corporation shall consist of 8,000,000 Class A Preference Shares designated as Class A Preference Shares, Series 12 (“Series 12 Preference Shares”) and, in addition to the rights, privileges, restrictions and conditions attaching to the Class A Preference Shares as a class, shall have attached thereto the following rights, privileges, restrictions and conditions:

1. Consideration for Issue

The consideration for the issue of each Series 12 Preference Share shall be $25.00 or its equivalent in property or past services.

2. Dividends

2.1. Definitions

For the purposes hereof, the following capitalized terms shall have the following meanings, unless the context otherwise requires:

(a) “Dividend Payment Date” in respect of the dividends payable on the Series 12 Preference Shares means the last day of each of March, June, September and December in each year.

(b) “Dividend Period” means the period from and including the date of initial issue of the Series 12 Preference Shares up to but excluding March 31, 2003 and, thereafter, the period from and including a Dividend Payment Date up to but excluding the next succeeding Dividend Payment Date.

2.2. Cumulative Preferential Dividends

The holders of Series 12 Preference Shares (the “Holders”) shall be entitled to receive, and the Corporation shall pay thereon, if, as and when declared by the Board of Directors, out of moneys of the Corporation properly applicable to the payment of dividends, fixed cumulative preferential cash dividends (the “Series 12 Dividends”) payable quarterly, with respect to each Dividend Period, on the Dividend Payment Date immediately following the end of each such Dividend Period in an amount per Series 12 Preference Share per annum equal to $1.35, accruing daily from the date of issue (less any tax required to be deducted) which shall be calculated on a 365 or 366 day basis, being the actual number of days in the year in which the amount is to be ascertained, by cheque at par in lawful money of Canada at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable.

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Series 12 Dividends shall (except in case of redemption in which case payment of Series 12 Dividends shall be made on surrender of the certificate representing the Series 12 Preference Shares to be redeemed) be paid by posting in a postage paid envelope addressed to each Holder at the last address of such Holder as it appears on the securities register of the Corporation or, in the case of joint Holders, to the address of that one whose name appears first in the securities register of the Corporation as one of such joint Holders, or, in the event of the address of any Holder not so appearing, then to the address of such Holder last known to the Corporation, a cheque for such Series 12 Dividends (less any tax required to be deducted) payable to the order of such Holder or, in the case of joint Holders, to the order of all such Holders failing written instructions from them to the contrary. Notwithstanding the foregoing, any dividend cheque may be delivered by the Corporation to a Holder at his address as aforesaid. The posting or delivery of such cheque on or before the date on which such dividend is to be paid to a Holder shall be deemed to be payment and shall satisfy and discharge all liabilities for the payment of such dividends to the extent of the sum represented thereby (plus the amount of any tax required to be deducted as aforesaid) unless such cheque is not paid on due presentation. Subject to applicable law, dividends which are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed for a period of six years from the date on which they were declared to be payable shall be forfeited to the Corporation.

If on any Dividend Payment Date, the Series 12 Dividends accrued to such date are not paid in full on all of the Series 12 Preference Shares then outstanding, such Series 12 Dividends, or the unpaid part thereof, shall be paid on a subsequent date or dates determined by the Board of Directors on which the Corporation shall have sufficient monies properly applicable to the payment of such Series 12 Dividends.

The Holders shall not be entitled to any dividends other than or in excess of the cumulative preferential cash dividends herein provided for.

2.3. Dividend for Other than a Full Dividend Period

(a) in respect of the period beginning on and including the date of initial issue of the Series 12 Preference Shares to but excluding March 31, 2003 (the “Initial Dividend Period”), a dividend in an amount per Series 12 Preference Share equal to the amount obtained (rounded to four decimal places) when $1.35 is multiplied by a fraction, the numerator of which is the number of calendar days from and including the date of issue of the Series 12 Preference Shares up to but excluding March 31, 2003, and the denominator of which is 365. The Series 12 Dividend payable for the Initial Dividend Period, payable as of March 31, 2003, as calculated by this method shall be $0.1479 per Series 12 Preference Share; and

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(b) in respect of any period other than the Initial Dividend Period that is more or less than a full Dividend Period, a dividend in an amount per Series 12 Preference Share equal to the amount obtained (rounded to four decimal places) when $1.35 is multiplied by a fraction, the numerator of which is the number of calendar days in the relevant period (which shall include the first day of such period but exclude the last day of such period) and the denominator of which is the number of calendar days in the year in which such period falls.

3. Rights on Liquidation

In the event of the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or any other distribution of assets of the Corporation among its shareholders for the purpose of winding up its affairs, the Holders shall be entitled to receive $25.00 per Series 12 Preference Share, together with all Series 12 Dividends accrued and unpaid up to but excluding the date of payment or distribution (less any tax required to be deducted or withheld by the Corporation), before any amounts shall be paid or any assets of the Corporation distributed to the holders of any shares ranking junior as to capital to the Series 12 Preference Shares. Upon payment of such amounts, the Holders shall not be entitled to share in any further distribution of the assets of the Corporation.

4. Redemption at the Option of the Corporation

The Corporation may not redeem any of the Series 12 Preference Shares prior to March 31, 2014. On or after this date, the Corporation may, subject to applicable law and to the provisions described under Section 6 below, upon giving notice as hereinafter provided, at its option, at any time redeem all, or from time to time any part, of the then outstanding Series 12 Preference Shares by the payment of an amount in cash for each Series 12 Preference Share so redeemed equal to:

(a)   $26.00 if redeemed before March 31, 2015;

(b)   $25.75 if redeemed on or after March 31, 2015, but before March 31, 2016;

(c)   $25.50 if redeemed on or after March 31, 2016, but before March 31, 2017;

(d)   $25.25 if redeemed on or after March 31, 2017, but before March 31, 2018; and

(e)   $25.00 if redeemed on or after March 31, 2018;

in each case, together with all accrued and unpaid Series 12 Dividends up to but excluding the date fixed for redemption (less any tax required to be deducted and withheld by the Corporation) (the “Redemption Price”).

If less than all of the then outstanding Series 12 Preference Shares are at any time to be redeemed, then the particular Series 12 Preference Shares to be redeemed shall be selected on a pro rata basis.

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The Corporation shall give notice in writing not less than 30 days nor more than 60 days prior to the date on which the redemption is to take place of its intention to redeem such Series 12 Preference Shares to each person who at the date of giving such notice is the Holder of Series 12 Preference Shares to be redeemed. Any such notice shall be validly and effectively given on the date on which it is sent and such notice shall be given and sent by posting the same in a postage paid envelope addressed to each Holder of Series 12 Preference Shares to be redeemed at the last address of such Holder as it appears on the securities register of the Corporation, or in the case of joint Holders, to the address of that one whose name appears first in the securities register of the Corporation as one of such joint Holders or, in the event of the address of any Holder not so appearing, then to the address of such Holder last known to the Corporation, provided that the accidental failure or omission to give any such notices as aforesaid to one or more of such Holders shall not affect the validity of the redemption as to the other Holders of the Series 12 Preference Shares to be redeemed. Such notice shall set out the number of such Series 12 Preference Shares held by the person to whom it is addressed which are to be redeemed and the Redemption Price and shall also set out the date on which the redemption is to take place. On and after the date so specified for redemption, the Corporation shall pay or cause to be paid to the Holders to be redeemed the Redemption Price on presentation and surrender, at any place within Canada designated by such notice, of the certificate or certificates for such Series 12 Preference Shares so called for redemption. Such payment shall be made by cheque payable at par at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable and shall be a full and complete discharge of the Corporation’s obligation to pay the Redemption Price owed to the holders of Series 12 Preference Shares so called for redemption unless the cheque is not honoured when presented for payment. From and after the date specified in any such notice, the Series 12 Preference Shares called for redemption shall cease to be entitled to Series 12 Dividends and the Holders thereof shall not be entitled to exercise any of the rights of shareholders in respect thereof, except to receive the Redemption Price therefor, provided that if payment of the Redemption Price shall not be duly made by the Corporation. At any time after notice of redemption is given as aforesaid, the Corporation shall have the right to deposit the Redemption Price of any or all Series 12 Preference Shares called for redemption (less any tax required to be deducted and withheld by the Corporation), or such part thereof as at the time of deposit has not been claimed by the holders entitled thereto, with any chartered bank or banks or with any trust company or trust companies in Canada named in the notice of redemption to the credit of a special account or accounts in trust for the respective Holders of such shares, to be paid to them respectively upon surrender to such bank or banks or trust company or trust companies of the certificate or certificates representing the same. Upon such deposit or deposits being made, such shares shall be deemed to be redeemed on the redemption date specified in the notice of redemption. After the Corporation has made a deposit as aforesaid with respect to any shares, the Holders thereof shall not, from and after the redemption date, be entitled to exercise any of the rights of shareholders in respect thereof and the rights of the Holders thereof shall be limited to receiving a proportion of the amounts so deposited applicable to such shares, without interest. Any interest allowed on such deposit shall belong to the Corporation. Subject to applicable law, redemption monies that are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed (including monies held in deposit as

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provided for above) for a period of six years from the date specified for redemption shall be forfeited to the Corporation.

5. Conversion of Series 12 Preference Shares

5.1. Conversion at the Option of the Corporation

The Series 12 Preference Shares shall not be convertible at the option of the Corporation prior to March 31, 2014. On and after March 31, 2014, the Corporation may, subject, if required, to applicable law and other regulatory approvals, and upon notice as hereinafter described, convert all, or from time to time any part, of the then outstanding Series 12 Preference Shares into that number of freely tradeable Class A Shares determined (per Series 12 Preference Share) by dividing the Redemption Price that would be applicable on the Corporation’s Conversion Date (as hereinafter defined), together with all accrued and unpaid dividends up to but excluding the Corporation’s Conversion Date, by the greater of $2.00 or 95% of the weighted average trading price of the Class A Shares on the Toronto Stock Exchange (or any successor exchange or trading system) for the 20 consecutive trading days ending on: (i) the fourth day prior to the date specified for conversion, or (ii) if such fourth day is not a trading day, the immediately preceding trading day (the “Current Market Price”). Fractional Class A Shares will not be issued on any conversion of Class A Preference Shares, Series 12, but in lieu thereof the Corporation will make cash payments in the manner set out in Section 5.3 below. Such conversion shall be deemed to have been made at the close of business on the Corporation’s Conversion Date, so that the rights of the Holder of such Series 12 Preference Shares as the Holder thereof shall cease at such time and the person or persons entitled to receive Class A Shares upon such conversion shall be treated for all purposes as having become the holder or holders of record of such Class A. Shares at such time.

Upon exercise by the Corporation of its right to convert Series 12 Preference Shares into Class A Shares, the Corporation is not required to issue Class A Shares to any person whose address is in, or whom the Corporation or its transfer agent has reason to believe is a resident of, any jurisdiction outside of Canada, to the extent that such issue would require compliance by the Corporation with the securities or other laws of such jurisdiction.

The Corporation shall give written notice to each Holder whose shares are to be converted, which notice (the “Corporation’s Conversion Notice”) shall specify the number of Series 12 Preference Shares held by such Holder that will be converted and the date fixed by the Corporation for conversion (the “Corporation’s Conversion Date”), and which notice shall be given not more than 60 calendar days and not less than 30 calendar days prior to such Corporation’s Conversion Date.

If less than all of the then outstanding Series 12 Preference Shares are at any time to be converted at the option of the Corporation, then the particular Series 12 Preference Shares to be so converted shall be selected on a pro rata basis.

Series 12 Preference Shares that are the subject of a Corporation’s Conversion Notice shall be converted effective on the Corporation’s Conversion Date.

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The Corporation cannot exercise its conversion rights hereunder in respect of any Series 12 Preference Shares that are the subject of a Holder’s Conversion Notice under Section 5.2 below.

5.2. Conversion at the Option of the Holder

Subject to applicable law and to the option of the Corporation in Section 5.4, on each Dividend Payment Date on or after March 31, 2018, a Holder, upon notice as hereinafter described, may convert all or any part of the then outstanding Series 12 Preference Shares registered in the name of the Holder into that number of freely tradeable Class A Shares determined (per Series 12 Preference Share) by dividing $25.00, together with all accrued and unpaid Series 12 Dividends up to but excluding the Holder’s Conversion Date (as hereinafter defined), by the greater of $2.00 or 95% of the Current Market Price. Fractional Class A Shares will not be issued on any conversion of Series 12 Preference Shares, but in lieu thereof the Corporation will make cash payments in the manner set out in Section 5.3 below. Such conversion shall be deemed to have been made at the close of business on the Holder’s Conversion Date, so that the rights of the Holder of such Series 12 Preference Shares as the Holder thereof shall cease at such time and the person or persons entitled to receive Class A Shares upon such conversion shall be treated for all purposes as having become the holder or holders of record of such Class A Shares at such time.

In order to exercise its conversion rights, the Holder shall give written notice to the Corporation at the registered office of the Corporation or the principal transfer office of the transfer agent for the Series 12 Preference Shares in the City of Toronto (the “Holder’s Conversion Notice”), which Holder’s Conversion Notice shall specify the number of Series 12 Preference Shares (the “Subject Shares”) held by such Holder which shall be converted on the Dividend Payment Date chosen by the Holder for conversion (the “Holder’s Conversion Date”). The Holder’s Conversion Notice shall be given at least 30 calendar days prior to such Holder’s Conversion Date and shall be irrevocable.

Upon exercise by the Holder of its right to convert Series 12 Preference Shares into Class A Shares, the Corporation is not required to issue Class A Shares to any person whose address is in, or whom the Corporation or its transfer agent has reason to believe is a resident of, any jurisdiction outside of Canada, to the extent that such issue would require compliance by the Corporation with the securities or other laws of such jurisdiction.

If the Corporation gives notice as provided in Section 4 to a Holder of the redemption of Series 12 Preference Shares prior to that Holder giving a Holder’s Conversion Notice to the Corporation, the right of that Holder to convert such Series 12 Preference Shares as herein provided shall cease and terminate in that event.

5.3. Delivery of Certificates Representing Class A Shares

The Corporation shall, on presentation and surrender at the head office of the Corporation, the principal transfer office of the transfer agent for the Series 12 Preference Shares in the City of Toronto, or such other place or places in Canada as the Corporation may agree, of

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the certificate or certificates representing the Series 12 Preference Shares being converted by the Corporation or the Holder, give or cause to be given, on the applicable Corporation’s Conversion Date or Holder’s Conversion Date, as the case may be, to each Holder of Series 12 Preference Shares being converted or as such Holder may have otherwise directed:

(a) a certificate representing the whole number of Class A Shares into which such Series 12 Preference Shares being converted are to be converted, registered in the name of the Holder, or as such Holder may have otherwise directed; and

(b) in lieu of the issuance of a fractional Class A Share, a cheque in an amount equal to the product of the fractional remainder, if any (rounded to four decimal places), produced by the conversion formula set forth in Section 5.1 or Section 5.2 above, as the case may be, multiplied by the greater of $2.00 or 95% of the then Current Market Price.

If on any conversion under Section 5.1 or 5.2, less than all of the Series 12 Preference Shares represented by any certificate are to be converted, a new certificate representing the balance of such Series 12 Preference Shares shall be issued by the Corporation without cost to the Holder.

The Holder of any Series 12 Preference Share on the record date for any dividend declared payable on such share shall be entitled to such dividend notwithstanding that such share is converted into Class A Shares after such record date and on or before the date of the payment of such dividend.

The issuance of certificates for the Class A Shares upon the conversion of Series 12 Preference Shares shall be made without charge to the Holders for any fee or tax in respect of the issuance of such certificates or the Class A Shares represented thereby; provided, however, that the Corporation shall not be required to pay any tax which may be imposed upon the person or persons to whom such Class A Shares are issued in respect of the issuance of such Class A Shares or the certificate therefor or which may be payable in respect of any transfer involved in the issuance and delivery of any such certificate in the name or names other than that of the Holder or deliver such certificate unless the person or persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid.

5.4. Option of the Corporation

If a Holder gives a Holder’s Conversion Notice to the Corporation, subject to the provisions described in Section 6 below, as applicable, the Corporation may, at its option, on notice to such Holder in the manner described in this Section 5.4, either (i) redeem on the first business day after the Holder’s Conversion Date all or any part of the Subject Shares, or (ii) cause the Holder to sell on the first business day after the Holder’s Conversion Date all or any part of the Subject Shares to another purchaser or purchasers in the event that a purchaser or purchasers willing to purchase all or any part of such Subject Shares is or are found by the Corporation pursuant to this Section 5.4. The proportion of the Subject Shares which are either

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redeemed, purchased or converted on that Conversion Date shall, to the extent practicable, be the same for each holder delivering a Conversion Notice.

If the Corporation elects to redeem for cash or arrange for the purchase of any Subject Shares, then the Corporation shall, not less than 20 calendar days prior to the Holder’s Conversion Date, give written notice to all Holders of the Subject Shares stating the number of Subject Shares to be redeemed for cash by the Corporation, the number of Subject Shares to be sold to another purchaser, and the number of Subject Shares to be converted into Class A Shares pursuant to the Holder’s Conversion Notice, such that all of the Subject Shares are either redeemed, purchased or converted on or before the first business day after the Holder’s Conversion Date.

If the Corporation elects to redeem for cash or arrange for the purchase of any Subject Shares, then the Corporation shall pay or cause to be paid, in respect of those Subject Shares to be redeemed for cash or purchased, on presentation and surrender at the head office of the Corporation, the principal transfer office of the transfer agent for the Series 12 Preference Shares in the City of Toronto, or such other place or places in Canada as the Corporation may agree, of the certificate or certificates representing such Subject Shares, on the Holder’s Conversion Date to the Holder of the Subject Shares or as such Holder may have otherwise directed, an amount in cash equal to $25.00 plus all accrued and unpaid Series 12 Dividends up to but excluding the Holder’s Conversion Date for each Subject Share being redeemed or purchased (less any tax required to be deducted and withheld by the Corporation), and each such Subject Share shall be deemed to have been redeemed or purchased, but not converted, as the case may be, on the Holder’s Conversion Date. Payment under this Section 5.4 shall be made by cheque in accordance with Section 5.5 hereof.

If the Corporation elects to redeem for cash or arrange for the purchase of some, but not all, of the Subject Shares, then the Corporation shall, in respect of those Subject Shares to be converted into Class A Shares, give or cause to be given to the Holder of such Subject Shares the certificate or certificates representing such Class A Shares and, if applicable, a cheque in lieu of a fractional Class A Share, all in accordance with the procedures set forth in Section 5.3.

5.5. Payment by Cheque

Any amounts that are paid by the Corporation to Holders in respect of the payment of (i) a redemption or purchase amount under Section 5.4, or (ii) a cash amount in lieu of the issuance of a fractional Class A Share under Sections 5.1 or 5.2, shall be paid by cheques drawn on a Canadian chartered bank and payable in lawful money of Canada at any branch of such bank in Canada, and the delivery or mailing of any such cheque to a Holder shall constitute a full and complete discharge of the Corporation’s obligation to pay such amounts (plus any tax required to be and in fact deducted and withheld therefrom and remitted to the proper taxing authority), unless such cheque is not honoured when presented for payment.

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6. Restrictions on Dividends and Retirement and Issue of Shares

So long as any of the Series 12 Preference Shares are outstanding, the Corporation shall not, without the approval of the Holders:

(a)   declare, pay or set apart for payment any dividends (other than stock dividends payable in shares of the Corporation ranking as to capital and dividends junior to the Series 12 Preference Shares) on any shares of the Corporation ranking as to dividends junior to the Series 12 Preference Shares;

(b)   except out of the net cash proceeds of a substantially concurrent issue of shares of the Corporation ranking as to return of capital and dividends junior to the Series 12 Preference Shares, redeem or call for redemption, purchase or otherwise pay off, retire or make any return of capital in respect of any shares of the Corporation ranking as to capital junior to the Series 12 Preference Shares;

(c)   redeem or call for redemption, purchase or otherwise retire for value or make any return of capital in respect of less than all of the Series 12 Preference Shares then outstanding;

(d)   except pursuant to any purchase obligation, sinking fund, retraction privilege or mandatory redemption provisions attaching thereto, redeem or call for redemption, purchase or otherwise pay off, retire or make any return of capital in respect of any Class A Preference Shares, ranking as to the payment of dividends or return of capital on a parity with the Series 12 Preference Shares; or

(e)   issue any additional Series 12 Preference Shares or any shares ranking as to the payment of dividends or the return of capital prior to or on a parity with the Series 12 Preference Shares;

unless, in each such case, all accrued and unpaid dividends up to and including the dividend payable for the last completed period for which dividends were payable on the Series 12 Preference Shares and on all other shares of the Corporation ranking prior to or on a parity with the Series 12 Preference Shares with respect to the payment of dividends have been declared paid or set apart for payment.

7. Purchase for Cancellation

Subject to applicable law and to the provisions described in Section 6 above, the Corporation may at any time purchase for cancellation the whole or any part of the Series 12 Preference Shares outstanding from time to time, in the open market through or from an investment dealer or any firm holding membership on a recognized stock exchange, or by private agreement or otherwise, at the lowest price or prices at which, in the opinion of the Board of Directors of the Corporation, such shares are obtainable.

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8. Voting Rights

The Holders will not (except as otherwise provided by law and except for meetings of the holders of Class A Preference Shares as a class and meetings of the holders of the Series 12 Preference Shares as a series) be entitled to receive notice of, attend, or vote at any meeting of shareholders of the Corporation unless and until the Corporation shall have failed to pay eight quarterly Series 12 Dividends on the Series 12 Preference Shares, whether or not consecutive and whether or not such dividends have been declared and whether or not there are any monies of the Corporation properly applicable to the payment of Series 12 Dividends. In the event of such non-payment, and for only so long as any such dividends remain in arrears, the Holders will be entitled to receive notice of and to attend each meeting of shareholders of the Corporation (other than any meetings at which only holders of another specified class or series are entitled to vote) and such Holders shall have the right, at any such meeting, to one vote for each Series 12 Preference Share held, provided that Holders will vote with holders of Class A Shares and, in certain circumstances, with the holders of certain other series of the Class A Preference Shares only in the election of one-half of the board of directors (less the number of directors which the holders of the Class A Preference Shares, Series 1, Class A Preference Shares, Series 2 and Class A Preference Shares, Series 3 may be entitled to elect). No other voting rights shall attach to the Series 12 Preference Shares in any circumstances. Upon payment of all such arrears of the Series 12 Dividends, the voting rights of the Holders shall forthwith cease (unless and until the same default shall again arise under the provisions of this section 8).

9. Modifications

The provisions attaching to the Series 12 Preference Shares as a series may be repealed, altered, modified or amended from time to time with such approval as may then be required by the Business Corporations Act (Ontario), any such approval to be given in accordance with Section 10.

10. Approval of Holders of Series 12 Preference Shares

10.1. Approval

Except as otherwise provided herein, any approval of the Holders with respect to any matters requiring the consent of the Holders may be given in such manner as may then be required by law, subject to a minimum requirement that such approval be given by a resolution signed by all the Holders or passed by the affirmative vote of at least 66 2/3% of the votes cast by the Holders who voted in respect of that resolution at a meeting of the Holders duly called for that purpose and at which the Holders of a majority of the outstanding Series 12 Preference Shares are present or represented by proxy. If at any such meeting the Holder(s) of a majority of the outstanding Series 12 Preference Shares are not present or represented by proxy within one-half hour after the time appointed for such meeting, then the meeting shall be adjourned to such date not less than 15 days thereafter and to such time and place as may be designated by the chairman of such meeting, and not less than 10 days’ written notice shall be given of such adjourned meeting. At such adjourned meeting, the Holders(s) of Series 12 Preference Shares

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represented in person or by proxy may transact the business for which the meeting was originally called and the Holders represented in person or by proxy shall form the necessary quorum.

10.2. Formalities, etc.

The proxy rules applicable to, the formalities to be observed in respect of the giving notice of, and the formalities to be observed in respect of the conduct of, any meeting or any adjourned meeting of Holders shall be those from time to time prescribed by the by-laws of the Corporation with respect to meetings of shareholders or, if not so prescribed, as required by law. On every poll taken at every meeting of Holders, each Holder entitled to vote thereat shall be entitled to one vote in respect of each Series 12 Preference Share held.

11. Tax Election

The Corporation shall elect, in the manner and within the time provided under the Income Tax Act (Canada), under subsection 191.2(1) of the said Act, or any successor or replacement provision of similar effect, and take all other necessary action under such Act, to pay or cause payment of the tax under Part VI.1 of such Act at a rate such that the corporate Holders will not be required to pay tax on dividends received on the Series 12 Preference Shares under Section 187.2 of Part IV.I of such Act or any successor or replacement provision of similar effect.

12. Notices

(i) give such notice by publication thereof once in a daily English language newspaper of general circulation published in each of Vancouver, Calgary, Winnipeg, Toronto, Montreal and Halifax, and once in a daily French language newspaper published in Montreal and such notice shall be deemed to have been validly given on the day next succeeding its publication in all of such cities; and

(ii) fulfill the requirement to send such cheque or such share certificate by arranging for the delivery thereof to such Holder by the transfer agent for the Series 12 Preference Shares at its principal offices in the cities of Vancouver, Toronto and Montreal, and such cheque and/or share certificate shall be deemed to have been sent on the date on which notice of such arrangement shall have been given as provided in (a) above, provided that as soon as the Board of Directors determines that mail service is no longer interrupted or threatened to be interrupted, such cheque or share certificate, if not theretofore delivered to such Holder, shall be sent by mail as herein provided. In the event that the Corporation

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is required to mail such cheque or share certificate, such mailing shall be made by prepaid mail to the registered address of each person who at the date of mailing is a registered Holder and who is entitled to receive such cheque or share certificate.

(b) Any notice, cheque, invitation for tenders or other communication from the Corporation herein provided for shall be sufficiently given if delivered or if sent by first class unregistered mail, postage prepaid, to the holders of the Series 12 Preference Shares at their respective addresses appearing on the books of the Corporation or, in the event of the address of any of such holders not so appearing, then at the last address of such holder known to the Corporation. Accidental failure to give such notice, invitation for tenders or other communication to one or more holders of the Series 12 Preference Shares shall not affect the validity of the notices, invitations for tenders or other communications properly given or any action taken pursuant to such notice, invitation for tender or other communication but, upon such failure being discovered, the notice, invitation for tenders or other communication, as the case may be, shall be sent forthwith to such holder or holders.

(c) If any notice, cheque, invitation for tenders or other communication from the Corporation given to a holder of Series 12 Preference Shares pursuant to paragraph (b) is returned on three consecutive occasions because the holder cannot be found, the Corporation shall not be required to give or mail any further notices, cheques, invitations for tenders or other communications to such shareholder until the holder informs the Corporation in writing of such holder’s new address.

13. Interpretation

In the provisions herein contained attaching to the Series 12 Preference Shares:

(a)   “accrued and unpaid dividends” means the aggregate of (i) all unpaid dividends on the Series 12 Preference Shares for any quarterly period; and (ii) the amount calculated as though dividends on each Series 12 Preference Share had been accruing on a day to day basis from and including the date on which the last quarterly dividend was payable up to and including the date to which the computation of accrued dividends is to be made;

(b)   “in priority to”, “on a parity with” and “junior to” have reference to the order of priority in payment of dividends and in the distribution of assets in the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs;

(c)   in the event that any date on which any dividend on the Series 12 Preference Shares is payable by the Corporation, or any date on or by which any other action

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    is required to be taken by the Corporation or the Holders hereunder, is not a business day (as hereinafter defined), then such dividend shall be payable, or such other action shall be required to be taken, on or by the next succeeding day that is a business day. A “business day” shall be a day other than a Saturday, a Sunday or any other day that is treated as a holiday in the province of Ontario;

(d)   “Class A Shares” means Class A Limited Voting Shares of the Corporation, as constituted from time to time and any shares resulting from a reclassification of the Class A Limited Voting Shares of the Corporation or which result from a capital reorganization of the Corporation or a consolidation, amalgamation or merger of the Corporation with or into any other corporation (other than a capital reorganization, consolidation, amalgamation or merger which does not result in any reclassification of the Class A Limited Voting Shares into other shares or securities); and

(e)   all references herein to a holder of Series 12 Preference Shares shall be interpreted as referring to a registered holder of the Series 12 Preference Shares.

14. Book-Entry Only System

If the Series 12 Preference Shares are held through the book-entry only system of the Canadian Depository for Securities (“CDS”), then the beneficial owner thereof shall provide instructions only by such beneficial owner providing instructions to the CDS participant through whom such beneficial owner holds such Series 12 Preference Shares. Beneficial owners of Series 12 Preference Shares will not have the right to receive share certificates representing their ownership of the shares.

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CLASS A PREFERENCE SHARES, SERIES 13 ATTRIBUTES

Number and Designation of and
Rights, Privileges, Restrictions and Conditions Attaching
to the Class A Preference Shares, Series 13

The thirteenth series of Class A Preference Shares of the Corporation shall consist of 9,999,000 Class A Preference Shares which shall be designated as Class A Preference Shares, Series 13 (hereinafter referred to as the “Series 13 Preference Shares”) and which, in addition to ‘, the rights, privileges, restrictions and conditions attached to the Class A Preference Shares as a class, shall have attached thereto the following rights, privileges, restrictions and conditions:

1. Consideration for Issue

The consideration for the issue of each Series 13 Preference Share shall be $25.00.

2. Dividends

2.1 Payment of Dividends

The holders of the Series 13 Preference Shares shall be entitled to receive, and the Corporation shall pay thereon, as and when declared by the Board of Directors of the Corporation, out of the monies of the Corporation properly applicable to the payment of dividends, cumulative preferential cash dividends payable quarterly (the “Quarterly Dividends”) on the last day of each of the months of March, June, September and December in each year (the “Dividend Payment Dates”), each such Quarterly Dividend to be equal to the amount obtained when the Quarterly Dividend Rate (as defined in clause 2.2) is multiplied by $25.00. The first Quarterly Dividend shall be paid on March 31,2005.

(i) $25.00 multiplied by seventy percent (70%) of the Average Prime Rate for the period of ninety days ending on a date which is thirty days before the end of such Dividend Payment Period

is multiplied by

(ii) the result obtained when the number of days in such Dividend Payment Period is divided by 365.

Dividends shall accrue on a day-to-day basis.

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2.2 Definitions

Where used in these share provisions, the following terms shall have the following meanings, respectively:

(a)   “Quarterly Dividend Rate” means, in relation to any Dividend Payment Date, one-quarter of seventy percent (70%) of the Average Prime Rate for the three calendar months ending on the last day of the calendar month immediately preceding the month during which such Dividend Payment Date falls.

(b)   “Average Prime Rate” means, for any period, the arithmetic average (rounded to the nearest one-one-hundredth of one percent (0.01%)) of the Average Daily Prime Rate for each day during such period.

(c)   “Average Daily Prime Rate” means, for any day, the arithmetic average, rounded to the nearest one-one-hundredth of one percent (0.01%) of the Daily Prime Rates of the Banks on such date; provided that, if on such day, there shall be no Daily Prime Rate for one (but not both) of the Banks, the Average Daily Prime Rate for such day shall be the Daily Prime Rate of the other of such Banks, and further provided that if, on such day, there shall be no Daily Prime Rate for both of the Banks, the Average Daily Prime Rate for such day shall be 1.65% above the average yields at weekly tender on 91-day Government of Canada Treasury Bills as reported by the Bank of Canada for such day.

(d)   “Daily Prime Rate” means, for either Bank, on any day, the annual prime commercial lending rate of interest established and announced as the reference, rate of interest used by such Bank on such date to determine the rates of interest on Canadian dollar loans to customers in Canada and designated by such Bank as its prime rate.

(e)   “Banks” means The Toronto-Dominion Bank and the Canadian Imperial Bank of Commerce, collectively, and the term “Bank” means one of the Banks.

2.3 Method of Payment

Dividends (less any tax required to be withheld by the Corporation) on the Series 13 Preference Shares shall be paid by cheque payable in lawful money of Canada at par at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable. The mailing of such cheque from the Corporation’s registered office, or the principal office in Toronto of the registrar for the Series 13 Preference Shares, or the payment by such other reasonable means as the Corporation deems desirable, on or before the date on which such dividend is to be paid to a holder of Series 13 Preference Shares shall be deemed to be payment of the dividends represented thereby and payable on such date unless the cheque is not paid upon presentation or payment by such other means is not received. Dividends which are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed for a period of six years from the date on which they were declared to be payable shall be forfeited to the Corporation.

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2.4 Cumulative Payment of Dividends

If on any date on which dividends are to be paid the dividends accrued to such date are not paid in full on all of the Series 13 Preference Shares then outstanding, such dividends, or the unpaid part thereof, shall be paid on a subsequent date or dates determined by the directors of the Corporation on which the Corporation shall have sufficient monies properly applicable to the payment of such dividends. The holders of Series 13 Preference Shares shall not be entitled to any dividends other than or in excess of the cumulative preferential cash dividends herein provided for.

3. Redemption

3.1 Optional Redemption

Subject to the provisions of clause 5 hereof, the Corporation may redeem at any time the whole or from time to time any part of the then outstanding Series 13 Preference Shares, on payment for each share to be redeemed of $25.00 together with all accrued and unpaid dividends thereon up to the date fixed for redemption which, for greater certainty, shall include dividends calculated in accordance with clause 2.1 hereof during the period from and including the immediately preceding Dividend Payment Date to but excluding the date fixed for redemption, the whole constituting and hereinafter referred to as the “Redemption Price”.

3.2 Partial Redemption

In case a part only of the Series 13 Preference Shares is at any time to be redeemed, the shares so to be redeemed shall be selected by lot or in such other manner as the directors of the Corporation, from time to time, so determine. If a part only of the Series 13 Preference Shares represented by any certificate shall be redeemed, a new certificate representing the balance of such shares shall be issued to the holder thereof at the expense of the Corporation upon presentation and surrender of the first mentioned certificate.

3.3 Method of Redemption

In any case of redemption of Series 13 Preference Shares, the Corporation shall not less than 30 days and not more than 60 days before the date specified for redemption send by prepaid mail or deliver to the registered address of each person who at the date of mailing or delivery is a registered holder of Series 13 Preference Shares to be redeemed a notice in writing of the intention of the Corporation to redeem such Series 13 Preference Shares. Accidental failure or omission to give such notice to one or more holders shall not affect the validity of such redemption, but upon such failure or omission being discovered notice shall be given forthwith to such holder or holders and shall have the same force and effect as if given in due time. Such notice shall set out the number of Series 13 Preference Shares held by the person to whom it is addressed which are to be redeemed, the Redemption Price, the date specified for redemption and the place or places within Canada at which holders of Series 13 Preference Shares may present and surrender such shares for redemption. On and after the date so specified for redemption, the Corporation shall pay or cause to be paid to or to the order of the registered holders of the Series 13 Preference Shares to be redeemed the Redemption Price of such shares on presentation and surrender, at the registered office of the Corporation or any other place or

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places within Canada specified in such notice of redemption, of the certificate or certificates representing the Series 13 Preference Shares called for redemption. Payment in respect of Series 13 Preference Shares being redeemed shall be made by cheque payable to the holders thereof in lawful money of Canada at par at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable. From and after the date specified for redemption in any such notice of redemption, the Series 13 Preference Shares called for redemption shall cease to be entitled to dividends or any other participation in the assets of the Corporation and the holders thereof shall not be entitled to exercise any of their other rights as shareholders in respect thereof unless payment of the Redemption Price shall not be made upon presentation and surrender of the certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected. The Corporation shall have the right at any time after the mailing or delivery of notice of its intention to redeem Series 13 Preference Shares to deposit the Redemption Price of the Series 13 Preference Shares so called for redemption, or of such of the Series 13 Preference Shares which are represented by certificates which have not at the date of such deposit been surrendered by the holders thereof in connection with such redemption, to a special account in any chartered bank or any trust company in Canada named in such notice or in a subsequent notice to the holders of the shares in respect of which the deposit is made, to be paid without interest to or to the order of the respective holders of Series 13 Preference Shares called for redemption upon presentation and surrender to such bank or trust company of the certificates representing such shares. Upon such deposit being made or upon the date specified for redemption in such notice, whichever is the later, the Series 13 Preference Shares in respect of which such deposit shall have been made shall be deemed to be redeemed and the rights of the holders thereof shall be limited to receiving, without interest, their proportionate part of the amount so deposited upon presentation and surrender of the certificate or certificates representing their Series 13 Preference Shares being redeemed. Any interest allowed on any such deposit shall belong to the Corporation. Redemption monies that are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed (including monies held on deposit to a special account as provided for above) for a period of six years from the date specified for redemption shall be forfeited to the Corporation.

4. Purchase for Cancellation

Subject to the provisions of clause 5 hereof, the Corporation may at any time or from time to time purchase for cancellation all or any part of the outstanding Series 13 Preference Shares in the open market (including purchase through or from an investment dealer or a member of a recognized stock exchange) or by invitation for tenders addressed to all of the holders of record of Series 13 Preference Shares then outstanding, at the lowest price or prices at which, in the opinion of the directors of the Corporation, such shares are then obtainable but not exceeding a price per share equal to the Redemption Price plus, reasonable costs of purchase. If, in response to an invitation for tenders under the provisions of this clause 4, more Series 13 Preference Shares are tendered at a price or prices acceptable to the Corporation than the Corporation is prepared to purchase, then the Series 13 Preference Shares to be purchased by the Corporation shall be purchased as nearly as may be pro rata according to the number of shares tendered by each holder who submits a tender to the Corporation, provided that when shares are tendered at different prices, the pro rating shall be effected only with respect to the shares

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tendered at the price at which more shares were tendered than the Corporation is prepared to purchase after the Corporation has purchased all the shares tendered at lower prices.

5. Restrictions on Dividends and Retirement of Shares

So long as any of the Series 13 Preference Shares are outstanding, the Corporation shall not, without the approval of the holders of the Series 13 Preference Shares given as hereinafter specified:

(a)   declare, pay or set apart for payment any dividends (other than stock dividends in shares of the Corporation ranking as to capital and dividends junior to the Series 13 Preference Shares) on shares ranking as to dividends junior to the Series 13 Preference Shares; or

(b)   call for redemption, redeem, purchase or otherwise pay off or retire for value any shares ranking as to capital junior to the Series 13 Preference Shares (except out of the net cash proceeds of a substantially concurrent issue of shares ranking as to capital and dividends junior to the Series 13 Preference Shares); or

(c)   call for redemption, redeem, purchase or otherwise pay off or retire for value less than all of the Series 13 Preference Shares; or

(d)   except pursuant to any purchase obligation, sinking fund, retraction privilege or mandatory redemption provisions attaching to any series of preferred shares from time to time issued, call for redemption, redeem, purchase or otherwise pay off or retire for value any shares ranking as to capital on a parity with the Series 13 Preference Shares; or

(e)   issue any additional Series 13 Preference Shares or any shares ranking as to dividends or capital on a parity with the Series 13 Preference Shares;

unless, in each such case, all dividends then payable on the Series 13 Preference Shares then outstanding and on all other shares of the Corporation ranking as to dividends on a parity with the Series 13 Preference Shares accrued up to and including the dividends payable on the immediately preceding respective date or dates for the payment of dividends thereon shall have been declared and paid or set apart for payment.

As long as any Series 13 Preference Shares are outstanding, the Corporation shall not, without the prior approval of the holders of such outstanding Series 13 Preference Shares given in the manner hereinafter specified, issue any shares ranking as to dividends or capital prior to the Series 13 Preference Shares.

6. Voting Rights

The holders of the Series 13 Preference Shares shall not be entitled to receive notice of or to attend or to vote at any meetings of shareholders of the Corporation unless and until the Corporation from time to time shall fail to pay in the aggregate eight Quarterly Dividends on the Series 13 Preference Shares on the dates on which the same should be paid

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according to the terms hereof whether or not consecutive and whether or not such dividends have been declared and whether or not there are any monies of the Corporation properly applicable to the payment of dividends. Thereafter, but only so long as any dividends on the Series 13 Preference Shares remain in arrears, the holders of the Series 13 Preference Shares shall be entitled to receive notice of and to attend all annual and other general meetings of shareholders of the Corporation other than any meetings of the holders of any other class or series of shares of the Corporation held separately as a class or series, but shall not be entitled to vote thereat except in the election of directors in which case the holders of the Series 13 Preference Shares shall be entitled to one vote in respect of each $25.00 of the issue price of each Series 13 Preference Share held (provided that holders of the Series 13 Preference Shares shall vote together with holders of Class A Limited Voting Shares in the election of one-half of the board of directors).

7. Liquidation, Dissolution or Winding-up

In the event of the liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or in the event of any distribution of assets of the Corporation among its shareholders for the purpose of winding-up its affairs, the holders of the Series 13 Preference Shares shall be entitled to receive from the assets of the Corporation a sum equal to $25.00 per Series 13 Preference Share held by them respectively, plus an amount equal to all accrued and unpaid dividends thereon up to the date of payment which, for greater certainty, shall include dividends calculated in accordance with clause 2.1 during the period from and including the immediately preceding Dividend Payment Date to but excluding the date of payment before any amount shall be paid to, or assets of the Corporation distributed amongst the holders of any other shares of the Corporation ranking as to capital junior to the Series 13 Preference Shares. After payment to the holders of the Series 13 Preference Shares of the amounts so payable to them, they shall not be entitled to share in any further distribution of the assets of the Corporation.

8. Interpretation

In the event that any date on which any dividend on the Series 13 Preference Shares is payable by the Corporation, or on or by which any other action is required to be taken by the Corporation hereunder, is not a Business Day, then such dividend shall be payable, or such other action shall be required to be taken, on or by the next succeeding day that is a Business Day.

For the purposes of these share provisions:

(a) “Business Day” means a day other than a Saturday, a Sunday or any other day that is treated as a statutory holiday in the jurisdiction in which the Corporation’s registered office is located; and

(b) “ranking as to capital” means ranking with respect to the distribution of assets in the event of a liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or in the event of any other distribution of assets of the Corporation among its shareholders for the purpose of winding-up its affairs.

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9. Mail Service Interruption

If the directors of the Corporation determine that mail service is or is threatened to be interrupted at the time when the Corporation is required or elects to give any notice hereunder, or is required to send any cheque or any share certificate to the holder of any Series 13 Preference Share, whether in connection with the redemption of such share or otherwise, the Corporation may, notwithstanding the provisions hereof:

(a) give such notice by publication thereof once in a daily English language newspaper of general circulation published in each of Vancouver, Calgary, Regina, Winnipeg, Toronto, Montreal, Saint John, Charlottetown, Halifax and St. John’s and once in a daily French language newspaper published in Montreal and such notice shall be deemed to have been validly given on the day next succeeding its publication in all of such cities; and

(b) fulfill the requirement to send such cheque or such share certificate by arranging for the delivery thereof to such holder by the transfer agent for the Series 13 Preference Shares at its principal offices in the cities of Vancouver, Calgary, Regina, Winnipeg, Toronto, Montreal, Saint John, Charlottetown, Halifax and St. John’s, and such cheque and/or certificate shall be deemed to have been sent on the date on which notice of such arrangement shall have been given as provided in (a) above, provided that as soon as the directors of the Corporation determine that mail service is no longer interrupted or threatened to be interrupted such cheque or share certificate, if not theretofore delivered to such holder, shall be sent by mail as herein provided. In the event that the Corporation is required to mail such share certificate, such mailing shall be made by prepaid mail to the registered address of each person who at the date of mailing is a registered holder and who is entitled to receive such certificate.

10. Amendment

The rights, privileges, restrictions and conditions attached to the Series 13 Preference Shares may be added to, changed or removed by Articles of Amendment but only with the prior approval of the holders of the Series 13 Preference Shares given in such manner as provided in clause 11.2 and as may then be required by law, subject to a minimum requirement that such approval be given by resolution signed by all the holders of outstanding Series 13 Preference Shares or passed by the affirmative vote of at least 66 2/3% of the votes cast by the holders of the Series 13 Preference Shares who voted in respect of that resolution at a meeting of the holders of the Series 13 Preference Shares duly called for that purpose and at which a majority of the Series 13 Preference Shares are represented or, if no quorum is present at such meeting, at any adjourned meeting of the holders of the Series 13 Preference Shares at which holders of Series 13 Preference Shares represented thereat shall constitute the quorum and may transact the business for which the meeting was originally called notwithstanding that they may not represent a majority of the outstanding Series 13 Preference Shares.

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11. Approval of Holders of Series 13 Preference Shares

11.1 Any approval of the holders of the Series 13 Preference Shares with respect to any matters requiring the consent of the holders of the Series 13 Preference Shares other than the amendment of the rights, privileges, restrictions and conditions attached to the Series 13 Preference Shares as set forth in clause 10 may be given in such manner as may then be required by law, subject to a minimum requirement that such approval be given by resolution signed by all the holders of outstanding Series 13 Preference Shares or passed by the affirmative vote of at least 66 2/3% of the votes cast by the holders of Series 13 Preference Shares who voted in respect of that resolution at a meeting of the holders of the Series 13 Preference Shares duly called for that purpose and at which the quorum as required by the by-laws of the Corporation is present.

11.2 The proxy rules applicable to, the formalities to be observed in respect of the giving of notice of, and the formalities to be observed in respect of the conduct of, any meeting or any adjourned meeting of holders of Series 13 Preference Shares shall be those from time to time prescribed by the by-laws of the Corporation with respect to meetings of shareholders, or if not so prescribed, as required by law. On every poll taken at every meeting of holders of Series 13 Preference Shares, each holder of Series 13 Preference Shares entitled to vote thereat shall have one vote in respect of each $25.00 of the issue price of the Series 13 Preference Shares held.

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CLASS A PREFERENCE SHARES, SERIES 14

Number and Designation of and

Rights, Privileges, Restrictions and

Conditions Attaching to the Class A Preference Shares, Series 14

The fourteenth series of Class A Preference Shares of the Corporation shall consist of 665,000 Class A Preference Shares which shall be designated as Class A Preference Shares, Series 14 (hereinafter called the “Series 14 Preference Shares”) and which, in addition to the rights, privileges, restrictions and conditions attaching to the as Class A Preference Shares as a class, shall have attached thereto the following rights, privileges, restrictions and conditions:

1. Consideration for Issue

The consideration for the issue of each Series 14 Preference Share shall be $100.00.

2. Dividends

2.1 Subject to clauses 3 and 5 hereof, the holders of the Series 14 Preference Shares shall be entitled to receive, and the Corporation shall pay thereon, as and when declared by the Board of Directors of the Corporation, out of moneys of the Corporation properly applicable to the payment or dividends, cumulative, preferential cash dividends (the “Monthly Dividends”) in respect of each calendar month (a “Monthly Dividend Period”) in each year, payable on the 12^th day of the month immediately following each Monthly Dividend Period (the “Dividend Payment Dates”) in an amount per Series 14 Preference Share calculated in accordance with clause 2.2 hereof. The first Monthly Dividend shall be paid on February 12, 2005.

2.2 The Monthly Dividend to be paid per Series 14 Preference Share in respect of a Monthly Dividend Period shall be the amount obtained when

(A) the Monthly Dividend Rate for such Monthly Dividend Period multiplied by $100

is multiplied by

(B) the number of days in the Monthly Dividend Period divided by 365 or 366 in a leap year, as the case may be.

2.3 In any case where dividends (the “Short Dividends”) are payable on the Series 14 Preference Shares in respect of a period (a “Short Dividend Period”) of less than a calendar month, dividends shall be paid for such Short Dividend Period in the amount per Series 14 Preference Share equal to the amount obtained when

(A) $100 multiplied by 63% of the Average Prime Rate on the next to last Wednesday of the calendar month immediately prior to the calendar month during which the last day of such Short Dividend Period falls

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is multiplied by

(B) the number of days in such Short Dividend Period divided by 365 or 366 in a leap year, as the case may be.

2.4 That portion of the amount payable to a holder of a Series 14 Preference Share on a redemption, retraction or purchase for cancellation thereof, or on the liquidation, dissolution or winding-up of the Corporation or other distribution of assets of the Corporation (“winding-up”), equal to all accrued and unpaid dividends thereon to but excluding the date of redemption, retraction, purchase or winding-up (the “specified date”), shall consist of:

(i) all accrued and unpaid Monthly Dividends thereon, if any, in respect of all complete Monthly Dividend Periods preceding the specified date, whether or not declared payable on or after the specified date

plus

(ii) if the specified date is other than the first day of a calendar month, an amount equal to the Short Dividend that would be payable thereon in respect of a Short Dividend commencing after the Monthly Dividend Period immediately preceding the specified date and ending on the day prior to the specified date.

2.5 Where used in these share provisions, the following terms shall have the following meanings, respectively:

(a)   “Monthly Dividend Rate” means, in respect of a Monthly Dividend Period, sixty-three percent (63%) of the Average Prime Rate on the next to last Wednesday of the calendar month immediately prior to the Monthly Dividend Period for which the determination is being made.

(b)   “Banks” means The Toronto-Dominion Bank, The Royal Bank of Canada, Canadian Imperial Bank of Commerce, Bank of Nova Scotia and Bank of Montreal collectively, and the term “Bank” means one of the Banks and for purposes of this definition, “Banks” shall include any bank with which one or more of such Banks may merge and any bank which may become a successor to the business of one of such Banks.

(c)   “Prime Rate” means, for any Bank, on any day, the annual prime commercial lending rate of interest established and announced as the reference rate of interest used by such Bank on such day to determine the rates of interest on Canadian dollar loans to customers in Canada and designated by such Bank as its prime rate.

(d)   “Average Prime Rate” means, for any day, the arithmetic average, rounded to the nearest one-one-hundredth of one percent (0.01%), of the Prime Rates of the Banks on such day or, if on such day there shall be a Prime Rate for some but not all of the Banks, of the Prime Rates of the Banks having a Prime Rate; provided

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that if on such day there shall be no Prime Rate for any of the Banks, the Average Prime Rate for such day shall be 1.50% per annum above the average yield per annum on 91 day Government of Canada Treasury Bills as reported by the Bank of Canada for the weekly tender immediately preceding that day.

2.6 Dividends (less any tax required to be withheld by the Corporation) on the Series 14 Preference Shares shall be paid by cheque payable in lawful money of Canada at par at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable. The mailing of such cheque from the Corporation’s registered office, or the principal office in Toronto of the registrar for the Series 14 Preference Shares, or the payment by such other reasonable means as the Corporation deems desirable, on or before the date on which such dividend is to be paid to a holder of Series 14 Preference Shares shall be deemed to be payment of the dividends represented thereby and payable on such date unless the cheque is not paid upon presentation or payment by such other means is not received. Dividends which are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed for a period of six years from the date on which they were declared to be payable shall be forfeited to the Corporation.

2.7 If on any date on which dividends are to be paid, the dividends accrued to such date are not paid in full on all of the Series 14 Preference Shares then outstanding, such dividends, or the unpaid part thereof, shall be paid on a subsequent date or dates determined by the directors of the Corporation on which the Corporation shall have sufficient monies properly applicable to the payment of such dividends. The holders of Series 14 Preference Shares shall not be entitled to any dividends other than or in excess of the cumulative preferential cash dividends herein provided for.

2.8 Dividends on the Series 14 Preference Shares shall accrue on a day to day basis.

3. Redemption

3.1 Subject to the provisions of clause 6 hereof, the Corporation may, upon giving notice as hereinafter provided, on any March 1, June 1, September 1 and December 1 thereafter (a “Redemption Date”) redeem the whole or from time to time any part of the then outstanding Series 14 Preference Shares on payment for each share to be redeemed of a price of $100 together with an amount equal to all accrued and unpaid dividends thereon to but excluding the date fixed for redemption (the whole constituting and being herein referred to as the “Redemption Price”). In the event that a dividend declared payable on the Series 14 Preference Shares to holders of record thereof on a date (a “record date”) prior to a Redemption Date has not been paid by the Corporation prior to such Redemption Date and an amount equal to that dividend is paid as part of the Redemption Price payable in respect of Series 14 Preference Shares redeemed on such Redemption Date, Series 14 Preference Shares which are redeemed on the Redemption Date shall not be entitled to such dividend notwithstanding that the holders of the Series 14 Preference Shares redeemed on the Redemption Date were holders of record on the record date.

3.2 In case a part only of the Series 14 Preference Shares is at any time to be redeemed, the shares so to be redeemed shall be selected by lot or in such other manner as the

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directors of the Corporation, from time to time, so determine. If a part only of the Series 14 Preference Shares represented by any certificate shall be redeemed, a new certificate representing the balance of such shares shall be issued to the holder thereof at the expense of the Corporation upon presentation and surrender of the first mentioned certificate.

3.3 In the case of redemption of Series 14 Preference Shares, the Corporation shall not less than 30 days and not more than 60 days before the date specified for redemption send by prepaid mail or deliver to the registered address of each person who at the date of mailing or delivery is a registered holder of Series 14 Preference Shares to be redeemed a notice in writing of the intention of the Corporation to redeem such Series 14 Preference Shares. Accidental failure or omission to give such notice to one or more holders shall not affect the validity of such redemption, but upon such failure or omission being discovered notice shall be given forthwith to such holder or holders and shall have the same force and effect as if given in due time. Such notice shall set out the number of Series 14 Preference Shares held by the person to whom it is addressed which are to be redeemed, the Redemption Price, the date specified for redemption and the place or places within Canada at which holders of Series 14 Preference Shares may present and surrender such shares for redemption. On and after the date so specified for redemption, the Corporation shall pay or cause to be paid to or to the order of the registered holders of the Series 14 Preference Shares to be redeemed the Redemption Price of such shares on presentation and surrender, at the registered office of the Corporation or any other place or places within Canada specified in such notice of redemption, of the certificate or certificates representing the Series 14 Preference Shares called for redemption. Payment in respect of Series 14 Preference Shares being redeemed shall be made by cheque payable to the holders thereof in lawful money of Canada at par at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable. From and after the date specified for redemption in any such notice of redemption, the Series 14 Preference Shares called for redemption shall cease to be entitled to dividends or any other participation in the assets of the Corporation and the holders thereof shall not be entitled to exercise any of their other rights as shareholders in respect thereof unless payment of the Redemption Price shall not be made upon presentation and surrender of the certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected. The Corporation shall have the right at any time after the mailing or delivery of notice of its intention to redeem Series 14 Preference Shares to deposit the Redemption Price of the Series 14 Preference Shares so called for redemption, or of such of the Series 14 Preference Shares which are represented by certificates which have not at the date of such deposit been surrendered by the holders thereof in connection with such redemption, to a special account in any chartered bank or any trust company in Canada named in such notice or in a subsequent notice to the holders of the shares in respect of which the deposit is made, to be paid without interest to or to the order of the respective holders of Series 14 Preference Shares called for redemption upon presentation and surrender to such bank or trust company of the certificates representing such shares. Upon such deposit being made or upon the date specified for redemption in such notice, whichever is the later, the Series 14 Preference Shares in respect of which such deposit shall have been made shall be deemed to be redeemed and the rights of the holders thereof shall be limited to receiving, without interest, their proportionate part of the amount so deposited upon presentation and surrender of the certificate or certificates representing their Series 14 Preference Shares being redeemed. Any interest allowed on any such deposit shall belong to the Corporation. Redemption monies that are represented by a cheque which has not been presented to the Corporation’s

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bankers for payment or that otherwise remain unclaimed (including monies held on deposit to the special account as provided for above) for a period of six years from the date specified for redemption shall be forfeited to the Corporation.

4. Purchase for Cancellation

4.1 Subject to the provisions of clause 6 hereof, the Corporation may at any time or times purchase (if obtainable), upon notice to Dominion Securities Pitfield Limited or its successors (“DSP”), the whole or any part of the outstanding Series 14 Preference Shares either on the open market (including purchase through or from an investment dealer or firm holding membership on a recognized stock exchange) or by invitation for tenders to all the holders of record of Series 14 Preference Shares outstanding, or in any other manner, provided that shares so purchased for cancellation in any such other manner shall be purchased at a price not exceeding the highest price offered for a board lot of the Series 14 Preference Shares on any stock exchange on which such shares are listed on the last day on which a price is offered for a board lot of the Series 14 Preference Shares on any such stock exchange preceding the date of purchase for cancellation; provided further that if the Series 14 Preference Shares are not listed on any stock exchange, such shares shall not be purchased in any such other manner at a price per share exceeding $100 plus an amount equal to all accrued and unpaid dividends thereon to but excluding the date of purchase.

4.2 If, in response to an invitation for tenders under the provisions of this clause 4, more Series 14 Preference Shares are tendered at a price or prices acceptable to the Corporation than the Corporation is prepared to purchase, then the Series 14 Preference Shares to be purchased by the Corporation shall be purchased as nearly as may be pro rata according to the number of shares tendered by each holder who submits a tender to the Corporation, provided that when shares are tendered at different prices, the pro rating shall be effected only with respect to the shares tendered at the price at which more shares were tendered than the Corporation is prepared to purchase after the Corporation has purchased all the shares tendered at lower prices.

If part only of the Series 14 Preference Shares represented by any certificate shall be purchased, a new certificate for the balance of such shares shall be issued at the expense of the Corporation.

5. Retraction at the Option of the Holder

5.1 Subject as hereinafter provided, a holder of Series 14 Preference Shares shall be entitled to require the Corporation to redeem on any March 1, June 1, September 1 and December 1(a “Retraction Date”) any or all of the Series 14 Preference Shares registered in his name at a price per share equal to $100 together with an amount equal to all accrued and unpaid dividends thereon to but excluding the Retraction Date (the whole constituting and being herein referred to as the “Retraction Price”). In the event that a dividend declared payable on the Series 14 Preference Shares to holders of record thereof on a date (a “record date”) prior to a Retraction Date has not been paid by the Corporation prior to such Retraction Date and an amount equal to that dividend is paid as part of the Retraction Price payable in respect of Series 14 Preference Shares redeemed on such Retraction Date, Series 14 Preference Shares which are redeemed on the Retraction Date shall not be entitled to the dividend payable on the date subsequent to the

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Retraction Date notwithstanding that the holders of the Series 14 Preference Shares redeemed on the Retraction Date were holders of record on the record date.

5.2 Each holder of Series 14 Preference Shares who desires to have the Corporation redeem any or all of the Series 14 Preference Shares registered in his name must, not less than 15 days prior to a Retraction Date, present and surrender to the transfer agent (the “Transfer Agent”) for the Series 14 Preference Shares, the certificate or certificates representing the Series 14 Preference Shares which the holder wishes to have the Corporation redeem with the retraction panel on such certificate or, such other election form as may be designated by the Corporation for such purposes which includes at least substantially the same information as the retraction panel on the date of initial issue of the Series 14 Preference Shares, in either case duly completed by the registered holder specifying the number of Series 14 Preference Shares represented by such certificate that are to be redeemed by the Corporation on the Retraction Date. Such presentation and surrender of Series 14 Preference Shares for Redemption shall be irrevocable by the holder except with respect to those Series 14 Preference Shares which are not redeemed by the Corporation on the applicable Retraction Date and are not purchased by DSP as hereinafter provided in this clause 5. Unless a holder presenting a certificate representing Series 14 Preference Shares for redemption pursuant to this clause 5 indicates in the retraction panel on such certificate or such other election form as may be designated by the Corporation that such holder requires that the Series 14 Preference Shares referred to therein be redeemed by the Corporation and not be purchased by DSP, the Series 14 Preference Shares (together with the right to all accrued and unpaid dividends thereon) tendered for redemption by the Corporation may, at the option of DSP, be purchased on the Retraction Date by DSP from the holder at a price (the “Purchase Price”) equal to the Retraction Price.

5.3 On or prior to the 10^th day prior to a Retraction Date, the Corporation shall cause the Transfer Agent to give notice to DSP of the aggregate number of Series 14 Preference Shares which have been tendered for redemption on such Retraction Date in accordance with the foregoing provisions of this clause 5 and in respect of which the holder thereof has not indicated as aforesaid that such shares are not to be purchased by DSP (such shares being herein referred to as the “Shares Available for Purchase”). Prior to the Retraction Date, DSP may deliver to the Transfer Agent a commitment letter (a “commitment”) obligating DSP to purchase from holders of Shares Available for Purchase all or some of the Shares Available for Purchase. If the number of shares to be purchased on a Retraction Date by DSP as specified in a commitment is less than all the Shares Available for Purchase on such Retraction Date, any purchase by DSP of Series 14 Preference Shares from the holders of the Shares Available for Purchase shall be as nearly as may be pro rata (disregarding fractions) in proportion to the number of Series 14 Preference Shares held by the holders respectively which comprise the Shares Available for Purchase. The Shares Available for Purchase which are Specified in a commitment to be purchased by DSP on a Retraction Date as aforesaid are herein referred to as the “Purchased Shares”. Payment of the Purchase Price by DSP for the Purchased Shares shall be made by the delivery to the Transfer Agent on or prior to the applicable Retraction Date of one or more bank drafts payable to the Transfer Agent. Upon such delivery, the Corporation shall cause the Transfer Agent to transfer the Purchased Shares to DSP, to note on the share records for the Series 14 Preference Shares the right of DSP or its assigns to receive all dividends on the Purchased Shares declared but unpaid as of the applicable Retraction Date, to deliver to DSP certificates for the Purchased Shares duly registered in the name of DSP or as DSP may direct and to pay the Purchase Price of the

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Purchased Shares to the holders of Series 14 Preference Shares which have been purchased in the manner, mutatis mutandis, in which payment is made by the Corporation for Series 14 Preference Shares redeemed by the Corporation pursuant to this clause 5. Notwithstanding the provisions of clause 1 hereof, the Corporation shall cause any dividends on the Series 14 Preference Shares which have theretofore been declared but not paid to which the Transfer Agent has noted DSP’s or its assigns’ right in accordance with the preceding sentence to be paid to DSP or to its assigns, as the case may be, and not to the holder of record of such shares on the relevant record date or dates for such dividends.

5.4 The Corporation shall, on the applicable Retraction Date, redeem, at a price per Series 14 Preference Share equal to the Retraction Price, the Series 14 Preference Shares in respect of which the certificates have been surrendered for redemption in accordance with the provisions of this clause 5 and have not been purchased by DSP in accordance with the provisions of this clause 5. Payment of the Retraction Price may be made by cheque of the Corporation or by any other reasonable means the Corporation deems desirable and such payment of the Retraction Price shall be a full and complete discharge of the Corporation’s obligation to pay the Retraction Price owed to the holders of Series 14 Preference Shares so presented and surrendered for redemption. Subject as hereinafter provided, the Series 14 Preference Shares so presented and surrendered for redemption and not purchased by DSP shall be and be deemed to be redeemed on the applicable Retraction Date. From and after the applicable Retraction Date, a holder of any Series 14 Preference Share presented and surrendered for redemption and not purchased by DSP shall not be entitled to dividends or to exercise any of the rights of a holder of Series 14 Preference Shares in respect thereof except the right to receive the Retraction Price, provided that if payment of the Retraction Price is not duly made by or on behalf of the Corporation in accordance with the provisions hereof, then the rights of such holder shall remain unaffected. Notwithstanding the foregoing and for greater certainty, the Corporation shall have no obligation to redeem on a Retraction Date any Purchased Shares which are purchased by DSP in accordance with the provisions of this clause 5.

If part only of the Series 14 Preference Shares represented by any certificate are redeemed or purchased as aforesaid, a new certificate for the balance of shares shall be issued at the expense of the Corporation.

5.5 If, prior to any Retraction Date, the Corporation determines that by reason of the provisions of the Business Corporations Act (Ontario) or its Articles or other applicable law, will be unable to redeem all of the Series 14 Preference Shares then outstanding, the Corporation shall give to the holders of the Series 14 Preference Shares a notice which shall include a statement of the maximum number of Series 14 Preference Shares which it then believes it will be permitted to redeem on the applicable Retraction Date and, provided the Corporation has acted in good faith in making such determination, the Corporation shall have no liability in the event that such determination proves inaccurate. If the Corporation is unable by reason of the provisions of the Business Corporations Act (Ontario) or its Articles or other applicable law to redeem all Series 14 Preference Shares duly presented and surrendered to the Corporation for redemption on any Retraction Date and which are not Purchased Shares, it will redeem such number thereof (rounded to the next lower multiple of 1,000 shares) as it is then permitted to redeem, which shall be selected as nearly as may be pro rata (disregarding fractions) in proportion to the total number of Series 14 Preference Shares so presented and surrendered for

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redemption by each holder thereof and which are not Purchased Shares. If all Series 14 Preference Shares duly presented and surrendered to the Corporation for redemption on any Retraction Date are not redeemed or purchased as aforesaid on such date, the Corporation shall continue to hold the Series 14 Preference Shares not so redeemed or purchased and shall, as soon as possible thereafter, give to each holder thereof a notice stating: (i) the number of Series 14 Preference Shares of such holder then held by the Corporation; (ii) the intention of the Corporation to redeem on each Retraction Date thereafter, that number of the Series 14 Preference Shares presented and surrendered to the Corporation for redemption on a Retraction Date and not theretofore redeemed, purchased or withdrawn as the Corporation is then permitted to redeem; and (iii) the right of such holder to require the Corporation to return to him all or any part of his Series 14 Preference Shares held by the Corporation, with the result that the obligation of the Corporation to redeem the shares so returned shall cease.

Thereafter on each Retraction Date, to the extent it is permitted to do so by the Business Corporations Act (Ontario) and by its Articles and by other applicable law, the Corporation shall redeem such number (rounded, except for the final redemption of any number of shares less than 1,000, to the next lower multiple of 1,000 shares) of the Series 14 Preference Shares presented and surrendered to the Corporation for redemption on a Retraction Date and not theretofore redeemed, purchased or withdrawn, as the Board of Directors of the Corporation determines the Corporation is permitted to redeem on such Retraction Date, until all such Series 14 Preference Shares have been so redeemed. The Series 14 Preference Shares redeemed on any Retraction Date shall be selected as nearly as may be pro rata (disregarding fractions) in the manner aforesaid. Payment of the Retraction Price therefor shall be made as aforesaid and shall be accompanied by a statement addressed to the holder of Series 14 Preference Shares redeemed setting out the number of shares so redeemed and the number then held by the Corporation. Upon such payment, the Series 14 Preference Shares to be redeemed shall then be and be deemed to be redeemed and such holder shall cease to be entitled to dividends and shall not be entitled to exercise any of the rights of a shareholder in respect thereof. Except as otherwise provided herein, a holder of Series 14 Preference Shares presented and surrendered to the Corporation for redemption on a Retraction Date which are not so redeemed shall continue to be entitled to exercise all of the rights of a shareholder in respect of such Series 14 Preference Shares and to receive dividends thereon until such shares are redeemed except that, in order to obtain possession of the share certificate or certificates representing such Series 14 Preference Shares, a holder thereof must give 10 days’ prior written notice to the Corporation (given not less than 20 days prior to the Dividend Payment Date) requiring the Corporation to return to him any or all said Series 14 Preference Shares held by the Corporation. Upon receipt of such written notice, the Corporation shall promptly send to such holder a share certificate or share certificates for that number of Series 14 Preference Shares which such holder has requested the Corporation to return and thereupon the Corporation shall cease have to any obligation to redeem such shares under this clause 5.

6. Restriction on Dividends, Retirement and Issue of Shares

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(a)   declare, pay or set apart for payment any dividends on shares of the Corporation ranking as to dividends junior to the Series 14 Preference Shares (other than stock dividends in shares of the Corporation ranking as to capital and dividends junior to the Series 14 Preference Shares); or

(b)   except out of the net cash proceeds of a substantially concurrent issue of shares ranking as to capital and dividends junior to the Series 14 Preference Shares, redeem or call for redemption, purchase or otherwise reduce or make any return of capital in respect of shares of the Corporation ranking as to capital junior to the Series 14 Preference Shares; or

(c)   except pursuant to the retraction privilege attaching thereto, redeem or call for redemption or purchase or otherwise reduce or make any return of capital in respect of less than all of the Series 14 Preference Shares; or

(d)   except pursuant to any purchase obligation, sinking fund, retraction privilege or mandatory redemption provisions attaching thereto, redeem or call for redemption or purchase or otherwise reduce or make any return of capital in respect of any shares of the Corporation ranking as to capital on a parity with the Series 14 Preference Shares; or

(e)   issue any additional Class A Preference Shares or any shares ranking as to dividends or capital on a parity with the Series 14 Preference Shares;

unless at the date of such declaration, payment, setting apart for payment, redemption, call for redemption or purchase or reduction or return of capital, or issuance, as the case may be, all accrued and unpaid cumulative dividends up to and including the dividend payment and the last completed period for which such dividend payment for the last completed period for which such dividends shall be payable, shall have been declared and paid or set apart for payment on the Series 14 Preference Shares and any accrued and unpaid cumulative dividends which have become payable and any declared and unpaid non-cumulative dividends shall have been paid or set apart for payment on all other shares ranking as to dividends on a parity with the Series 14 Preference Shares.

As long as any Series 14 Preference Shares are outstanding, the Corporation shall not, without prior approval of the holders of such outstanding Series 14 Preference Shares given in the manner hereinafter specified, issue any shares ranking as to dividends or capital prior to the Series 14 Preference Shares.

7. Voting Rights

The holders of the Series 14 Preference Shares shall not be entitled to receive notice of or to attend or to vote at any meetings of shareholders of the Corporation unless and until the Corporation from time to time shall fail to pay in the aggregate 24 Monthly Dividends on the Series 14 Preference Shares on the dates on which the same should be paid according to the terms hereof whether or not consecutive and whether or not such dividends which have been declared and whether or not there are any monies of the Corporation properly applicable to the payment of dividends. Thereafter, but only so long as any dividends on the Series 14 Preference

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Shares remain in arrears, the holders of the Series 14 Preference Shares shall be entitled to receive notice of and to attend all annual and other general meetings of shareholders of the Corporation other than any meetings of the holders of any other class or series of shares of the Corporation held separately as a class or series, but shall not be entitled to vote thereat except in the election of directors in which case the holders of the Series 14 Preference Shares shall be entitled to four votes in respect of each $100.00 of the issue price of the Series 14 Preference Shares held (provided that holders of the Series 14 Preference Shares shall vote together with holders of Class A Limited Voting Shares in the election of one-half of the board of directors).

8. Liquidation, Dissolution and Winding-up

In the event of liquidation, dissolution or winding-up of the Corporation or other distribution of assets of the Corporation among its shareholders for the purpose of winding-up its affairs, whether voluntary or involuntary, the holders of the Series 14 Preference Shares shall be entitled to be paid and to receive $100.00 per share together with an amount equal to all accrued and unpaid dividends thereon to but excluding the date of payment, before any amount shall be paid or any assets of the Corporation shall be distributed to the holders of shares of the Corporation ranking as to capital junior to the Series 14 Preference Shares. Upon payment to the holders of the Series 14 Preference Shares of the amount so payable to them, they shall not be entitled to share in any distribution of the assets of the Corporation.

9. Interpretation

In the event that any date on which any dividend on the Series 14 Preference Shares is payable by the Corporation, or on or by which any other action is required to be taken by the Corporation hereunder, is not a Business Day, then such dividend shall be payable, or such other action shall be required to be taken, on or by the next succeeding day that is a Business Day.

For the purposes of these share provisions:

(a) “Business Day” means a day other than a Saturday, a Sunday or any other day that is treated as a statutory holiday in the jurisdiction in which the Corporation’s registered office is located; and

(b) “ranking as to capital” means ranking with respect to the distribution of assets in the event of a liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or in the event of any other distribution of assets of the Corporation among its shareholders for the purpose of winding-up its affairs.

10. Mail Service Interruption

If the directors of the Corporation determine that mail service is or is threatened to be interrupted at the time when the Corporation is required or elects to give any notice hereunder, or is required to send any cheque or any share certificate to the holder of any Series 14 Preference Share, whether in connection with the redemption of such share or otherwise, the Corporation may, notwithstanding the provisions hereof:

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(a) give such notice by publication thereof once in a daily English language newspaper of general circulation published in each of Vancouver, Calgary, Regina, Winnipeg, Toronto, Montreal and Halifax and once in a daily French language newspaper published in Montreal and such notice shall be deemed to have been validly given on the day next succeeding its publication in all of such cities; and

(b) fulfil the requirement to send such cheque or such share certificate by arranging for the delivery thereof to such holder by the transfer agent for the Series 14 Preference Shares at its principal offices in the cities of Vancouver, Calgary, Regina, Winnipeg, Toronto, Montreal and Halifax, and such cheque and/or certificate shall be deemed to have been sent on the date on which notice of such arrangement shall have been given as provided in (a) above, provided that as soon as the directors of the Corporation determine that mail service is no longer interrupted or threatened to be interrupted such cheque or share certificate, if not there to for delivered to such holder, shall be sent by mail as herein provided. In the event that the Corporation is required to mail such share certificate, such mailing shall be made by prepaid mail to the registered address of each person who at the date of mailing is a registered holder and who is entitled to receive such certificate.

11. Amendment

The rights, privileges, restrictions and conditions attached to the Series 14 Preference Shares may be added to, changed or removed by Articles of Amendment but only with the prior approval of the holders of the Series 14 Preference Shares given in such manner as provided in clause 12.2 and as may then be required by law, subject to a minimum requirement that such approval be given by resolution signed by all the holders of outstanding Series 14 Preference Shares or passed by the affirmative vote of at least 66 2/3% of the votes cast by the holders of the Series 14 Preference Shares who voted in respect of that resolution at a meeting of the holders of the Series 14 Preference Shares duly called for that purpose and at which a majority of the Series 14 Preference Shares are represented or, if no quorum is present at such meeting, at any adjourned meeting of the holders of the Series 14 Preference Shares at which holders of Series 14 Preference Shares represented thereat shall constitute the quorum and may transact the business for which the meeting was originally called notwithstanding that they may not represent a majority of the outstanding Series 14 Preference Shares.

12. Approval of Holders of Series 14 Preference Shares

12.1 Any approval of the holders of the Series 14 Preference Shares with respect to any matters requiring the consent of the holders of the Series 14 Preference Shares other than the amendment of the rights, privileges, restrictions and conditions attached to the Series 14 Preference Shares as set forth in clause 11 may be given in such manner as may then be required by law, subject to a minimum requirement that such approval be given by resolution signed by all the holders of outstanding Series 14 Preference Shares or passed by the affirmative vote of at least 66 2/3% of the votes cast by the holders of Series 14 Preference Shares who voted in respect of that resolution at a meeting of the holders of the Series 14 Preference Shares duly

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called for that purpose and at which the quorum as required by the by-laws of the Corporation is present.

12.2 The proxy rules applicable to, the formalities to be observed in respect of the giving of notice of, and the formalities to be observed in respect of the conduct of, any meeting or any adjourned meeting of holders of Series 14 Preference Shares shall be those from time to time prescribed by the by-laws of the Corporation with respect to meetings of shareholders, or if not so prescribed, as required by law. On every poll taken at every meeting of holders of Series 14 Preference Shares, each holder of Series 14 Preference Shares entitled to vote thereat shall have four votes in respect of each $100.00 of the issue price of the Series 14 Preference Shares held.

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CLASS A PREFERENCE SHARES, SERIES 15 ATTRIBUTES

Number and Designation of and Rights, Privileges, Restrictions
and Conditions Attaching to the Class A Preference Shares, Series 15

The 15th series of Class A Preference Shares of the Corporation shall consist of 4,000,000 Class A Preference Shares which shall be designated as Class A Preference Shares Series Fifteen (hereinafter referred to as the “Series 15 Preference Shares”) and which, in addition to the rights, privileges, restrictions and conditions attached to the Class A Preference Shares as a class, shall have attached thereto the following rights, privileges, restrictions and conditions:

I. PART I

All terms used in Part I of these provisions respecting the Series 15 Preference Shares which are defined in Part II hereof have the meaning ascribed to them in Part II hereof.

1. Consideration For Issue

The consideration for the issue of each Series 15 Preference Share shall be $25.00.

2. Payment of Dividends

(a)   For the Initial Term and for each Dividend Period falling within a Corporation Determined Term, the holders of Series 15 Preference Shares shall be entitled to receive and the Corporation shall pay thereon, as and when declared by the directors of the Corporation, out of the moneys of the Corporation properly applicable to the payment of dividends, quarterly cumulative preferential cash dividends, in an amount determined in accordance with section I.3(a) hereof, payable, with respect to each such Dividend Period, on the Dividend Payment Date immediately following the end of such Dividend Period.

(b)   After the expiry of the Initial Term, for each Dividend Period falling within a Dealer Determined Term, the holders of Series 15 Preference Shares shall be entitled to receive and the Corporation shall pay thereon, as and when declared by the directors of the Corporation, out of the moneys of the Corporation properly applicable to the payment of dividends, quarterly cumulative preferential cash dividends, in an amount determined in accordance with section I.3(b) hereof, payable, with respect to each such Dividend Period, on the Dividend Payment Date immediately following the end of such Dividend Period.

(c)   After the expiry of the Initial Term, for each Auction Dividend Period falling within an Auction Term, the holders of Series 15 Preference Shares shall be entitled to receive and the Corporation shall pay thereon, as and when declared by the directors of the Corporation, out of the moneys of the Corporation properly applicable to the payment of dividends, monthly cumulative preferential cash dividends, in an amount determined in accordance with section I.3(c) hereof,

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payable, with respect to each such Auction Dividend Period, on the Auction Dividend Payment Date immediately following the end of such Auction Dividend Period.

The Corporation shall pay dividends (less any tax required to be deducted and withheld by the Corporation) on such shares to the holders of record thereof at the close of business on the sixth Business Day immediately preceding the relevant Dividend Payment Date or Auction Dividend Payment Date (as applicable). Dividends shall be paid by cheque payable in lawful money of Canada at par at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable. The mailing of such cheque from the Corporation’s registered office, or the principal office in Toronto of the registrar for the Series 15 Preference Shares, or the payment by such other reasonable means as the Corporation deems desirable, on or before the date on which such dividend is to be paid to a holder of Series 15 Preference Shares shall be deemed to be payment of the dividends represented thereby and payable on such date unless the cheque is not paid upon presentation or payment by such other means is not received.

Dividends which are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed for a period six years from the date on which they were declared to be payable shall be forfeited to the Corporation.

3. Amount of Dividends

(a)       The dividend to be paid on each Series 15 Preference Share during the Initial Term shall be the amount obtained by multiplying $25.00 by the Corporation Determined Quarterly Dividend Rate for the Initial Term. Subject to section I.3(d) hereof, for each Dividend Period included within a Corporation Determined Term, the dividend to be paid on each Series 15 Preference Share on the Dividend Payment Date immediately following the end of such Dividend Period shall be the amount obtained by multiplying $25.00 by the Corporation Determined Quarterly Dividend Rate for such Dividend Period.

(b)   Subject to section I.3(d) hereof, after the expiry of the Initial Term, for each Dividend Period included within a Dealer Determined Term, the dividend to be paid on each Series 15 Preference Share on the Dividend Payment Date immediately following the end of such Dividend Period shall be the amount obtained by multiplying $25.00 by the Dealer Determined Quarterly Dividend Rate for such Dividend Period.

(c)   After the expiry of the Initial Term, for each Auction Dividend Period included within an Auction Term, the dividend to be paid on each Series 15 Preference Share on the Auction Dividend Payment Date immediately following the end of such Auction Dividend Period shall be determined as follows:

(i) on the Auction Dividend Payment Date immediately following the end of the first Auction Dividend Period during any Auction Term, the dividend to be paid on each Series 15 Preference Share shall be the amount which is

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the product of (1) $25.00, (2) 75% of the Bankers’ Acceptance Rate (as defined in section V.1(d) hereof) determined as of the first Business Day of such Auction Dividend Period and (3) the number of days in the first Auction Dividend Period, divided by 365; and

(ii) on the Auction Dividend Payment Dates immediately following the end of the second and subsequent Auction Dividend Periods during any Auction Term, the dividend to be paid on each Series 15 Preference Share shall be the amount which is the product of (1) $25.00, (2) the Current Dividend Rate for each such Auction Dividend Period determined on the Auction Date immediately prior to the beginning of such Auction Dividend Period and (3) the number of days in such Auction Dividend Period, divided by 365.

(d) After the expiry of the Initial Term, for the first Dividend Period included within a Corporation Determined Term or a Dealer Determined Term, in either case immediately following an Auction Term, the dividend to be paid on each Series 15 Preference Share on the Dividend Payment Date immediately following the end of such Dividend Period shall be the product of (1) $25.00, (2) four times the Corporation Determined Quarterly Dividend Rate or the Dealer Determined Quarterly Dividend Rate, as the case may be, for such Dividend Period and (3) the number of days in such Dividend Period, divided by 365.

(e) If, for any reason, the dividend rate applicable hereunder is, in respect of any particular day, not determined or not determinable in accordance with the provisions hereof, the rate applicable in respect of such day shall be the Bankers’ Acceptance Rate (as defined in section V.1(d) hereof) on such day plus 0.40%.

4. Cumulative Payment of Dividends

If on any Dividend Payment Date or Auction Dividend Payment Date the dividends accrued to such date are not paid in full on all Series 15 Preference Shares then outstanding, such dividends, or the unpaid part thereof, shall be paid on a subsequent date or dates determined by the directors of the Corporation on which the Corporation shall have sufficient monies properly applicable to the payment of such dividends. The holders of Series 15 Preference Shares shall not be entitled to any dividends other than or in excess of the cumulative preferential cash dividends herein provided for.

5. Redemption

Subject to section I.8, the Corporation may, upon giving notice as hereinafter specified, redeem at any time the whole or from time to time any part of the then outstanding Series 15 Preference Shares, on payment for each share to be redeemed of a price of $25.00, together, in each case, with all accrued and unpaid dividends thereon up to but excluding the date fixed for redemption (the whole constituting and being herein referred to as the “Redemption Price”).

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In case a part only of the Series 15 Preference Shares is at any time to be redeemed, the shares so to be redeemed shall be selected by lot or in such other manner as the directors of the Corporation, from time to time, so determine. If a part only of the Series 15 Preference Shares represented by any certificate shall be redeemed, a new certificate representing the balance of such shares shall be issued to the holder thereof at the expense of the Corporation upon presentation and surrender of the first mentioned certificate.

6. Method of Redemption

In any case of redemption of Series 15 Preference Shares, the Corporation shall not less than 30 (or in the case of notice given during an Auction Term, 12) days and not more than 60 days before the date specified for redemption (which date may not be a day during an Auction Term other than a Settlement Date), send by prepaid mail or deliver to the registered address of each person who at the date of mailing or delivery is a registered holder of Series 15 Preference Shares to be redeemed a notice in writing of the intention of the Corporation to redeem such Series 15 Preference Shares. Any such notice shall be validly and effectively given on the date it is delivered to the holder of Series 15 Preference Shares for whom it is intended or is sent by prepaid first class mail addressed to such holder at his address as it appears on the books of the Corporation, or in the event of the address of such holder not so appearing, then to the address of such holder last known to the Corporation, provided, however, that the accidental failure or, omission to give such notice to one or more holders shall not affect the validity of such redemption, but upon such failure or omission being discovered notice shall be given forthwith to such holder or holders and shall have the same force and effect as if given in due time. Such notice shall set out the number of Series 15 Preference Shares held by the person to whom it is addressed which are to be redeemed, the Redemption Price, the date specified for redemption and the place or places within Canada at which holders of Series 15 Preference Shares may present and surrender such shares for redemption. On and after the date so specified for redemption, the Corporation shall pay or cause to be paid to or to the order of the registered holders of the Series 15 Preference Shares called for redemption the Redemption Price of such shares on presentation and surrender, at the registered office of the Corporation or any other place or places within Canada specified in such notice of redemption, of the certificate or certificates representing the Series 15 Preference Shares called for redemption. Payment in respect of Series 15 Preference Shares being redeemed shall be made by cheque payable to the holders thereof in lawful money of Canada at par at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable and such payment shall be a full and complete discharge of the Corporation’s obligation to pay the Redemption Price owed to the holders of Series 15 Preference Shares so called for redemption unless the cheque is not honoured when presented for payment. From and after the date specified for redemption in any such notice of redemption, the Series 15 Preference Shares called for redemption shall cease to be entitled to dividends or any other participation in the assets of the Corporation and the holders thereof shall not be entitled to exercise any of their other rights as shareholders in respect thereof, other than the right to receive the Redemption Price, unless payment of the Redemption Price shall not be made upon presentation and surrender of the certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected. The Corporation shall have the right at any time after the mailing or delivery of notice of its intention to redeem Series 15 Preference Shares to deposit an amount equal to the aggregate Redemption Price of the Series 15 Preference Shares so called for

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redemption, or of such of the Series 15 Preference Shares which are represented by certificates which have not at the date of such deposit been surrendered by the holders thereof in connection with such redemption, to a special account in any chartered bank or any trust company in Canada named in such notice or in a subsequent notice to the holders of the Series 15 Preference Shares in respect of which the deposit is made, to be paid without interest to or to the order of the respective holders of Series 15 Preference Shares called for redemption upon presentation and surrender to such bank or trust company of the certificates representing such shares. Upon such deposit being made or upon the date specified for redemption in such notice, whichever is the later, the Series 15 Preference Shares in respect of which such deposit shall have been made shall be deemed to be redeemed and the rights of the holders thereof shall be limited to receiving, without interest, their proportionate part of the amount so deposited upon presentation and surrender of the certificate or certificates representing their Series 15 Preference Shares being redeemed. Any interest allowed on any such deposit shall belong to the Corporation. Redemption monies that are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed (including monies held on deposit to a special account as provided for above) for a period of six years from the date specified for redemption shall be forfeited to the Corporation.

7. Purchase for Cancellation

Subject to the provisions of section I.8 hereof, the Corporation may at any time or from time to time purchase for cancellation all or any part of the outstanding Series 15 Preference Shares at any price by tender to all of the holders of record of the Series 15 Preference Shares then outstanding or through the facilities of any stock exchange on which the Series 15 Preference Shares are listed, or in any other manner provided that in the case of a purchase in any other manner, such Series 15 Preference Shares shall be purchased for cancellation at the lowest price or prices at which, in the opinion of the directors of the Corporation, such shares are then obtainable, but not exceeding $25.00 per share together with an amount equal to all accrued and unpaid dividends thereon up to but excluding the date of purchase, plus reasonable costs of purchase. If, in response to an invitation for tenders under the provisions of this section I.7, more Series 15 Preference Shares are tendered at a price or prices acceptable to the Corporation than the Corporation is prepared to purchase, then the Series 15 Preference Shares to be purchased by the Corporation shall be purchased as nearly as may be pro rata according to the number of shares tendered by each holder who submits a tender to the Corporation, provided that when shares are tendered at different prices, the pro rating shall be effected only with respect to the shares tendered at the price at which more shares were tendered than the Corporation is prepared to purchase after the Corporation has purchased all the shares tendered at lower prices. If part only of the Series 15 Preference Shares represented by a certificate shall be purchased, a new certificate for the balance of such shares shall be issued at the expense of the Corporation.

8. Restriction on Dividends and Retirement or Issue of Shares

As long as any Series 15 Preference Shares are outstanding, the Corporation will not, without prior approval of the holders of such outstanding Series 15 Preference Shares given in the manner hereinafter specified:

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(a)   declare, pay or set apart for payment any dividends on shares of the Corporation ranking as to dividends junior to the Series 15 Preference Shares (other than stock dividends in shares of the Corporation ranking as to capital and dividends junior to the Series 15 Preference Shares); or

(b)   except out of the net cash proceeds of a substantially concurrent issue of shares ranking as to capital and dividends junior to the Series 15 Preference Shares, redeem or call for redemption, purchase or otherwise reduce or make any return of capital in respect of shares of the Corporation ranking as to capital junior to the Series 15 Preference Shares; or

(c)   redeem or call for redemption or purchase or otherwise reduce or make any return of capital in respect of less than all of the Series 15 Preference Shares; or

(d)   except pursuant to any purchase obligation, sinking fund, retraction privilege or mandatory redemption provisions attaching thereto, redeem or call for redemption or purchase or otherwise reduce or make any return of capital in respect of any shares of the Corporation ranking as to capital on a parity with the Series 15 Preference Shares; or

(e)   issue any additional Class A Preference Shares or any shares ranking as to dividends or capital on a parity with the Series 15 Preference Shares;

unless at the date of such declaration, payment, setting apart for payment, redemption, call for redemption or purchase or reduction or return of capital, or issuance, as the case may be, all accrued and unpaid dividends up to and including the dividend payment for the last completed period for which such dividends shall be payable, shall have been declared and paid or set apart for payment on the Series 15 Preference Shares and any accrued and unpaid cumulative dividends which have become payable and any declared and unpaid non-cumulative dividends shall have been paid or set apart for payment on all other shares ranking as to dividends on a parity with the Series 15 Preference Shares.

As long as any Series 15 Preference Shares are outstanding, the Corporation shall not, without the prior approval of the holders of such outstanding Series 15 Preference Shares given in the manner hereinafter specified, issue any shares ranking as to dividends or capital prior to the Series 15 Preference Shares.

9. Liquidation, Dissolution or Winding-Up

In the event of the liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or in the event of any other distribution of assets of the Corporation among its shareholders for the purpose of winding-up its affairs, the holders of Series 15 Preference Shares shall be entitled to receive from the assets of the Corporation a sum equal to $25.00 per Series 15 Preference Share held by them plus an amount equal to all accrued and unpaid dividends thereon up to the date of payment. Upon payment to the holders of record of the Series 15 Preference Shares on the date of distribution of the amount so payable to them, they shall not be entitled to share in any further distribution of the property or assets of the Corporation.

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II. PART II

1. Interpretation and Application

(a) For the purposes hereof, including Part I, Part III, Part IV and Part V hereof, the following expressions have the following meanings:

(i)   “Auction” shall mean the periodic operation of the Auction Procedures;

(ii)   “Auction Date” shall mean the first Wednesday of each calendar month of each Auction Dividend Period included within an Auction Term or, if such Wednesday is not a Business Day the next preceding Business Day;

(iii)   “Auction Dividend Payment Date” shall mean the first Business Day following the Settlement Date;

(iv)   “Auction Dividend Period” shall mean, with respect to the first Auction Dividend Period of any Auction Term, the period from and including the immediately preceding Dividend Payment Date to but excluding the first Settlement Date and, with respect to any subsequent Auction Dividend Period of such Auction Term, shall mean the period from and including each Settlement Date to but excluding the next succeeding Settlement Date; for greater certainty, the first Auction Dividend Period of an Auction Term shall commence on the day immediately following the last day of the Initial Term and on the day immediately following the last day of each Corporation Determined Term and each Dealer Determined Term unless the provisions of Parts III or Part IV hereof shall have been implemented prior to such day so as to result in a Corporation Determined Term or Dealer Determined Term commencing on such day;

(v)   “Auction Procedures” shall mean the procedures set forth in Part V hereof for determining the applicable dividend rate for the Series 15 Preference Shares from time to time during an Auction Term;

(vi)   “Auction Term” shall mean any term of not less than two consecutive Auction Dividend Periods with respect to which the Auction Procedures apply commencing on the first day of the first of such Auction Dividend Periods and terminating on the last day of any subsequent Auction Dividend Period which immediately precedes the beginning of a Corporation Determined Term or a Dealer Determined Term, as the case may be;

(vii)   “Average Daily Prime Rate” shall mean, for any day, the arithmetic average, rounded to the nearest one-hundredth of one percent (0.01%), of the Daily Prime Rates of the Banks on such day; provided that, if on such day there shall be no Daily Prime Rate for one or more of the Banks, the Average Daily Prime Rate for such day shall be the average of the Daily Prime Rates of the other Bank or Banks, as the case may be, and further

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    provided that if on such day there shall be no Daily Prime Rate for any of the Banks, the Average Daily Prime Rate for such day shall be 1.5% above the average yield per annum on 91-day Government of Canada Treasury bills as reported by the Bank of Canada for the most recent weekly tender preceding such day;

(viii)   “Average Prime Rate” shall mean, for any period consisting of one or more days, the arithmetic average, (rounded to the nearest one-hundredth of one percent (0.01%)), of the Average Daily Prime Rate for each day during such period;

(ix)   “Banks” shall mean Canadian Imperial Bank of Commerce, The Royal Bank of Canada, The Toronto-Dominion Bank, Bank of Montreal and The Bank of Nova Scotia and the term “Bank” shall mean one of the Banks and, for the purposes of this definition, “Banks” shall include any bank with which one or more of such Banks may merge and any bank which may become a successor to the business of one of such Banks;

(x)   “Business Day” shall mean a day on which the Toronto Stock Exchange or any successor stock exchange is open for business and during an Auction Term, a day on which both such stock exchange and the principal offices of the Auction Manager in Toronto, Ontario are open for business;

(xi)   “Corporation Determined Quarterly Dividend Rate” shall have the meaning ascribed thereto in Part III hereof;

(xii)   “Corporation Determined Term” shall mean a term selected by the Corporation consisting of one or more consecutive Dividend Periods commencing on a Dividend Payment Date or a Settlement Date and terminating on the last day of the last Dividend Period selected by the Corporation, to which the provisions of Part III hereof shall apply for the purpose of determining the dividend to be paid on each Dividend Payment Date relating to such term, provided that such term and the dividend rate applicable thereto have been approved by the holders of Series 15 Preference Shares in accordance with section III.3 hereof;

(xiii)   “Current Dividend Rate” shall be the rate per annum which has been determined in accordance with section V.4(b) hereof for the next succeeding Auction Dividend Period;

(xiv)   “Daily Prime Rate” shall mean, for any Bank, on any day, the annual prime commercial lending rate of interest established and announced as the reference rate of interest used by such Bank on such day to determine the rates of interest such Bank will charge on Canadian dollar loans to customers in Canada and designated by such Bank as its prime rate;

(xv)   “Dealer Determined Quarterly Dividend Rate” shall have the meaning ascribed to that term in Part IV hereof;

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(xvi)   “Dealer Determined Term” shall mean a term selected by a Dealer consisting of one or more consecutive Dividend Periods commencing on a Dividend Payment Date or Settlement Date and terminating on the last day of the last Dividend Period selected by such Dealer, to which the provisions of Part IV hereof shall apply for the purpose of determining the dividend to be paid on each Dividend Payment Date relating to such term;

(xvii)   “Dividend Payment Dates” shall mean the last day of each of the months of March, June, September and December in each year commencing March 31, 2005;

(xviii)   “Dividend Period” shall mean the period from and including the date of issue of the Series 15 Preference Shares to but excluding the first Dividend Payment Date and, thereafter, the period from and including each Dividend Payment Date to but excluding the next succeeding Dividend Payment Date except for the first Dividend Period following an Auction Term in which case “Dividend Period” shall mean the period from and including the most recent Settlement Date of the Auction Term to but excluding the next succeeding Dividend Payment Date which falls at least three calendar months after the said Settlement Date;

(xix)   “hereof and similar expressions mean or refer to the provisions relating to the Series 15 Preference Shares;

(xx)   “Initial Term” shall mean the period from and including January 1, 2005 to but excluding March 31, 2005.

(xxi)   “Reuters Screen” means the display designated as page “CDOR” on the Reuter Monitor Money Rates Service (or such other page as may replace the CDOR page on that service) for the purpose of displaying Canadian dollar bankers’ acceptance rates and Government of Canada Treasury bill rates;

(xxii)   “ranking as to capital” means ranking with respect to the distribution of assets in the event of a liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or in the event of any other distribution of assets of the Corporation among its shareholders for the purposes of winding-up its affairs; and

(xxiii)   “Settlement Date” shall mean the first Business Day following an Auction Date.

(b) In the event that any date on which any dividend on the Series 15 Preference Shares is payable or on or by which any other action is required to be taken by the Corporation hereunder, is not a Business Day, then such dividend shall be payable, or such other action shall be required to be taken, on or by the next succeeding day that is a Business Day.

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(c)   In the event of the non-receipt of a cheque by a holder of Series 15 Preference Shares entitled to such cheque, or the loss or destruction thereof, the Corporation, upon being furnished with reasonable evidence of such non-receipt, loss or destruction, and an indemnity reasonably satisfactory to the Corporation, shall issue to such holder a replacement cheque for the amount of such cheque.

(d)   The provisions of Part III hereof with respect to the fixing of a Corporation Determined Quarterly Dividend Rate for a Corporation Determined Term may be initiated by the Corporation no earlier than 60 days and no later than 45 days prior to the end of the Initial Term and, thereafter, may be used by the Corporation from time to time during any Corporation Determined Term, Dealer Determined Term or Auction Dividend Period (other than during the first Auction Dividend Period within an Auction Term), as the case may be, provided that, in such circumstances, such provisions are initiated no earlier than 60 days and no later than 45 days prior to the end of the current Corporation Determined Term or Dealer Determined Term or are initiated no earlier than 25 days and no later than 20 days prior to the end of the current Auction Dividend Period, as the case may be.

(e)   The provisions of Part IV hereof with respect to the solicitation of Dealer Offers for the purpose of fixing a Dealer Determined Quarterly Dividend Rate for a Dealer Determined Term may be initiated by the Corporation no earlier than 30 days and no later than 25 days prior to the end of the Initial Term and, thereafter, may be used by the Corporation from time to time during any Corporation Determined Term, Dealer Determined Term or Auction Dividend Period (other than during the first Auction Dividend Period within an Auction Term), as the case may be, provided that in such circumstances, such provisions are initiated no earlier than 30 days and no later than 25 days prior to the end of the current Corporation Determined Term or Dealer Determined Term or are initiated no earlier than 13 days and no later than 10 days prior to the end of the current Auction Dividend Period, as the case may be.

(f)   The provisions of Part V hereof shall apply following the end of the Initial Term and following the end of any Corporation Determined Term, Dealer Determined Term or Auction Dividend Period, as the case may be, unless at any such time a Corporation Determined Quarterly Dividend Rate is in effect in accordance with the provisions of Part III hereof or a Dealer Determined Quarterly Dividend Rate is in effect in accordance with the provisions of Part IV hereof and the provisions of section IV.2(g) hereof are fully complied with.

(g)   For the purposes hereof, including Part I, Part III, Part IV and Part V hereof, “accrued and unpaid dividends” means the aggregate of (i) all unpaid dividends on the Series 15 Preference Shares in respect of any Dividend Payment Date for any completed Dividend Period and in respect of any Auction Dividend Payment Date for any completed Auction Dividend Period and (ii) the amount calculated as though dividends on each Series 15 Preference Share had been accruing on a day to day basis in a manner consistent with section I.3 hereof from and including the

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Dividend Payment Date or Auction Dividend Payment Date in respect of the most recently completed of the Dividend Periods or Auction Dividend Periods, as the case may be, to but excluding the date on which the computation of accrued dividends is to be made; provided that, for the purpose of calculating accrued and unpaid dividends payable on (x) the Redemption Date in the event notice of redemption of the Series 15 Preference Shares has been given pursuant to the provisions of section I.6 (y) the purchase date in the case of any purchase of Series 15 Preference Shares made under section I.7 or (z) the relevant date for the purposes of section I.9, the Average Prime Rate, if applicable to the calculation of the Corporation Determined Quarterly Dividend Rate for a Corporation Determined Term or to the calculation of the Dealer Determined Quarterly Dividend Rate for a Dealer Determined Term, shall be determined based on 90 days ending on a day not more than 15 days prior to the Redemption Date or purchase date and set out in the applicable notice of redemption or invitation for tenders, as the case may be, or ending on the relevant date for the purpose of section I.9, as the case may be.

(h) The index and the headings of the various sections hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof.

2. Notices

(a) Any notice or other communication from the Corporation provided for herein, including without limitation any notice of redemption, shall be in writing and shall be sufficiently given of delivered or if sent by ordinary unregistered first class prepaid mail, to the holders of Series 15 Preference Shares at their respective addresses appearing on the securities register of the Corporation, or in the event of the address of any such holder not so appearing, then at the last address of such holder known to the Corporation, or if given to such holders by telex or telecopier communication. Notwithstanding the foregoing, any notice given under Part III, IV or V hereof shall be given by telex or telecopier communication, if possible. Accidental failure to give any notice or other communication to one or more holders of the Series 15 Preference Shares shall not affect the validity of the notices or other communications properly given or any action, including the redemption of all or any part of the Series 15 Preference Shares, taken pursuant to such properly given notice or other communication but, upon such failure being discovered, the notice or other communication, as the case may be, shall be sent forthwith to such holder or holders and shall have the same force and effect as if given in due time.

(b) If the Corporation determines that mail service is or is threatened to be interrupted at the time when the Corporation is required or elects to give any notice hereunder by mail, or is required to send any cheque or any share certificate to the holder of any Series Series 15 Preference Share, whether in connection with the redemption of such share or otherwise, the Corporation may, notwithstanding the provisions hereof:

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(i) give such notice by means of publication once in each of two successive weeks in newspapers of general circulation published or distributed in Toronto or Montreal; and

(ii) fulfil the requirement to send such cheque or such share certificate by arranging for delivery thereof to the principal office of the registrar and transfer agent for Series 15 Preference Shares in Toronto, and such cheque and/or certificate shall be deemed to have been sent on the date on which notice of such arrangement shall have been given as provided in (i) above, provided that as soon as the Corporation determines that mail service is no longer interrupted or threatened to be interrupted such cheque or share certificate, if not theretofore delivered to such holder, shall be sent by ordinary unregistered first class mail to the registered address of each person who at the date of mailing is a registered holder and who is entitled to receive such cheque or share certificate or, in the event of the address of any such holder not so appearing, to the last address of such holder known to the Corporation.

(c) Notice given by the Corporation by mail shall be deemed to be given on the day upon which it is mailed unless on the day of such mailing an actual disruption of mail services has occurred in the province in or to which such notice is mailed. Notice given by the Corporation by publication shall be deemed to be given on the day on which the first publication is completed in each city in which notice is required to be published and notice given by telex or telecopier shall be deemed to be given on the day on which it is sent (or, if such day is not a Business Day on the next following Business Day). Notice given to the Corporation pursuant to the provisions hereof shall be deemed to be given on the date of actual receipt thereof by the Corporation.

3. Voting Rights

The holders of the Series 15 Preference Shares shall not be entitled to receive notice of or to attend or to vote at any meetings of shareholders of the Corporation unless and until the Corporation from time to time shall fail to pay in the aggregate dividends with respect to the Dividend Periods on the Series 15 Preference Shares aggregating at least 24 months whether or not consecutive and whether or not such dividends have been declared and whether or not there are any monies of the Corporation properly applicable to the payment of dividends. Thereafter, but only so long as any dividends on the Series 15 Preference Shares remain in arrears, the holders of the Series 15 Preference Shares shall be entitled to receive notice of and to attend all annual and other general meetings of shareholders of the Corporation other than any meetings of the holders of any other class or series of shares of the Corporation held separately as a class or series, but shall not be entitled to vote thereat except in the election of directors in which case the holders of the Series 15 Preference Shares shall be entitled to one vote in respect of each $25.00 of the issue price of the Series 15 Preference Shares held (provided that holders of the Series 15 Preference Shares shall vote together with holders of Class A Limited Voting Shares in the election of one-half of the board of directors).

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4. Amendment

The rights, privileges, restrictions and conditions attached to the Series 15 Preference Shares may be added to, changed or removed by Articles of Amendment but only with the prior approval of the holders of the Series 15 Preference Shares given in such manner as provided in section II.5(b) hereof and as may then be required by law, subject to a minimum requirement that such approval be given by resolution signed by all the holders of outstanding Series 15 Preference Shares or passed by the affirmative vote of at least 66 2/3% of the votes cast by the holders of the Series 15 Preference Shares who voted in respect of that resolution at a meeting of the holders of the Series 15 Preference Shares duly called for that purpose and at which a majority of the Series 15 Preference Shares are represented or, if no quorum is present at such meeting, at any adjourned meeting of the holders of the Series 15 Preference Shares at which holders of Series 15 Preference Shares represented thereat shall constitute the quorum and may transact the business for which the meeting was originally called notwithstanding that they may not represent a majority of the outstanding Series 15 Preference Shares.

5. Approval of Holders of Series 15 Preference Shares

(a) Any approval of the holders of the Series 15 Preference Shares with respect to any matters requiring the consent of the holders of the Series 15 Preference Shares other than an amendment of the rights, privileges, restrictions and conditions attached to the Series 15 Preference Shares, may be given in such manner as may then be required by law, subject to a minimum requirement that such approval be given by resolution signed by all the holders of outstanding Series 15 Preference Shares or passed by the affirmative vote of at least 66 2/3% of the votes cast by the holders of Series 15 Preference Shares who voted in respect of that resolution at a meeting of the holders of the Series 15 Preference Shares duly called for that purpose and at which the quorum as required by the by-laws of the Corporation is present.

(b) The proxy rules applicable to, the formalities to be observed in respect of the giving of notice of, and the formalities to be observed in respect of the conduct of, any meeting or any adjourned meeting of holders of Series 15 Preference Shares shall be those from time to time prescribed by the by-laws of the Corporation with respect to meetings of shareholders, or if not so prescribed, as required by law. On every poll taken at every meeting of holders of Series 15 Preference Shares, each holder of Series 15 Preference Shares entitled to vote thereat shall have one vote in respect of each $25.00 of the issue price of the Series 15 Preference Shares held.

6. Tax Election

The Corporation shall elect, in the manner and within the time provided under section 191.2 of the Income Tax Act (Canada) or any successor or replacement provision of similar effect, to pay tax at a rate such that, and shall take all other necessary action under such Act such that, no holder of Series 15 Preference Shares shall be required to pay tax on dividends

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received on the Series 15 Preference Shares under section 187.2 of Part IV.1 of such Act or any successor or replacement provision of similar effect.

III. PART III CORPORATION DETERMINED RATE PROCEDURES

1. Definitions

For the purposes of this Part III, the following expressions have the following meanings:

(a)   “Bankers’ Acceptance Rate”, for any day, shall mean the average bid rate for three-month Canadian dollar bankers’ acceptances which appears on the Reuters Screen as of 10:00 a.m., Toronto time, on that day. If such rate does not appear on the Reuters Screen, the rate on that day shall be determined on the basis of the average quoted bid rates of the Banks for three-month Canadian dollar bankers’ acceptances for settlement on that day accepted by the Banks as of 10:00 a.m., Toronto time, on that day;

(b)   “Corporation Determined Percentage” shall mean a percentage of the Average Prime Rate or of the Bankers’ Acceptance Rate to be selected by the Corporation and set forth in the notice referred to in section III.2 hereof;

(c)   “Corporation Determined Quarterly Dividend Rate” shall mean one-quarter of the annual dividend rate specified by the Corporation in its notice pursuant to section III.2 hereof, which annual dividend rate shall be one of:

(i)   the Corporation Determined Percentage of the Average Prime Rate determined quarterly for each Dividend Payment Date immediately following the Dividend Period for which such determination is being made based on the Average Prime Rate for the period consisting of the three calendar months ending on the last day of the calendar month prior to the calendar month during which the Dividend Payment Date for which the determination is being made falls; or

(ii)   the Corporation Determined Percentage of the Bankers’ Acceptance Rate determined on the first Business Day of the Dividend Period for which such determination is being made; or

(iii)   a fixed annual percentage rate.

Terms defined in Part II, Part IV or Part V hereof and used but not defined in this Part III shall have the meanings attributed thereto in Part II, Part IV or Part V as the case may be.

2. Determination of New Dividend Rate

No earlier than 60 days and no later than 45 days prior to the end of the Initial Term or the current Corporation Determined Term or Dealer Determined Term or no earlier than 25 days and no later than 20 days prior to the end of the current Auction Dividend Period (and

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provided such Auction Dividend Period is not the first Auction Dividend Period within an Auction Term), as the case may be, the Corporation may notify the holders of Series 15 Preference Shares of a proposed Corporation Determined Quarterly Dividend Rate for a proposed Corporation Determined Term. Such notification to such holders shall also:

(i) specify a date by which each holder must notify the Corporation in writing of its acceptance of the proposed Corporation Determined Quarterly Dividend Rate and the proposed Corporation Determined Term, if such holder intends to accept such rate and term, which date shall be at least 35 days prior to the end of the Initial Term or the current Corporation Determined Term or Dealer Determined Term or at least 15 date prior to the end of the current Auction Dividend Period, as the case may be; and

(ii) specify that the proposed Corporation Determined Quarterly Dividend Rate and the proposed Corporation Determined Term shall become effective for the purposes of determining the dividends to be paid on the Dividend Payment Dates for Dividend Periods during such proposed Corporation Determined Term only if all of the holders of Series 15 Preference Shares accept such rate and term.

3. Acceptance of Corporation Determined Quarterly Dividend Rate

If,

(i) by the time prescribed in paragraph (i) of section III.2 hereof, all of the holders of Series 15 Preference Shares have accepted the proposed Corporation Determined Quarterly Dividend Rate and the proposed Corporation Determined Term as evidenced by notice in writing to the Corporation, and

(ii) at least 30 days prior to the end of the Initial Term of the current Corporation Determined Term or Dealer Determined Term or at least 12 days prior to the end of the current Auction Dividend Period, as the case may be, the Corporation has notified all of such holders that each of them has agreed with the Corporation on such rate and term;

such Corporation Determined Quarterly Dividend Rate and Corporation Determined Term shall apply for the purposes of determining the dividend to be paid on the Series 15 Preference Shares, from time to time, on each of the Series 15 Preference Shares on each Dividend Payment Date in respect of Dividend Periods during such Corporation Determined Term.

4. Termination of Application

Notwithstanding the acceptance of a Corporation Determined Quarterly Dividend Rate and a Corporation Determined Term as provided for in this Part III, the Corporation may notify the holders of Series 15 Preference Shares that the Corporation does not intend to implement application of the Corporation Determined Quarterly Dividend Rate and Corporation Determined Term as set forth in the notification to holders provided that such notification is

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given by the Corporation prior to the end of the Initial Term or the current Corporation Determined Term, Dealer Determined Term or Auction Dividend Period, as the case may be. In such circumstances, the provisions of Part IV hereof may be applied in accordance with such Part, failing which the provisions of Part V hereof shall be applied in accordance with such Part. Any such notification shall not limit or restrict the right of the Corporation, prior to the expiry of any subsequent Corporation Determined Term, Dealer Determined Term or Auction Dividend Period, as the case may be, to implement the provisions of this Part III by forwarding a notification to the holders of Series 15 Preference Shares.

5. Miscellaneous

In the event that there is any inconsistency, ambiguity or uncertainty in the interpretation or application of the procedures set forth in this Part, the directors of the Corporation (or any person or persons designated by the directors) may, in such manner as they shall determine in their sole discretion, interpret such procedures in order to deal with such inconsistency, ambiguity or uncertainty and any such determination evidenced by a certificate of the Secretary of the Corporation (which shall be provided to holders of Series 15 Preference Shares upon request) shall be conclusive.

IV. PART IV DEALER BIDS PROCEDURES

1. Definitions

For the purposes of this Part IV, the following expressions have the following meanings:

(a)   “Bankers’ Acceptance Rate”, for any day, shall mean the average bid rate for three-month Canadian dollar bankers’ acceptances which appears on the Reuters Screen as of 10:00 a.m., Toronto time, on that day. If such rate does not appear on the Reuters Screen, the rate on that day shall be determined on the basis of the average quoted bid rates of the Banks for three-month Canadian dollar bankers’ acceptances for settlement on that day accepted by the Banks as of 10:00 a.m., Toronto time, on that day;

(b)   “Dealer” shall mean any registered investment dealer or other person permitted by law to perform the functions required of a Dealer in this Part IV;

(c)   “Dealer Determined Percentage” shall mean a percentage of the Average Prime Rate or the Banker’s Acceptance Rate to be selected by each Dealer and to be set forth in each Dealer Offer in accordance with section IV.2(b) hereof;

(d)   “Dealer Determined Quarterly Dividend Rate” shall mean one-quarter of the annual dividend rate specified by the Dealer in the Accepted Dealer Offer referred to in section IV.2(c) hereof which shall be one of:

(i) the Dealer Determined Percentage of the Average Prime Rate determined quarterly for each Dividend Payment Date immediately following the Dividend Period for which such determination is being made based on the

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    Average Prime Rate for the period consisting of the three calendar months ending on the last day of the calendar month prior to the calendar month during which the Dividend Payment Date for which the determination is being made falls;

(ii)   the Dealer Determined Percentage of the Bankers’ Acceptance Rate determined on the first Business Day of the Dividend Period for which such determination is being made; or

(iii)   a fixed annual percentage rate;

(e)   “Dealer Offer” shall mean a written irrevocable and unconditional offer from a Dealer in response to a Notice Requesting Bids to purchase all of the Series 15 Preference Shares outstanding on the last day of the Initial Term or the current Corporation Determined Term, Dealer Determined Term or Auction Dividend Period, as the case may be, at a purchase price per Series 15 Preference Share equal to $25.00 and containing the information specified in section IV.2(b) hereof;

(f)   “Dealer Response Date” shall have the meaning ascribed thereto in section IV.2(a) hereof;

(g)   “Notice Requesting Bids” shall mean a notice from the Corporation to one or more Dealers requesting them to submit Dealer Offers as provided for in section IV.2(a) hereof; and

(h)   “Notification to Holders” shall mean the notification from the Corporation to holders of Series 15 Preference Shares of the acceptance of a Dealer Offer as provided for in section IV.2(d) hereof.

Terms defined in Part II and Part V hereof and used but not defined in this Part IV shall have the meanings attributed thereto in Part II and Part V.

2. Bids by Dealers

(a) No earlier than 30 days and no later than 25 days prior to the end of the Initial Term or the current Corporation Determined Term or Dealer Determined Term or no earlier than 13 days and no later than 10 days prior to the end of the current Auction Dividend Period (and provided such Auction Dividend Period is not the first Auction Dividend Period within an Auction Term), as the case may be, the Corporation may solicit bids from one or more Dealers for the purchase of all of the Series 15 Preference Shares. Such solicitation shall be contained in a Notice Requesting Bids to be sent by the Corporation to such Dealers which notice shall:

(i) invite each Dealer to submit to the Corporation a Dealer Offer; and

(ii) specify a date, which date shall not be more than 10 days after the giving of such notice except if such notice is given during an Auction Dividend

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Period in which case the date specified shall not be more than 5 days after the giving of such notice, by which any such offer must be received (the “Dealer Response Date”) by the Corporation.

(b) Each Dealer receiving a Notice Requesting Bids may submit a Dealer Offer provided such Dealer does so by the Dealer Response Date and provided that such Dealer Offer specifies:

(i) for the purpose of determining the Dealer Determined Quarterly Dividend Rate in the event such Dealer’s Dealer Offer is accepted under section IV.2(c):

(A)   the Dealer Determined Percentage of the Average Prime Rate (to be determined as described in paragraph (i) of the definition herein of “Dealer Determined Quarterly Dividend Rate”);

(B)   the Dealer Determined Percentage of the Bankers’ Acceptance Rate (to be determined as described in paragraph (ii) of the definition herein of “Dealer Determined Quarterly Dividend Rate”); or

(C)   a fixed annual percentage rate;

(ii) a Dealer Determined Term for which the rate referred to in paragraph (i) of this section IV.2(b) shall apply; and

(iii) the amount of any fees to be paid by the Corporation to the Dealer in respect of the Series 15 Preference Shares in the event the Dealer’s Offer is accepted by the Corporation.

(c) If the Corporation wishes to accept a Dealer Offer, it shall signify such acceptance on or before 15 days prior to the end of the Initial Term or the current Corporation Determined Term or Dealer Determined Term or on or before 5 days prior to the end of the current Auction Dividend Period, as the case may be, by notice to the Dealer whose Dealer Offer it accepts (an “Accepted Dealer Offer”). The Dealer Determined Quarterly Dividend Rate and Dealer Determined Term specified in the Accepted Dealer Offer shall apply for the purposes of determining the dividends to be paid on the Series 15 Preference Shares on each Dividend Payment Date in respect of Dividend Periods during such Dealer Determined Term provided the provisions of section IV.2(g) hereof are fully complied with. The Dealer whose Dealer Offer is accepted will be required to purchase all of the Series 15 Preference Shares not retained by the existing holders on the last day of the Initial Term or the current Corporation Determined Term or Dealer-Determined Term or on the Settlement Date immediately following the current Auction Dividend Period, as the case may be, on the terms contained in the Accepted Dealer Offer.

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(d) Concurrently with its acceptance of a Dealer Offer, and in any event not later than 15 days prior to end of the Initial Term or the current Corporation Determined Term or Dealer Determined Term or not later than 5 days prior to the end of the current Auction Dividend Period, as the case may be, the Corporation shall notify (a “Notification to Holders”) each existing holder of Series 15 Preference Shares that the Corporation has accepted a Dealer Offer. Such notification shall:

(i)   specify the Dealer Determined Quarterly Dividend Rate to apply to the Series 15 Preference Shares;

(ii)   specify the Dealer Determined Term for which the Dealer Determined Quarterly Dividend Rate referred to in paragraph (i) of this section IV.2(d) shall apply;

(iii)   notify such holders of the right of each holder either to sell all or some of the Series 15 Preference Shares it holds to such Dealer or to continue to hold all or some of the Series 15 Preference Shares it holds;

(iv)   notify such holders of the date (which shall be not more than ten days and not less than six days prior to the end of the Initial Term or the current Corporation Determined Term or Dealer Determined Term or not more than three days and not less than two days prior to the end of the current Auction Dividend Period, as the case may be) by which the Corporation must have received written notice from such holder of its decision to sell all or some of the Series 15 Preference Shares it holds as provided for in section IV.2(e) hereof;

(v)   notify such holders that any holder of Series 15 Preference Shares that fails to respond to the Notification to Holders by the date specified for response therein will be deemed to have elected to continue to hold all of the Series 15 Preference Shares then held by it subject to the terms and conditions as to the Dealer Determined Quarterly Dividend Rate and the Dealer Determined Term which are set forth in the Notification to Holders; and

(vi)   identify the Dealer whose Dealer Offer has been accepted.

(e) Upon receipt of the Notification to Holders, an existing holder of Series 15 Preference Shares may elect to sell Series 15 Preference Shares in accordance with the terms specified in such Notification to Holders by notifying the Corporation in writing of such decision and of the number of shares to be sold. Each holder of Series 15 Preference Shares who elects to sell all or some of its holdings of Series 15 Preference Shares shall, together with such notice, deposit the certificate or certificates representing Series 15 Preference Shares which such holder desires to sell (with the transfer panel on such certificate duly completed and signed or, in the alternative, with a duly completed stock transfer power of attorney accompanying such certificate or certificates) at the registered office of

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    the Corporation, or at any place where the Series 15 Preference Shares may be transferred or any other place or places in Canada specified by the Corporation to holders of the Series 15 Preference Shares in the Notification to Holders. If a holder of Series 15 Preference Shares wishes to sell only some of the Series 15 Preference Shares represented by any share certificate or certificates the holder may deposit the certificate or certificates, as aforementioned, and the Corporation shall issue and deliver to such holder, at the expense of the Corporation, a new share certificate representing the Series 15 Preference Shares which are not being delivered for sale. Any holder of Series 15 Preference Shares that fails to respond to the Notification to Holders by the date specified for response therein will be deemed to have elected to continue to hold all of the Series 15 Preference Shares then held by it subject to the terms and conditions as to the Dealer Determined Quarterly Dividend Rate and the Dealer Determined Term which are set forth in the Notification to Holders. The Corporation shall have all such powers and authority as may be necessary to determine finally the adequacy of all transfer instruments and related matters with respect to the sale of shares by an existing holder to a Dealer hereunder. Any determination by the Corporation to the effect that any instrument of transfer is incomplete or ineffective shall bind the holder intending to sell any of its Series 15 Preference Shares pursuant to the provisions of this Part IV and shall also bind the Dealer in question.

(f)   At least one Business Day prior to the end of the Initial Term, or the current Corporation Determined Term, Dealer Determined Term or Auction Dividend Period, as the case may be, the Corporation shall notify the Dealer submitting the Accepted Dealer Offer of the number of shares to be purchased by such Dealer in accordance with section IV.2(g) hereof and of the identity of the vendor or vendors thereof.

(g)   On the last day of the Initial Term, or the current Corporation Determined Term or Dealer Determined Term or on the Settlement Date immediately following the end of the Auction Dividend Period, as the case may be, the Dealer submitting the Accepted Dealer Offer shall purchase the Series 15 Preference Shares from the holders specified in section IV.2(f) hereof, at the purchase price set out in section IV.1(e) hereof. For the purposes of completing such purchase, the Dealer submitting the Accepted Dealer Offer shall deposit with the Corporation, at its registered office, on or prior to noon (Toronto time) on such date, a certified cheque payable to the Corporation, as agent for the vendor or vendors referred to in-section IV.2(f) hereof, representing the aggregate purchase price for the Series 15 Preference Shares to be purchased pursuant to this section IV.2(g) together with a direction as to registration particulars with respect to such Series 15 Preference Shares to be purchased. Upon receipt of such certified cheque as aforesaid, the Corporation shall deliver to the vendor or vendors at the registered office of the Corporation cheques payable to the vendor or vendors in payment of the purchase price for such Series 15 Preference Shares (less any tax required to be deducted and withheld therefrom) against delivery of the certificates therefor duly completed in accordance with section IV.2(e), and delivery of such cheques by the Corporation shall be deemed to be payment and shall satisfy and discharge

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all liability for such purchase price to the extent of the amount represented by such cheques (plus any tax required to be and in fact deducted and withheld therefrom and remitted to the proper tax authority), unless such cheques are not paid on due presentation.

3. Termination of Application

Notwithstanding the acceptance of a Dealer Offer as provided for in this Part IV, the Corporation may notify the holders of Series 15 Preference Shares that the Corporation does not intend to implement application of the Dealer Determined Quarterly Dividend Rate and Dealer Determined Term as set forth in the Notification to Holders provided that such notification is given by the Corporation prior to the end of the Initial Term or the current Corporation Determined Term, Dealer Determined Term or the Auction Dividend Period, as the case may be. In such circumstances, the provisions of Part V hereof shall be applied in accordance with such Part and, for greater certainty, the Dealer whose Dealer Offer has been accepted shall not be obliged to purchase any Series 15 Preference Shares pursuant to such Dealer Offer. Any such notification shall not limit or restrict the right of the Corporation, prior to the end of any subsequent Corporation Determined Term, Dealer Determined Term or Auction Dividend Period, as the case may be, to implement the provisions of this Part IV by forwarding a Notice Requesting Bids to one or more Dealers.

4. Miscellaneous

In the event that there is any inconsistency, ambiguity or uncertainty in the interpretation or application of the procedures set forth in this Part IV, the directors of the Corporation (or any person or persons designated by the directors) may, in such manner as they shall determine in their sole discretion, interpret such procedures in order to deal with such inconsistency, ambiguity or uncertainty and any such determination evidenced by a certificate of the Secretary of the Corporation (which shall be provided to holders of Series 15 Preference Shares) shall be conclusive.

V. PART V AUCTION PROCEDURES

1. Definitions

For the purposes of this Part V the following expressions have the following meanings:

(a) “Auction Manager” shall mean the trust corporation (which may be an affiliate of the Corporation) duly appointed or to be appointed from time to time by the Corporation as Auction Manager in respect of the Series 15 Preference Shares pursuant to the Auction Manager Agreement;

(b) “Auction Manager Agreement” shall mean an agreement made between the Auction Manager and the Corporation which provides, among other things, that the Auction Manager will follow the procedures set forth in this Part V for the purposes of determining the Current Dividend Rate for the Series 15 Preference Shares;

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(c)   “Available Shares” shall have the meaning specified in paragraph (i) of section V.4(a) hereof;

(d)   “Bankers’ Acceptance Rate”, for any day, shall mean the average bid rate for one-month Canadian dollar bankers’ acceptances which appears on the Reuters Screen as of 10:00 a.m., Toronto time, on that day. If such rate does not appear on the Reuters Screen, the rate on that day shall be determined on the basis of the average quoted bid rates of the Banks for one-month Canadian dollar bankers’ acceptances for settlement on that day accepted by the Banks as of 10:00 a.m., Toronto time, on that day;

(e)   “Bid” and “Bids” shall have the respective meanings specified in section V.2(a) hereof;

(f)   “Bidder” and “Bidders” shall have the respective meanings specified in section V.2(a) hereof;

(g)   “Dealer” shall mean any registered investment dealer or other person permitted by law to perform the functions required of a Dealer in this Part V that has entered into a Dealer Agreement with the Auction Manager that remains effective;

(h)   “Dealer Agreement” shall mean an agreement between the Auction Manager and a Dealer pursuant to which the Dealer agrees to participate in Auctions in compliance with the procedures set forth in this Part V;

(i)   “Existing Holder” shall mean a holder of Series 15 Preference Shares (i) who has signed a Purchaser’s Letter, (ii) who has delivered or caused to be delivered such Purchaser’s Letter to the Auction Manager and to any Dealer to which such Existing Holder submits information pursuant to section V.2(a) hereof, and (iii) who is registered in the ledger maintained by the Auction Manager in respect of holders of Series 15 Preference Shares;

(j)   “held by” with respect to any Series 15 Preference Shares registered in the name of the Action Manager shall include such shares beneficially owned by an Existing Holder but does not include, with respect to such shares, the Auction Manager;

(k)   “Hold Order” and “Hold Orders” shall have the respective meanings specified in section V.2(a) hereof;

(l)   “Maximum Rate” with respect to any Auction Dividend Period shall mean the Bankers’ Acceptance Rate determined on the Auction Date immediately preceding the beginning of such Auction Dividend Period plus 0.40%;

(m)   “Order” and “Orders” shall have the respective meanings specified in section V.2(a) hereof;

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(n)   “Potential Holder” shall mean any person, including any Existing Holder, (i) who has executed a Purchaser’s Letter, (ii) who has delivered or caused to be delivered such Purchaser’s Letter to the Auction Manager and to any Dealer to which such Potential Holder submits information pursuant to section V.2(a) hereof and (iii) who may be interested in acquiring Series 15 Preference Shares (or, in the case of an Existing Holder, additional Series 15 Preference Shares);

(o)   “Purchaser’s Letter” shall mean a letter addressed to the Auction Manager and a Dealer in which a person agrees, among other things, to be bound by the Auction Procedures in the event such person participates in an Auction;

(p)   “Remaining Shares” shall have the meaning specified in paragraph (iv) of section V.5(a) hereof;

(q)   “Sell Order” and “Sell Orders” shall have the respective meanings specified in section V.2(a) hereof;

(r)   “Submission Deadline” shall mean 11:00 a.m., Toronto time, on any Auction Date or such later time on any Auction Date, as specified by the Auction Manager from time to time, by which Dealers are required to submit Orders to the Auction Manager;

(s)   “Submitted Bid” and “Submitted Bids” shall have the respective meanings specified in section V.4(a) hereof;

(t)   “Submitted Hold Order” and “Submitted Hold Orders” shall have the respective meanings specified in section V.4(a) hereof;

(u)   “Submitted Order” and “Submitted Orders” shall have the respective meanings specified in section V.4(a) hereof;

(v)   “Submitted Sell Order” and “Submitted Sell Orders” shall have the respective meanings specified in section V.4(a) hereof;

(w)   “Sufficient Clearing Bids” shall have the meaning specified in section V.4(a) hereof; and

(x)   “Winning Bid Rate” shall mean the dividend rate per annum determined in accordance with section V.4(a) hereof.

2. Orders by Existing Holders and Potential Holders

(a) Prior to the Submission Deadline on each Auction Date:

(i) each Existing Holder may submit to a Dealer information as to the number of Series 15 Preference Shares, if any, held by such Existing Holder which such Existing Holder:

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(A)   desires to continue to hold without regard to the Current Dividend Rate; and/or

(B)   desires to continue to hold, provided that the Current Dividend Rate shall not be less than the dividend rate per annum specified by such Existing Holder; and/or

(C)   offers to sell without regard to the Current Dividend Rate; and

(ii) Potential Holders may submit to a Dealer offers to purchase Series 15 Preference Shares, provided that any such offer shall be effective only if the Current Dividend Rate shall not be less than the dividend rate per annum specified by such Potential Holder.

The communication to a Dealer of the information referred to in this section V.2(a) is an “Order” and, collectively, are “Orders”, and each Existing Holder and each Potential Holder placing an Order is a “Bidder” and, collectively, are “Bidders”; an Order containing the information referred to in subparagraph (i)(A) of this section V.2(a) is a “Hold Order” and, collectively, are “Hold Orders”; an Order containing the information referred to in subparagraph (i)(B) or paragraph (ii) of this section V.2(a) is a “Bid” and, collectively, are “Bids”; and an Order containing the information referred to in subparagraph (i)(C) of this section V.2(a) is a “Sell Order” and, collectively, are “Sell Orders”.

(b) (i) A Bid by an Existing Holder shall constitute an irrevocable offer to sell at a price per Series 15 Preference Share equal to $25.00:

(A)   the number of Series 15 Preference Shares specified in such Bid if the Winning Bid Rate determined on the applicable Auction Date is less than the rate specified in such Bid;

(B)   the number of Series 15 Preference Shares specified in such Bid or a lesser number to be determined as set forth in paragraph (iv) of section V.5(a) hereof if the Winning Bid Rate determined on such Auction Date is equal to the rate specified in such Bid;

(C)   the number of Series 15 Preference Shares specified in such Bid if the rate specified in such Bid is higher than the Maximum Rate and Sufficient Clearing Bids do exist; or

(D)   a lesser number of Series 15 Preference Shares to be determined as set forth in paragraph (iii) of section V.5(b) hereof if the rate specified in such Bid is higher than the Maximum Rate and Sufficient Clearing Bids do not exist.

(ii) A Sell Order by an Existing Holder shall constitute an irrevocable offer to sell at a price per Series 15 Preference Share equal to $25.00:

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(A) the number of Series 15 Preference Shares specified in such Sell Order if Sufficient Clearing Bids do exist; or

(B) a lesser number of Series 15 Preference Shares to be determined as set forth in paragraph (iii) of section V.5(b) hereof if Sufficient Clearing Bids do not exist.

(iii) A Bid by a Potential Holder shall constitute an irrevocable offer to purchase at a price per Series 15 Preference Share equal to $25.00:

(A)   the number of Series 15 Preference Shares specified in such Bid if the Winning Bid Rate determined on the applicable Auction Date is higher than the rate specified in such Bid; or

(B)   the specified number or a lesser number of Series 15 Preference Shares to be determined as set forth in paragraph (v) of section V.5(a) hereof if the Winning Bid Rate determined on such Auction Date is equal to the rate specified in such Bid; or

(C)   the specified number of Series 15 Preference Shares if the rate specified in such Bid is equal to or lower than the Maximum Rate and Sufficient Clearing Bids do not exist.

(c) A rate specified by an Existing Holder or Potential Holder in any Bid shall be a fixed annual percentage rate or a specified percentage of the Bankers’ Acceptance Rate determined on the relevant Auction Date.

(d) If none of the holders of Series 15 Preference Shares is an Existing Holder for the purposes of this Part V on any date which would be an Auction Date hereunder, the Current Dividend Rate for the next succeeding Auction Dividend Period shall be equal to 50% of the Bankers’ Acceptance Rate determined on the Auction Date.

3. Submission of Orders by Dealers to the Auction Manager

(a) Each Dealer shall submit to the Auction Manager in writing in accordance with its Dealer Agreement prior to the Submission Deadline on each Auction Date all Orders obtained by such Dealer and specifying with respect to each Order:

(i)   the name of the Bidder placing such Order;

(ii)   the aggregate number of Series 15 Preference Shares that are the subject of the Order;

(iii)   to the extent that the Bidder is an Existing Holder, the number of Series 15 Preference Shares, if any, subject to any:

(A) Hold Order placed by such Existing Holder;

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(B) Bid placed by such Existing Holder and the rate specified in such Bid; and/or

(C) Sell Order placed by such Existing Holder; and

(iv) to the extent that the Bidder is a Potential Holder, the rate specified in the Bid of such Potential Holder.

(b)   If any rate specified in any Bid contains more than three figures to the right of the decimal point, the Auction Manager shall round such rate up to the next highest one-thousandth of one percent (0.001%).

(c)   If for any reason an Order or Orders covering in the aggregate all the Series 15 Preference Shares held by an Existing Holder is not submitted to the Auction Manager prior to the Submission Deadline, the Auction Manager shall deem a Hold Order to have been submitted on behalf of such Existing Holder covering the number of Series 15 Preference Shares held by such Existing Holder and not subject to Orders submitted to the Auction Manager.

(d)   If one or more Orders covering in the aggregate more than the number of Series 15 Preference Shares held by any Existing Holder are submitted to the Auction Manager, such Orders shall be considered valid as follows and in the following order of priority:

(i) all Hold Orders shall be considered valid, but only up to and including, in the aggregate, the number of Series 15 Preference Share held by such Existing Holder, and, solely for purposes of allocating compensation among the Dealers submitting Hold Orders, if the number of Series 15 Preference Shares subject to such Hold Orders exceeds the number of Series 15 Preference Shares held by such Existing Holder, the number of Series 15 Preference Shares subject to each such Hold Order shall be reduced pro rata to cover the number of Series 15 Preference Shares held by such Existing Holder;

(ii) (A) any Bid shall be considered valid up to and including the excess of the number of Series 15 Preference Shares held by such Existing Holder over the number of Series 15 Preference Shares subject to any Hold Order referred to in paragraph (i) of this section V.3(d);

(B) subject to subparagraph (ii)(A) of this section V.3(d), if more than one Bid with the same rate is submitted on behalf of such Existing Holder and the number of Series 15 Preference Shares subject to such Bids is greater than such excess, such Bids shall be considered valid up to the amount of such excess, and, solely for purposes of allocating compensation among the Dealers submitting Bids with the same rate, the number of Series 15 Preference Shares subject to each Bid with the same rate shall be reduced pro rata to

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cover the number of Series 15 Preference Shares equal to such excess;

(C) subject to subparagraph (ii)(A) of this section V.3(d), if more than one Bid with different rates is submitted on behalf of such Existing Holder, such Bids shall be considered valid in the ascending order of their respective rates up to the amount of such excess; and

(D) in any event, the number, if any, of such Series 15 Preference Shares subject to Bids not valid under this paragraph (ii) shall be treated as the subject of a Bid by a Potential Holder; and

(iii) all Sell Orders shall be considered valid but only up to and including in the aggregate the excess of the number of Series 15 Preference Shares held by such Existing Holder over the sum of the Series 15 Preference Shares subject to Hold Orders referred to in paragraph (i) of this section V.3(d) and valid Bids by Existing Holders referred to in paragraph (ii) of this section V.3(d).

(e) If more than one Bid is submitted on behalf of any Potential Holder, each Bid submitted shall be a separate Bid.

4. Determination of Sufficient Clearing Bids, Winning Bid Rate and Current Dividend Rate

(a) On the Submission Deadline on each Auction Date, the Auction Manager shall assemble all Orders submitted or deemed submitted to it by the Dealers (each such Order as submitted or deemed submitted by a Dealer being individually a “Submitted Hold Order”, a “Submitted Bid” or a “Submitted Sell Order”, as the case may be, or a “Submitted Order” and, collectively, “Submitted Hold Orders”, “Submitted Bids” or “Submitted Sell Orders”, as the case may be, or “Submitted Orders”) and shall determine:

(i) the excess of (a) the total number of Series 15 Preference Shares held by Existing Holders issued and outstanding over (b) the number of Series 15 Preference Shares that are the subject of Submitted Hold Orders (such excess being the “Available Shares”);

(ii) from the Submitted Orders, whether:

(A) the number of Series 15 Preference Shares that are the subject of Submitted Bids by Potential Holders specifying one or more rates equal to or lower than the Maximum Rate;

exceeds or is equal to the sum of:

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(B) (I) the number of Series 15 Preference Shares that are the subject of Submitted Bids by Existing Holders specifying one or more rates higher than the Maximum Rate; and

(II) the number of Series 15 Preference Shares that are the subject of Submitted Sell Orders;

and if such excess or equality exists (other than because all of the Series 15 Preference Shares are the subject of Submitted Hold Orders), then such Submitted Bids in subparagraph (A) hereof shall be “Sufficient Clearing Bids”; and

(iii) if Sufficient Clearing Bids exist, the lowest rate specified in the Submitted Bids which if the Auction Manager accepted:

(A) (I) each Submitted Bid from Existing Holders specifying that lowest rate, and

(II) all other Submitted Bids from Existing Holders specifying lower rates,

thus entitling those Existing Holders to continue to hold the aggregate number of Series 15 Preference Shares that are specified in those Submitted Bids; and

(B) (I) each Submitted Bid from Potential Holders specifying that lowest rate, and

(II) all other Submitted Bids from Potential Holders specifying lower rates,

thus entitling those Potential Holders to purchase the aggregate number of Series 15 Preference Shares that are specified in those Submitted Bids;

would result in such Existing Holders described in subparagraph (A) hereof continuing to hold an aggregate number of Series 15 Preference Shares which, when added to the aggregate number of Series 15 Preference Shares to be purchased by such Potential Holders described in subparagraph (B) hereof, would equal not less than the number of Available Shares. This lowest rate is the “Winning Bid Rate”.

(b) Promptly after the Auction Manager has made the determinations pursuant to section V.4(a) hereof, the Auction Manager shall advise the Corporation of the Bankers’ Acceptance Rate and, based on such determinations, of the dividend rate applicable to the Series 15 Preference Shares for the next succeeding Auction Dividend Period (the “Current Dividend Rate”) as follows:

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(i)   if Sufficient Clearing Bids exist, that the Current Dividend Rate for the next succeeding Auction Dividend Period shall be equal to the Winning Bid Rate so determined;

(ii)   if Sufficient Clearing Bids do not exist (other than because all of the Series 15 Preference Shares are the subject of Submitted Hold Orders), that the Current Dividend Rate for the next succeeding Auction Dividend Period shall be equal to the Maximum Rate; or

(iii)   if all of the Series 15 Preference Shares are the subject of Submitted Hold Orders, that the Current Dividend Rate for the next succeeding Auction Dividend Period shall be equal to 50% of the Bankers’ Acceptance Rate determined on the Auction Date.

5. Acceptance and Rejection of Submitted Bids and Submitted Sell Orders and Allocation of Shares

Based on the determinations made pursuant to section V.4(a) hereof, the Submitted Bids and Submitted Sell Orders shall be accepted or rejected and the Auction Manager shall take such other action as set forth below:

(a) If Sufficient Clearing Bids have been made, subject to the provisions of sections V.5(c) and V.5(d) hereof, Submitted Bids and Submitted Sell Orders shall be accepted and rejected in the following order of priority and all other Submitted Bids shall be rejected:

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Preference Shares subject to Submitted Bids described in paragraphs (ii) and (iii) of this section V.5(a) (the “Remaining Shares”). In this event, the Submitted Bids of each such Existing Holder described in this paragraph (iv) shall be rejected, and each such Existing Holder shall be required to sell Series 15 Preference Shares, but only in an amount equal to the difference between (A) the number of Series 15 Preference Shares then held by such Existing Holder subject to such Submitted Bid, and (B) the number of Series 15 Preference Shares obtained by multiplying (x) the number of Remaining Shares by (y) a fraction, the numerator of which shall be the number of Series 15 Preference Shares held by such Existing Holder subject to such Submitted Bid and the denominator of which shall be the sum of the number of Series 15 Preference Shares subject to such Submitted Bids made by all such Existing Holders who specified a rate equal to the Winning Bid Rate; and

(v) the Submitted Bid of each Potential Holder specifying a rate that is equal to the Winning Bid Rate shall be accepted but only in an amount equal to the number of Series 15 Preference Shares obtained by multiplying (A) the excess, if any, of the total number of Available Shares over the number of Series 15 Preference Shares subject to accepted Submitted Bids described in clauses (ii), (iii) and (iv) of this subsection V.5(a) by (B) a fraction, the numerator of which shall be the number of Series 15 Preference Shares specified in such Submitted Bid and the denominator of which shall be the sum of the number of Series 15 Preference Shares subject to Submitted Bids made by all Potential Holders who specified a rate equal to the Winning Bid Rate.

(b) If Sufficient Clearing Bids have not been made (other than because all of the Series 15 Preference Shares are subject to Submitted Hold Orders), subject to the provisions of sections V.5(c) and V.5(d) of this Part V, Submitted Bids and Submitted Sell Orders shall be accepted or rejected in the following order of priority and all other Submitted Bids shall be rejected:

(i)   the Submitted Bid of each Existing Holder specifying any rate that is equal to or lower than the Maximum Rate shall be accepted, thus entitling that Existing Holder to continue to hold the Series 15 Preference Shares that are the subject of such Submitted Bid;

(ii)   the Submitted Bid of each Potential Holder specifying any rate that is equal to or lower than the Maximum Rate shall be accepted, thus requiring such Potential Holder to purchase the number of Series 15 Preference Shares specified in such Submitted Bid; and

(iii)   the Submitted Bid of each Existing Holder specifying any rate that is higher than the Maximum Rate shall be rejected and the Submitted Sell Order of each Existing Holder shall be accepted, in both cases only in an amount equal to the difference between (A) the number of Series 15

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Preference Shares then held by such Existing Holder subject to such Submitted Bid or Submitted Sell Order and (B) the number of Series 15 Preference Shares obtained by multiplying (x) the difference between the total number of Available Shares and the aggregate number of Series 15 Preference Shares subject to Submitted Bids described in paragraphs (i) and (ii) of this section V.5(b) by (y) a fraction, the numerator of which shall be the number of Series 15 Preference Shares held by such Existing Holder subject to such Submitted Bid or Submitted Sell Order and the denominator of which shall be the number of Series 15 Preference Shares subject to all such Submitted Bids and Submitted Sell Orders.

(c)   If, as a result of the procedures described in section V.5(a) or V.5(b) hereof, any Existing Holder would be entitled or required to sell, or any Potential Holder would be entitled or required to purchase, a fraction of a Series 15 Preference Share on any Auction Date, the Auction Manager shall, in such manner as it shall determine in its sole discretion, round up or down the number of Series 15 Preference Shares to be purchased or sold by any Existing Holder or Potential Holder on such Auction Date so that the number of shares purchased or sold by each Existing Holder or Potential Holder shall be whole Series 15 Preference Shares.

(d)   If, as a result of the procedures described in section V.5(a) hereof, any Potential Holder would be entitled or required to purchase a fraction of a Series 15 Preference Share on any Auction Date, the Auction Manager shall, in such manner as it shall determine in its sole discretion, allocate shares for purchase among Potential Holders so that only whole Series 15 Preference Shares are purchased on such Auction Date by any Potential Holder, even if such allocation results in one or more of such Potential Holders not purchasing Series 15 Preference Shares on such Auction Date.

(e)   Based on the results of each Auction, the Auction Manager shall determine to which Potential Holder or Potential Holders purchasing Series 15 Preference Shares an Existing Holder or Existing Holders shall sell Series 15 Preference Shares being sold by such Existing Holder or Existing Holders. Such purchases and sales of Series 15 Preference Shares shall be completed in accordance with the procedures specified in the Purchaser’s Letter on the Settlement Date by payment by each Potential Holder purchasing Series 15 Preference Shares of the aggregate purchase price of the Series 15 Preference Shares to be purchased from a relevant Existing Holder equal to $25.00 per Series 15 Preference Share against delivery by such Existing Holder selling Series 15 Preference Shares to such Potential Holder of a certificate or certificates representing the number of Series 15 Preference Shares being sold, duly endorsed for transfer.

6. Miscellaneous

Notwithstanding the provisions of Part V hereof, the Auction Manager shall not follow the Auction Procedures on the Auction Date immediately preceding: (i) the Redemption

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Date in the event that written notice of redemption of all the outstanding Series 15 Preference Shares has been given pursuant to the provisions of section I.6 hereof or (ii) the first day of a Corporation Determined Term or Dealer Determined Term.

In the event that there is any inconsistency, ambiguity or uncertainty in the interpretation or application of the procedures set forth in this Part, the directors of the Corporation (or any person or persons designated by the directors) may, in such manner as they shall determine in their sole discretion, interpret such procedures in order to deal with any such inconsistency, ambiguity or uncertainty and any such determination evidenced by a certificate of the Secretary of the Corporation (which shall be provided to holders of Series 15 Preference Shares) shall be conclusive.

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CLASS A PREFERENCE SHARES, SERIES 16 ATTRIBUTES

Number and Designation of
and Rights, Privileges, Restrictions and
Conditions Attaching to the Class A Preference Shares, Series 16

The sixteenth series of Class A Preference Shares of the Corporation shall consist of 7,835,200 Class A Preference Shares designated as Class A Preference Shares, Series 16 (“Series 16 Preference Shares”) and, in addition to the rights, privileges, restrictions and conditions attaching to the Class A Preference Shares as a class, shall have attached thereto the following rights, privileges, restrictions and conditions:

1. Consideration for Issue

The consideration for the issue of each Series 16 Preference Share shall be $25.00 or its equivalent in property for past services.

2. Dividends

2.1 Definitions

For the purposes hereof, the following capitalized terms shall have the following meanings, unless the context otherwise requires:

(a) “Adjustment Factor” for any Month means the percentage per annum, positive or negative, based on the Trading Price of the Series 16 Preference Shares for the preceding Month, determined in accordance with the following table:


	The Adjustment Factor as a Percentage of
If Trading Price Is	Prime Shall Be:
$25.50 or more		-4.00	%
$25.375 and less than $25.50		-3.00	%
$25.25 and less than $25.375		-2.00	%
$25.125 and less than $25.25		-1.00	%
Greater than $24.875 and less than $25.125	nil
Greater than $24.75 to $24.875		1.00	%
Greater than $24.625 to $24.75		2.00	%
Greater than $24.50 to $24.625		3.00	%
$24.50 or less		4.00	%

The maximum Adjustment Factor for any Month will be ±4.00%.

If in any Month there is no trade on the Exchange of the Corporation’s Class A Preference Shares, Series 8 (“Series 8 Preference Shares”) of a board lot or more, the Adjustment Factor for the following Month shall be nil;

(b) “Annual Dividend Rate” means for any Month, the rate of interest expressed as a percentage per annum (rounded to the nearest one-thousand (1/1000) of one percent (1%)) which is equal to Prime multiplied by the Designated Percentage for such Month;

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(c)   “Banks” means any two of Royal Bank of Canada, Bank of Montreal, The Bank of Nova Scotia, The Toronto-Dominion Bank and Canadian Imperial Bank of Commerce and any successor of any of them as may be designated from time to time by the Board of Directors by notice given to the transfer agent for the Series 16 Preference Shares, such notice to take effect on, and to be given at least two business days prior to, the commencement of a particular Dividend Period and, until such notice is first given, means Canadian Imperial Bank of Commerce and The Bank of Nova Scotia.

(d)   “Board of Directors” means the board of directors of the Corporation;

(e)   “Designated Percentage” for the Month of January, 2005 means seventy-five percent (75%) and for each Month thereafter means the Adjustment Factor for such Month plus the Designated Percentage for the preceding Month, provided that the Annual Dividend Rate for any Month shall in no event be less than 50% of Prime for such Month or more than 150% of Prime for such Month;

(f)   “Dividend Payment Date” means the 12th day of each Month commencing with the Month of January, 2005 and the first Dividend Payment Date shall be January 12, 2005;

(g)   “Dividend Period” means a Month;

(h)   “Exchange” means the Toronto Stock Exchange or such other exchange or trading market in Canada as may be determined from time to time by the Corporation as being the principal trading market for the Series 8 Preference Shares;

(i)   “Month” means a calendar month;

(j)   “Prime” for a Month means the average (rounded to the nearest one-thousandth (1/1000) of one percent (1%)) of the Prime Rate in effect on each day of such Month;

(k)   “Prime Rate” for any day means the average (rounded to the nearest one-thousandth (1/1000) of one percent (1%)) of the annual rates of interest announced from time to time by the Banks as the reference rates then in effect for such day for determining interest rates on Canadian dollar commercial loans made to prime commercial borrowers in Canada. If one of the Banks does not have such an interest rate in effect on a day, the Prime Rate for such day shall be such interest rate in effect for that day of the other Bank; if both Banks do not have such an interest rate in effect on a day, the Prime Rate for that day shall be equal to one and a half percent (1.5%) per annum plus the average yield expressed as a percentage per annum on 91-day Government of Canada Treasury Bills, as reported by the Bank of Canada, for the weekly tender for the week immediately preceding that day; and if both of such Banks do not have such an interest rate in effect on a day and the Bank of Canada does not report such average yield per annum, the Prime Rate for that day shall be equal to the Prime Rate for the next preceding day. The Prime Rate and Prime shall be determined from time to time

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    by an officer of the Corporation from quotations supplied by the Banks or otherwise publicly available. Such determination shall, in the absence of manifest error, be final and binding upon the Corporation and upon all holders of Series 16 Preference Shares;

(l)   “Trading Day” means, if the Exchange is a stock exchange in Canada, a day on which the Exchange is open for trading, or, in any other case, a business day; and

(m)   “Trading Price” for any Month means the inferred trading price of the Series 16 Preference Shares (as determined by management of the Corporation based on the “Calculated Trading Price” of the Series 8 Preference Shares where “Calculated Trading Price” is determined in accordance with the timing and conditions of the Series 8 Preference Shares.

2.2 General

The holders of the Series 16 Preference Shares shall be entitled to receive cumulative preferred cash dividends, as and when declared by the Board of Directors, out of moneys of the Corporation properly applicable to the payment of dividends, at the rates and times herein provided. Dividends on the Series 16 Preference Shares shall accrue on a daily basis from and including the date of issue hereof, and shall be payable monthly and shall be calculated on a 365 or 366 day basis, being the actual number of days in the year in which the amount is to be ascertained. Payment of the dividend on the Series 16 Preference Shares payable on any Dividend Payment Date (less any tax required to be deducted) shall be made by cheque at par in lawful money of Canada payable at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems available.

Dividends declared on the Series 16 Preference Shares shall (except in case of redemption in which case payment of dividends shall be made on surrender of the certificate representing the Series 16 Preference Shares to be redeemed) be paid by posting in a postage paid envelope addressed to each holder of the Series 16 Preference Shares at the last address of such holder as it appears on the securities register of the Corporation, or, in the case of joint holders, to the address of that one whose name appears first in the securities register of the Corporation as one of such joint holders, or, in the event of the address of any holder not so appearing, then to the address of such holder last known to the Corporation, a cheque for such dividends (less any tax required to be deducted) payable to the order of such holder, or in the case of joint holders, to the order of all such holders failing written instructions from them to the contrary. Notwithstanding the foregoing, any dividend cheque may be delivered by the Corporation to a holder of Series 16 Preference Shares at his address as aforesaid. The posting or delivery of such cheque on or before the date on which such dividend is to be paid to a holder of Series 16 Preference Shares shall be deemed to be payment and shall satisfy and discharge all liabilities for the payment of such dividend to the extent of the sum represented thereby (plus the amount of any tax required to be deducted as aforesaid) unless such cheque is not paid on due presentation. Subject to applicable law, dividends which are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed for a period of six years from the date on which they were declared to be payable shall be forfeited to the Corporation.

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If on any date on which dividends are to be paid, the dividends accrued to such date are not paid in full on all of the Series 16 Preference Shares then outstanding, such dividends, or the unpaid part thereof, shall be paid on a subsequent date or dates determined by the Board of Directors on which the Corporation shall have sufficient monies properly applicable to the payment of such dividends.

The holders of Series 16 Preference Shares shall not be entitled to any dividends other than or in excess of the cumulative preferential cash dividends herein provided for.

2.3 Floating Rate

The dividends in respect of the Series 16 Preference Shares shall be payable monthly at the Annual Dividend Rate as calculated from time to time. Accordingly, on each Dividend Payment Date, the dividend payable on the Series 16 Preference Shares shall be the amount (rounded to the nearest one-thousandth (1/1000) of one cent) obtained by multiplying $25.00 by the Annual Dividend Rate applicable to the Month preceding such Dividend Payment Date and by dividing the product by twelve. The record date for the purpose of determining holders of Series 16 Preference Shares entitled to receive dividends on each Dividend Payment Date shall be the last Trading Day of the next preceding Month. In the event of the redemption or purchase of the Series 16 Preference Shares as contemplated by Section 3 hereof, the amount of the dividend which has accrued during the Month in which such redemption, purchase or distribution occurs shall be the amount (rounded to the nearest one-thousandth (1/1000) of one cent) calculated by multiplying:

(a)   the amount obtained by multiplying $25.00 by one-twelve (1/12) of the Annual Dividend Rate applicable to the preceding Month

    by

(b)   a fraction of which the numerator is the number of days elapsed in the Month in which such redemption, purchase or distribution occurs up to but not including the date of such event and the denominator of which is the number of days in that Month.

2.4 Calculation of Designated Percentage

The Corporation shall as promptly as practicable calculate the Designated Percentage for each Month and give notice thereof to all stock exchanges in Canada on which the Series 16 Preference Shares are listed for trading or if the Series 16 Preference Shares are not listed on a stock exchange in Canada to the Investment Dealers Association of Canada.

3. Rights on Liquidation

In the event of the liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or any other distribution of assets of the Corporation for the purpose of winding-up its affairs, the holders of the Series 16 Preference Shares shall be entitled to receive $25.00 per Series 16 Preference Share together with all dividends accrued and unpaid up to but excluding the date of payment or distribution, before any amounts shall be paid or any

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assets of the Corporation distributed to the holders of any shares ranking junior to the Series 16 Preference Shares. Upon payment of such amounts, the holders of the Series 16 Preference Shares shall not be entitled to share in any further distribution of the assets of the Corporation.

4. Redemption at the Option of the Corporation

Subject to applicable law and Section 5 hereof, upon giving notice as hereinafter provided, the Corporation may redeem at any time all, but not less than all, the outstanding Series 16 Preference Shares, on payment of $25.00 for each such share to be redeemed, in each case, together with accrued and unpaid dividends up to but excluding the date fixed for redemption, the whole constituting the redemption price.

The Corporation shall give notice in writing not less than 45 days nor more than 60 days prior to the date on which the redemption is to take place to each person who at the date of giving such notice is the holder of Series 16 Preference Shares to be redeemed of the intention of the Corporation to redeem such shares. Any such notice shall be validly and effectively given on the date on which it is sent and such notice shall be given and sent by posting the same in a postage paid envelope addressed to each holder of Series 16 Preference Shares to be redeemed at the last address of such holder as it appears on the securities register of the Corporation, or in the case of joint holders, to the address of that one whose name appears first in the securities register of the Corporation as one of such joint holders or, in the event of the address of any holder not so appearing, then to the address of such holder as known to the Corporation, provided that the accidental failure or omission to give any such notices as aforesaid to one or more of such holders shall not affect the validity of the redemption as to the other holders of the Series 16. Preference Shares to be redeemed. Such notice shall set out the number of such Series 16 Preference Shares held by the person to whom it is addressed which are to be redeemed and the redemption price and shall also set out the date on which the redemption is to take place, and on and after the date so specified for redemption the Corporation shall pay or cause to be paid to the holders of such Series 16 Preference Shares to be redeemed the redemption price on presentation and surrender at any place or places within Canada designated by such notice, of the certificate or certificates for such Series 16 Preference Shares so called for redemption; such payment shall be made by cheque payable at par at any branch in Canada of the Corporation’s bankers for the time being or by any other reasonable means the Corporation deems desirable; from and after the date specified in any such notice, the Series 16 Preference Shares called for redemption shall cease to be entitled to dividends and the holders thereof shall not be entitled to exercise any of the rights of shareholders in respect thereof unless payment of the redemption price shall not be duly made by the Corporation; at any time after notice of redemption is given as aforesaid, the Corporation shall have the right to deposit the redemption price of any or all Series 16 Preference Shares called for redemption with a chartered bank or banks or with any trust company or trust companies in Canada named in the notice of redemption to the credit of a special account or accounts in trust for the respective holders of such shares, to be paid to them respectively upon surrender to such bank or banks or trust company or trust companies of the certificate or certificates representing the same, and upon such deposit or deposits being made, such shares shall be redeemed on the redemption date specified in the notice of redemption; after the Corporation has made a deposit as aforesaid with respect to any shares, the holders thereof shall not, from and after the redemption date, be entitled to exercise any of the rights of shareholders in respect thereof and the rights of the holders thereof shall be limited to receiving the proportion

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of the amounts so deposited applicable to such shares, without interest, any interest allowed on such deposit shall belong to the Corporation. Subject to applicable law, redemption monies that are represented by a cheque which has not been presented to the Corporation’s bankers for payment or that otherwise remain unclaimed (including monies held on deposit as provided for above) for a period of six years from the date specified for redemption shall be forfeited to the Corporation.

5. Restrictions on Dividends and Retirement of Shares

Without the approval of the holders of the outstanding Series 16 Preference Shares:

(a)   the Corporation shall not declare, pay or set apart for payment any dividends (other than stock dividends payable in shares of the Corporation ranking junior to the Series 16 Preference Shares) on any shares of the Corporation ranking junior to the Series 16 Preference Shares;

(b)   the Corporation shall not redeem, purchase or otherwise retire or make any capital distribution on or in respect of any shares of the Corporation ranking junior to the Series 16 Preference Shares (except out of the net cash proceeds of a substantially concurrent issue of shares of the Corporation ranking junior to the Series 16 Preference Shares);

(c)   the Corporation shall not purchase or otherwise retire less than all of the Series 16 Preference Shares then outstanding;

(d)   the Corporation shall not redeem, purchase or otherwise retire (except in connection with the exercise of any retraction privilege or mandatory redemption or purchase obligation attaching thereto) any shares of any class or series ranking on a parity with the Series 16 Preference Shares provided that, for greater certainty, the covenant in this Section (d) shall not limit or affect any such action in respect of any class of shares ranking in priority to the Series 16 Preference Shares; or

(e)   the Corporation shall not issue any additional Class A Preference Shares or any shares ranking on a parity with the Series 16 Preference Shares;

unless, in each such case, all dividends on outstanding Series 16 Preference Shares accrued up to and including the dividend payable for the last completed period for which dividends were payable shall have been declared and paid. Any approval of the holders of the Series 16 Preference Shares required to be given pursuant to this Section 5 may be given in accordance with Section 9. Notwithstanding the provisions of Section 9, any approval required to be given pursuant to this Section 5 may be given by the affirmative vote of the holders of the majority of the Series 16 Preference Shares present or represented at a meeting or adjourned meeting of the holders of Series 16 Preference Shares duly called for that purpose and at which a quorum is present.

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6. Purchase for Cancellation

The Corporation may at any time purchase for cancellation the whole or any part of the Series 16 Preference Shares outstanding from time to time, in the open market through or from an investment dealer or any firm holding membership on a recognized stock exchange, or by private agreement or otherwise, at the lowest price or prices at which in the opinion of the Board of Directors such shares are obtainable plus in each case all accrued and unpaid dividends and costs of purchase.

7. Voting Rights

The holders of Series 16 Preference Shares will not be entitled (except as otherwise permitted by law) to receive notice of, attend at, or vote at any meeting of shareholders of the Corporation unless the Corporation fails to pay 24 dividends on the Series 16 Preference Shares, whether or not consecutive, the holders of the Series 16 Preference Shares shall have the right to receive notice of, and to attend, each meeting of shareholders of the Corporation which takes place more than 60 days after the date on which the failure first occurs (other than a separate meeting of the holders of another series or class of shares) and such holders shall also have the right, at any such meeting, to one vote for each Series 16 Preference Share held (provided that when entitled to vote in the election of directors, holders of Series 16 Preference Shares shall vote together with holders of Class A Limited Voting Shares in the election of one-half of the board of directors), until all such arrears of dividends on the Series 16 Preference Shares shall have been paid whereupon such rights shall cease unless and until the same default shall again arise under the provisions of this Section 7.

8. Modifications

The provisions attaching to the Series 16 Preference Shares as a series may be repealed, altered, modified or amended from time to time with such approval as may then be required by the Business Corporations Act (Ontario), any such approval to be given in accordance with Section 9.

None of the series provisions of the articles of the Corporation relating to the Series 16 Preference Shares shall be amended or otherwise changed unless, contemporaneously therewith, the series provisions, if any, relating to the Series 8 Preference Shares are, to the extent deemed required by the Corporation, amended or otherwise changed in the same proportion and in the same manner.

9. Approval of Holders of Series 16 Preference Shares

Except as otherwise provided herein, any approval of the holders of the outstanding Series 16 Preference Shares with respect to any matters requiring the consent of the holders of the Series 16 Preference Shares with respect to any matters requiring the consent of the holders of the Series 16 Preference Shares may be given in such manner as may then be required by law, subject to a minimum requirement that such approval be given by a resolution signed by all the holders of outstanding Series 16 Preference Shares or passed by the affirmative vote of at least 66 2/3% of the votes cast by the holders of Series 16 Preference Shares who voted in respect of that resolution at a meeting of the holders of the Series 16 Preference Shares

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duly called for that purpose and at which a quorum as required by the by-laws of the Corporation is present, subject to a minimum requirement that the quorum at the meeting (other than an adjourned meeting), be at least two persons entitled to vote thereat.

The proxy rules applicable to, the formalities to be observed in respect of the giving notice of, and the formalities to be observed in respect of the conduct of, any meeting or any adjourned meeting of holders of Series 16 Preference Shares shall be those from time to time prescribed by the by-laws of the Corporation with respect to meetings of shareholders or, if not so prescribed, as required by law. On every poll taken at every meeting of holders of Series 16 Preference Shares, each holder of Series 16 Preference Shares entitled to vote thereat shall have one vote in respect of each $25.00 of the issue price of each Series 16 Preference Share held.

10. Tax Election

The Corporation shall elect, in the manner and within the time provided under the Income Tax Act (Canada), under Subsection 191.2(1) of the said Act, or any successor or replacement provision of similar effect, and take all other necessary action under such Act, to pay tax at a rate such that no holder of the Series 16 Preference Shares will be required to pay tax on dividends received on the Series 16 Preference Shares under Section 187.2 of Part IV.I of such Act or any successor or replacement provision of similar effect.

11. Mail Service Interruption

If the Board of Directors determines that mail service is, or is threatened to be, interrupted at the time when the Corporation is required or elects to give any notice hereunder by mail, or is required to send any cheque or any share certificate to the holder of any Series 16 Preference Share, whether in connection with the redemption or conversion of such share or otherwise, the Corporation may, notwithstanding the provisions hereof:

(a) give such notice by publication thereof once in a daily English language newspaper of general circulation published in each of Vancouver, Calgary, Winnipeg, Toronto, Montreal and Halifax, and once in a daily French language newspaper published in Montreal and such notice shall be deemed to have been validly given on the day next succeeding its publication in all of such cities; and

(b) fulfil the requirement to send such cheque or such share certificate by arranging for the delivery thereof to such holder by the transfer agent for the Series 16 Preference Shares at its principal offices in the cities of Vancouver, Toronto and Montreal, and such cheque and/or share certificate shall be deemed to have been sent on the date on which notice of such arrangement shall have been given as provided in (a) above, provided that as soon as the Board of Directors determines that mail service is no longer interrupted or threatened to be interrupted, such cheque or share certificate, if not theretofore delivered to such holder, shall be sent by mail as herein provided. In the event that the Corporation is required to mail such cheque or share certificate such mailing shall be made by prepaid mail to the registered address of each person who at the date of mailing is a registered holder and who is entitled to receive such cheque or share certificate.

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12. Notice of Annual Dividend Rate Applicable to the Series 16 Preference Shares

Within three business days of the determination of the Annual Dividend Rate (as defined in Section 2.1 of the articles of the Corporation relating to the Series 16 Preference Shares) the Corporation shall give notice thereof to the holders of the Series 16 Preference Shares by publication once in the national edition of the Globe and Mail in the English language and once in the City of Montréal, Quebéc in both the French and English languages in a daily newspaper of general circulation in Montréal; provided that if any such newspaper is not being generally circulated at that time, such notice shall be published in another equivalent publication.

13. Interpretation

    In the provisions herein contained attaching to the Series 16 Preference Shares:

(a)   “accrued and unpaid dividends” means the aggregate of (A) all unpaid dividends on the Series 16 Preference Shares for any Dividend Period and (B) the amount calculated as though dividends on each Series 16 Preference Share had been accruing on a day-to-day basis from and including the first day of the Month immediately following the Month with respect to which the dividend was or will be, as the case may be, payable to but excluding the date to which the computation of accrued dividends is to be made;

(b)   “in priority to”, “on a parity with” and “junior to” have reference to the order of priority in payment of dividends and in the distribution of assets in the event of any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or other distribution of the assets of the Corporation among its shareholders for the purpose of winding-up its affairs; and

(c)   in the event that any date on which any dividend on the Series 16 Preference Shares is payable by the Corporation, or any date on or by which any other action is required to be taken by the Corporation or the holders of Series 16 Preference Shares hereunder, is not a business day (as hereinafter defined), then such dividend shall be payable, or such other action shall be required to be taken, on or by the next succeeding day that is a business day. A “business day” shall be a day other than a Saturday, a Sunday or any other day that is treated as a holiday at the Corporation’s principal office in Canada.

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Class AA Preference Shares

The Class AA Preference Shares shall, as a class, have attached thereto the following rights, privileges, restrictions and conditions:

1. Directors’ Right to Issue One or More Series

The Class AA Preference Shares may, at any time or from time to time, be issued in one (1) or more series, each series to consist of such number of shares as may before the issue thereof be determined by the directors; the directors of the Corporation may (subject as hereinafter provided) by resolution fix from time to time before the issue thereof the designation of and the preferences, rights, conditions, restrictions, limitations or prohibitions attaching to the Class AA Preference Shares of each series including, without limiting the generality of the foregoing, the rate of preferential dividends, the dates of payment thereof, the redemption price and terms and conditions of redemption, conversion rights (if any) and any sinking fund or other provisions, the whole subject to the issue of Articles of Amendment setting forth the number and designation of and the preferences, rights, conditions, restrictions, limitations or prohibitions attaching to the Class AA Preference Shares of such series.

2. Ranking of Class AA Preference Shares

The Class AA Preference Shares of each series shall rank junior to the Class A Preference Shares of the Corporation and shall be entitled to preference over the Class A Limited Voting Shares and the Class B Limited Voting Shares of the Corporation, and any other shares ranking junior to the Class AA Preference Shares, with respect to priority in payment of dividends and in the distribution of assets in the event of the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs and may also be given such other preferences over the Class A Limited Voting Shares and the Class B Limited Voting Shares of the Corporation and any other shares ranking junior to the Class AA Preference Shares as may be determined as to the respective series authorized to be issued. The Class AA Preference Shares of each series shall rank on a parity with the Class AA Preference Shares of every other series with respect to priority in payment of dividends and in the distribution of assets in the event of the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs.

3. Amendment

The Corporation shall not delete or vary any preference, right, condition, restriction, limitation or prohibition attaching to the Class AA Preference Shares as a class except by special resolution passed by at least two-thirds (2/3) of the votes cast at a meeting of the holders of the Class AA Preference Shares duly called for that purpose and held upon at least fifteen (15) days’ notice at which the holders of at least a majority of the outstanding Class AA Preference Shares are present or represented by proxy; if at any such meeting the holders of a majority of the outstanding Class AA Preference Shares are not present or represented by proxy within half an hour after the time appointed for such meeting, then the meeting shall be adjourned to such date being not less than twenty-one (21) days later and to such time and place as may be appointed by the chairman and not less than fifteen (15) days’ notice shall be given of such adjourned meeting but it shall not be necessary in such notice to specify the purpose for which the meeting was originally called; at such adjourned meeting the holders of Class AA Preference Shares present or represented by proxy may transact the business for which the meeting was originally called and a resolution passed thereat by not less than two-thirds (2/3) of the votes cast at such meeting shall constitute the authorization of the holders of the Class AA Preference Shares referred to above; the formalities to be observed in respect of the giving of notice of any such meeting of adjourned meeting and the conduct thereof shall be those from time to time prescribed by the by-laws of the Corporation with respect to meetings of shareholders. On every poll taken at a meeting of the holders of Class AA Preference Shares as a class, or at a joint meeting of the holders of two or more series of Class AA Preference Shares, each holder of Class AA Preference Shares entitled to vote thereat shall have one vote in respect of each $25.00 of the issue price of each Class AA Preference Share held.

4YYYYYYY

Limited Voting Shares

There shall be two classes of Limited Voting Shares. Class A Limited Voting Shares and Class B Limited Voting Shares, which shall have attached thereto the following rights, privileges, restrictions and conditions.

1. Rank

The Class A Limited Voting Shares and the Class B Limited Voting Shares shall rank on a parity with each other and shall rank after the Class A Preference Shares and the Class AA Preference Shares with respect to the payment of dividends and the return of capital on the liquidation, dissolution or winding-up of the Corporation. After payment to the holders of the Class A Preference Shares, Class AA Preference Shares and any other shares ranking as to dividends prior to the Class A Limited Voting Shares and the Class B Limited Voting Shares of the amount or amounts to which they may be entitled, the holders of the Class A Limited Voting Shares and the Class B Limited Voting Shares shall be entitled to receive any dividend declared by the board of directors of the Corporation and to receive the remaining property of the Corporation upon dissolution.

2. Voting

Other than as provided below, each holder of Class A Limited Voting Shares and Class B Limited Voting Shares shall be entitled to notice of and to attend all meetings of shareholders of the Corporation (except meetings at which only holders of another specified class or series of shares are entitled to vote) and shall be entitled to cast at any such meeting one vote per share. Subject to applicable law and in addition to any other required shareholder approvals, all matters to be approved by shareholders (other than the election of directors), must be approved by: (i) a majority or, in the case of matters that require approval by a special resolution of shareholders, at least 66 2/3 per cent of the votes cast by holders of Class A Limited Voting Shares who vote in respect of the resolution or special resolution, as the case may be; and (ii) a majority or, in the case of matters that require approval by a special resolution of shareholders, at least 66 2/3 per cent of the votes cast by holders of Class B Limited Voting Shares who vote in respect of the resolution or special resolution, as the case may be.

3. Election of Directors

In the election of directors, holders of Class A Limited Voting Shares shall be entitled to elect one-half of the board of directors of the Corporation, provided that if holders of Class A Preference Shares, Series 1, Series 2 and Series 3 become entitled to elect two or three directors, as the case may be, the number of directors to be elected by holders of Class A Limited Voting Shares shall be reduced by the number of directors to be elected by holders of Class A Preference Shares, Series 1, Series 2 and Series 3. Holders of Class B Limited Voting Shares shall be entitled to elect the other one-half of the board of directors of the Corporation.

9.   The issue, transfer or ownership of shares is/is not restricted and the restrictions (if any) are as follows: L’émission, le transfert ou la propriété d’actions est/n’est pas restreinte. Les restrictions, s’il y a lieu, sont les suivantes:

    N/A

10.   Other provisions, (if any):
Autres dispositions, s’il y a lieu :

Each holder of shares of a class or series of shares of the Corporation entitled to vote in the election of directors will have the right to cast a number of votes equal to the number of votes attached to the shares held by the holder multiplied by the number of directors to be elected by the holder and the holders of shares of the classes or series of shares entitled to vote with the holder in the election of directors. A holder may cast all such votes in favour of one candidate or distribute such votes among its candidates in any manner the holder sees fit and if a holder has voted for more than one candidate without specifying the distribution of votes among such candidates, the holder will be deemed to have divided the holder’s votes equally among the candidates for whom the holder voted.

11.   The statements required by subsection 178(2) of the Business Corporations Act are attached as Schedule “A”.

    Les declarations exigees aux termes du paragraphe 178(2) de la Loi sur les societe par actions constituent l’annexe “A”

12.   A copy of the amalgamation agreement or directors’ resolutions (as the case may be) is/are attached as Schedule “B”.

    Une copie de la convention de fusion ou les resolutions des administrateurs (selon le cas) constitue(nt) l’annexe “B”.

These articles are signed in duplicate.
Les présents status sont signés en double exemplaire.


	Names of the amalgamating corporations and signatures and descriptions of office of their proper officers. Dénomination sociale des sociétés qui fusionnent, signature et fonction de leurs dirigeants réguliérement désignés.


1644036 ONTARIO LIMITED

By:	/s/ Brian Lawson

	Name:	Brian Lawson
	Title	Director

BRASCAN CORPORATION

By:	/s/ Lisa Chu

	Name:	Lisa Chu
	Title	Vice President

Schedule “A”


CANADA	) )	IN THE MATTER OF the Business Corporations Act (Ontario) and the Articles of
PROVINCE OF ONTARIO	)	Amalgamation of Brascan Corporation and
	)	Ontario Limited
	)
	)
TO WIT:	)

I, Alan V. Dean, of the City of Toronto, in the Province of Ontario, hereby certify that:

1. I am the Senior Vice President and Secretary of Brascan Corporation and have knowledge of the matters herein declared.

2. There are reasonable grounds for believing that:

(a)   each amalgamating corporation is and the amalgamated corporation will be able to pay its liabilities as they become due;

(b)   the realizable value of the amalgamated corporation’s assets will not be less than the aggregate of its liabilities and stated capital of all classes; and

(c)   no creditor will be prejudiced by the amalgamation.

    DATED at Toronto, Ontario, this 31st day of December, 2004.


		/s/ Alan V. Dean

		Alan V. Dean
		Senior Vice President and Secretary

Schedule “A”


CANADA	) )	IN THE MATTER OF the Business Corporations Act (Ontario) and the Articles of
PROVINCE OF ONTARIO	)	Amalgamation of Brascan Corporation and
	)	Ontario Limited
	)
	)
TO WIT:	)

I, Lenis W. Quan, of the City of Toronto, in the Province of Ontario, hereby certify that:

3. I am the Secretary of 1644036 Ontario Limited and have knowledge of the matters herein declared.

4. There are reasonable grounds for believing that:


		/s/ Lenis W. Quan

		Lenis W. Quan
		Secretary

Schedule “B”

RESOLUTIONS OF THE BOARD OF DIRECTORS
OF
Brascan Corporation
(the “Corporation”)

Combination with Brascan Financial Corporation, December 2004

Whereas Brascan Financial Corporation (“BFC”) and Trilon Holdings Inc. (“Trilon”) are subsidiaries of the Corporation:

Whereas the Corporation has deemed it desirable to simplify its corporate structure by consolidating a number of its subsidiaries:

Whereas the Corporation has proposed that BFC and Trilon amalgamate (the “Amalgamation”) to form an amalgamated corporation (“Amalco”), as the first step in the series of transactions that will have the effect of combining BFC with the Corporation:

Whereas the authorized capital of the Corporation includes an unlimited number of Class A preference shares, issuable in a series, and authorizes the directors of the Corporation to fix the number of shares in each series and to determine the designation, rights, privileges, restrictions and conditions attaching to the shares of each series:

Whereas pursuant to an amalgamation agreement (the “Amalgamation Agreement”), between the Corporation, BFC and Trilon, the outstanding Class I and II preferred shares of BFC and the common shares and Senior Preference shares of Trilon held by First Toronto Equities Inc. will be exchanged for Class A preference shares of the Corporation and the existing indebtedness of BFC will become obligations of Amalco:

Whereas Amalco will in turn combine with the Corporation pursuant to a vertical short form amalgamation or voluntary dissolution of Amalco, as management of the Corporation will determine (the “Combination”), with the effect that the Corporation will acquire all of the assets and assume all of the liabilities of Amalco:

Whereas the Directors of the Corporation have considered the Amalgamation and Combination and have determined that the Amalgamation and Combination are in the best interests of the Corporation:

Whereas the Corporation from time to time has a tax liability under Part VI. 1 of the Income Tax Act (Canada) (the “ITA”) arising from dividends paid by the Corporation in respect of its Class A preference shares, which the Corporation has deemed desirable to transfer to related companies:

And Whereas it is necessary to pass a resolution approving the creation and issuance of the Class A preference shares of the Corporation to be issued upon the Amalgamation, approving the contents of the Amalgamation Agreement and authorizing its execution on behalf of the Corporation, approving the application for substitutional listing on the Toronto Stock Exchange (the “TSX”) of the Class A preference shares to be issued upon the Amalgamation, approving the Combination, approving the transfer of the Corporation’s Part VI. 1 tax liability to any related company and certain other incidental matters.

Now Therefore Be It Resolved:

Creation of Class A Preference Shares to be Issued Upon Amalgamation

1. That the articles of the Corporation be amended to create the thirteenth series of Class A preference shares of the Corporation by designating 9,999,000 of such shares as “Class A Preference Shares, Series 13”, which shares shall have rights, privileges, restrictions and conditions set out in the term sheet attached as Appendix A-1;

2. That the articles of the Corporation be amended to create the fourteenth series of Class A preference shares of the Corporation by designating 665,000 of such shares as “Class A Preference Shares, Series 14”, which shares shall have rights, privileges, restrictions and conditions set out in the term sheet attached as Appendix A-2;

3. That the articles of the Corporation be amended to create the fifteenth series of Class A preference shares of the Corporation by designating 4,000,000 of such shares as “Class A Preference Shares, Series 15”, which shares shall have rights, privileges, restrictions and conditions set out in the term sheet attached as Appendix A-3;

4. That the articles of the Corporation be amended to create the sixteenth series of Class A preference shares of the Corporation by designating 7,835,200 of such shares as “Class A Preference Shares, Series 16”, which shares shall have rights, privileges, restrictions and conditions set out in the term sheet attached as Appendix A-4; and

5. That any one or more officers or directors of the Corporation are hereby authorized and directed to file articles of amendment and to execute and deliver for and in the name and on behalf of the Corporation, whether under its corporate seal or otherwise, all such instruments, notices and other documents, and to do all such other acts and things as in their opinion may be necessary or desirable to give full effect to the purpose and intent of the foregoing resolutions.

Amalgamation of BFC and Trilon

6. That the Amalgamation upon the terms and conditions set forth in the Amalgamation Agreement, substantially in the form of the agreement attached as Appendix B, is hereby approved;

7. That the Amalgamation Agreement is hereby approved; and

8. That any one or more officers or directors of the Corporation are hereby authorized and directed to take any and all such other steps or actions as may be reasonably necessary or appropriate in connection with the Amalgamation, including, without limitation, actions to amend, extend, waive conditions of or terminate the Amalgamation Agreement and to execute and deliver for and in the name and on behalf of the Corporation, whether under its corporate seal or otherwise, all such other certificates, instruments, agreements, documents and notices, including articles of amalgamation, and to do all such other acts and things as in their opinion may be necessary or desirable to give full effect to the purpose and intent of the foregoing resolutions.

Issuance of Class A Preference Shares, Series 13,14,15 and 16

9. That subject to the articles of the Corporation creating the Class A Preference Shares, Series 13,14, 15 and 16 becoming effective and to the completion of the Amalgamation through the filing of articles of amalgamation with the relevant government authorities:

(a) the allotment and issuance of up to 9,999,000 Class A Preference Shares, Series 13, 665,000 Class A Preference Shares, Series 14, 4,000,000 Class A Preference Shares,

    Series 15 and 7,835,000 Class A Preference Shares, Series 16, in each case in accordance with the terms of the Amalgamation Agreement, is hereby authorized;

(b)   the consideration for the allotment and issuance of each Class A Preference Share, Series 13, 14, 15 and 16 is not less in value than the fair equivalent of the money the Corporation would have received if the share had been issued for money; and

(c)   upon the Amalgamation, such Class A Preference Shares, Series 13, 14, 15 and 16 be issued as fully paid and non-assessable; and

10. That any one or more officers or directors of the Corporation are hereby authorized and directed to execute and deliver for and in the name and on behalf of the Corporation, under its corporate seal or otherwise, all such other certificates, instruments, agreements, conveyances, transfers, notices, affidavits and other documents, and to do all such other acts and things as in their opinion may be necessary or desirable to give full effect to the purpose and intent of the foregoing resolution.

Approval of Application for Substitutional Listing

11. That the making of an application to the TSX for a substitutional listing of the Class A Preference Shares, Series 13 and 14 is hereby approved; and

12. That any one or more officers or directors of the Corporation are hereby authorized and directed to file such all other documents and supporting material and to execute and deliver for and in the name and on behalf of the Corporation, under its corporate seal or otherwise, all such documents and instruments, and to do all such other acts and things as in their opinion may be necessary or desirable to give full effect to the purpose and intent of the foregoing resolution.

Approval of Transfer Agent and Registrar

13. That CIBC Mellon Trust Company be appointed the transfer agent and registrar for the Class A Preference Shares, Series 13 and 14;

14. That any one or more officers or directors of the Corporation are hereby authorized and directed to execute and deliver for and in the name and on behalf of the Corporation, under its corporate seal or otherwise, all such certificates, instruments, agreements, conveyances, transfers, notices, affidavits and other documents, and to do all such other acts and things as in their opinion may be necessary or desirable to give full effect to the purpose and intent of the forgoing resolution.

Approval of the Combination of the Corporation and Amalco

15. That the Combination of the Corporation and Amalco to form the Amalgamated Corporation, with the effect that the Amalgamated Corporation will acquire all the assets and assume all of the liabilities of Amalco, is hereby approved;

16. That the by-laws of the Amalgamated Corporation shall be the by-laws of the Corporation, until amended or repealed;

17. That the shares of Amalco shall be cancelled without any repayment of capital in respect of those shares;

18. That except as may be prescribed by the Business Corporations Act (Ontario), the articles of amalgamation of the Amalgamated Corporation shall be the same as the articles of the Corporation;

19. That no securities shall be issued and no assets shall be distributed by the Amalgamated Corporation in connection with the Combination;

20. That any one or more officers or directors of the Corporation are hereby authorized and directed to take any and all such other steps or actions as may be reasonably necessary or appropriate in connection with the Combination, including to execute and deliver for and in the name and on behalf of the Corporation, under its corporate seal or otherwise, all such articles, agreements, documents and instruments, and to do all such other acts and things as in their opinion may be necessary or desirable to give full effect to the purpose and intent of the foregoing resolution.

Approval of Transfer of the Corporation’s Part VI.1 Tax Liability

21. That the Corporation is authorized to enter into an agreement with any related company to transfer the tax liability arising under Part VI.1 of the ITA relating to dividends paid on certain of the Corporation’s Class A preference shares in respect of the 2004 or prior taxation years;

22. That any one or more officers or directors of the Corporation are hereby authorized and directed to execute and deliver for and in the name and on behalf of the Corporation, under its corporate seal or otherwise, all such other certificates, instruments, agreements, documents and notices, and to do all such other acts and things as in their opinion may be necessary or desirable to give full effect to the purpose and intent of the foregoing resolution.

General

23. That any one or more officers or directors of the Corporation are hereby authorized and directed to execute and deliver for and in the name and on behalf of the Corporation, under its corporate seal or otherwise, all such articles, agreements, documents and instruments, and to do all such other acts and things as in their opinion may be necessary or desirable to give full effect to the purpose and intent of the foregoing resolutions.

CERTIFICATE

I, Alan V. Dean, the Secretary of Brascan Corporation (the “Corporation”), hereby certify that the foregoing is a complete and correct copy of a resolution duly passed by the board of directors of the Corporation on December 3, 2004 and that such resolution is, at the date hereof, in full force and effect, unamended.

DATED: December 31, 2004.


		/s/ Alan V. Dean

		Secretary

Schedule “B”

1644036 ONTARIO LIMITED
(the “Corporation”)

RECITALS:

A.   The Corporation has been incorporated under the laws of Ontario by a certificate and articles of amalgamation dated December 31, 2004.

B.   It is desirable that the Corporation be amalgamated with Brascan Corporation (“Parentco”).

C.   The Corporation is a wholly-owned subsidiary corporation of Parentco.

RESOLVED THAT:

1. the amalgamation of the Corporation with Parentco is hereby approved;

2. the by-laws of the amalgamated corporation shall be the by-laws of Parentco, until amended or repealed;

3.     (i)    the shares of the Corporation shall be cancelled without any repayment of capital in respect thereof;

     (ii)   except as may be prescribed by the Business Corporations Act (Ontario), the articles of amalgamation shall be the same as the articles of Parentco;

     (iii)   no securities shall be issued and no assets shall be distributed by the amalgamated corporation in connection with the amalgamation;

4. any director or officer of the Corporation is hereby authorized to take any action and to execute any document which, in the opinion of that person, is necessary or desirable to give effect to this resolution and to deliver all or any of those documents to the Ministry of Consumer and Business Services.

CERTIFICATE

I, Lenis W. Quan, the Secretary of 1644036 Ontario Limited (the “Corporation”), hereby certify that the foregoing is a complete and correct copy of a resolution duly passed by the board of directors of the Corporation on December 31, 2004 and that such resolution is, at the date hereof, in full force and effect, unamended.

DATED: December 31, 2004.


		/s/ Lenis W. Quan

		Secretary

EX-99.2 3 t16149exv99w2.htm EX-99.2 exv99w2

BY-LAW NO. 1
of
EdperBrascan Corporation
(the “Corporation”)

1. INTERPRETATION

1.1. Expressions used in this By-law shall have the same meanings as corresponding expressions in the Business Corporations Act (Ontario) (the “Act”).

2. CORPORATE SEAL

2.1. Until changed by the directors, the corporate seal of the Corporation shall be in the form impressed in the margin hereof.

3. FINANCIAL YEAR

3.1. Until changed by the directors, the financial year of the Corporation shall end on the last day of December in each year.

4. DIRECTORS

4.1. Number. The number of directors shall be not fewer than the minimum and not more than the maximum provided in the articles. At each election of directors the number elected shall be such number as shall be determined from time to time by special resolution or, if the directors are empowered by special resolution to determine the number, by the directors.

4.2. Quorum. A quorum of directors shall be such number as the directors or shareholders may from time to time determine.

4.3. Calling of Meetings. Meetings of the directors shall be held at such time and place within or outside Ontario as the Chairman of the Board, the President or any two directors may determine. A majority of meetings of directors need not be held within Canada in any financial year.

4.4. Notice of Meetings. Notice of the time and place of each meeting of directors shall be given to each director by telephone not less than 48 hours before the time of the meeting or by written notice not less than four days before the date of the meeting, provided that the first meeting immediately following a meeting of shareholders at which directors are elected may be held without notice if a quorum is present. Meetings may be held without notice if the directors waive or are deemed to waive notice.

- 2 -

4.5. Chairman. The Chairman of the Board, or in his absence the President if a director, or in his absence a director chosen by the directors at the meeting, shall be chairman of any meeting of directors.

4.6. Voting at Meetings. At meetings of directors each director shall have one vote and questions shall be decided by a majority of votes. In case of an equality of votes the Chairman of the meeting shall have a second or casting vote.

5. OFFICERS

5.1. General. The directors may from time to time appoint a Chairman of the Board, a President, one or more Vice-Presidents, a Secretary, a Treasurer and such other officers as the directors may determine.

5.2. Chairman of the Board. The Chairman of the Board, if any, shall be appointed from among the directors and when present shall be chairman of meetings of directors and shareholders and shall have such other powers and duties as the directors may determine.

5.3. President. Unless the directors otherwise determine the President shall be appointed from among the directors and shall be the chief executive officer of the Corporation and shall have general supervision of its business and affairs and in the absence of the Chairman of the Board shall be chairman of meetings of directors and shareholders when present.

5.4. Vice-President. A Vice-President shall have such powers and duties as the directors or the chief executive officer may determine.

5.5. Secretary. The Secretary shall give required notices to shareholders, directors, auditors and members of committees, act as secretary of meetings of directors and shareholders when present, keep and enter minutes of such meetings, maintain the corporate records of the Corporation, have custody of the corporate seal and shall have such other powers and duties as the directors or the chief executive officer may determine.

5.6. Treasurer. The Treasurer shall keep proper accounting records in accordance with the Act, have supervision over the safekeeping of securities and the deposit and disbursement of funds of the Corporation, report as required on the financial position of the Corporation, and have such other powers and duties as the directors or the chief executive officer may determine.

5.7. Assistants. Any of the powers and duties of an officer to whom an assistant has been appointed may be exercised and performed by such assistant unless the directors or the chief executive officer otherwise direct.

- 3 -

5.8. Term of Office. Each officer shall hold office until his successor is elected or appointed, provided that the directors may at any time remove any officer from office but such removal shall not affect the rights of such officer under any contract of employment with the Corporation.

6. SHAREHOLDERS

6.1. Quorum. A quorum for the transaction of business at a meeting of shareholders shall be two persons present and each entitled to vote at the meeting.

6.2. Casting Vote. In case of an equality of votes at a meeting of shareholders the Chairman of the meeting shall have a second or casting vote.

6.3. Scrutineers. The Chairman at any meeting of shareholders may appoint one or more persons (who need not be shareholders) to act as scrutineer or scrutineers at the meeting.

7. DIVIDENDS AND RIGHTS

7.1. Declaration of Dividends. Subject to the Act, the directors may from time to time declare dividends payable to the shareholders according to their respective rights and interest in the Corporation.

7.2. Cheques. A dividend payable in money shall be paid by cheque to the order of each registered holder of shares of the class or series in respect of which it has been declared and mailed by prepaid ordinary mail to such registered holder at the address of such holder in the Corporation’s securities register, unless such holder otherwise directs. In the case of joint holders the cheque shall, unless such joint holders otherwise direct, be made payable to the order of all of such joint holders and mailed to them at their address in the Corporation’s securities register. The mailing of such cheque as aforesaid, unless the same is not paid on due presentation, shall satisfy and discharge the liability for the dividend to the extent of the sum represented thereby plus the amount of any tax which the Corporation is required to and does withhold.

7.3. Non-Receipt of Cheques. In the event of non-receipt of any dividend cheque by the person to whom it is sent as aforesaid, the Corporation shall issue to such person a replacement cheque for a like amount on such terms as to indemnity, reimbursement of expenses and evidence of non-receipt and of title as the directors may from time to time prescribe, whether generally or in any particular case.

7.4. Unclaimed Dividends. Any dividend unclaimed after a period of six years from the date on which the same has been declared to be payable shall be forfeited and shall revert to the Corporation.

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8. EXECUTION OF INSTRUMENTS

8.1. Deeds, transfers, assignments, agreements, proxies and other instruments may be signed on behalf of the Corporation by any two directors or by a director and an officer or by one of the Chairman of the Board, the President and a Vice-President together with one of the Secretary and the Treasurer or in such other manner as the directors may determine; except that insider trading reports may be signed on behalf of the Corporation by any one director or officer of the Corporation.

9. NOTICE

9.1. A notice mailed to a shareholder, director, auditor or member of a committee shall be deemed to have been given when deposited in a post office or public letter box.

9.2. Accidental omission to give any notice to any shareholder, director, auditor or member of a committee or non-receipt of any notice or any error in a notice not affecting the substance thereof shall not invalidate any action taken at any meeting held pursuant to such notice.

The foregoing by-law is made a by-law of the Corporation pursuant to the Amalgamation Agreement between The Edper Group Limited and Brascan Limited upon the filing of Articles of Amalgamation of the Corporation pursuant to the Business Corporations Act (Ontario), effective the first day of August, 1997.

BY-LAW NO. 2
of
EdperBrascan Corporation
(the “Corporation”)

being a by-law respecting the borrowing of money,
the issuing of securities and the securing of
liabilities of the Corporation

The directors of the Corporation may from time to time

(a)   borrow money on the credit of the Corporation;

(b)   issue, sell or pledge securities (including bonds, debentures, debenture stock or other like liabilities) of the Corporation; and

(c)   charge, mortgage, hypothecate or pledge all or any of the real or personal property of the Corporation, including book debts, and unpaid calls, rights, powers, franchises and undertaking to secure any such securities or any money borrowed or other debt, or any other obligations or liability of the Corporation.

BY-LAW NO. 3
of
EdperBrascan Corporation
(the “Corporation”)

being a by-law respecting the borrowing of money,
the issuing of securities and the securing of
liabilities of the Corporation

BE IT ENACTED by the Directors of the Corporation, as a by-law thereof:

1. That the Directors of the Corporation be and they are hereby authorized to borrow moneys from time to time from the BANK OF MONTREAL upon the credit of the Corporation in such amounts as they deem proper and by way of overdraft or otherwise.

2. That any promissory notes or other negotiable paper (including renewals thereof in whole or in part) signed on behalf of the Corporation by the officer or officers of the Corporation authorized from time to time to sign negotiable instruments in its behalf and granted to said Bank for the moneys so borrowed and interest thereon as may be agreed upon, shall be binding upon the Corporation.

3. That the Directors may from time to time, if they see fit to do so, grant securities by way of mortgage, hypothecation or pledge covering all or any of the property and assets of the Corporation as security for all or any moneys borrowed by the Corporation from the Bank or any other liability of the Corporation to the Bank, and any such mortgage, hypothecation or pledge shall be valid and binding upon the Corporation if signed by any of the officers authorized to sign negotiable instruments on the Corporation’s behalf.

4. All contracts, deeds, grants, assurances and documents reasonably required by said Bank or its Counsel for all or any of the purposes aforesaid shall be executed and carried into effect by the proper officers of the Corporation, and when necessary the Seal of the Corporation shall be affixed thereto.

5. This by-law shall be irrevocable until a by-law repealing the same shall have been confirmed or sanctioned by the Shareholders and a copy thereof duly certified under the Seal of the Corporation delivered to the said Bank, and meanwhile all the powers and authorities hereby conferred shall continue in force.

BY-LAW NO. 4
of
EdperBrascan Corporation
(the “Corporation”)

being a by-law respecting the appointment of
honorary directors

BE IT ENACTED by the Directors of the Corporation, as a by-law thereof:

1. That the board may from time to time appoint advisers to the board who may be designated as honorary directors and who shall be paid such remuneration as the board may from time to time by resolution determine. The term of appointment of any such adviser shall be such as the board may from time to time determine, but the board may at any time revoke such appointment. Advisers so appointed may attend meetings of the board of which notice is given to them, but shall not form part of any quorum for meetings of the board and shall not be entitled to vote thereat or, as such advisers, to act in any way on behalf of the Corporation.

EX-99.3 4 t16149exv99w3.htm EX-99.3 exv99w3

RESTATED TRUST AGREEMENT

THIS RESTATED TRUST AGREEMENT made as of August 1, 1997.


B E T W E E N:		PARTNERS LIMITED, a corporation incorporated under the laws of the Province of Ontario,

		(“Partners”)

		- and -

		EDPERBRASCAN CORPORATION, a corporation amalgamated under the laws of the Province of Ontario,

		(“EdperBrascan”)

		- and -

		MONTREAL TRUST COMPANY OF CANADA, a trust company incorporated under the laws of Canada,

		(the “Trustee”)

RECITES THAT:

WHEREAS as of January 1, 1997, The Edper Group Limited (“Old Edper”) and Hees International Bancorp Inc. amalgamated under the Business Corporations Act (Ontario) to continue as Edper Group (“New Edper”);

AND WHEREAS as of August 1, 1997 New Edper and Brascan Limited (“Brascan”) amalgamated under the Business Corporations Act (Ontario) to continue as EdperBrascan;

AND WHEREAS the authorized capital of EdperBrascan consists of an unlimited number of Class A Preference Shares, issuable in series, an unlimited number of Class AA Preference Shares, issuable in series, an unlimited number of Class A Limited Voting Shares (the “Class A Shares”) and 85,120 Class B Limited Voting Shares (the “Class B Shares”);

AND WHEREAS all of the issued and outstanding Class B Shares are owned by Partners;

AND WHEREAS all of the outstanding Class A Shares are listed on The Toronto Stock Exchange and The Montreal Exchange;

AND WHEREAS as of January 1, 1997 Partners, Axe Canada Inc., New Edper and the Trustee entered into a trust agreement to ensure that the holders from time to time of the Class A Shares of New Edper would not be deprived of rights under applicable takeover bid

- 2 -

legislation to which they would have been entitled in the event of a takeover bid if the Class A Shares of New Edper and the Class B Shares of New Edper were of a single class of shares;

AND WHEREAS as a result of the amalgamation of New Edper and Brascan, Axe Canada Inc. has ceased to be a holder of Class B Shares of EdperBrascan;

AND WHEREAS the parties wish to restate the trust agreement to reflect the foregoing and to ensure that the holders from time to time of the Class A Shares will not be deprived of rights under applicable takeover bid legislation to which they would have been entitled in the event of a takeover bid if the Class A Shares and the Class B Shares were of a single class of shares;

AND WHEREAS Partners and EdperBrascan hereby confirm the appointment of the Trustee as a trustee for the holders from time to time of the Class A Shares for the purposes hereinafter set forth with the intent that such holders, through the Trustee, will receive the benefit of the covenants of Partners and EdperBrascan contained in this Agreement;

AND WHEREAS the foregoing recitals are made by the parties hereto other than Montreal Trust;

NOW THEREFORE THIS AGREEMENT WITNESSES that for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby covenant and agree as follows:

1. Subject to sections 2 and 7 below, Partners will not sell any Class B Shares, directly or indirectly, pursuant to a takeover bid (as defined in applicable securities legislation) at a price per share in excess of 115% of the “market price” of the Class A Shares (determined in accordance with the takeover bid provisions of applicable securities legislation) or as part of a transaction involving purchases made from more than five persons or companies in the aggregate.

2. Section 1 will not apply to prevent a sale by Partners of Class B Shares pursuant to a takeover bid if the sale is made pursuant to an offer to purchase Class B Shares and a concurrent offer is made to all holders of Class A Shares to purchase the same percentage of Class A Shares as the percentage of Class B Shares that are offered to be purchased from Partners at a price per share at least as high as the highest price per share paid pursuant to the takeover bid for the Class B Shares, and provided that the concurrent offer is the same as the offer for Class B Shares in all other material respects and has no condition, if any, attached other than the right not to take up and pay for shares tendered if no shares are purchased pursuant to the offer for Class B Shares.

3. Without limiting the generality of section 1 above: (i) a sale will be deemed to be an indirect sale of Class B Shares owned by Partners, or by any person or company controlled, directly or indirectly, by Partners, for the purposes of section 1 above if the offer pursuant to which such sale is made would be deemed to be an indirect offer for the Class B Shares under the takeover bid provisions of applicable securities legislation; and (ii) an offeror will be deemed to include any person or company acting jointly or in concert with an offeror for Class B Shares under the takeover bid provisions of applicable securities legislation.

- 3 -

Notwithstanding the foregoing, a sale will not be deemed to be an indirect sale of Class B Shares owned by Partners, or by any person controlled, directly or indirectly, by Partners, for the purposes of section 1 above, if the sale is an indirect sale of Class B Shares resulting from the sale of shares of Partners or a corporation which, directly or indirectly, holds shares of Partners, where (a) each selling shareholder is a shareholder of Partners, (b) the transferee is (i) a shareholder of Partners or a person or company which, in conjunction with such sale, will become a shareholder of Partners and who, in either case, will not, as a result of such sale, hold, directly or indirectly, more than 20% of the outstanding voting or equity securities of Partners, or (ii) a person or company which controls a person or company referred to in (b)(i) above, and (c) no such transferee is a party to any arrangement under which any person, other than a person or company referred to in (b)(i) or (ii) above, would participate in the ownership of, or control or direction over, voting or equity shares of Partners; provided that, where required by Ontario securities legislation, an order from the Ontario Securities Commission permitting such sale has been obtained.

4. Partners will use its best efforts to prevent any person or company from carrying out a sale (including an indirect sale) described in section 1 above in respect of any Class B Shares owned from time to time by Partners, regardless of whether such person or company is a party to this Agreement, unless section 2 above applies in respect of the sale.

5. If any person or company other than Partners carries out an indirect sale described in section 1 above in respect of any Class B Shares owned from time to time by Partners, unless section 2 above applies in respect of the sale, Partners will not at the time the sale becomes effective or thereafter do any of the following with respect to any of the Class B Shares so sold: (a) dispose of them without the prior written consent of the Trustee; or (b) exercise any voting rights attaching to them except in accordance with the written instructions of the Trustee, and Partners will comply with such instructions. The Trustee may attach conditions to any instructions the Trustee gives in exercising its rights hereunder. The Trustee will exercise such rights in a manner that the Trustee considers to be: (i) in the best interests of the holders of the Class A Shares, other than Partners and holders who, in the opinion of the Trustee, participated directly or indirectly in the transaction that triggered the operation of this section 5; and (ii) consistent with the intentions of Partners and EdperBrascan in entering into this Agreement as such intentions are set out in the recitals to this Agreement. If an indirect sale of Class B Shares that is referred to in this section 5 occurs and this section 5 is applicable to the sale, Partners will have no liability under this Agreement in respect of the sale, provided that Partners is in compliance with all other provisions of this Agreement, including, without limitation, the provisions of section 4 above and this section 5.

6. Partners will not, and will ensure that each person and company which it controls will not, effect or facilitate a disposition of any Class B Shares owned by Partners or by any person or company which Partners controls, directly or indirectly, unless the disposition is conditional upon the person or company acquiring the shares becoming a party to an agreement with the same terms and conditions as this Agreement under which such person or company will have the same rights and obligations as Partners hereunder and in which all references in this Agreement to Partners will be to the acquiring person or company.

- 4 -

7. Nothing in this Agreement will prevent Partners from time to time, directly or indirectly, granting a security interest, by way of pledge, hypothecation or otherwise, whether directly or indirectly, in Class B Shares to any financial institution with which it deals at arm’s length (within the meaning of the Income Tax Act (Canada)) in connection with a bona fide borrowing provided that concurrently with the pledge, hypothecation or other granting of the security interest, the financial institution agrees in writing to become a party to and abide by the terms of this Agreement as if such financial institution were Partners herein until such time as the pledge, hypothecation or other security interest has been released or the Class B Shares which were subject thereto have been disposed of in accordance with the terms of this Agreement.

8. If the Trustee is advised in writing by a party hereto or a holder of Class A Shares that there is reasonable cause to believe that Partners or EdperBrascan may have breached, or may intend to breach, any provision of this Agreement, the Trustee will make reasonable enquiries of Partners, EdperBrascan, any party to an agreement to purchase Class B Shares and any appropriate securities regulatory authorities or stock exchanges to determine whether: (i) such a breach has occurred or is intended; and (ii) such breach or intended breach can be corrected expeditiously and without prejudice to the bona fide interest of the holders of Class A Shares, and if so, the steps proposed to be taken by Partners and EdperBrascan to correct such breach or intended breach. If the Trustee thereupon determines that a breach has occurred or is intended and either cannot be corrected or the steps proposed to be taken to correct such breach or intended breach will not adequately correct such breach expeditiously and without prejudice to the bona fide interests of the holders of Class A Shares, the Trustee will forthwith deliver to EdperBrascan a certificate stating that the Trustee has made such determination. The Trustee will thereupon be entitled to take and, subject to section 10 below, will take such action as the Trustee considers necessary to enforce its rights under this Agreement on behalf of the holders of the Class A Shares.

Nothing in this section 8 will impose on the Trustee any obligation to make inquiries as to any breach or intended breach of this Agreement by Partners or EdperBrascan provided that the Trustee does not have reasonable cause to believe that a breach has occurred or is intended. Where the Trustee does not have any reasonable cause to so believe, the Trustee will have no liability under this section 8 in respect of any breach or intended breach.

9. Subject to section 10 below, if holders of not less than 10% of the then outstanding Class A Shares determine that Partners or EdperBrascan have breached, or intend to breach, any provision of this Agreement, such holders may require the Trustee to take action in connection therewith by delivering to the Trustee a requisition in writing signed in one or more counterparts by such holders and setting forth the action to be taken by the Trustee, and upon receipt by the Trustee of a requisition the Trustee will forthwith take the action specified in the requisition and any other action that the Trustee considers necessary to enforce its rights under this Agreement on behalf of the holders of the Class A Shares; provided that the Trustee will in the first instance determine whether the breach or intended breach can be corrected expeditiously and without prejudice to the bona fide interests of the holders of Class A Shares, and if so, whether the steps proposed to be taken by Partners or EdperBrascan to correct the breach or intended breach will adequately correct such breach expeditiously and without prejudice to the bona fide interests of the holders of Class A Shares.

- 5 -

10. The obligation of the Trustee to take any action on behalf of the holders of the Class A Shares will be conditional upon the Trustee receiving from EdperBrascan or from one or more holders of Class A Shares such funds and indemnities as the Trustee may reasonably require in respect of any costs or expenses which it may incur in connection with any such action. EdperBrascan will provide such funds and indemnities to the Trustee if the Trustee has delivered to EdperBrascan the certificate referred to in section 8 above.

11. No holder of Class A Shares will have the right, other than through the Trustee, to institute any action or proceeding or to exercise any other remedy for the purpose of enforcing any rights arising from this Agreement unless holders of Class A Shares have requested in the manner specified in section 9 above that the Trustee act and have provided reasonable funds and indemnities to the Trustee and the Trustee has failed to so act within 30 days after the provision of such funds and indemnities. In such case, any holder of Class A Shares acting on its own behalf and on behalf of all other holders of Class A Shares will be entitled to initiate whatever proceedings that the Trustee would have been entitled to initiate in any court of competent jurisdiction.

12. EdperBrascan will do all things reasonably within its control to facilitate the due performance of this Agreement including the fulfilment by Partners of its obligations hereunder.

13. The Trustee may resign and be discharged from all further duties and liabilities hereunder, subject to this section 13, after giving 60 days written notice to Partners and EdperBrascan or such shorter notice as Partners and EdperBrascan may accept as sufficient. EdperBrascan will have the power at any time to remove the existing Trustee, provided that such removal is in the best interests of the holders of the Class A Shares, after giving the Trustee 30 days written notice of such removal or such shorter notice that the Trustee will accept as sufficient. In the event that the office of the Trustee becomes vacant due to the removal of the existing Trustee by EdperBrascan, EdperBrascan will forthwith appoint a new trustee which must be one of the largest five corporations licensed or authorized to carry on the business of a trust company in Ontario in terms of assets under administration. In the event that the office of trustee becomes vacant otherwise than by removal of the Trustee by EdperBrascan, EdperBrascan will forthwith appoint a new trustee which must be a corporation licensed or authorized to carry on the business of a trust company in Ontario; failing such appointment, Partners, the Trustee or any holder of Class A Shares may apply to a judge of the Ontario Court (General Division) for the appointment of a new trustee. Upon any new appointment, the new trustee will be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as the trustee, but there will be immediately executed, at the expense of EdperBrascan, all such instruments as may be, in the opinion of counsel to EdperBrascan, necessary or desirable to assure such vesting. Any resignation of the Trustee will not become effective until the successor party executes an appropriate instrument accepting the appointment as the new trustee. Notwithstanding its resignation, the Trustee will continue to be indemnified in accordance with section 14 below.

14. (a) Partners and EdperBrascan hereby indemnify and save harmless the Trustee from and against any and all costs, expenses and claims made against it by anyone, in the absence of negligence, reckless disregard, wilful misconduct or fraud by the Trustee, its officers, directors, employees and agents by reason of the Trustee’s compliance in good

- 6 -

faith with the terms hereof. This indemnity will survive any termination of this Agreement.

(b) The Trustee may employ or retain such counsel, auditors, accountants, or other experts or advisers, whose qualifications give authority to any opinion or report made by them, as it may reasonably require for the purpose of discharging its duties hereunder and will not be responsible for any misconduct or negligence on their part. The Trustee may, if it is acting in good faith, rely on the accuracy of any such opinion or report.

(c) The Trustee will have no responsibility, if it is acting in good faith, for the genuineness or validity of any securities, documents or other things deposited with it. In the exercise of its rights, duties and obligations hereunder, the Trustee may, if it is acting in good faith, rely as to the truth of the statements made in any certificates or other documents provided to it.

15. EdperBrascan will pay the reasonable fees and expenses of the Trustee in connection with the performance of the Trustee’s obligations hereunder, including the reasonable fees and disbursements of counsel or other experts employed by the Trustee, but this section 15 will not require EdperBrascan to pay any fees or expenses in connection with any action taken by the Trustee pursuant to section 9 above if the Trustee has not delivered to EdperBrascan the certificate referred to in section 8 above in respect of such action.

16. The Trustee hereby accepts the appointment as trustee for the holders from time to time of the Class A Shares and the trusts in this Agreement declared and provided for and agrees to perform the same upon the terms and conditions herein set forth and to hold and exercise the rights, privileges and benefits conferred upon it hereby in trust for the various persons who are from time to time holders of Class A Shares.

17. In the exercise of its rights and duties hereunder, the Trustee will exercise that degree of care, diligence and skill that a reasonably prudent trustee would exercise in comparable circumstances.

18. The Trustee represents that at the time of the execution and delivery hereof no material conflict of interest exists in the Trustee’s role as a fiduciary hereunder and agrees that in the event of a material conflict of interest arising hereafter it will, within three months after ascertaining that it has a material conflict of interest, either eliminate the same or resign its trust hereunder. Subject to the foregoing, the Trustee, in its personal or any other capacity, may buy, lend upon and deal in securities of EdperBrascan and generally may contract with and enter into financial transactions with EdperBrascan, any of its subsidiaries or affiliates without being liable to account for any profit made thereby.

19. Partners and EdperBrascan covenant and agree that all certificates representing Class B Shares owned by Partners will have endorsed thereon a legend to the effect that the Class B Shares represented by the certificate(s) are subject to the terms of this Agreement and that a copy of this Agreement may be examined at the head office of EdperBrascan. EdperBrascan will maintain a true copy of this Agreement at its head office and will permit any shareholder of EdperBrascan to inspect and make copies thereof during normal business hours.

- 7 -

20. It is acknowledged that damages may not be an adequate remedy if a party bound by this Agreement breaches any of its covenants contained herein. Therefore, the parties agree that orders of specific performance, injunction and other equitable remedies may be required to protect the parties hereto and the holders of Class A Shares and thus may be sought and obtained hereunder in lieu of or in addition to damages, and all defences and protests with respect to the seeking or granting thereof are hereby waived to the maximum extent permitted by law.

21. This Agreement will take effect on the date hereof and will remain in full force and effect until the date that EdperBrascan delivers to the Trustee the consent in writing of The Toronto Stock Exchange to the termination of this Agreement.

22. This Agreement may not be amended, varied or modified, and no provision hereof may be waived, except with the approval of at least two-thirds of the votes cast by the holders of Class A Shares present or represented at a meeting duly called for the purpose of considering the amendment, variation, modification or waiver, which two-thirds majority will include a simple majority of the votes cast by the holders of Class A Shares, excluding Partners and its affiliates and any person who owns Class B Shares or has an agreement to purchase Class B Shares on terms which would constitute a sale prohibited by the terms of this Agreement, prior to giving effect to the amendment, variation, modification or waiver.

23. Notwithstanding the provisions of section 22 above, this Agreement may be amended without the approval of the holders of Class A Shares in order to correct or rectify any errors, ambiguities, defective provisions, inconsistencies or omissions herein, provided that the Trustee is of the opinion that the rights hereunder of the holders of Class A Shares will not be prejudiced, in any material respect, by such amendment and further provided that the prior consent of The Toronto Stock Exchange in respect of such changes has been received.

24. No provision in this Agreement will limit the rights of any holders of Class A Shares under applicable securities legislation.

25. Any notice or other communication made pursuant to or in connection with this Agreement will be sufficiently given if it is in writing and delivered or sent by registered mail, or by facsimile transmission or other form of recorded communication, addressed as follows:


(a)		if to Partners:

		P.O. Box 762, Suite 4400
		BCE Place
		181 Bay Street
		Toronto, Ontario
		M5J 2T3
		Attention: President
		Telecopy Number: (416) 363-2856

- 8 -


(b)		if to EdperBrascan:

		P.O. Box 762, Suite 4400
		BCE Place
		181 Bay Street
		Toronto, Ontario
		M5J 2T3
		Attention: President
		Telecopy Number: (416) 363-2856

(c)		if to the Trustee:

		Montreal Trust Company of Canada
		Suite 605
		151 Front Street West
		Toronto, Ontario
		M5J 2N1
		Attention: Corporate Services
		Telecopy Number: (416) 981-9777

or to such other address as the party to whom the notice or communication is to be given has last designated to the party giving the same in the manner specified in this section 25. Any such notice or communication will be deemed to have been given and received on the day it is so delivered or sent or on the third day following the day of mailing thereof in Ontario as the case may be.

26. This Agreement will be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. The terms “associate” and “affiliate” as used herein have the respective meanings attributed thereto under Ontario securities legislation. Reference herein to Ontario securities legislation or to applicable securities legislation means such legislation in effect at the relevant time.

27. This Agreement will enure to the benefit of and be binding upon the parties and their respective successors and assigns.

28. The parties hereto will do and perform and cause to be done and performed such further and other acts and things as may be necessary or desirable in order to give effect to this Agreement.

29. This Agreement constitutes the entire Agreement between the parties hereto with respect to the subject matter hereof. There are no verbal statements, representations, warranties, undertakings or agreements between the parties in respect of the subject matter hereof, other than as expressly set forth herein.

30. If any provision of this Agreement, or of the application thereof to any person or circumstances, is, to any extent, determined to be invalid or unenforceable, the remainder of this

- 9 -

Agreement, or the application of such provision or portion thereof to any other person or circumstances, will not be affected thereby and each provision of this Agreement will be valid and enforceable to the fullest extent permitted by law.

IN WITNESS WHEREOF the parties hereto have executed this Agreement.


		PARTNERS LIMITED

		By:

		EDPERBRASCAN CORPORATION

		By:

		MONTREAL TRUST COMPANY OF CANADA

		By:

				c/s

EX-99.4 5 t16149exv99w4.htm EX-99.4 exv99w4

AMENDING AGREEMENT

This Amending Agreement (the “Agreement”) dated as of March 22, 2005 between Noranda Inc., a corporation incorporated under the laws of the Province of Ontario, Canada (the “Corporation”), Brascan Corporation, a corporation subsisting under the laws of the Province of Ontario, Canada (“Brascan”) and Brascade Corporation, a corporation subsisting under the laws of Canada (“Brascade”). Brascan and Brascade are together referred to as the “Sellers”.

RECITALS

WHEREAS the parties entered into a lock up agreement (the “Lock Up Agreement”) dated March 8, 2005;

AND WHEREAS the parties would like to amend the Lock Up Agreement;

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE 1

AMENDMENT TO THE LOCK UP AGREEMENT

1.1   Defined Terms. Capitalized terms used but not defined in this Agreement have the meanings ascribed to them in the Lock Up Agreement.

1.2   Amendment. The Lock Up Agreement is amended by inserting the following section as a new section 4.3:

    Tax Planning Considerations. The Corporation acknowledges that the Sellers may seek a structure for the Offer which accommodates certain tax planning measures, substantially in the form described in Schedule C. In that regard, the Corporation hereby covenants to use commercially reasonable efforts to adjust the structure of the Offer to permit the use of a holding company alternative designed to enable shareholders of the Corporation to access their share of the safe income of the Corporation for income tax purposes in respect of Shares tendered to the Offer, provided that the Corporation shall not be required to make any change to the amount or form of consideration being offered pursuant to the Offer that is inconsistent with or in contravention of any applicable law or that, in the opinion of the Corporation acting reasonably, may have any adverse consequence to the Corporation, based upon tax or other considerations. The Corporation and the Sellers acknowledge that any such structure agreed to will be offered to all shareholders of the Corporation. Any such structure will require participating shareholders to meet the conditions set out in Schedule D and to enter into a holding company participation agreement that will contain representations, covenants and indemnities typical of a holding company alternative in a public transaction, including those summarized in Schedule E. The requirement in section 4.1 to deposit all of the

- 2 -

Shares that are owned at the time of deposit by the Sellers or any of the direct or indirect Wholly Owned Subsidiaries will be satisfied by either directly depositing such Shares to the Offer or including all such Shares in the holding company participating in the holding company alternative or any combination thereof. The Corporation acknowledges that the Sellers may desire to delay completing the holding company participation agreement until the date specified in Schedule D in order to maximize their share of safe income of the Corporation. In order to comply with the obligations in section 4.1, in such a case, the Sellers will deposit their Shares directly within the time specified in section 4.1 provided that the Corporation hereby agrees to permit such Shares to be withdrawn and re-deposited through the holding company alternative within the time specified in Schedule D.

1.3 Confirmation of the Lock Up Agreement. The parties hereby agree that, except as expressly amended hereby, the Lock Up Agreement shall continue in full force and effect, unamended.

ARTICLE 2

GENERAL

2.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

2.2 Amendments. This Agreement may not be modified, amended, altered or supplemented except upon the execution and delivery of a written agreement executed by all of the parties hereto.

[signatures on next page]

- 3 -

This Agreement was executed on the date first set forth above.


NORANDA INC.

By:		<<Derek G. Pannell>>

		Name: Derek G. Pannell
		Title: President and Chief Executive Officer


BRASCAN CORPORATION

By:		<<Jeffrey M. Blidner>>

		Name: Jeffrey M. Blidner
		Title: Managing Partner


BRASCADE CORPORATION

By:		<<Bryan K. Davis>>

		Name: Bryan K. Davis
		Title: Vice-President and Treasurer

- 4 -

SCHEDULE C

Holding Company Alternative

This is a general description of a “holding company alternative”. This description is intended to provide a general overview of this alternative and a Participating Shareholder (as defined below) may amend the steps to be undertaken in paragraphs 1 and 2 provided, in the opinion of the Corporation, acting reasonably, they do not result in any adverse consequence to the Corporation, based upon tax or other considerations.

1.   Each shareholder of the Corporation (a “Participating Shareholder”) wishing to participate in the holding company alternative will transfer all or a portion of such shareholder’s Shares (not to exceed the number of Shares that would be tendered to the Offer absent the holding company alternative) to a separate corporation (in the case of each Participating Shareholder, a “Holdco”) in exchange for shares of the Holdco. (Note that a Participating Shareholder that is not itself a corporation may first transfer Shares to a corporation which will then transfer Shares to a Holdco.)

2.   Each Holdco will undertake such steps as are reasonably necessary to increase the adjusted cost base to a Participating Shareholder of its shares in Holdco by an amount not exceeding the Participating Shareholder’s share of the safe income of the Corporation for the purposes of the Income Tax Act (Canada). These steps could include the payment by the Holdco of one or more stock dividends on its shares, the payment by the Holdco of one or more cash dividends on its shares (such cash being contributed to Holdco by the Participating Shareholder as a contribution to surplus) or the increase by the Holdco, by one or more special resolutions, of the stated capital of its shares.

3.   Following a determination by the Corporation that all of its conditions to the Offer have been satisfied or waived, the Corporation will:

(a) purchase all of the shares of the Holdcos for consideration equal to a combination of:

(i) Preferred Shares in the same amount and in the same proportion (subject to payment for fractions included in (a)(ii)) as if the Holdcos had tendered their Shares directly to the Offer, including that a maximum of 50,000,000 Preferred Shares will be issued, when aggregated with the number of Preferred Shares to be issued to shareholders who tender to the Offer directly rather than through the holding company alternative, and that the number of Preferred Shares to be issued in exchange for the Shares of a particular Holdco will be determined as if such Shares were tendered directly and will be subject to proration,

(ii) cash in the amount determined in accordance with the Offer in respect of any fractional Preferred Share that would have been issuable to the Holdcos if the Holdcos had tendered their Shares directly to the Offer; and

- 5 -

(iii) one Share for each whole Share held by a Holdco that would not have been purchased if the Holdcos had tendered their Shares directly to the Offer; and

(b) take up and pay for all the Shares deposited pursuant to the Offer directly rather than through the holding company alternative.

- 6 -

SCHEDULE D

Conditions to Using the Holding Company Alternative

Conditions

1.   The Participating Shareholder advises Noranda c/o Secretary of Noranda, BCE Place, 181 Bay Street, Suite 200, Toronto, Ontario, Canada M5J 2T3, not later than five Business Days prior to the time of expiry of the Offer, in writing, that it wishes to participate in the holding company alternative;

2.   The Participating Shareholder holds Shares indirectly through a Holdco that was incorporated under the Business Corporations Act (Ontario) (the “OBCA”) after March 15, 2005, has been used solely in relation to the holding company alternative, has at all times since its incorporation been validly in existence and in good standing under the OBCA, and is a resident of Canada and a “taxable Canadian corporation” for the purposes of the Income Tax Act (Canada);

3.   If required by Noranda, the Participating Shareholder provides Noranda with security satisfactory to Noranda in respect of the Participating Shareholder’s obligations under the holding company participation agreement;

4.   The Participating Shareholder’s Holdco does not declare or pay dividends (except as agreed to by Noranda) or effect other distributions or redemptions, except that, in the event that the Holdco receives a dividend from Noranda, the Holdco will declare and pay a dividend and/or redeem shares in the same amount and form immediately following the receipt of the dividend by the Holdco and prior to the completion of the holding company alternative;

5.   The holding company participation agreement, together with any accompanying required documentation, is completed, executed and returned to Noranda, c/o Secretary of Noranda, BCE Place, 181 Bay Street, Suite 200, Toronto, Ontario, Canada M5J 2T3, on or before the time of expiry of the Offer;

6.   In the case of a Participating Shareholder that is not a resident of Canada within the meaning of the Income Tax Act (Canada), the Participating Shareholder provides to Noranda, at the time the holding company alternative is completed, a certificate under section 116 of the Income Tax Act (Canada) and any equivalent provision of provincial legislation, in form and substance satisfactory to Noranda, acting reasonably, or the Participating Shareholder enters into arrangements satisfactory to Noranda, acting reasonably, if a section 116 certificate (or any equivalent provincial certificate) is not available at that time;

7.   Any exemptions required from any applicable Canadian securities regulatory authority needed to complete the holding company alternative are obtained; and

8.   All other terms and conditions of the holding company alternative are satisfactory to Noranda, acting reasonably.

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SCHEDULE E

Representative Representations, Covenants and Indemnities

Representations

1.   The Holdco is a corporation duly incorporated and validly existing and in good standing under the OBCA;

2.   All of the issued and outstanding shares of the Holdco are held directly by the Participating Shareholder (or, in the case of a Participating Shareholder that is an individual, another company all of the issued and outstanding shares of which are held directly by the Participating Shareholder);

3.   Upon completion of the holding company alternative, Noranda will acquire the sole legal and beneficial ownership of all the issued and outstanding shares of the Holdco;

4.   The Holdco has no material assets other than the Shares and has no liabilities whatsoever except as set out in the holding company participation agreement;

5.   Since incorporation, the sole activities of the Holdco have been the acquisition and ownership of the Shares and other matters expressly contemplated by the holding company participation agreement;

6.   The Holdco is not a party to nor bound or affected by any agreements, commitments or undertakings of any nature whatsoever other than the holding company participation agreement and except as agreed to by Noranda;

7.   In respect of tax matters, among other things, the Holdco:

(a)   has duly and timely paid all taxes which are or have been due and payable by it;

(b)   has duly and timely filed with the appropriate taxing or other governmental authority all tax returns required to be filed by it;

(c)   is a “taxable Canadian corporation” for purposes of the Income Tax Act (Canada); and

8. There are no suits, actions, litigation, or other proceedings in progress, pending or threatened against or relating to the Holdco.

Covenants and Indemnities

1. The Participating Shareholder must prepare, at its expense, all tax returns of the Holdco in respect of all periods ending on or prior to the completion of the holding company alternative, and must not file the returns without the prior approval of Noranda of all the returns as to form and substance;

- 8 -

2. The Participating Shareholder must pay all costs and expenses incurred in connection with any transaction entered into under the holding company participation agreement;

3. The Participating Shareholder will provide an indemnity in favor of Noranda and the Holdco (and their respective directors and officers, employees, advisors and agents) from all actions, claims, demands, processes, proceedings, losses, damages, liabilities, deficiencies, taxes, costs and expenses suffered or incurred by Noranda and the Holdco (and their respective directors and officers, employees, advisors and agents), in connection with the holding company alternative as a result of:

(a)   any breach of any representation, warranty, obligation or covenant of the Participating Shareholder to Noranda;

(b)   any liability sustained, incurred, assumed or acquired by the Holdco on or before the completion of the holding company alternative; and

(c)   any liability that would not have been sustained, suffered or incurred by Noranda or the Holdco (and their respective directors and officers, employees, advisors and agents) if Noranda had taken up and exchanged the Shares held by the Holdco directly rather than through the completion of the holding company alternative and the transactions contemplated in the holding company participation agreement;

4. The Participating Shareholder will provide a release of Noranda (and their respective successors, assigns, parent companies, subsidiaries, affiliated companies, and all of the present and former directors, officers, employees, advisors and agents of these entities) from all liabilities suffered or incurred as a result of certain information provided by Noranda to the Participating Shareholder in connection with the holding company alternative; and

5. Each vendor of shares of a Holdco (a “Vendor”) that is a resident of Canada for purposes of the Income Tax Act (Canada) (other than any such Vendor that is exempt from tax under Part I of the Income Tax Act (Canada)) may request that Noranda make, in which case Noranda agrees to make, joint elections with the Vendor under subsection 85(1) of the Income Tax Act (Canada) and section 518 et seq. of the Taxation Act (Québec) if the Taxation Act (Québec) is applicable in respect of the transfer of the shares of the Holdco to Noranda at elected amounts selected by the Vendor, subject to the provisions respectively of subsection 85(1) of the Income Tax Act (Canada) and section 518 et seq. of the Taxation Act (Québec) if the Taxation Act (Québec) is applicable. Noranda shall have no liability whatsoever for the proper completion of or timely filing of such election forms which shall be prepared at the expense of and by the Vendors. Noranda agrees to sign properly completed forms and return them to the Vendors within 60 days of receipt.

EX-99.5 6 t16149exv99w5.htm EX-99.5 exv99w5

EXHIBIT 99.5

PURCHASE AND SALE AGREEMENT

BY AND BETWEEN

ORION POWER HOLDINGS, INC.,

AS SELLER,

RELIANT ENERGY, INC.

AS SELLER GUARANTOR,

GREAT LAKES POWER INC.,

AS BUYER

AND

BRASCAN CORPORATION,

AS BUYER GUARANTOR

DATED AS OF MAY 18, 2004

TABLE OF CONTENTS

ARTICLE I

DEFINITIONS AND CONSTRUCTION


Section 1.01	Definitions and Construction	1
ARTICLE II
PURCHASE AND SALE AND CLOSING

Section 2 .01	Purchase and Sale	1
Section 2 .02	Purchase Price	2
Section 2 .03	Closing	3
Section 2 .04	Closing Deliveries by Seller to Buyer	3
Section 2 .05	Closing Deliveries by Buyer to Seller	3
Section 2 .06	Post-Closing Adjustment	4
Section 2 .07	Allocation of Purchase Price	4
ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER ENTITIES

Section 3 .01	Organization and Qualification	5
Section 3 .02	Authority	5
Section 3 .03	No Conflicts; Consents and Approvals	6
Section 3 .04	Capitalization	6
Section 3 .05	Legal Proceedings	6
Section 3 .06	Brokers	6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANIES

Section 4 .01	Organization and Qualification	7
Section 4 .02	No Conflicts; Consents and Approvals	7
Section 4 .03	Capitalization; Subsidiaries	7
Section 4 .04	Financial Statements	7
Section 4 .05	Absence of Undisclosed Liabilities; Absence of Certain Developments	8
Section 4 .06	Litigation	8
Section 4 .07	Compliance with Laws	9
Section 4 .08	Contracts	9
Section 4 .09	Taxes	11
Section 4 .10	Employee Benefit Plans; ERISA	13
Section 4 .11	Labor Agreements and Controversies	15
Section 4 .12	Environmental Matters	15
Section 4 .13	Intellectual Property	15
Section 4 .14	PUHCA; Regulation as Utility	16
Section 4 .15	Tangible Personal Property	16
Section 4 .16	Real Property	16
Section 4 .17	Good Operating Practices	16


Section 4 .18	Corporate Records	17
Section 4 .19	Sufficiency	17
Section 4 .20	Insurance	17
Section 4 .21	Banks	17
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER

Section 5 .01	Organization and Qualification	17
Section 5 .02	Authority	18
Section 5 .03	No Conflicts; Consents and Approvals	18
Section 5 .04	Legal Proceedings	18
Section 5 .05	Compliance with Laws and Orders	18
Section 5 .06	Brokers	18
Section 5 .07	Acquisition as Investment	18
Section 5 .08	Financial Resources	19
Section 5 .09	No Knowledge of Seller’s Breach	19
Section 5 .10	Opportunity for Independent Investigation	19
ARTICLE VI
COVENANTS

Section 6 .01	Access of Buyer	19
Section 6 .02	Conduct of Business Pending the Closing	20
Section 6 .03	Resignation of Members, Managers, Officers and Directors	23
Section 6 .04	Use of Certain Names	23
Section 6 .05	Support Obligations	23
Section 6 .06	Excluded Assets	24
Section 6 .07	Termination of Certain Services, Contracts, Receivables and Payables	24
Section 6 .08	Payment of Indebtedness	25
Section 6 .09	Tax Matters	25
Section 6 .10	Certain Restrictions	27
Section 6 .11	No Solicitation	27
Section 6 .12	Confidentiality	27
Section 6 .13	Employee and Benefit Matters	27
Section 6 .14	Public Announcements	31
Section 6 .15	Expenses and Fees	32
Section 6 .16	Agreement to Cooperate	32
Section 6 .17	Intentionally Omitted	33
Section 6 .18	Further Assurances	33
Section 6 .19	Non-Solicitation	33
Section 6 .20	Insurance	33
Section 6 .21	Data	33


ARTICLE VII
CONDITIONS TO THE CLOSING

Section 7 .01	Conditions to the Obligations of Each Party	34
Section 7 .02	Conditions to the Obligations of Buyer	34
Section 7 .03	Conditions to the Obligations of Seller	36
ARTICLE VIII
TERMINATION

Section 8 .01	Termination	36
Section 8 .02	Effect of Termination	37
ARTICLE IX
INDEMNIFICATION

Section 9 .01	Survival	38
Section 9 .02	Indemnification	38
Section 9 .03	Waiver of Other Representations	40
Section 9 .04	Waiver of Remedies; Certain Limitations	41
Section 9 .05	Procedures for Indemnification	42
ARTICLE X
MISCELLANEOUS

Section 10.01	Notices	43
Section 10.02	Headings	44
Section 10.03	Assignment	44
Section 10.04	Governing Law	44
Section 10.05	Arbitration	44
Section 10.06	Counterparts	46
Section 10.07	Amendments; Extensions	46
Section 10.08	Entire Agreement	47
Section 10.09	Severability	47
Section 10.10	Seller Guarantor Guaranty	47
Section 10.11	Buyer Guarantor Guaranty	47

iii


APPENDICES

Appendix I	-	Construction; Definitions

EXHIBITS

Exhibit A	-	Facilities

SCHEDULES


Schedule 3.03(b)		Seller Consents
Schedule 3.03(c)		Seller Governmental Approvals
Schedule 3.04		Capitalization
Schedule 4.02(a)		Company Consents
Schedule 4.03		Capitalization
Schedule 4.04		February 29 Balance Sheets
Schedule 4.05(a)		Certain Company Liabilities
Schedule 4.05(b)		Material Adverse Effect
Schedule 4.06		Litigation
Schedule 4.07		Compliance with Laws
Schedule 4.08		Material Contracts
Schedule 4.09		Taxes
Schedule 4.10(a)		Employee Benefit Plans
Schedule 4.10(c)		Employee Benefit Matters
Schedule 4.12		Environmental Matters
Schedule 4.13		Intellectual Property
Schedule 4.15		Tangible Personal Property
Schedule 4.16		Condemnation Proceedings
Schedule 4.17		Good Operating Practices
Schedule 4.19		Sufficiency
Schedule 4.21		Bank Accounts
Schedule 5.03(c)		Buyer Governmental Approvals
Schedule 6.02		Certain Permitted Actions
Schedule 6.02(b) (iv)		Permitted Capital Expenditures
Schedule 6.05(a)		Support Obligations
Schedule 6.06		Excluded Assets
Schedule 6.07		Terminated Contracts
Schedule 6.13(c)		Affiliate Employees
Schedule 7.01(c)		Company Lien Release Consents

PURCHASE AND SALE AGREEMENT

This Purchase and Sale Agreement (this “AGREEMENT”) dated as of May 18, 2004 (the “EXECUTION DATE” ) is made and entered into by and between Orion Power Holdings, Inc., a Delaware corporation (“SELLER”), Reliant Energy, Inc., a Delaware corporation (“SELLER GUARANTOR”), Great Lakes Power Inc., an Ontario corporation (“BUYER”), and Brascan Corporation, an Ontario corporation (“BUYER GUARANTOR”).

RECITALS

Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, 100% of the equity interests in Orion Power New York GP II, Inc., a Delaware corporation (“OPNY GP II”), Erie Boulevard Hydropower, L.P., a Delaware limited partnership (“ERIE”), Carr Street Generating Station, L.P., a Delaware limited partnership (“CARR STREET”), Orion Power Operating Services Coldwater, Inc., a Delaware corporation (“OPOS COLDWATER”), and Orion Power Operating Services Carr Street, Inc. , a Delaware corporation (“OPOS CARR Street”), which are direct and indirect subsidiaries of Seller and which own and operate the power plants listed on Exhibit A (the “FACILITIES”).

OPNY GP II is owned by Seller. Erie and Carr Street are owned by Orion Power New York, L.P., a Delaware limited partnership (“OPNY LP”), and Orion Power New York GP, Inc., a Delaware corporation (“OPNY GP”) . OPNY LP is owned by Orion Power New York LP, LLC, a Delaware limited liability company (“OPNY LLC”), and OPNY GP. OPNY LLC and OPNY GP are owned by Orion Power Capital, LLC, a Delaware limited liability company (“ORION POWER CAPITAL”). Orion Power Capital is owned by Seller.

OPOS Coldwater and OPOS Carr Street are owned by Orion Power Operating Services, Inc., a Delaware corporation (“OPOS PARENT”). OPOS Parent is owned by Seller.

STATEMENT OF AGREEMENT

Now, therefore, in consideration of the premises and the mutual representations, warranties, covenants and agreements in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE I

DEFINITIONS AND CONSTRUCTION

Section 1.01 Definitions and Construction. Capitalized terms used in this Agreement and rules of construction to apply to this Agreement are set forth in Appendix I.

ARTICLE II

PURCHASE AND SALE AND CLOSING

Section 2.01 Purchase and Sale. On the terms and subject to the conditions set forth in this Agreement, Buyer agrees to purchase from Seller, and Seller agrees to sell or cause to be sold to Buyer, the following equity interests (the “COMPANY INTERESTS”): (i) 100% of the general

and limited partnership interests in Erie, (ii) 100% of the general and limited partnership interests in Carr Street, (iii) in the event the OPNY Corporate Reorganization is not completed prior to the Closing Date, 100% of the capital stock of OPNY GP II, (iv) in the event the OPOS Corporate Reorganization is not completed prior to the Closing Date, 100% of the capital stock of OPOS Coldwater, and (v) in the event the OPOS Corporate Reorganization is not completed prior to the Closing Date, 100% of the capital stock of OPOS Carr Street.

Section 2.02 Purchase Price.

(a) The purchase price to be paid by Buyer to Seller for the Company Interests is Nine Hundred Million U.S. Dollars ($900,000,000) (the “BASE PURCHASE PRICE”), as adjusted pursuant to Section 2.02(b) and Section 2.02(c).

(b) The Base Purchase Price shall be increased by an amount equal to the sum of the following amounts:

(i) an amount equal to the sum of the Federal, state, city and other income and franchise Taxes that would be payable with respect to (A) the net income and gain of OPOS Coldwater, (B) the net income and gain of OPOS Carr Street, (C) the net income and gain of OPNY GP II, (D) the net income and gain of Erie allocable to Seller and its Affiliates, and (E) the net income and gain of Carr Street allocable to Seller and its Affiliates, in each case for the period from February 29, 2004 through the Closing Date assuming that (x) such Taxes are imposed on such net income and gain at an aggregate rate equal to 39.9%, and (y) the relevant taxpayers realize no other Tax Items, and have no other Tax attributes that can be taken into account, for such period; provided that the term “income and gain” shall not include (1) any income or gain incurred by any of the Companies as a result of the transactions contemplated by this Agreement (including any of the OPNY Corporate Reorganization or OPOS Corporate Reorganization or the transactions contemplated by Section 6.06 or Section 7.02(d)) or (2) any income or gain in connection with the cancellation of Intercompany Payables or Intercompany Receivables; and

(ii) if on a date (the “INTEREST START DATE”) that is 90 days or more after the Execution Date, all other conditions to the Closing have been satisfied or are then capable of being satisfied and the sole reason that the Closing has not occurred is that the condition set forth in Section 7.01(b)(ii) has not been satisfied, simple interest on the Base Purchase Price calculated from and including the Interest Start Date through and excluding the Closing Date at the Interest Rate.

(c) If the Intercompany Adjustment Amount is negative, then the Base Purchase Price shall be decreased by the absolute value of the Intercompany Adjustment Amount. If the Intercompany Adjustment Amount is positive, then the Base Purchase Price shall be increased by the Intercompany Adjustment Amount. Following such adjustments, all Intercompany Payables and Intercompany Receivables outstanding as of the Closing shall be deemed to be cancelled immediately prior to the Closing.

Section 2.03 Closing. The closing of the transactions contemplated by this Agreement (the “CLOSING”) shall take place at the offices of Vinson & Elkins L.L.P., 1001 Fannin, Houston, Texas 77002 at 10:00 A.M. local time, on the third Business Day after the conditions to the Closing set forth in Article VII (other than actions to be taken or items to be delivered at the Closing) have been satisfied or waived by the applicable Party or Parties, or on such other date and at such other time and place as the Parties mutually agree in writing. All actions listed in Section 2.04 or Section 2.05 that occur on the Closing Date shall be deemed to occur simultaneously at the Closing. Subject to the provisions of Article VIII, failure to consummate the purchase and sale provided for in this Agreement on the date determined pursuant to this Section 2.03 will not result in the termination of this Agreement and will not relieve any Party of any obligation under this Agreement.

Section 2.04 Closing Deliveries by Seller to Buyer. At the Closing, Seller shall deliver, or shall cause to be delivered, to Buyer the following:

(a) Assignments of Partnership Interests in a form reasonably acceptable to Buyer and Seller for Erie and Carr Street;

(b) in the event the OPNY Corporate Reorganization is not completed prior to the Closing Date, a stock certificate, with a valid stock power executed in blank, for 100 shares of common stock of OPNY GP II; and in the event the OPOS Corporate Reorganization is not completed prior to the Closing Date, stock certificates, with valid stock powers executed in blank for 100 shares of common stock of OPOS Coldwater and 100 shares of common stock of OPOS Carr Street;

(d) the written resignations of each of the directors or other managers of the Companies;

(e) certificates of good standing as of a recent date with respect to each Company issued by the Secretary of State of its jurisdiction of organization, and for each state in which such Company is qualified to do business as a foreign entity;

(f) an affidavit of non-foreign status as set forth in Treasury Regulation Section 1.1445-2(b) for each of the Seller Entities, as applicable; and

(g) mutual releases, in form and substance reasonably acceptable to Buyer, between Seller and the Non-Company Affiliates, on the one hand, and the Companies, on the other hand, of any and all obligations to each other under any Contracts between or among such parties.

Section 2.05 Closing Deliveries by Buyer to Seller. At the Closing, Buyer shall deliver to Seller the following:

(a) a wire transfer of immediately available funds (to such account as Seller shall have notified Buyer of at least two Business Days prior to the Closing Date) in an amount equal to the Base Purchase Price as adjusted pursuant to Section 2.02(b) and Section 2.02(c), as estimated in good faith by Seller (the “ESTIMATED PURCHASE PRICE”). Seller shall deliver a

calculation of the Estimated Purchase Price in writing to Buyer at least two Business Days prior to the Closing Date and shall attach to the calculation of the Estimated Purchase Price a schedule showing the estimated adjustments to the Base Purchase Price pursuant to Section 2.02 (b) and Section 2.02(c); and

(b) the certificate described in Section 7.03(c).

Section 2.06 Post-Closing Adjustment.

(a) As soon as practicable after the Closing, but no later than 60 days after the Closing Date, Seller shall determine the actual adjustments to the Base Purchase Price pursuant to Section 2.02(b) and Section 2.02(c) as of the Closing Date. Seller and Buyer shall cooperate and provide each other access to their respective books and records (and those of the Companies) as are reasonably requested in connection with the matters addressed in this Section 2.06. Seller shall provide Buyer with written notice of such determinations, along with reasonable supporting information (the “SELLER’S POST-CLOSING ESTIMATE”).

(b) If Buyer objects to any determinations set forth in the Seller’s Post-Closing Estimate, then it shall provide Seller written notice thereof within 20 Business Days after receiving the Seller’s Post-Closing Estimate. If the Parties are unable to agree on the disputed amounts as of the Closing Date within 120 days after the Closing Date, the Parties shall refer such dispute to an internationally recognized accounting firm that is not the principal accounting firm of either Buyer or Seller, mutually acceptable to Buyer and Seller, which firm shall make a final and binding determination as to all such matters in dispute (and only such matters) on a timely basis and promptly shall notify the Parties in writing of its resolution. Such firm shall not have the power to modify or amend any term or provision of this Agreement. Each Party shall bear and pay one-half of the fees and other costs charged by such accounting firm.

(c) If the Base Purchase Price adjusted using such actual values (as agreed or determined by the above-referenced accounting firm) (the “FINAL PURCHASE PRICE”) is greater than the Estimated Purchase Price, then Buyer shall pay Seller within 10 Business Days after such actual values are agreed or determined, by wire transfer of immediately available funds, the difference between the Final Purchase Price and the Estimated Purchase Price plus interest thereon at the Interest Rate from the Closing Date through and including the date of such payment. If the Final Purchase Price is less than the Estimated Purchase Price, then Seller shall pay Buyer within 10 Business Days after such actual values are agreed or determined, by wire transfer of immediately available funds, the difference between the Estimated Purchase Price and the Final Purchase Price plus interest thereon at the Interest Rate from the Closing Date through and including the date of such payment. In each case, the recipient Party shall designate the account to which such payment is to be made at least two Business Days prior to the date such payment is due.

Section 2.07 Allocation of Purchase Price. Seller and Buyer agree to work in good faith to agree upon an allocation of the Estimated Purchase Price among the assets of Erie and Carr Street and among the assets of each successor to OPNY GP II, OPOS Coldwater or OPOS Carr Street, following any of the OPNY Corporate Reorganization or the OPOS Corporate Reorganization, in accordance with applicable Treasury Regulations, within 30 days after the

signing of this Agreement (the “ESTIMATED PURCHASE PRICE ALLOCATION”). Not later than 30 days after the determination of the Final Purchase Price, Seller and Buyer shall further agree upon the allocation of any adjustments resulting from such determination, with such adjustments to be made in a manner consistent with the Estimated Purchase Price Allocation and in accordance with applicable Treasury Regulations (as adjusted, the “FINAL PURCHASE PRICE ALLOCATION”). Buyer and Seller shall work in good faith to resolve any disagreements regarding the Estimated Purchase Price Allocation and the Final Purchase Price Allocation. If the Parties fail to agree within such respective 30-day periods upon either the Estimated Purchase Price Allocation or the Final Purchase Price Allocation, such dispute shall be resolved by an independent accounting firm mutually acceptable to Buyer and Seller, and the decision of such independent accounting firm shall be final and binding on the Parties. The fees and expenses of such accounting firm shall be borne equally by Seller, on the one hand, and Buyer, on the other hand. Seller and Buyer shall each prepare and timely file IRS Form 8594 “Asset Acquisition Statement Under Section 1060” and any other statements or forms prescribed under federal, state, local or foreign Tax Law (including any exhibits thereto) to report the Final Purchase Price Allocation. The Parties agree that they shall not, and shall not permit their Affiliates (including the Companies) to, take a position on any Tax Return or for any Tax purpose (including for purposes of assigning values to the Purchased Assets in connection with an election under Section 754 of the Code) that is inconsistent with the Final Purchase Price Allocation. Each of Seller and Buyer agrees to provide the other promptly with any information required to complete Form 8594 and any other Tax forms prescribed under applicable federal, state, local or foreign Tax Law to report the Final Purchase Price Allocation.

ARTICLE III

REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER ENTITIES

Seller hereby represents and warrants to Buyer that, except as set forth in Seller’s Disclosure Schedule:

Section 3.01 Organization and Qualification. Each of the Seller Entities (other than OPNY LP) is a corporation, duly formed, validly existing and in good standing under the Laws of Delaware. OPNY LP is a limited partnership, duly formed, validly existing and in good standing under the Laws of Delaware. Each of the Seller Entities is duly qualified or licensed to do business in each other jurisdiction where the actions required to be performed by it hereunder makes such qualification or licensing necessary, except in those jurisdictions where the failure to be so qualified or licensed would not, in the aggregate, reasonably be expected to result in a material adverse effect on Seller’s ability to perform its obligations hereunder.

Section 3.02 Authority. Seller has all requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery by Seller of this Agreement, and the performance by Seller of its obligations hereunder, have been duly and validly authorized by all necessary corporate action. This Agreement has been duly and validly executed and delivered by Seller and constitutes the legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar Laws relating to or affecting the rights of creditors generally, or by general equitable principles.

Section 3.03 No Conflicts; Consents and Approvals. The execution and delivery by Seller of this Agreement do not, and the performance by Seller of its obligations under this Agreement will not:

(a) assuming the Seller Consents have been obtained, conflict with or result in a violation or breach of any of the terms, conditions or provisions of the Charter Documents of any of the Seller Entities;

(b) assuming all consents set forth on Schedule 3.03(b) (collectively, the “SELLER CONSENTS”) have been obtained, violate or result in a default (or give rise to any right of termination, cancellation or acceleration) under any material Contract to which any Seller Entity is a party, except for any such violations or defaults (or rights of termination, cancellation or acceleration) which would not, in the aggregate, reasonably be expected to result in a material adverse effect on Seller’s ability to perform its obligations hereunder; and

(c) assuming all required filings, approvals, consents, authorizations and notices set forth on Schedule 3.03(c) (collectively, the “SELLER GOVERNMENTAL APPROVALS”) have been made, obtained or given, (i) conflict with, violate or breach any material term or provision of any Law or writ, judgment, order or decree applicable to the Seller Entities or (ii) require the material consent or approval of any Governmental Authority under any applicable Law.

Section 3.04 Capitalization. Seller directly or indirectly owns 100% of the Company Interests. The capitalization and ownership of the Companies are set forth on Schedule 3.04. Except as set forth on Schedule 3.04, each owner of the Company Interests as indicated on Schedule 3.04 owns such Company Interests directly and free and clear of all Liens, restrictions on transfer or other encumbrances other than those arising pursuant to this Agreement or applicable securities laws and, in the case of Erie, its limited partnership agreement and, in the case of Carr Street, its limited partnership agreement. Without limiting the generality of the foregoing, none of the Company Interests are subject to any voting trust, shareholder agreement or voting agreement.

Section 3.05 Legal Proceedings. None of the Seller Entities has been served with written notice of any Claim, and to Seller’s Knowledge none is threatened against any of the Seller Entities, which seeks a writ, judgment, order or decree restraining, enjoining or otherwise prohibiting or making illegal any of the transactions contemplated by this Agreement.

Section 3.06 Brokers. None of the Seller Entities has any liability or obligation to pay fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement for which Buyer or the Companies could become liable or obligated.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANIES

Seller hereby represents and warrants to Buyer that, except as set forth in Seller’s Disclosure Schedule:

Section 4.01 Organization and Qualification. Each of Erie and Carr Street is a limited partnership duly formed and validly existing under the laws of the State of Delaware, and each of OPNY GP II, OPOS Coldwater and OPOS Carr Street is a corporation duly organized and validly existing under the laws of the State of Delaware. If the OPNY Corporate Reorganization occurs, the successor to OPNY GP II will be a limited liability company validly existing under the laws of the State of Delaware. If the OPOS Corporate Reorganization occurs, each of the successors to OPOS Coldwater and OPOS Carr Street will be a limited liability company validly existing under the laws of the State of Delaware. Each Company has the requisite partnership, corporate or company power and authority to own, lease and operate its assets and properties and to carry on its business as it is now being conducted or as contemplated herein. Each Company is qualified to transact business and is in good standing in each jurisdiction in which the properties owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary, except as would not, in the aggregate, reasonably be expected to have a Material Adverse Effect. True, accurate and complete copies of each Company’s Charter Documents, in each case as amended and in effect on the Execution Date, have previously been delivered or made available to Buyer.

Section 4.02 No Conflicts; Consents and Approvals. The execution and delivery by Seller of this Agreement do not, and the performance by Seller of its obligations under this Agreement and the consummation of the transactions contemplated hereby will not:

(a) assuming the consents set forth on Schedule 4.02(a) (the “COMPANY CONSENTS”) have been obtained, conflict with or result in a violation or breach of any of the terms, conditions or provisions of the Charter Documents of any Company;

(b) assuming the Company Consents have been obtained, be in material violation of or result in a material default (or give rise to any right of termination, cancellation or acceleration) under any Material Contract; and

(c) assuming all the Seller Governmental Approvals have been made, obtained or given, (i) conflict with or result in a violation or breach of any material term or provision of any Law or writ, judgment, order or decree applicable to any Company or any of the Purchased Assets or (ii) require the material consent or approval of any Governmental Authority under any applicable Law.

Section 4.03 Capitalization; Subsidiaries. Except as disclosed on Schedule 4.03 and except with respect to the OPNY Corporate Reorganization and the OPOS Corporate Reorganization, no Company is a party to any written or oral agreement, and no Company has granted to any Person any option or any right or privilege capable of becoming an agreement or option, for the purchase, subscription, allotment or issue of any unissued interests, units or other securities (including convertible securities, warrants or convertible obligations of any nature) of any Company. Subject to the OPNY Corporate Reorganization and the OPOS Corporate Reorganization, none of the Companies has subsidiaries or owns equity interests in any Person. The Company Interests constitute all of the equity interests in the Companies.

Section 4.04 Financial Statements. Seller has previously furnished or made available to Buyer copies of the following for OPNY LP and its subsidiaries: the audited

consolidated balance sheets at December 31, 2002 and 2003 and the audited consolidated statements of operations, partners’ capital and comprehensive income (loss) and cash flows for the periods from January 1, 2002 to February 19, 2002 and February 20, 2002 to December 31, 2002 and for the year ending December 31, 2003, and the related notes and supplemental information, and all of such financial statements fairly present, in all material respects and in accordance with GAAP, the consolidated financial position, the results of operations and cash flows, as the case may be, of the entities covered thereby, at the dates and for the periods indicated. Attached as Schedule 4.04 are copies of the following for each of the Companies: the unaudited balance sheet at February 29, 2004 (collectively, the “FEBRUARY 29 BALANCE SHEETS”) and the unaudited statement of operations for the period January 1, 2004 through February 29, 2004, and all of such financial statements fairly present, in all material respects and in accordance with GAAP, the financial position and the results of operations, as the case may be, of the entities covered thereby, at the dates and for the periods indicated, except for the allocation of corporate support and general and administrative expenses and the allocation of goodwill and its related accounting in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets,” and except for the absence of footnote disclosure.

Section 4.05 Absence of Undisclosed Liabilities; Absence of Certain Developments.

(a) Except as recorded in the February 29 Balance Sheets or as disclosed in Schedule 4.05(a), except for liabilities incurred in the ordinary course of business since February 29, 2004 and except as will be repaid or extinguished on or prior to the Closing pursuant to Section 6.08, the Companies do not have aggregate liability in excess of $1,000,000, without duplication, that would be required to be recorded as of the date of this Agreement in the unaudited balance sheets of the Companies prepared in accordance with GAAP, excluding (i) liabilities under the Terminated Contracts or the Material Contracts, (ii) liabilities under this Agreement, (iii) liabilities under the Company Permits, and (iv) liabilities incurred after the date of this Agreement in accordance with the provisions contained in Article VI.

(b) Since February 29, 2004, except as disclosed in Schedule 4.05(b) and except for liabilities incurred in the ordinary course of business, there has not occurred (i) any circumstance, development or event or series of such occurrences that, in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect; (ii) any loss or interference with the business of any Company from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or action, order or decree of any Governmental Authority that, in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect; or (iii) any change by any Company in financial accounting principles, practices or methods, except as required by GAAP or by a Change of Law that, in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect.

Section 4.06 Litigation. Except as disclosed on Schedule 4.06, there is no material litigation pending, or, to Seller’s Knowledge, overtly threatened, against any Company before any Governmental Authority or any arbitrator. No Company is subject to any judgment, decree, injunction, rule or order of any Governmental Authority or any arbitrator that prohibits the consummation of the transactions contemplated by this Agreement.

Section 4.07 Compliance with Laws. Except as disclosed on Schedule 4.07, no Company is in violation of or has been given written notice of any violation of, any Law, except for violations that would not, in the aggregate, reasonably be expected to have a Material Adverse Effect. Except as disclosed on Schedule 4.07, no investigation or review relating to any Company by any Governmental Authority is pending or, to Seller’s Knowledge, threatened, other than, in each case, those that would not, in the aggregate, reasonably be expected to have a Material Adverse Effect. Except as disclosed on Schedule 4.07, no Company is in violation of the terms of any permits, licenses, franchises, variances, exemptions, orders and other authorizations, consents and approvals from Governmental Authorities used by such Company to conduct its business as presently conducted (collectively, the “COMPANY PERMITS”), except for violations which would not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

Section 4.08 Contracts.

(a) Excluding Contracts with respect to which no Company and none of the Purchased Assets will be bound or have liability after the Closing and excluding the Terminated Contracts and any Benefit Plans, Schedule 4.08 sets forth a list as of the date of this Agreement of the following Contracts to which any Company is a party or by which the Purchased Assets may be bound (collectively, the “MATERIAL CONTRACTS”):

(i) Contracts for the future purchase, exchange or sale of gas or fuel oil;

(ii) Contracts for the future purchase, exchange or sale of electric power or ancillary services;

(iii) Contracts for the future transportation of gas or fuel oil;

(iv) Contracts for the future transmission of electric power;

(v) interconnection Contracts;

(vi) other than Contracts of the nature addressed by Section 4.08(a) (i) - (iv) , Contracts (A) for the sale of any asset of a Company or (B) that grant a right or option to purchase any asset of a Company, other than in each case Contracts entered into in the ordinary course of business consistent with past practices relating to assets with a value of less than $250,000 individually or $1,000,000 in the aggregate;

(vii) other than Contracts of the nature addressed by Section 4.08(a) (i) - (iv) , Contracts for the future provision of goods or services requiring payments in excess of $500,000 for each individual Contract;

(viii) Contracts under which a Company has created, incurred, assumed or guaranteed any outstanding indebtedness for borrowed money or any capitalized lease obligation, or under which such Company has imposed a security interest on any of its assets, tangible or intangible, which security interest secures outstanding indebtedness for borrowed money;

(ix) outstanding agreements of guaranty, surety or indemnification, direct or indirect, by a Company, or by Seller or any Non-Company Affiliate for the benefit of a Company;

(x) Contracts with Seller or any Non-Company Affiliate or any current or former director or officer thereof;

(xi) employment Contracts providing annual compensation in excess of $150,000 and which are not cancelable by a Company on notice of 90 days or less;

(xii) outstanding futures, swap, collar, put, call, floor, cap, option or other Contracts that are intended to benefit from or reduce or eliminate the risk of fluctuations in the price of commodities, including electric power, gas or securities;

(xiii) Contracts that purport to limit a Company’s freedom to compete in any line of business or in any geographic area;

(xiv) partnership, joint venture or limited liability company agreements;

(xv) Contracts conveying, granting, leasing or assigning an interest in real property to a Company;

(xvi) Contracts for leases of personal property involving annual payments in excess of $500,000 (the “PERSONAL PROPERTY LEASES”);

(xvii) Contracts relating to the acquisition by a Company of any operating business or the capital stock of any other Person;

(xviii) Contracts providing for severance, retention, change in control or other similar payments; and

(xix) Contracts that are otherwise material to the Companies.

(b) Seller has provided Buyer with, or access to, true and complete copies of all Material Contracts.

(c) No Company is in default, and, to Seller’s Knowledge, no other party is in default in the performance or observance of any term or provision of, and no event has occurred which, with lapse of time or action by a third party, would result in such a default under any Contract to which any Company is a party or by which any of them is bound or to which any of the Purchased Assets is subject, other than as would not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

(d) To Seller’s Knowledge, each of the Material Contracts is in full force and effect and is the legal, valid and binding obligation of the Companies party thereto, enforceable against them in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a

proceeding at law or in equity), other than as would not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

Section 4.09 Taxes. Except as disclosed on Schedule 4.09:

(a) (i) All material Tax Returns required to be filed by or with respect to the Companies and the Purchased Assets (or any affiliated, consolidated, combined or unitary group of which any Company is or was a member) have been duly and timely filed with the appropriate Taxing Authorities, (ii) all such Tax Returns are true, correct and complete in all material respects; provided, however, that the representation made by Seller in this clause (ii) shall not be construed as a representation or warranty by Seller as to (A) the basis of any of the assets of the Companies, or (B) the amount or availability after the Closing Date of any net operating losses, net capital losses, tax credits, or other tax attributes of the Companies, and (iii) all material Taxes payable by or with respect to the Companies and the Purchased Assets (or any affiliated, consolidated, combined or unitary group of which any Company is or was a member) have been fully and timely paid.

(b) There are no liens for Taxes upon any property or asset of any Company, except for Permitted Exceptions. There are not pending or threatened in writing any Tax audits or examinations of or with respect to the Companies or the Purchased Assets, and there are no written notices of deficiency, proposed deficiency or assessment from the Internal Revenue Service (“IRS”) or any other Taxing Authority with respect to Taxes of or relating to any Company or the Purchased Assets. All material deficiencies asserted or assessments made for Taxes due with respect to the Companies and the Purchased Assets as a result of any completed and settled examinations or any concluded litigation have been fully paid. No claim has been made in writing by a Taxing Authority in a jurisdiction where Tax Returns of or with respect to the Companies or the Purchased Assets are not filed such that any Company or Affiliate of any Company is or may be subject to taxation by that jurisdiction.

(c) Each of Erie and Carr Street is, and during its entire existence has been, a partnership for federal, state and local income tax purposes. Following the OPNY Corporate Reorganization, the successor to OPNY GP II is, and during its entire existence has been, a “disregarded entity” for federal, state and local income tax purposes. Following the OPOS Corporate Reorganization, each successor to each of OPOS Coldwater and OPOS Carr Street is, and during its entire existence has been, a “disregarded entity” for federal, state and local income tax purposes.

(d) The Companies have complied in all material respects with all applicable Laws relating to the payment and withholding of Taxes and have duly and timely withheld and paid over to the appropriate Taxing Authorities all material amounts required to be withheld and paid over for all periods under all applicable Laws.

(e) The Buyer has received complete copies of (i) the Tax Returns set forth on Schedule 4.09(e) and (ii) any audit report issued in the last three years relating to the Companies or the Purchased Assets. None of the material Tax Returns filed by or with respect to the Companies or the Purchased Assets have been audited by the relevant Taxing Authorities.

(f) No property owned by any Company is (i) property required to be treated as being owned by another person pursuant to the provisions of Section 168 (f) (8) of the Internal Revenue Code of 1954, as amended and in effect immediately prior to the enactment of the Tax Reform Act of 1986, (ii) “tax-exempt use property” within the meaning of Section 168(h) (1) of the Code, (iii) “tax-exempt bond financed property” within the meaning of Section 168(g) of the Code, (iv) subject to Section 168 (g) (1) (A) of the Code, (v) “limited use property” within the meaning of Rev. Proc. 2001-28, or (vi) property financed by the proceeds of an “industrial development bond” within the meaning of Section 103(b) of the Internal Revenue Code of 1954, as amended and in effect immediately prior to the enactment of the Tax Reform Act of 1976.

(g) None of the Seller Entities is a foreign person within the meaning of Section 1445 of the Code.

(h) None of the Companies is a party to any tax sharing, allocation, indemnity or similar agreement or arrangement (whether or not written) pursuant to which it will have any obligation to make any payments after the Closing.

(i) In connection with the consummation of the transactions contemplated by this Agreement, there is no Contract, agreement, plan or arrangement covering any person who is or was an employee or independent contractor with respect to a Company that, individually or collectively, could give rise to the payment of any amount that would not be deductible by Buyer or its Affiliates (including the Companies) by reason of Section 280G of the Code or that would give rise to Tax pursuant to Section 4999 of the Code.

(j) None of the Companies has ever been a member of any consolidated, combined, affiliated or unitary group of corporations for any Tax purposes or has any liability for the Taxes of any person under Treasury Regulation Section 1.1502-6 or any similar provision of Law, other than a group of which Seller Guarantor (or an Affiliate thereof) is the common parent.

(k) No power of attorney with respect to any Tax matter is currently in force with respect to any Company or the Purchased Assets that would in any manner bind, obligate or restrict Buyer or its Affiliates (including any Company).

(l) To Seller’s Knowledge, for federal, state and local income Tax purposes (including for the purpose of taking all applicable depreciation deductions and investment tax credits), the Companies are the owners of the Purchased Assets (including any property that is subject to any lease). The Companies have filed all Tax Returns consistent with their being treated as the owners of the Purchased Assets for such Tax purposes. No Taxing Authority has raised any challenge or other inquiry regarding such ownership with respect to any such Tax Return.

(m) All federal, state and local income or franchise Tax Returns filed by or with respect to the Companies or the Purchased Assets since January 1, 2002 have been filed on a consolidated or combined basis with Seller Guarantor, or an Affiliate thereof, as the common parent.

Section 4.10 Employee Benefit Plans; ERISA.

(a) Schedule 4.10(a) sets forth a true, correct and complete list, as of the Execution Date, of (i) the Company Plans and (ii) all Seller Plans sponsored, maintained or contributed to by a Company. On or before the Execution Date, Seller has made available to Buyer copies of each of the following: (A) with respect to the Company Plans, to the extent applicable: (i) the most recent annual report (Form 5500) filed with the Employee Benefits Security Administration, (ii) the plan document and related trust agreement, and all amendments thereto, (iii) the most recent summary plan description if required by ERISA, (iv) the most recent actuarial report or valuation that is required to be prepared under applicable Laws, (v) the most recent determination letter, if any, issued by the IRS with respect to any Company Plan intended to be qualified under Section 401(a) of the Code, and (vi) a written description of any non-written Company Plan; and (B) with respect to a Seller Plan sponsored, maintained or contributed to by a Company, to the extent applicable: (i) the plan document and all amendments thereto, (ii) the most recent determination letter, if any, issued by the IRS with respect to any such Seller Plan intended to be qualified under Section 401(a) of the Code, (iii) the most recent summary plan description if required by ERISA, and (iv) a written description of any such non-written Seller Plan. None of the Company Plans and none of the Seller Plans sponsored, maintained or contributed to by a Company is described in Section 4(b) (4) of ERISA. No Company contributes to, has an obligation to contribute to, or otherwise has any obligation or liability (contingent or otherwise) with respect to a multiemployer plan (within the meaning of Section 3(37) of ERISA).

(b) With respect to any “employee benefit plan, “ within the meaning of Section 3(3) of ERISA, that is a Seller Plan (i) no withdrawal liability, with in the meaning of Section 4201 of ERISA, has been incurred by Seller or by any trade or business, whether or not incorporated, that together with Seller would be a “single employer” within the meaning of Section 4001(b) of ERISA (a “COMMONLY CONTROLLED ENTITY”), which withdrawal liability has not been satisfied, (ii) no liability to the Pension Benefit Guaranty Corporation (the “PBGC”) has been incurred by Seller or by any Commonly Controlled Entity, which liability has not been satisfied (other than with respect to the payment of premiums that are not past due), (iii) no accumulated funding deficiency, whether or not waived, within the meaning of Section 302 of ERISA or Section 412 of the Code currently exists, and (iv) all contributions (including installments) to such plan required of Seller or any Commonly Controlled Entity by Section 302 of ERISA and Section 412 of the Code have been made.

(c) Except as otherwise set forth in Schedule 4.10(c) and for matters which would not, in the aggregate, reasonably be expected to have a Material Adverse Effect:

(i) Each Company Plan has been operated and maintained in accordance with its terms and all provisions of applicable Law. With respect to each Company Plan, the Companies and their Affiliates have performed all obligations, whether arising by operation of Law or by Contract, required to be performed by them, and no event has occurred and, to the Knowledge of Seller, there exists no condition or set of circumstances in connection with which the Companies could be subject to any liability for failure to operate and administer such Company Plan in accordance with its terms or any applicable Laws. All amendments required to bring each Company Plan into

conformity with all of the applicable provisions of ERISA and other applicable Laws have been made except to the extent such amendments are not required by Law to be made until a date after the Closing Date and are disclosed on Schedule 4.10(c);

(ii) Each of the Company Plans and Seller Plans intended to be qualified under Section 401(a) of the Code (A) so qualifies and satisfies in form and in operation the requirements of such Section except to the extent amendments are not required by applicable Laws to be made until a date after the Closing Date, (B) has received or applied for a favorable determination letter from the IRS regarding such qualified status, and (C) has not been operated in a way that would adversely affect its qualified status;

(iii) As to any Company Plan subject to Title IV of ERISA, (A) there has been no event or condition which presents a risk of termination of the Company Plan, (B) no accumulated funding deficiency, whether or not waived, within the meaning of Section 302 of ERISA or Section 412 of the Code currently exists, (C) no reportable event within the meaning of Section 4043 of ERISA (for which the disclosure requirements set forth in applicable regulations promulgated by the PBGC have not been waived) has occurred, (D) no notice of intent to terminate the Company Plan has been given under Section 4041 of ERISA, (E) no proceeding has been instituted under Section 4042 of ERISA to terminate the Company Plan, and (F) no liability to the PBGC has been incurred (other than with respect to the payment of premiums that are not past due);

(iv) None of the Companies, Seller, any Commonly Controlled Entity or any organization which is a success or corporation or parent corporation thereto, within the meaning of Section 4069(b) of ERISA, has engaged in any transaction described in Section 4069(a) of ERISA;

(v) Each of the Company, Seller and Commonly Controlled Entity which maintains a “group health plan” within the meaning of Section 5000(b)(1) of the Code has complied with the notice and continuation requirements of COBRA and the regulations thereunder;

(vi) There are no Claims pending with respect to any Company Plan, its assets, any Company, or the plan administrator or any fiduciary of any Company Plan with respect to the operation of such plan (other than routine claims for benefits) , there is no matter pending with respect to any Company Plan before any Governmental Authority (other than routine qualification determination filings), and, to the Knowledge of Seller, there are no facts or circumstances which could form the basis of any such Claim or matter; and

(vii) All contributions and premiums required to be made to any Company Plan pursuant to its terms and the provisions of any applicable Laws have been timely made.

(d) Except as provided in Section 6.13 and except for matters that will not result in any increased liability of any Company, in connection with the consummation of the transactions contemplated by this Agreement, whether alone or in combination with some other action or

event, (i) no payment of money or other property, or increase in the amount of compensation, will become due to any current or former employee of any Company, (ii) no benefits otherwise payable under any Company Plan or Seller Plan will increase, and (iii) no acceleration of the time of payment or vesting of any such compensation or benefits will result.

Section 4.11 Labor Agreements and Controversies. Except for the Collective Bargaining Contract, no Company is a party to, or is bound by, the terms of any collective bargaining agreement or any other Contract with any labor union or representative of employees. Seller has provided Buyer with, or access to, a true and complete copy of the Collective Bargaining Contract. There is no material litigation pending or, to Seller’s Knowledge, overtly threatened between a Company and any representatives (including unions and any bargaining unit) of any of its employees. To Seller’s Knowledge, there are no material organizational efforts presently being made involving any of the presently unorganized employees of the Companies.

Section 4.12 Environmental Matters. Except as disclosed on Schedule 4.12 and except as would not reasonably be expected to have a Material Adverse Effect: (a) each Company and Facility is in compliance with all applicable Environmental Laws, (b) no Company has received any written notice, demand or request for information from any Governmental Authority indicating that it or any of the Facilities may be in violation of, or liable under, any Environmental Law, (c) there are no civil, criminal or administrative actions, suits, demands, claims, hearings, investigations or proceedings pending or, to Seller’s Knowledge, threatened against any Company relating to any violation, or alleged violation, of any Environmental Law, (d) to Seller’s Knowledge, no Company has disposed of, released or transported, or arranged for the disposal, release, or transportation of, any Hazardous Substance in violation of any applicable Environmental Law, or in a manner giving rise to any liability under Environmental Law, (e) no Company is subject to any liabilities or expenditures (fixed or contingent) relating to any suit, settlement, court order, administrative order, regulatory requirement, judgment or claim asserted or arising under any Environmental Law and (f) Seller has made available to Buyer copies of all environmental assessments involving each Company and Facility that have been prepared by third parties and that are in the possession or control of Seller or any Company. Not withstanding any other provision of this Agreement to the contrary, this section contains the sole and exclusive representations and warranties of Seller with regard to environmental matters.

Section 4.13 Intellectual Property. Except as would not be material, (a) except for the Seller Marks and except as disclosed on Schedule 4.15, each Company owns, or otherwise has the right to use the Intellectual Property used in or necessary for the conduct of such Company’s business as it is currently conducted, (b) to Seller’s Knowledge, the use of Intellectual Property by each Company does not infringe on or otherwise violate the rights of any third party, and is in accordance with the applicable license pursuant to which such Company acquired the right to use such Intellectual Property, (c) to Seller’s Knowledge, no third party is challenging, infringing on or otherwise violating any right of any Company with respect to any Intellectual Property, (d) except as set forth on Schedule 4.13, no Company has granted, or is obligated to grant, any license, sub-license, or assignment of any Intellectual Property, (e) no Company has received any notice from any third party regarding a pending Claim with respect to any Intellectual Property used in or necessary for the conduct of such Company’s business as it is currently conducted, and (f) to Seller’s Knowledge, no Intellectual Property is being used or

enforced by any Company in a manner that would reasonably be expected to result in the abandonment, cancellation or unenforceability of any Intellectual Property used in or necessary for the conduct of such Company’s business as it is currently conducted.

Section 4.14 PUHCA; Regulation as Utility.

(a) No Company is (i) subject to regulation as a “public-utility company,” a “holding company,” or a “subsidiary company” or “affiliate” of a “public-utility company,” or a “holding company” within the meaning of the Public Utility Holding Company Act of 1935, as amended, or (ii) currently regulated pursuant to any state law or regulation with respect to the rates charged for sales of electricity, but Erie and Carr Street are subject to state law or regulation with respect to the financial and organizational regulation of electric utilities.

(b) Each of Erie, Carr Street and OPNY GP II meets the requirements for, and has been determined by FERC to be, an “Exempt Wholesale Generator” within the meaning of the Public Utility Holding Company Act of 1935, as amended.

(c) Each of Erie, Carr Street and OPNY GP II has on file with FERC effective rate schedules in compliance with the Federal Power Act, as amended.

Section 4.15 Tangible Personal Property. Except as set forth on Schedule 4.15, the Companies own or have the right to use, or prior to the Closing will own or have the right to use, all of the material tangible personal property that Seller and its Affiliates own or have the right to use that is primarily used to operate the business of the Companies. Except as would not, in the aggregate, reasonably be expected to have a Material Adverse Effect, the Companies have valid title to all of the items of tangible personal property included in the Purchased Assets, free and clear of any and all Liens, other than Permitted Exceptions.

Section 4.16 Real Property.

(a) Seller has delivered or otherwise made available to the Buyer true, correct and complete copies of all existing title policies, title reports and surveys for the Facilities in the possession of Seller.

(b) To Seller’s Knowledge, other than Permitted Encumbrances and Company Liens, there are no material defects in or material encumbrances on title to the Purchased Assets. The consents, waivers and approvals listed on Schedule 7.01(c) are all of the consents, waivers and approvals that are necessary to release the Company Liens.

(c) Except as set forth on Schedule 4.16 there does not exist any actual or, to the Knowledge of the Seller, threatened or contemplated condemnation or eminent domain proceedings that affect any Facility or any part thereof, and neither the Seller nor the Companies have received any written notice of the intention of any federal or state governmental authority to take or use all or any part thereof.

Section 4.17 Good Operating Practices. Except as set forth on Schedule 4.17, to Seller’s Knowledge, (a) since September 20, 2002, the Facilities owned by OPNY GP II and (b) since February 19, 2002, the Facilities owned by Erie and Carr Street have been operated in

accordance with Good Operating Practices, except as would not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

Section 4.18 Corporate Records.

(a) Seller has delivered to Buyer true, correct and complete copies of the certificates of incorporation (each certified by the Secretary of State or other appropriate official of the applicable jurisdiction of organization) and bylaws (each certified by the secretary, assistant secretary or other appropriate officer) or comparable organizational documents of the Companies.

(b) In all material respects, since February 19, 2002, (i) the minute books of the Companies previously made available to Buyer contain true, correct and complete records of all meetings and accurately reflect all other action of the stockholders and board of directors (including committees thereof) (or comparable constituencies) of the Companies and (ii) the stock certificate books and stock transfer ledgers of the applicable Companies previously made available to Buyer are true, correct and complete.

Section 4.19 Sufficiency. Except as disclosed in Schedule 4.19, the Purchased Assets constitute all of the properties and assets used in or held for use in the business of the Companies and are sufficient to conduct such business from and after the Closing Date as it is currently being conducted by the Companies, other than as would not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

Section 4.20 Insurance. The Companies have insurance policies in full force and effect in all material respects in connection with their business and the Purchased Assets (including without limitation business interruption insurance; liability insurance with respect to claims for personal injury, death or property damage; and boiler and machinery insurance), with responsible and reputable insurance companies, in such amounts and with such deductibles as are customary for businesses of established reputation engaged in the same or similar businesses.

Section 4.21 Banks. Schedule 4.21 contains a complete and correct list of the names and locations of all banks in which any Company has accounts or safe deposit boxes and the names of all persons authorized to draw thereon or to have access thereto. Except as set forth on Schedule 4.21, no Person holds a power of attorney to act on behalf of any Company.

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Seller that:

Section 5.01 Organization and Qualification. Buyer is a corporation duly formed, validly existing and in good standing under the Laws of Ontario. Buyer is duly qualified or licensed to do business in each other jurisdiction where the actions required to be performed by it hereunder makes such qualification or licensing necessary, except in those jurisdictions where the failure to be so qualified or licensed would not reasonably be expected to result in a material adverse effect on Buyer’s ability to perform its obligations hereunder.

Section 5.02 Authority. Buyer has all requisite corporate power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery by Buyer of this Agreement and the performance by Buyer of its obligations hereunder have been duly and validly authorized by all necessary corporate action on behalf of Buyer. This Agreement has been duly and validly executed and delivered by Buyer and constitutes the legal, valid and binding obligation of Buyer enforceable against Buyer in accordance with its terms except as the same may be limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar Laws relating to or affecting the rights of creditors generally or by general equitable principles.

Section 5.03 No Conflicts; Consents and Approvals. The execution and delivery by Buyer of this Agreement, the performance by Buyer of its obligations hereunder and the consummation of the transactions contemplated hereby will not:

(a) conflict with or result in a violation or breach of any of the terms, conditions or provisions of its Charter Documents;

(b) be in violation of or result in a default (or give rise to any right of termination, cancellation or acceleration) under any material Contract to which Buyer is a party or by which any of its assets may be bound except for any such violations or defaults (or rights of termination, cancellation or acceleration) which would not, in the aggregate, reasonably be expected to result in a material adverse effect on Buyer’s ability to perform its obligations hereunder; or

(c) assuming all required filings, approvals, consents, authorizations and notices set forth in Schedule 5.03(c) (collectively, the “BUYER GOVERNMENTAL APPROVALS”) have been made, obtained or given, (i) conflict with or result in a violation or breach of any material term or provision of any Law or writ, judgment, order or decree applicable to Buyer or any of its assets or (ii) require the material consent or approval of any Governmental Authority under any applicable Law.

Section 5.04 Legal Proceedings. Buyer has not been served with written notice of any Claim, and to Buyer’s knowledge, none is threatened, against Buyer which seeks a writ, judgment, order or decree restraining, enjoining or otherwise prohibiting or making illegal any of the transactions contemplated by this Agreement.

Section 5.05 Compliance with Laws and Orders. Buyer is not in violation of or in default under any Law or order applicable to Buyer or its assets the effect of which, in the aggregate, would reasonably be expected to result in a material adverse effect on Buyer’s ability to perform its obligations hereunder.

Section 5.06 Brokers. Buyer does not have any liability or obligation to pay fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement for which Seller could become liable or obligated.

Section 5.07 Acquisition as Investment. Buyer is acquiring the Company Interests for its own account as an investment without the present intent to sell, transfer or otherwise distribute the same to any other Person. Buyer has made, independently and without reliance on

Seller (except to the extent that Buyer has relied on the representation and warranties of Seller in this Agreement), its own analysis of the Company Interests, the Companies and the Purchased Assets for the purpose of acquiring the Company Interests, and Buyer has had reasonable and sufficient access to documents, other information and materials as it considers appropriate to make its evaluations. Buyer acknowledges that the Company Interests are not registered pursuant to the Securities Act of 1933 (the “1933 ACT”) and that none of the Company Interests may be transferred, except pursuant to an applicable exception under the 1933 Act. Buyer is an “accredited investor” as defined under Rule 501 promulgated under the 1933 Act.

Section 5.08 Financial Resources. Buyer has cash or credit available, and will have cash available at the Closing, to enable it to purchase the Company Interests on the terms hereof.

Section 5.09 No Knowledge of Seller’s Breach. Buyer does not have Knowledge of any breach by Seller of any of the representations and warranties herein.

Section 5.10 Opportunity for Independent Investigation. Prior to its execution of this Agreement, Buyer has conducted to its satisfaction an independent investigation and verification of the current condition and affairs of the Companies, the Purchased Assets and the Facilities; provided, that, such independent investigation and verification shall not affect the express representations and warranties of Seller contained in this Agreement.

ARTICLE VI
COVENANTS

The Parties hereby covenant and agree as follows:

Section 6.01 Access of Buyer.

(a) During the Interim Period, Seller will provide Buyer and its Representatives with reasonable access during normal business hours to the Facilities and the officers and management employees of Seller and its Affiliates (including the Companies) in such a manner so as not to unreasonably interfere with the business or operations of Seller or its Affiliates (including the Companies); provided, however, that Seller shall have the right to (i) have a Representative present for any communication with employees or officers of Seller or its Affiliates and (ii) impose reasonable restrictions and requirements for safety or operational purposes. Buyer shall be entitled, at its sole cost and expense, to visit the Property. Notwithstanding the foregoing, Seller shall not be required to provide any information or allow any inspection which it reasonably believes it may not provide to Buyer or allow by reason of applicable Law, which constitutes or allows access to information protected by attorney/client privilege, or which Seller or its Affiliates is required to keep confidential or prevent access to by reason of contract, agreement or understanding with third parties if Seller has used reasonable best efforts to obtain the consent of such third party to such inspection or disclosure. Following the Closing, Seller shall be entitled to retain copies of all books and records relating to the ownership and/or operation of the Companies or their respective businesses.

(b) Buyer agrees to indemnify, defend and hold harmless Seller, the Companies, the Non-Company Affiliates and their Representatives from and against any and all Losses incurred by Seller, the Companies, the Non-Company Affiliates, their Representatives or any other Person

arising out of the access rights under this Section 6.01, including any Claims by any of Buyer’s Representatives for any injuries or Losses while present on the Property unless caused by the gross negligence or willful misconduct of Seller or the Companies.

Section 6.02 Conduct of Business Pending the Closing.

(a) Except as otherwise contemplated by this Agreement or set forth in Schedule 6.02, during the Interim Period, Seller will cause the Companies to:

(i) operate in the ordinary course of business consistent with past practices in all material respects;

(ii) use their commercially reasonable efforts to (A) preserve its present business operations, organization (including, without limitation, management) and goodwill of the Companies and (B) preserve its present relationship with Persons having business dealings with the Companies (including, without limitation, customers and suppliers);

(iii) determine the cost of renewing the Pollution Legal Liability Policy as it applies to Erie for a term of one year and, at Buyer’s direction, and at the Companies’ expense, so renew such policy, with Seller named as an additional insured; and

(iv) file, or ensure that Carr Street is in a position to file, Carr Street’s market-based rate triennial report with FERC by October 1, 2004.

(b) Except as otherwise contemplated by this Agreement or set forth in Schedule 6.02 or as consented to by Buyer, which consent shall not be unreasonably withheld, conditioned or delayed, during the Interim Period, Seller will not, and will cause the Companies not to:

(i) other than the Company Liens referenced in Section 6.08, permit or allow any Lien securing indebtedness for borrowed money against any of the Purchased Assets ;

(ii) grant any waiver of any material term under, or give any material consent with respect to, any Material Contract ;

(iii) except in respect of Capital Expenditures required by Section 6.02(a), enter into, terminate or amend any Contract involving total consideration throughout its term in excess of $1,000,000 (other than Contracts entered into in the ordinary course of business consistent with past practices which will be fully performed prior to the Closing);

(iv) incur Capital Expenditures in excess of the applicable amount shown on Schedule 6.02(b)(iv),

(v) [intentionally omitted];

(vi) other than trade payables incurred in the ordinary course of business consistent with past practices or accounts payable pursuant to the Material Contracts or the Terminated Contracts, incur, create, assume or otherwise become liable for indebtedness or issue any debt securities or assume or guarantee the obligations of any other Person;

(vii) fail to maintain its partnership or corporate existence or consolidate with any other Person or acquire all or substantially all of the assets of any other Person;

(viii) issue or sell any partnership interests or securities of any Company, or grant options, warrants, calls or other rights to purchase or otherwise acquire shares of the capital stock or other securities of any Company;

(ix) liquidate, dissolve, recapitalize, reorganize or otherwise wind up its business or operations;

(x) purchase any securities of any Person, except for short-term investments or cash equivalents made in the ordinary course of business consistent with past practices;

(xi) cancel any debts or waive any claims or rights having a value in excess of $500,000;

(xii) make or revoke any material election with respect to Taxes of or relating to any Company or the Purchased Assets or settle or compromise any material claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy with respect to Taxes of or relating to any Company or the Purchased Assets that could reasonably be expected to have a material effect on the Companies or the Purchased Assets after the Closing;

(xiii) amend or modify its Charter Documents;

(xiv) except for transfers of cash with respect to which corresponding Intercompany Receivables or Intercompany Payables have been created or correspondingly adjusted or transfers of cash in exchange for goods and services pursuant to a Material Contract listed on Schedule 4.08(x) with Seller or a Non-Company Affiliate, make any transfers of cash to Seller or a Non-Company Affiliate; provided, further, that the Companies shall not directly pay any principal of or interest or fees on indebtedness owed by Seller or any Non-Company Affiliate without the creation of an equivalent Intercompany Receivable or a corresponding adjustment of a corresponding Intercompany Payable;

(xv) record accounting entries to Intercompany Payables or Intercompany Receivables with respect to which the offsetting entry is recorded to shareholder equity or partner’s capital;

(xvi) subject to Section 2.02(c), declare, set aside, make or pay any dividend or other distribution in respect of the capital stock or partnership interests of any

Company or repurchase, redeem or otherwise acquire any outstanding shares of the capital stock or other securities of, or other ownership interests in, any Company;

(xvii) effect any recapitalization, reclassification, stock split or like change in the capitalization of any Company;

(xviii) (i) hire or promote any employee, (ii) except with respect to increases in compensation that, but for the timing of the grant thereof, are in the ordinary course of business, grant any increase in the compensation of any employee, (iii) establish any new compensation or benefit plan or arrangement, (iv) amend or modify any Company Plan or Seller Plan insofar as any such amendment or modification to a Seller Plan relates solely to employees of the Companies, or (v) enter into any employment, consulting, termination, retention, change of control or severance agreement; provided, that nothing above shall restrict normal periodic increases, promotions, hiring or changes effected in the ordinary course of business consistent with past practices, changes required pursuant to applicable Laws, or changes required pursuant to Contracts in effect as of the Execution Date (including the Collective Bargaining Contract);

(xix) except in the ordinary course of business, acquire any material properties or assets or sell, assign, license, transfer, convey, lease or otherwise dispose of any of the material properties or assets of the Companies;

(xx) enter into or agree to enter into any merger or consolidation with, any corporation or other entity, and not engage in any new business or invest in, make a loan, advance or capital contribution to, or otherwise acquire the securities of any other Person;

(xxi) enter into, modify or terminate any labor or collective bargaining agreement of the Company or any of its Subsidiaries;

(xxii) make any material change in its accounting or Tax reporting principles, methods or policies, except as otherwise required by GAAP;

(xxiii) enter into any Contract that restrains, restricts, limits or impedes the ability of any Company to compete with or conduct any business or line of business in any geographic area;

(xxiv) except in the ordinary course of business, terminate, amend, restate, supplement or waive any rights under any (A) Material Contract, Real Property Lease, Personal Property Lease or Intellectual Property license or (B) Company Permit;

(xxv) enter into a Contract with any Affiliate;

(xxvi) permit any Company to enter into any material Contract or to enter into, modify or renew any material Contract with respect to the sale of energy which could bind the Companies after September 30, 2003; or

(xxvii) agree or commit to do any of the foregoing.

Notwithstanding the foregoing, Seller may permit the Companies to take commercially reasonable actions with respect to emergency situations and to comply with applicable Law so long as Seller shall promptly inform Buyer of any such emergency actions taken outside the ordinary course of business consistent with past practices.

Section 6.03 Resignation of Members, Managers, Officers and Directors. At Closing, Seller shall cause the resignation of all officers and directors or similar persons nominated or appointed by Seller or its Affiliates to any board or operating, management or other committee established under each Company’s Charter Documents.

Section 6.04 Use of Certain Names. Within 30 days following the Closing, Buyer shall cause the Companies to cease using the words “Orion” and “Reliant” and any word or expression similar thereto or constituting an abbreviation or extension thereof (the “SELLER MARKS”), including eliminating the Seller Marks from each Company’s property and Purchased Assets and disposing of any unused stationery and literature of the Companies bearing the Seller Marks, and thereafter, Buyer shall not, and shall cause the Companies and their Affiliates not to, use the Seller Marks or any logos, trademarks, trade names, patents or other Intellectual Property rights belonging to Seller or any Non-Company Affiliate, and Buyer acknowledges that it, its Affiliates and the Companies have no rights whatsoever to use such Intellectual Property; provided, however, that any Company may continue to use any Internet domain names owned by a Company that contain a Seller Mark for a period of up to twelve (12) months following the Closing Date for purposes of redirecting Internet traffic to a web site for the business of such Company. Without limiting the foregoing, within 30 days after the Closing Date, Buyer shall cause each applicable Company to change its name to a name that does not contain any of the Seller Marks.

Section 6.05 Support Obligations.

(a) Buyer recognizes that Seller and the Non-Company Affiliates have provided credit support to the Companies with respect to the Facilities pursuant to certain credit support obligations set forth on Schedule 6.05(a) (the “SUPPORT OBLIGATIONS”). Prior to the Closing, Buyer shall use commercially reasonable efforts to effect the full and unconditional release of Seller and the Non-Company Affiliates from all Support Obligations, including by:

(i) furnishing letters of credit containing terms and conditions that are substantially identical to the terms and conditions of existing letters of credit and from lending institutions that have a Credit Rating commensurate with or better than that of lending institutions for existing letters of credit;

(ii) instituting escrow arrangements with terms equal to or more favorable to the counterparty than the terms of existing escrow arrangements;

(iii) posting surety or performance bonds issued by a Person having a net worth or a Credit Rating at least equal to those of the issuer of existing surety or performance bonds, and which replacement surety or performance bond contains terms and conditions that are substantially identical to the terms and conditions of existing surety or performance bonds;

(iv) replacing any other security agreement or arrangement on substantially identical terms and conditions to the existing security agreement or arrangement; and

(v) providing substitute guaranties from an Investment Grade entity to the counterparty with terms substantially identical to the terms of existing guaranties.

(b) Buyer shall use commercially reasonable efforts to cause the beneficiary or beneficiaries of the Support Obligations to terminate and redeliver to Seller prior to the Closing each original copy of each original guaranty, letter of credit or other instrument constituting or evidencing such Support Obligations and, as to any Support Obligations terminated after the Closing, promptly to redeliver such originals to Seller, and in each case, to take such other actions as may be required to terminate such Support Obligations.

(c) If Buyer is not successful in obtaining the complete and unconditional release of Seller and the Non-Company Affiliates from the Support Obligations prior to the Closing, then at Seller’s option, Seller shall have the right to waive the performance by Buyer of Section 6.05(a) and Section 6.05(b), and if Seller does so waive such sections, Buyer shall, at Seller’s option, indemnify, defend and hold harmless Seller and the Non-Company Affiliates from and against any and all Losses incurred by any such indemnified Persons in connection with the Support Obligations or shall provide other credit support to Seller in form and substance satisfactory to Seller. Buyer shall, for so long as any Support Obligation remains outstanding, not, and shall cause the Companies not to, effect any amendments or modifications or any other changes to the Contracts to which any of such Support Obligations relate, or to otherwise take any action that would effect any change to such Contracts, guaranties or letters of credit, in either case that adversely affects the rights of Seller or the Non-Company Affiliates thereunder, without Seller’s prior written consent. Notwithstanding anything in this Agreement to the contrary, during the Interim Period, Buyer shall have the right to contact and have discussions with each beneficiary of a Support Obligation in order to satisfy its obligations under this Section 6.05; provided, however, that Buyer shall give Seller prior notice before making any such contact, Seller shall have the right to have one of its Representatives present on the telephone line or in person, as applicable, during any such contact or discussion, Buyer shall only contact and hold discussions with such beneficiaries through Representatives of Buyer previously approved by Seller and Buyer shall cause such Representatives to comply with all procedures and protocols regarding such contacts and discussions that may be established by Seller.

Section 6.06 Excluded Assets. Notwithstanding anything in this Agreement to the contrary, Buyer acknowledges and agrees that Seller will, prior to the Closing Date, cause the Companies to distribute, transfer or assign to Seller and the Non-Company Affiliates those assets described on Schedule 6.06 (the “EXCLUDED ASSETS”).

Section 6.07 Termination of Certain Services, Contracts, Receivables and Payables. Notwithstanding anything in this Agreement to the contrary, during the Interim Period, (a) Seller shall take such actions as may be necessary to terminate or sever as to the Companies (with appropriate mutual releases) upon the Closing any services jointly shared or used by any of the Companies and Seller or a Non-Company Affiliate, joint Tax services, joint legal services and joint banking services (to include the severance of any centralized clearance accounts) and each Contract listed on Schedule 6.07 (the “TERMINATED CONTRACTS”), (b) the Companies shall be

entitled to transfer cash to Seller and the Non-Company Affiliates if corresponding Intercompany Receivables or Intercompany Payables have been created or correspondingly adjusted; provided, that no dividends in respect of the equity securities of the Companies shall be made in cash, and (c) Seller shall be entitled to take such actions as may be necessary to settle (through offsets and/or cash transactions) immediately prior to the Closing such Intercompany Payables and Intercompany Receivables as Seller, in its sole discretion, elects to settle.

Section 6.08 Payment of Indebtedness. Notwithstanding anything in this Agreement to the contrary, prior to or at the Closing, Seller shall use its commercially reasonable efforts to cause any and all indebtedness for borrowed money of the Companies to be paid in full and any and all Liens securing any such indebtedness or other indebtedness for borrowed money secured by liens on the Purchased Assets and any and all related guaranties provided by the Companies (collectively, the “COMPANY LIENS”) to be released and any and all agreements relating to the Company Liens or the indebtedness secured thereby to be terminated as to the Companies, such that Buyer shall take title to the Companies and the Purchased Assets free of any such indebtedness or any Company Liens.

Section 6.09 Tax Matters.

(a) Tax Returns.

(i) Consolidated Tax Returns. Seller shall cause to be included in the consolidated federal income Tax Returns (and similar Tax Returns of any state, local or foreign jurisdiction that permits consolidated, combined or unitary income Tax Returns, if any) of the affiliated group of corporations that includes Seller and OPNY GP II, OPOS Coldwater and OPOS Carr Street, as applicable (the “SELLER GROUP”), all items of income, gain, loss, deduction and credit or other items (“TAX ITEMS”) of OPNY GP II, OPOS Coldwater and OPOS Carr Street, as applicable, through the Closing Date; shall cause such Tax Returns to be timely filed with the appropriate Taxing Authorities; and shall be responsible for the timely payment of all Taxes due with respect to the periods covered by such Tax Returns. All transactions occurring on the Closing Date but after the Closing shall have occurred shall be reported on Buyer’s consolidated United States federal income Tax Return to the extent permitted by Treasury Regulation Section 1.1502-76(b)(1)(ii)(B) and shall be similarly reported on other Tax Returns of Buyer or its Affiliates.

(ii) Partnership Tax Returns. Seller shall prepare or cause to be prepared all federal Tax Returns (Forms 1065) and all similar state, local or foreign Tax Returns to be filed by or with respect to Erie and Carr Street to report to the members of Erie and Carr Street partnership Tax Items for Tax periods ending on or before the Closing Date.

(iii) Other Tax Returns. Seller shall cause to be timely filed with the appropriate Taxing Authorities all other income or franchise Tax Returns required to be filed by or with respect to any Company or the Purchased Assets for taxable periods ending on or prior to the Closing Date that are not specified in Section 6.09(a)(i) or 6.09(a)(ii), and shall be responsible for the timely payment of all Taxes due with respect to the periods covered by such Tax Returns.

(iv) Section 754 Elections. Seller shall cooperate in making an election under Section 754 of the Code to adjust the basis of the assets of Erie and Carr Street.

(v) Buyer Tax Returns. Following the Closing, Buyer shall cause to be timely filed all Tax Returns required to be filed by the Companies after the Closing Date, other than Tax Returns described in Section 6.09(a)(i), (ii) and (iii) for which Seller is responsible, and shall pay or cause to be paid all Taxes shown due thereon.

(b) Cooperation. Buyer and Seller shall cooperate fully, and shall cause their respective Affiliates, including the Companies, to cooperate fully, as and to the extent reasonably requested by either Party, in connection with the filing of Tax Returns pursuant to this Section 6.09 and any audit, litigation or other proceeding with respect to Taxes of or relating to any Company or the Purchased Assets (a “TAX PROCEEDING”). Such cooperation shall include the retention and (upon a Party’s request) the provision of records and information which are reasonably relevant to any such Tax Return or Tax Proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.

(c) Transfer Taxes. Buyer shall file all Tax Returns required to be filed to report Transfer Taxes imposed on or with respect to the transactions contemplated by this Agreement, shall be solely liable for and shall pay all such Transfer Taxes, and shall indemnify, defend and hold harmless Seller and the Non-Company Affiliates from and against any and all liability for the payment of such Transfer Taxes and the filing of such Tax Returns.

(d) Disputes. Any dispute as to any matter covered by this Section 6.09 shall be resolved by an independent accounting firm mutually acceptable to Seller and Buyer. The fees and expenses of such accounting firm shall be borne equally by Seller, on the one hand, and Buyer on the other.

(e) Tax Refunds. Seller shall be entitled to any refunds or credits for any Taxes relating to any Company or the Purchased Assets for periods for which Seller is responsible pursuant to Section 6.09(a)(a)(i), (a)(ii) and (a)(iii) or for which Seller is required to provide indemnification pursuant to Section 9.02(c), and Buyer shall be entitled to any refunds or credits for any Taxes relating to any Company or the Purchased Assets for which Buyer is responsible pursuant to Section 6.09(a)(v) or Section 6.09(c).

(f) Tax Sharing. Any Tax allocation, indemnity, or similar agreement or arrangement between Seller and its Affiliates, on the one hand, and any Company, on the other hand, shall be terminated prior to the Closing Date and will have no further effect for any taxable year (whether the current year, a future year or a past year).

(g) Tax Amendment. If either the OPNY Corporate Reorganization or the OPOS Corporate Reorganization does not occur prior to the Closing, the Parties agree to enter into an amendment to this Agreement , reasonably acceptable to both Parties, that will take into account (i) the intent of the Parties to effect transactions that are equivalent to sales and purchases of the Purchased Assets for federal, state and local income Tax purposes, and (ii) the fact that certain

transactions will be carried out as sales of corporate entities rather than as sales of interests in limited liability companies.

Section 6.10 Certain Restrictions. During the Interim Period, Buyer agrees that except as may be agreed in writing by Seller or as may be expressly permitted pursuant to this Agreement, it shall not, and shall not permit any of its subsidiaries or Affiliates to, acquire, develop or construct any electric generation facility, or otherwise obtain control over any electric generation facility, in each case located in the states of New York, New Jersey, Pennsylvania or Maryland, or take any action with any Governmental Authority relating to the foregoing, or agree, in writing or otherwise, to do any of the foregoing, in each case which could reasonably be expected to materially delay the consummation of the transactions contemplated hereby or result in the failure to satisfy any condition to consummation of the transactions contemplated hereby.

Section 6.11 No Solicitation. During the Interim Period, Seller shall not and shall cause its Affiliates not to, and Seller shall direct and use its reasonable best efforts to cause its and its Affiliates’ officers, directors and employees and any attorney, accountant, investment banker, financial advisor or other agent retained by it or any of its Affiliates not to, directly or indirectly, initiate, solicit or negotiate or provide nonpublic or confidential information to facilitate, any proposal or offer with respect to any acquisition, reorganization, exchange, consolidation or similar transaction involving any Company, or any purchase of the voting securities of any Company, or any material assets or businesses of the Companies, in a single transaction or a series of related transactions, or any combination of the foregoing.

Section 6.12 Confidentiality. All nonpublic information provided to, or obtained by, Buyer or its Representatives in connection with the transactions contemplated hereby shall be “Confidential Information” for purposes of the Confidentiality Agreement dated February 19, 2004 between Buyer and Seller (the “CONFIDENTIALITY AGREEMENT”), the terms of which shall continue in force until the Closing; provided, however, that Buyer may disclose such information as may be necessary in connection with seeking the Buyer Governmental Approvals.

Section 6.13 Employee and Benefit Matters.

(a) On or before the Closing, Seller shall take all actions necessary, if any, to cause (i) the Companies to cease to be adopting or participating employers under all Seller Plans and (ii) Seller and the Non-Company Affiliates to cease to be sponsors or adopting or participating employers under all Company Plans (and, if Seller or a Non-Company Affiliate is a sponsor of a Company Plan, Seller shall cause OPOS Coldwater to assume such sponsorship). Except as otherwise specifically provided in this Section 6.13, from and after the Closing, (i) the Companies shall not have any responsibility or liability with respect to the Seller Plans and (ii) Seller and the Non-Company Affiliates shall not have any responsibility or liability with respect to the Company Plans; provided, however, that, with respect to the Retirement Plan, Seller shall timely file or cause the appropriate Non-Company Affiliate to timely file (to the extent the following forms have not been filed prior to the Closing) (A) the annual report on Form 5500 for 2003 with the Employee Benefits Security Administration and (B) PBGC Form 1 or PBGC Form 1-EZ (as applicable) for 2003 with the PBGC. Buyer shall cooperate, and Buyer shall cause its Affiliates to cooperate, with Seller with respect to the filings described in the preceding sentence,

and Buyer shall provide to Seller such information as Seller may reasonably request in respect of such filings.

(b) Buyer acknowledges and agrees that (i) certain employees of the Companies are represented by Local Union 97 of the International Brotherhood of Electrical Workers, AFL-CIO (the “UNION”) pursuant to the terms of the Collective Bargaining Contract, (ii) OPOS Coldwater will continue to recognize the Union as the exclusive bargaining representative of the employees whose employment is covered by the Collective Bargaining Contract, (iii) the Collective Bargaining Contract will continue to be effective until it expires by its own terms or is renegotiated, and (iv) OPOS Coldwater will continue to be bound by the terms, conditions and provisions of the Collective Bargaining Contract. Buyer further acknowledges that, subject to the terms of the Collective Bargaining Contract, the employees covered by the Collective Bargaining Contract will continue to be employed by the Companies following the Closing.

(c) Within 45 days after the Execution Date, but effective as of the Closing Date, Buyer or an Affiliate of Buyer shall offer employment (which shall be contingent on the occurrence of the Closing) to each individual listed on Schedule 6.13(c) (each, an “AFFILIATE EMPLOYEE”). Each such offer of employment shall be consistent with the provisions of this Section 6.13(c) and shall remain open for a period of at least 10 days. For a period of one year beginning on the Closing Date and subject to the remaining paragraphs of this Section 6.13 and an individual’s continued employment with a Company or an Affiliate of a Company, Buyer shall cause each Continuing Employee to be provided with (i) compensation (including annual incentive compensation) on a basis substantially similar to that provided by Seller and its Affiliates to such employee immediately prior to the Closing and (ii) benefits that are substantially similar to those provided to such employee under the Company Plans and Seller Plans, as applicable (and worker’s compensation benefits that are substantially similar to those provided to such employee), by Seller and its Affiliates (including the Companies) immediately prior to the Closing (other than the Reliant Resources, Inc. 2002 Long-Term Incentive Plan, Reliant Resources, Inc. 2002 Stock Plan and Reliant Resources, Inc. Employee Stock Purchase Plan); provided, however, that with respect to Continuing Employees whose employment is covered by the Collective Bargaining Contract, Buyer shall cause the compensation and benefits provided to such employees from and after the Closing Date also to be consistent with the terms of the Collective Bargaining Contract. Notwithstanding anything to the contrary in this Section 6.13, subject to the terms of the Collective Bargaining Contract, each Company or an Affiliate of a Company shall have the right to dismiss any or all of the Continuing Employees at any time on or after the Closing Date, with or without cause, and, subject to this Section 6.13 and the terms of the Collective Bargaining Contract, to change the terms and conditions of their employment (including compensation and employee benefits provided to them).

(d) Buyer shall cause each Continuing Employee and his or her eligible dependents (including all such Continuing Employee’s dependents covered immediately prior to the Closing Date by a Company Plan or a Seller Plan that is a group health plan) to be covered under a group health plan maintained by Buyer or an Affiliate of Buyer that (i) provides medical and dental benefits to the Continuing Employee and such eligible dependents effective immediately upon the Closing Date and (ii) credits such Continuing Employee, for the year during which such coverage under such group health plan begins, with any deductibles and co-payments already incurred during such year under a Company Plan or a Seller Plan that is a group health plan.

(e) Buyer shall cause the employee benefit plans and programs maintained after the Closing by Buyer, the Companies and the Affiliates of Buyer to recognize each Continuing Employee’s years of service prior to the Closing Date with Seller, the Companies and their Affiliates (including service with any other employer that was recognized by Seller, the Companies or their Affiliates) for purposes of eligibility, vesting, level of benefits, and, solely for purposes of the Retirement Plan, benefit accrual to the same extent such service was recognized under the corresponding Company Plan or Seller Plan and provided that such recognition does not result in any duplication of benefits. Buyer shall cause each employee welfare benefit plan or program sponsored by Buyer or one of its Affiliates that a Continuing Employee may be eligible to participate in on or after the Closing Date to waive any preexisting condition exclusion with respect to participation and coverage requirements applicable to such Continuing Employee to the extent such condition was waived under the corresponding Company Plan or Seller Plan. Seller and its Commonly Controlled Entities shall be exclusively responsible for complying with COBRA with respect to employees of the Companies and their eligible dependents by reason of such employee’s termination of employment prior to the Closing Date, and Buyer, the Companies and their Affiliates shall not have any obligation or liability to provide COBRA on account of any such termination of employment.

(f) Buyer expressly agrees that it assumes all obligations to provide any required notice under the Worker Adjustment and Retraining Notification Act, as amended, or other applicable Laws, and to pay all severance payments, damages for wrongful dismissal and related costs, with respect to the termination of any employee of the Companies that occurs on or after the Closing Date.

(g) Effective as of the Closing Date, Seller shall take all necessary action, if any, to cause the Continuing Employees to be fully vested in their account balances under the Reliant Resources, Inc. Union Savings Plan and the Orion Power Holdings, Inc. 401(k) Savings Plan (collectively, the “SELLER SAVINGS PLANS”) (to the extent not then fully vested) on the Closing Date. As soon as practicable following the Closing Date, Seller shall cause to be transferred from the trustee of each of the Seller Savings Plans to the trustee of a defined contribution plan maintained by Buyer (the “BUYER SAVINGS PLAN”) an amount in cash equal to the aggregate account balances of the Company Participants under each respective Seller Savings Plan determined as of the transfer date; provided, however, that (i) to the extent any Company Participant owes any amount to a Seller Savings Plan pursuant to the terms of a loan from such plan to such Company Participant, an in-kind transfer of such loan shall be made in lieu of the transfer of cash, and (ii) to the extent any Company Participant’s account is invested in mutual fund shares that can be transferred to the Buyer Savings Plan, an in-kind transfer of such shares shall be made in lieu of the transfer of cash. From and after the date of such transfer, Buyer shall cause the Buyer Savings Plan to assume the obligations of the Seller Savings Plans with respect to benefits accrued by the Company Participants under the Seller Savings Plans, and the Seller Savings Plans shall cease to be responsible therefor. The Companies shall be responsible for, and shall contribute to each Seller Savings Plan as soon as practicable after the Closing Date and prior to the transfer described in this paragraph, all unpaid (A) pre-tax and after-tax contributions to such Seller Savings Plan attributable to withholdings from the compensation of employees of the Companies with respect to periods ending on or before the Closing Date and (B) employer matching contributions due with respect to pre-tax and after-tax contributions to such Seller Savings Plan by employees of the Companies for periods ending on or before the Closing Date.

For purposes of determining the amount of such employer matching contributions under the Seller Savings Plans, the Closing Date shall be deemed to be the last day of a payroll period. Buyer and Seller shall cooperate in making all appropriate arrangements and filings, if any, in connection with the transfer described in this paragraph. Further, Buyer and Seller shall cooperate and take such actions as are necessary to permit the continuation of loan repayments by Continuing Employees to the Seller Savings Plans by payroll deductions during the period beginning on the Closing Date and ending on the date of the transfer described in this paragraph. Seller represents, covenants and agrees with respect to each of the Seller Savings Plans, and Buyer represents, covenants and agrees with respect to the Buyer Savings Plan, that, as of the date of the transfer described in this paragraph, such plan will satisfy the requirements of Sections 401(a),(k), and (m) of the Code and will have received, or a pending application has been timely filed for, a favorable determination letter from the IRS regarding such qualified status and covering amendments required to have been adopted prior to the expiration of the GUST remedial amendment period.

(h) Claims of Continuing Employees and their eligible beneficiaries and dependents for medical, dental, prescription drug, life insurance, and/or other welfare benefits (“WELFARE BENEFITS”) (other than disability benefits) that are incurred before the Closing Date shall be the sole responsibility of the Seller Plans or the Company Plans, as applicable. Claims of Continuing Employees and their eligible beneficiaries and dependents for Welfare Benefits (other than disability benefits) that are incurred on or after the Closing Date shall be the sole responsibility of Buyer and the Companies. For purposes of the preceding provisions of this paragraph, a medical/dental claim shall be considered incurred on the date when the medical/dental services are rendered or medical/dental supplies are provided, and not when the condition arose or when the course of treatment began. Claims of individuals receiving long-term disability benefits under a Seller Plan as of the Closing Date shall be the sole responsibility of the Seller Plan. Except as provided in the preceding sentence, claims of Continuing Employees and their eligible beneficiaries and dependents for short-term or long-term disability benefits from and after the Closing Date shall be the sole responsibility of Buyer and the Companies (without regard to whether the circumstances giving rise to such claim occurred before, on or after the Closing Date).

(i) With respect to all employees who terminated from employment with a Company prior to the Closing Date and who have been, or are eligible to be, provided with post-retirement medical, dental, disability, life insurance and/or other welfare benefit coverage as of the Closing Date under a Seller Plan or Company Plan, the Companies shall assume and/or retain any and all liability with respect to the provision of such coverages to such terminated employees and their eligible dependents and beneficiaries on and after the Closing Date. In addition, the Companies shall extend post-retirement medical, dental, disability, life insurance and/or other welfare benefit coverages to all Continuing Employees (and their eligible dependents and beneficiaries) who are eligible for such coverages and subject to such terms and conditions as set forth in the Collective Bargaining Contract, Company Plan or plan maintained by Buyer or an Affiliate of Buyer, as applicable. Neither Seller nor any of the Non-Company Affiliates shall have any liability on or after the Closing Date with respect to the provision of post-retirement medical, dental, disability, life insurance and/or other welfare benefit coverages for those persons described in the preceding sentences of this paragraph.

(j) Except to the extent required by applicable Law, Seller shall not pay Continuing Employees (other than Affiliate Employees who are Continuing Employees, who will be paid by Seller their accrued and unused vacation as of the Closing Date) their accrued and unused vacation, and the Company, Buyer or an Affiliate of Buyer, as applicable, shall provide, without duplication of benefits, all such Continuing Employees with vacation time rather than cash in lieu of vacation time for all accrued and unused vacation through the Closing Date.

(k) As soon as practicable following the Closing Date, Seller shall cause to be transferred from the trustee of the master trust that holds the assets of the Retirement Plan as of the Closing Date to the trustee of a trust established or maintained by Buyer or a Company to hold the assets of the Retirement Plan after the Closing Date an amount of cash equal to the Retirement Plan’s share of the assets of the master trust as determined as of the transfer date by the Reliant Energy, Inc. Benefits Committee (the “BENEFITS COMMITTEE”) (which determination shall be based on the books and records maintained by the trustee of the master trust). Buyer and Seller shall cooperate in making all appropriate arrangements and filings, if any, in connection with the transfer described in this paragraph. In addition, (i) on or before the Closing Date, Seller shall cause the Benefits Committee to cease to be the plan administrator and to otherwise administer any aspect of the Retirement Plan as of the Closing Date, and (ii) on the Closing Date, Buyer shall cause OPOS Coldwater to appoint a new plan administrator for the Retirement Plan effective as of such date. Buyer shall cause the Retirement Plan to be maintained in accordance with its current terms for the benefit of Continuing Employees whose employment is not covered by the Collective Bargaining Contract until at least July 29, 2006; provided, however, that if changes in the Laws require any such terms to be modified, then Buyer may change such terms to the extent necessary to comply with such Laws. Such Continuing Employees shall be given credit under the Retirement Plan for all service with and compensation earned through the Closing Date from Seller, the Companies and their Affiliates (including service and compensation with any other employer that was recognized by Seller, the Companies or their Affiliates) for purposes of determining eligibility for benefits, the amount of any benefits or benefit accruals, vesting, and service related levels of benefits under the Retirement Plan.

Section 6.14 Public Announcements. Seller and Buyer will consult with each other before issuing, and provide each other a reasonable opportunity to review and make reasonable comment upon, any press release or making any public statement with respect to this Agreement and the transactions contemplated hereby and, except as may be required by applicable Law or any listing agreement with the NYSE, will not issue any such press release or make any such public statement prior to such consultation; provided, however, that each of the Parties may issue a press release or make any public statement in response to specific questions by the press, analysts, investors or those attending industry conferences or financial analyst conference calls, so long as any such statements are not inconsistent with or provide more information than is contained in previous press releases, public disclosures or public statements made by the other Party, as the case may be; provided further, that each Party may make disclosures to Persons bound by a confidentiality obligation to the disclosing Party that covers such disclosed information.

Section 6.15 Expenses and Fees. Except as expressly provided otherwise herein, all costs and expenses incurred in connection with this Agreement and the transactions

contemplated hereby shall be paid by the Party incurring such expenses, it being understood that in no event shall the Companies bear any of such expenses.

Section 6.16 Agreement to Cooperate.

(a) Subject to the terms and conditions of this Agreement and applicable Law, each Party shall use its reasonable best efforts to take, or cause to be taken, all action and do, or cause to be done, all things necessary, proper or advisable to obtain all necessary or appropriate waivers, consents, approvals or authorizations of Governmental Authorities required (i) in order to consummate the transactions contemplated by this Agreement (and, in such case, to proceed with the consummation of the transactions contemplated by this Agreement as expeditiously as possible) and (ii) in order to implement the matters set forth in Schedule 6.02, including through all possible appeals.

(b) In addition to and without limitation of the foregoing, each of Buyer and Seller undertakes and agrees to (i) file (and each Party agrees to cause any Person that may be deemed to be the ultimate parent entity or otherwise to control such Party to file, if such filing is required by Law) as soon as practicable, and in any event prior to 15 Business Days after the Execution Date, a Notification and Report Form under the HSR Act with the United States Federal Trade Commission and the Antitrust Division of the United States Department of Justice, (ii) file as soon as practicable any form or report required by FERC, (iii) file as soon as practicable any form or report required by any other Governmental Authority relating to antitrust, competition, trade or energy regulation matters, and (iv) take any act and make any undertaking to receive any clearance or approval required by any Governmental Authority or applicable Law, in each case, with respect to the transactions contemplated by this Agreement. Each of Buyer and Seller shall (and shall cause any such parent entity to) (A) respond as promptly as practicable to any inquiries or requests received from any Governmental Authority for additional information or documentation, and (B) not extend any waiting period under the HSR Act or enter into any agreement with any Governmental Authority not to consummate the transactions contemplated by this Agreement, except with the prior consent of the other Party (which shall not be unreasonably withheld, delayed or conditioned). Each Party shall consult and cooperate in the regulatory review process and, to the extent practical, (I) promptly notify the other Party of any written communication to that Party or its Affiliates from any Governmental Authority and, subject to applicable Law, permit the other Party or their counsel to review in advance any proposed written communication to any of the foregoing; (II) not agree to participate, or to permit its Affiliates to participate, in any substantive meeting or discussion with any Governmental Authority in respect of any filings, investigation or inquiry concerning this Agreement or the transactions contemplated hereby unless it consults with the other Party in advance and, to the extent permitted by such Governmental Authority, gives the other Party the opportunity to attend and participate thereat; and (III) subject to applicable Law, furnish the other Party with copies of all correspondence, filings, and communications (and memoranda setting forth the substance thereof) between them and their Affiliates and their respective Representatives on the one hand, and any Governmental Authority or members of their respective staffs on the other hand, with respect to this Agreement and the transactions contemplated hereby.

(c) In addition to and without limiting the foregoing, Seller and Buyer shall use reasonable best efforts and move expeditiously to avoid or eliminate each and every impediment under any antitrust, competition, or trade or energy regulation law (including the Federal Power Act, as amended, and the FERC’s regulations thereunder, any applicable New York Laws, and the NYPSC regulations thereunder; the HSR Act; and, if applicable, the Public Utility Holding Company Act of 1935, as amended, and the regulations promulgated thereunder) that may be asserted by any Governmental Authority with respect to the transactions contemplated hereby so as to enable the Closing to occur as soon as reasonably possible, but in any event to insure that the Closing occurs no later than the Termination Date.

(d) Nothing in this Agreement shall require Seller or any of its Affiliates to dispose of any of its assets or to limit its freedom of action with respect to any of its assets or businesses, whether prior to or after the Closing Date, or to commit or agree to any of the foregoing, in order to obtain any waivers, consents, approvals or authorizations or to remove any impediments to the Closing relating to the HSR Act or any other Law, regulation or order or to avoid the entry of, or to effect the dissolution of, any injunction or other order in any suit or proceeding relating thereto.

Section 6.17 Intentionally Omitted.

Section 6.18 Further Assurances. Subject to the terms and conditions of this Agreement, at any time or from time to time after the Closing, at any Party’s request and without further consideration, the other Party shall execute and deliver to such Party such other instruments of sale, transfer, conveyance, assignment and confirmation, provide such materials and information and take such other actions and execute and deliver such other documents as such Party may reasonably request in order to consummate the transactions contemplated by this Agreement.

Section 6.19 Non-Solicitation. For a period one (1) year from and after the Closing Date, Seller shall not, and shall cause its Affiliates not to, directly or indirectly, cause, solicit, induce or encourage any employees of the Companies who are or become employees of Buyer or its Affiliates to leave such employment or hire, employ or otherwise engage any such individual (except pursuant to a general solicitation not targeted at such employees).

Section 6.20 Insurance. Any claims for which an insurance claim is filed or pending as of the Closing Date under the insurance policies covering the Companies and the Purchased Assets and relating to the Companies shall be administered and collected by Seller (or by a claims handler appointed by Seller) on behalf of Buyer; provided, that no such claim shall be settled by Seller (or by a claims handler appointed by Seller) without the prior written consent of Buyer (except where such settlement would not result in any liability to Buyer). Any monies received by Seller as a result of such insurance claims shall be paid over to Buyer.

Section 6.21 Data. At Closing, Seller shall ensure that the Companies are in possession of all computer data used in or relating to the businesses of the Companies and relating to enterprise-wide functions, including financial accounting, accounts payable, purchasing, work management, materials management, cash management, logistics, scheduling

and energy trading, regard less of whether the Software that uses such data is an asset of the Company.

ARTICLE VII
CONDITIONS TO THE CLOSING

Section 7.01 Conditions to the Obligations of Each Party. The obligations of the Parties to proceed with the Closing are subject to the satisfaction on or prior to the Closing Date of all of the following conditions, any one or more of which may be waived in writing, in whole or in part, as to a Party by such Party:

(a) (i) no judgment, injunction, order or decree of a court or other Governmental Authority of competent jurisdiction shall be in effect which has the effect of making the transactions contemplated by this Agreement illegal or otherwise restraining or prohibiting the consummation of the transactions contemplated by this Agreement (each Party agreeing to use its reasonable best efforts, including appeals to higher courts, to have any judgment, injunction, order or decree lifted) and (ii) no material legal proceedings shall have been instituted against Seller, the Companies or Buyer seeking to restrain or prohibit or to obtain substantial damages with respect to the consummation of the transactions contemplated hereby; provided that, Seller and Buyer shall use their reasonable best efforts to have dismissed, settle or otherwise resolve such legal proceedings;

(b) (i) any waiting period applicable to consummation of the transactions contemplated by this Agreement under the HSR Act shall have expired or been terminated, and (ii) all Seller Governmental Approvals and Buyer Governmental Approvals shall have been filed, made or obtained, as the case may be; provided, however, that a Party whose breach of its obligations under this Agreement caused a failure to so file, make or obtain such Seller Governmental Approvals or Buyer Governmental Approvals, as the case may be, shall be deemed to have waived this condition to the extent of such failure; and

Section 7.02 Conditions to the Obligations of Buyer. The obligation of Buyer to proceed with the Closing is subject to the satisfaction on or prior to the Closing Date of the following further conditions, any one or more of which may be waived, in whole or in part, by Buyer :

(a) Seller shall have performed in all material respects all of its obligations hereunder required to be performed by it at or prior to the Closing Date;

(b) the representations and warranties of Seller contained in this Agreement (i) that are qualified as to “material adverse effect” or Material Adverse Effect shall be true and correct as of the Closing Date, except to the extent such representations and warranties expressly relate to an earlier date (in which case as of such earlier date), and (ii) those not so qualified shall be true and correct as of the Closing Date, except to the extent such representations and warranties expressly relate to an earlier date (in which case as of such earlier date), except for failures of the

representations and warranties referred to in this clause (ii) to be true and correct as do not and would not reasonably be expected to have, in the aggregate, a Material Adverse Effect;

(c) Buyer shall have received a certificate signed on behalf of Seller by an executive officer of Seller indicating that the conditions provided in Section 7.02 (a) and Section 7.02(b) have been satisfied; and

(d) Buyer shall have received updated title reports (the “UPDATED REPORTS”) with respect to the title insurance policies issued by Chicago Title Insurance Company and Lawyers Title Insurance Corporation to Erie from July 1999 to August 2000, and issued by Ticor Title Insurance Company to Carr Street on July 27, 1999. In the event that the Updated Reports reveal Liens, defects, exceptions, restrictions, easements, rights of way or encumbrances other than Permitted Exceptions and the Company Liens ( “DEFECTS”), and the aggregate cost of curing such Defects as determined by Houlihan, Lokey, Howard and Zukin (unless otherwise agreed by Seller and Buyer) exceeds one percent (1%) of the Base Purchase Price, Buyer may, within thirty (30) days after the Execution Date, submit one notice (the “TITLE NOTICE”) to Seller, setting forth in reasonable detail the Defects and the cost to cure each such Defect, requesting that Seller take curative action. If Buyer does not deliver the Title Notice to Seller within thirty (30) days after the Execution Date, this condition shall be satisfied and Buyer shall not have the right to claim any additional Defects. Upon receipt of the Title Notice, Seller shall within thirty (30) days after receipt of the Title Notice, elect to do any combination of the following with the effect that the cost to cure the remaining Defects shall not exceed 1% of the Base Purchase Price:

(i) cure such Defects; or

(ii) unless such transfer would give rise to a Material Adverse Effect, transfer one or more Facilities out of the Companies and reduce the Base Purchase Price by the market value of the Facility or Facilities so transferred as determined by Houlihan, Lokey, Howard and Zukin (unless otherwise agreed by Seller and Buyer).

Notwithstanding the foregoing, as a prerequisite to Seller taking such curative action, Seller must fully discharge all Liens securing indebtedness for borrowed money (and, for the avoidance of doubt, the limitations set forth in Section 9.02(a)(y) and (z) shall not apply to any payments so made by Seller) .

Each of Seller and Buyer agrees to pay one-half of all fees of title insurance companies and appraisal firms engaged pursuant to this Section 7.02(d).

In the event Seller elects to take any of the actions set forth in clauses (i) or (ii) above, the condition set forth this Section 7.02(d) shall be satisfied when Seller completes the action elected. To the extent Seller fails to take the curative action specified in clauses (i) or (ii) above and the aggregate cost to cure remaining Defects (as set forth in the Title Notice) exceeds 1 % of the Base Purchase Price, then this Section 7.02 (d) shall remain a condition precedent to Buyer’s obligation to close hereunder. Seller will keep Buyer reasonably informed of any curative actions proposed to be taken; provided, however, that Buyer shall not have the right to approve any such curative actions pursuant to this Section 7.02(d).

Section 7.03 Conditions to the Obligations of Seller. The obligation of Seller to proceed with the Closing is subject to the satisfaction on or prior to the Closing Date of the following further conditions, any or more of which may be waived, in whole or in part, by Seller:

(a) Buyer shall have performed in all material respects all of its obligations hereunder required to be performed by it at or prior to the Closing Date;

(b) the representations and warranties of Buyer contained in this Agreement (i) that are qualified as to “material adverse effect” shall be true and correct in as of the Closing Date, except to the extent such representations and warranties expressly relate to an earlier date (in which case as of such earlier date), and (ii) those not so qualified shall be true and correct as of the Closing Date, except to the extent such representations and warranties expressly relate to an earlier date (in which case as of such earlier date), except for failures of the representations and warranties referred to in this clause (ii) to be true and correct as do not and would not reasonably be expected to have, in the aggregate, a material adverse effect on Buyer’s ability to perform its obligations hereunder; and

(c) Seller shall have received a certificate signed on behalf of Buyer by an executive officer of Buyer indicating that the conditions provided in Section 7.03(a) and Section 7.03(b) have been satisfied.

ARTICLE VIII
TERMINATION

Section 8.01 Termination. This Agreement may be terminated and the consummation of the transactions contemplated hereby may be abandoned at any time prior to the Closing:

(a) by mutual written consent of Seller and Buyer;

(b) by either Seller or Buyer:

(i) if the Closing has not occurred on or before 364 days after the Execution Date (such date, as it may be extended under clause (A) of this paragraph, the “TERMINATION DATE”) provided, however, that (A) each of the Parties shall have the option, in its sole discretion, to extend the Termination Date for an additional period of time not to exceed 90 days if all other conditions to Closing (other than the condition described in the following clause (B)) are satisfied or capable of then being satisfied and the sole reason (other than the condition described in the following clause (B)) that the Closing has not occurred by such date is that the condition set forth in Section 7.01(a) or (b) has not been satisfied due to the failure to obtain the necessary waivers, consents, approvals and authorizations under applicable Laws or a judgment, injunction, order or decree of a court or other Governmental Authority of competent jurisdiction shall be in effect and Buyer or Seller is still attempting to obtain such necessary waivers, consents, approvals and authorizations under applicable Laws, or is contesting (x) the refusal of the relevant Governmental Authority to give such consents or approvals or (y) the entry of any such judgment , injunction, order or decree, in court or through other applicable proceedings; (B) each of the Parties shall have the option, in its sole discretion, to extend

the Termination Date for an additional period of time, not to exceed 90 days if all other conditions to Closing (other than the condition described in the preceding clause (A) to the extent applicable) are satisfied or capable of being satisfied and the sole reason (other than the condition described in the preceding clause (A) to the extent applicable) that the Closing has not occurred by such date is that the condition set forth in Section 7.01(a)(ii) has not been satisfied due to the existence of material legal proceedings; and (C) the right to terminate this Agreement pursuant to this Section 8.01(b)(i) shall not be available to any Party whose breach of any provision of this Agreement has been the cause of, or resulted in, the failure of the Closing to occur by the Termination Date; or

(ii) if any court of competent jurisdiction in the United States or other United States Governmental Authority shall have issued a final order, decree or ruling or taken any other final action restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated by this Agreement and such order, decree, ruling or other action is or shall have become final and nonappealable, provided, however, that the Party seeking to terminate this Agreement pursuant to this Section 8.01(b)(ii) shall have used reasonable best efforts to prevent the entry of and to remove such order, decree, ruling or final action;

(c) by Buyer if there has been a material breach by Seller of any representation, warranty, covenant or agreement contained in this Agreement which (x) would result in a failure of a condition set forth in Section 7.02(a) or Section 7.02(b) and (y) cannot be cured prior to the Termination Date or is not cured within 20 days following written notification of such breach or such longer period as may be reasonably necessary to cure such breach but not to exceed 90 days in the aggregate; and

(d) by Seller if there has been a material breach by Buyer of any representation, warranty, covenant or agreement contained in this Agreement which (x) would result in a failure of a condition set forth in Section 7.03(a) or Section 7.03(b) and (y) cannot be cured prior to the Termination Date or is not cured within 20 days following written notification of such breach or such longer period as may be reasonably necessary to cure such breach but not to exceed 90 days in the aggregate.

The Party desiring to terminate this Agreement pursuant to Section 8.01 (other than pursuant to Section 8.01(a)) shall give notice of such termination to the other Party.

Section 8.02 Effect of Termination. In the event of termination of this Agreement by either Seller or Buyer prior to the Closing pursuant to the provisions of Section 8.01, this Agreement shall forthwith become void, and there shall be no liability or further obligation on the part of Buyer or Seller or their respective officers or directors (except as set forth in Section 6.01(b), Section 6.12, Section 6.15, this Section 8.02, Section 9.03, Section 9.04(a), Section 9.04(b), Section 9.04(d), Section 9.04(f) and Article X, all of which shall survive the termination); provided, however, that nothing in this Section 8.02 shall relieve any Party from liability for any willful breach of this Agreement by such Party prior to termination of this Agreement; provided, further that in the event of a termination of this Agreement by reason of failure of the satisfaction of the condition set forth in Section 7.01(c), as Buyer’s sole remedy, Seller shall reimburse Buyer for all of its reasonable out-of-pocket expenses (including

reasonable fees of its legal and other advisors) incurred in connection with this Agreement and the transactions contemplated hereby.

ARTICLE IX
INDEMNIFICATION

Section 9.01 Survival. All representations, warranties, covenants and agreements contained herein, and the right to commence any Claim with respect thereto, shall terminate upon the date that is eighteen months after the Closing Date, except that (a) the representations and warranties contained in Section 3.01, Section 3.02, Section 3.04, Section 4.01, Section 4.03, Section 5.01 and Section 5.02 shall survive without limitation as to time, (b) the representations and warranties contained in Section 4.09 shall survive until 60 days after the end of the period of the applicable statute of limitations (taking into account any extensions thereof, whether automatic or permissive), (c) the representation and warranty contained in the first sentence of Section 4.16(b) shall terminate at the Closing and (d) the covenants and agreements of the Parties contained herein that by their terms are to be performed following the first anniversary of the Closing Date, shall survive the first anniversary of the Closing Date and continue in effect in accordance with their terms; provided, however, that in the event written notice of any Claim for indemnification under Section 9.02(a)(i) , Section 9.02(a)(ii), Section 9.02(b)(i), Section 9.02(b)(ii), or Section 9.02(c) shall have been given in accordance herewith within the applicable survival period setting forth such Claim in reasonable detail (including a reasonable specification of the legal and factual basis for such Claim and the Loss incurred), the representations, warranties, covenants and agreements that are the subject of such indemnification Claim shall survive with respect to that Claim only until such time as the Claim is fully and finally resolved.

Section 9.02 Indemnification.

(a) Subject to the provisions of this Article IX, from and after the Closing, Seller hereby agrees to indemnify and hold the Buyer Indemnified Group harmless from and against any and all Losses, whether arising out of contract, tort, strict liability, other Law or otherwise, actually incurred by any of them to the extent arising out of or resulting from:

(i) any breach as of the Closing Date of a representation or warranty made by Seller herein; and

(ii) any breach of any covenant or agreement of Seller herein.

Notwithstanding anything to the contrary in this Agreement, Seller shall not be liable for any Losses with respect to the matters set forth in Section 9.02(a)(i) or Section 9.02(a)(ii) (but only with respect to any breach of Section 6.02) unless (x) a Claim is timely asserted during the survival period specified in Section 9.01, (y) the Loss with respect to the particular act, circumstance, development, event, fact, occurrence or omission exceeds $100,000 (aggregating all Losses arising from substantially identical facts) and (z) the aggregate of all Losses under Section 9.02(a)(i) and Section 9.02(a)(ii) (but only with respect to any breach of Section 6.02(a)(i) or Section 6.02(a)(ii)) exceeds, on a cumulative basis, 3% of the Final Purchase Price (and then only to the extent of such excess); provided, that for purposes of determining whether such deductible has been attained (and for purposes of determining whether a member of the

Buyer Indemnified Group is entitled to indemnification once such deductible has been attained), all qualifications as to “material,” “materiality,” “Material Adverse Effect” or similar exception or qualifier contained in a representation shall be disregarded. Notwithstanding anything to the contrary in this Agreement, the aggregate liability of Seller to the Buyer Indemnified Group arising under or related to this Agreement and the transactions contemplated hereby, whether based in contract, tort, strict liability, other Law or otherwise, shall not exceed 50% of the Final Purchase Price.

(b) Subject to the provisions of this Article IX, from and after the Closing, Buyer hereby agrees to indemnify and hold the Seller Indemnified Group harmless from and against any and all Losses, whether arising out of contract, tort, strict liability, other Law or otherwise, actually incurred by any of them to the extent arising out of or resulting from:

(i) any breach as of the Closing Date of a representation or warranty made by Buyer herein;

(ii) any breach of any covenant or agreement of Buyer herein;

(iii) except for matters as to which Seller has agreed to indemnify the Buyer Indemnified Group pursuant to Section 9.02(c), the status of any of the Non-Company Affiliates as former partners of Erie or Carr Street, as relates to liabilities of the Companies in respect of the period before the Closing Date, regardless of when the applicable Claims are asserted;

(iv) any of the matters listed on Schedule 4.06, whether attributable to the ownership or operation of the Purchased Assets and the Companies before or after the Closing Date, regardless of when the applicable Claims are asserted; and

(v) except to the extent arising out of or resulting from a breach by Seller of the representations and warranties set forth in Section 4.12, Environmental Laws or any environmental conditions to the extent relating to the Purchased Assets or the Companies, whether attributable to the ownership or operation of the Purchased Assets and the Companies before or after the Closing Date, regardless of when the applicable Claims are asserted.

Notwithstanding anything to the contrary in this Agreement, Buyer shall not be liable for any Losses with respect to the matters set forth in Section 9.02(b)(i) or Section 9.02(b)(ii) unless a Claim is timely asserted during the survival period specified in Section 9.01.

(c) Seller hereby agrees to indemnify and hold the Buyer Indemnified Group harmless from and against any and all Losses in respect of (i) all income or franchise Taxes of or relating to any Company or the Purchased Assets for any taxable period ending on or before the Closing Date, (ii) all Taxes of any member of any affiliated, consolidated, combined or unitary group of which any Company is or was a member on or prior to the Closing Date, by reason of the liability of any such Company pursuant to Treasury Regulation Section 1.1502-6 (or any analogous provision of state, local or foreign Tax Law) and (iii) any and all liabilities for federal, state, local or foreign Taxes incurred as a result of any adjustment provided for in Section 2.02(c).

Any claim for indemnity under this Section 9.02(c) may be made at any time prior to 60 days after the expiration of the applicable Tax statute of limitations with respect to the relevant taxable period (taking into account any extensions thereof, whether automatic or permissive).

In the event of a conflict between the provisions of this Section 9.02(c), on the one hand, and the provisions of Section 9.02(a), on the other, the provisions of this Section 9.02(c) shall control.

Section 9.03 Waiver of Other Representations.

(a) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IT IS THE EXPLICIT INTENT OF EACH PARTY HERETO, AND THE PARTIES HEREBY AGREE, THAT NONE OF SELLER OR ANY OF ITS AFFILIATES OR REPRESENTATIVES HAS MADE OR IS MAKING ANY REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WRITTEN OR ORAL, INCLUDING ANY IMPLIED REPRESENTATION OR WARRANTY AS TO THE CONDITION, MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THE COMPANY INTERESTS, THE COMPANIES OR ANY OF THE PURCHASED ASSETS, OR ANY PART THEREOF, EXCEPT THOSE EXPRESS REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE III AND ARTICLE IV AND THE LAST SENTENCE OF SECTION 6.13(g). IN PARTICULAR, AND WITHOUT IN ANY WAY LIMITING THE FOREGOING, (I) SELLER MAKES NO REPRESENTATION OR WARRANTY REGARDING ANY ENVIRONMENTAL MATTERS EXCEPT AS EXPRESSLY SET FORTH IN SECTION 4.12, (II) SELLER MAKES NO REPRESENTATION OR WARRANTY TO BUYER WITH RESPECT TO ANY FINANCIAL PROJECTIONS OR FORECASTS RELATING TO THE COMPANIES OR THE PURCHASED ASSETS, AND (III) SELLER MAKES NO REPRESENTATION OR WARRANTY TO BUYER WITH RESPECT TO INFORMATION PROVIDED TO BUYER IN RESPONSE TO QUESTIONS PRESENTED BY BUYER OR OTHER INFORMATION PROVIDED TO BUYER RELATING TO THE COMPANIES OR THE PURCHASED ASSETS; PROVIDED, THAT THIS SENTENCE SHALL NOT LIMIT THE EXPRESS REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE III AND ARTICLE IV AND THE LAST SENTENCE OF SECTION 6.13(g).

(b) EXCEPT FOR THOSE EXPRESS REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE III, ARTICLE IV OR THE LAST SENTENCE OF SECTION 6.13 (g). AS OTHERWISE EXPRESSLY PROVIDED HEREIN, (A) SELLER’S INTERESTS IN THE COMPANIES ARE BEING TRANSFERRED THROUGH THE SALE OF THE COMPANY INTERESTS “AS IS, WHERE IS, WITH ALL FAULTS,” AND (B) SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO THE CONDITION, VALUE OR QUALITY OF THE COMPANIES AND THE PURCHASED ASSETS OR THE PROSPECTS (FINANCIAL OR OTHERWISE) , RISKS AND OTHER INCIDENTS OF THE COMPANIES AND THE PURCHASED ASSETS.

Section 9.04 Waiver of Remedies; Certain Limitations. Notwithstanding anything in this Agreement to the contrary:

(a) the Parties hereby agree that, except for actual fraud, neither Party shall have any liability, and neither Party shall make any Claim, for any Loss or other matter, under, relating to or arising out of this Agreement or any other document, agreement, certificate or other matter delivered pursuant hereto, whether arising out of contract, tort, strict liability, other Law or otherwise, except as expressly set forth in Section 6.01(b), Section 8.01, Section 8.02, Section 10.05 and this Article IX. The Parties agree that irreparable damage would occur in the event any of the provisions of this Agreement were not to be performed in accordance with the terms hereof and that the Parties shall be entitled to specific performance of the terms hereof in addition to any other remedies at Law or in equity;

(b) NO PARTY SHALL BE LIABLE FOR SPECIAL, PUNITIVE, EXEMPLARY, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES OR LOST PROFITS, WHETHER BASED ON CONTRACT, TORT, STRICT LIABILITY, OTHER LAW OR OTHERWISE AND WHETHER OR NOT ARISING FROM THE OTHER PARTY’S SOLE, JOINT OR CONCURRENT NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT, EXCEPT SUCH DAMAGES THAT ARE PAYABLE TO A THIRD PARTY WITH RESPECT TO A THIRD PARTY CLAIM FOR WHICH ANY PERSON IS SEEKING INDEMNIFICATION HEREUNDER;

(c) in calculating any amount of Losses recoverable pursuant to Section 9.02(a) or Section 9.02(b), the amount of such Losses shall be (i) reduced by (A) any insurance proceeds actually received relating to such Loss, net of any related deductible and any expenses to obtain such proceeds, (B) any recoveries from third parties pursuant to indemnification (or otherwise) with respect thereto, net of any expenses incurred by the Indemnified Party in obtaining such third party payment and (C) the amount of any income Tax benefit actually recognized by the Indemnified Party or its Affiliates resulting from the incurrence or payment of such Losses, and (ii) increased by the amount of any additional income Tax cost actually incurred by the Indemnified Party or its Affiliates as a result of the receipt of such indemnity payments, grossed up for such increase (excluding for purposes of the calculations under this Section 9.04(c)(ii), (A) any Taxes imposed on income or gain resulting from the recapture of deductions or losses claimed by the Indemnified Party or its Affiliates, (B) any Taxes incurred as a result of the reduction in basis in the Purchased Assets resulting from the receipt of the indemnity payments, (C) any Taxes imposed on a transfer or deemed transfer of an indemnity payment among any of the Indemnified Party or its Affiliates, and (D) any Taxes imposed as a result of an indemnity payment being treated as additional consideration received for the Purchased Assets. The Parties agree to treat any indemnification payment pursuant to this Article IX as an adjustment to the Final Purchase Price for all Tax purposes unless otherwise required by applicable Law;

(d) no Representative or Affiliate of Seller shall have any personal liability to Buyer or any other Person as a result of the breach of any representation, warranty, covenant, agreement or obligation of Seller in this Agreement and no Representative or Affiliate of Buyer shall have any personal liability to Seller or any other Person as a result of the breach of any representation, warranty, covenant, agreement or obligation of Buyer in this Agreement;

(e) no Person shall be entitled to indemnification under this Article IX if, on the Closing Date, such Person had Knowledge of the breach of representation, warranty, covenant or agreement with respect to which such Person is seeking indemnification under this Article IX;

(f) the Parties shall have a duty to use commercially reasonable efforts to mitigate any Loss in connection with this Agreement;

(g) Seller shall have no liability for any Losses that represent the cost of repairs, replacements or improvements which enhance the value of the repaired, replaced or improved asset above its value on the Closing Date or which represent the cost of repair or replacement exceeding the reasonable cost of repair or replacement; and

(h) Buyer hereby releases, waives and discharges forever Seller and the Non-Company Affiliates from all present and future Claims and from all Losses, present and future, that are or may be attributable to the matters described in Section 9.02(b)(v), including cost recovery or contribution actions pursuant to Environmental Law.

Section 9.05 Procedures for Indemnification.

(a) Whenever a Claim shall arise for indemnification under Section 9.02 (other than under Section 9.02(b)(iv)), the Person entitled to indemnification (the “INDEMNIFIED PARTY”) shall promptly notify the Party from which indemnification is sought (the “INDEMNIFYING PARTY”) of such Claim and, when known, the facts constituting the basis of such Claim; provided, however, that in the event of a Claim for indemnification resulting from or in connection with a Claim by a third party, the Indemnified Party shall give such notice thereof to the Indemnifying Party not later than 10 Business Days prior to the time any response to the third party Claim is required, if possible, and in any event within 15 Business Days following receipt of notice thereof (provided, that failure to notify the Indemnifying Party shall not relieve the Indemnifying Party of any liability it may have to the Indemnified Party, except to the extent that the Indemnifying Party has been actually and materially prejudiced by such failure). Following receipt of notice of any such third party Claim, and unless counsel to the Indemnified Party shall have reasonably determined in good faith that the assumption of such defense by the Indemnifying Party would be inappropriate due to a conflict of interest, the Indemnifying Party shall have the option, at its cost and expense, to assume the defense of such matter and to retain counsel (not reasonably objected to by the Indemnified Party) to defend any such claim or legal proceeding, and the Indemnifying Party shall not be liable to the Indemnified Party for any fees of other counsel or any other expenses (except as expressly provided to the contrary herein) with respect to the defense of such Claim, other than reasonable fees and expenses of counsel employed by the Indemnified Party for any period during which the Indemnifying Party has not assumed the defense thereof. The Indemnified Party shall have the option of joining the defense of such Claim (which shall be at the sole cost and expense of the Indemnified Party) with counsel not reasonably objected to by the Indemnifying Party and counsel for each party shall, to the extent consistent with such counsel’s professional responsibilities, cooperate with the other party and any counsel designated by that party. In effecting the settlement or compromise of, or consenting to the entry of any judgment with respect to, any such Claim, the Indemnifying Party, or the Indemnified Party, as the case may be, shall act in good faith, shall consult with the other party and shall enter into only such settlement or compromise or consent to the entry of any judgment as the other party shall consent, such consent not to be unreasonably withheld, conditioned or delayed. An Indemnifying Party shall not be liable for any settlement, compromise or judgment not made in accordance with the preceding sentence.

(b) Buyer shall promptly and diligently defend, prosecute or settle the matters described in Section 9.02(b)(iv) (including the defense of any members of the Seller Indemnified Group that are defendants or respondents with respect to such matters). If Buyer’s counsel shall have advised Buyer in writing, in which case Buyer shall deliver a copy to the Indemnified Party, or if the Indemnified Party reasonably believes, that there is a conflict of interest that could make it inappropriate under applicable standards of professional conduct to have common counsel, the Indemnified Party may retain its own counsel with respect to such defense and Buyer shall pay the reasonable attorneys’ fees and expenses of counsel for such Indemnified Party. Buyer shall obtain the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld, delayed or conditioned, before entering into or making (or allowing the Companies to enter into or make), any settlement or compromise of the matters described in Section 9.02(b)(iv) if (i) such settlement or compromise does not include a full release of the Indemnified Party, (ii) such settlement or compromise includes any non-monetary remedy binding on the Indemnified Party or (iii) the Indemnified Party reasonably believes that Buyer will not have the ability to satisfy fully its obligations pursuant to Section 9.02(b)(iv) at the time of such settlement or compromise.

(c) After the Closing Date, Seller and Buyer shall grant each other (or their respective designees), and Buyer shall cause the Companies to grant to Seller (or its designees), access at all reasonable times to all of the information, books and records relating to the Companies in its possession, and shall afford such party the right (at such party’s expense) to take extracts therefrom and to make copies thereof, to the extent reasonably necessary to implement the provisions of, or to investigate or defend any Claims arising under, this Agreement. Further, after the Closing Date, Buyer shall cause the Companies to grant to Seller (or its designees) the access and right to take extracts and make copies described in the preceding sentence for such other purposes as Seller may reasonably request.

ARTICLE X
MISCELLANEOUS

Section 10.01 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally to, or mailed by registered or certified mail (return receipt requested) if and when received by, or sent via facsimile if and when received by, the Parties at the following addresses (or at such other address for a Party as shall be specified by like notice):

If to Seller, to:

Orion Power Holdings, Inc.
1000 Main Street, 12th Floor
Houston, Texas 77002
Attention: General Counsel
Facsimile: 713-537-7465

If to Buyer, to:

c/o Brascan Power Corporation
Suite 300, BCE Place
181 Bay Street , P.O. Box 762
Toronto, Ontario, Canada M5J 2T3
Attention: Harry A. Goldgut
Facsimile: (416) 363-2856

and to:

Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Simeon Gold, Esq.
Facsimile: (212) 310-8007

and

Weil, Gotshal & Manges LLP
100 Federal Street, 34th Floor
Boston, MA 02110
Attention: Steven M. Peck, Esq.
Facsimile: (617) 772-8333

Section 10.02 Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 10.03 Assignment. This Agreement (including the documents and instruments referred to herein) shall not be assigned by operation of Law or otherwise, except that Buyer may assign its rights and obligations under this Agreement in whole or in part to any one or more direct or indirect Affiliates of Buyer, but no such assignment shall relieve Buyer of its obligations hereunder . This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

Section 10.04 Governing Law. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE OF NEW YORK.

Section 10.05 Arbitration.

(a) EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, ANY DISPUTE OR NEED OF INTERPRETATION ARISING OUT OF THIS AGREEMENT SHALL BE SETTLED BY BINDING ARBITRATION IN ACCORDANCE WITH THE THEN CURRENT CENTER FOR PUBLIC RESOURCES RULES FOR NON-ADMINISTERED ARBITRATION IN EFFECT ON THE DATE OF THIS AGREEMENT (“CPR RULES”) BY THREE ARBITRATORS WHO HAVE NOT PREVIOUSLY BEEN EMPLOYED BY EITHER

PARTY, AND WHO DO NOT HAVE A DIRECT OR INDIRECT INTEREST IN EITHER PARTY OR THE SUBJECT MATTER OF THE ARBITRATION. EACH PARTY SHALL SELECT ONE ARBITRATOR AND THE CENTER FOR PUBLIC RESOURCES SHALL SELECT ONE ARBITRATOR, ALL IN ACCORDANCE WITH THE “SCREENED” APPOINTMENT PROCEDURES SET FORTH IN THE CPR RULES. UNLESS BOTH PARTIES AGREE OTHERWISE, ALL ARBITRATORS SHALL BE SELECTED FROM THE CPR NATIONAL PANEL OF DISTINGUISHED NEUTRALS. EITHER PARTY MAY INITIATE ARBITRATION BY WRITTEN DEMAND TO THE OTHER PARTY AND THE ARBITRATION SHALL BE CONDUCTED ACCORDING TO THE FOLLOWING: (i) EACH PARTY SHALL DIVIDE EQUALLY THE COST OF THE ARBITRATORS AND THE HEARING AND EACH PARTY SHALL BE RESPONSIBLE FOR ITS OWN EXPENSES AND THOSE OF ITS COUNSEL AND REPRESENTATIVES; (ii) EVIDENCE CONCERNING THE FINANCIAL POSITION OF THE PARTIES, ANY OFFER MADE OR THE DETAILS OF ANY NEGOTIATION PRIOR TO ARBITRATION AND THE COST TO THE PARTIES OF THEIR REPRESENTATIVES AND COUNSEL SHALL NOT BE ADMISSIBLE IN THE ARBITRATION; (iii) THE ARBITRATION SHALL BE GOVERNED BY THE SUBSTANTIVE LAWS OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW RULES, AND BY THE FEDERAL ARBITRATION ACT, 9 U.S.C. 1-16 TO THE EXCLUSION OF STATE LAWS INCONSISTENT THEREWITH, AND JUDGMENT UPON THE AWARD RENDERED BY THE ARBITRATORS MAY BE ENTERED BY ANY COURT HAVING JURISDICTION THEREOF; (iv) UNLESS THE PARTIES OTHERWISE AGREE, THE ARBITRATION HEARING SHALL TAKE PLACE IN HOUSTON, TEXAS, OR AT SOME OTHER MUTUALLY AGREEABLE LOCATION AND THE HEARING SHALL TAKE PLACE WITHIN FOUR (4) MONTHS FROM THE DATE OF DEMAND FOR ARBITRATION; (v) THE PARTIES SHALL BE PERMITTED TO ENGAGE IN DOCUMENT AND DEPOSITION DISCOVERY, THE EXTENT OF WHICH SHALL BE DETERMINED BY THE ARBITRATORS; (vi) THE ARBITRATORS SHALL HAVE THE AUTHORITY TO DISPOSE OF A MATTER IN SUMMARY FASHION, AND TO GRANT INJUNCTIVE OR DECLARATORY RELIEF; (vii) THE ARBITRATORS SHALL SET FORTH IN WRITING AT THE TIME THEY RENDER THEIR AWARD , THE DETAILED FINDINGS OF FACT AND CONCLUSIONS OF LAW UPON WHICH THEIR AWARD IS BASED; (viii) UNLESS THE PARTIES OTHERWISE AGREE, THE ARBITRATION HEARINGS SHALL BE CONTINUOUS SUBJECT TO WEEKENDS, HOLIDAYS, OR OTHER DAYS TO BE MUTUALLY AGREED AND THE TOTAL DAYS OF HEARING SHALL NOT EXCEED TEN (10) HEARING DAYS PER PARTY; (ix) THE ARBITRATORS ARE NOT EMPOWERED TO AWARD DAMAGES IN EXCESS OF COMPENSATORY DAMAGES, AND EACH PARTY EXPRESSLY WAIVES AND FOREGOES ANY RIGHT TO PUNITIVE, EXEMPLARY OR SIMILAR DAMAGES UNLESS A STATUTE REQUIRES THAT COMPENSATORY DAMAGES BE INCREASED IN A SPECIFIED MANNER; (x) THE ARBITRATORS SHALL COMPILE A RECORD OF ALL PROCEEDINGS THAT INCLUDES ALL HEARINGS AND ALL EVIDENCE (INCLUDING, WITHOUT LIMITATION, EXHIBITS, DEPOSITION TRANSCRIPTS, AND AFFIDAVITS ADMITTED INTO EVIDENCE) IN THE ARBITRATION PROCEEDING; AND (xi) THE ARBITRATORS SHALL RENDER THEIR AWARD NO LATER THAN THIRTY (30) DAYS AFTER THE CONCLUSION OF THE HEARINGS . THE SUBMISSION OF POST-HEARING LEGAL BRIEFS SHALL BE SUBJECT TO THE DISCRETION OF THE ARBITRATORS , BUT IN

NO EVENT SHALL THE BRIEFS DELAY THE ARBITRATORS’ DECISION IN THIS MATTER. AN APPEAL MAY BE TAKEN UNDER THE CPR ARBITRATION APPEAL PROCEDURE FROM ANY FINAL AWARD OF AN ARBITRAL PANEL IN ANY ARBITRATION ARISING OUT OF OR RELATED TO THIS AGREEMENT THAT IS CONDUCTED IN ACCORDANCE WITH THE REQUIREMENTS OF SUCH APPEAL PROCEDURE. THE STANDARD OF REVIEW TO BE APPLIED TO THE ARBITRATORS’ FINDING OF FACT AND CONCLUSIONS OF LAW SHALL BE THE SAME AS THAT APPLIED BY AN APPELLATE COURT REVIEWING A DECISION OF A TRIAL COURT SITTING WITHOUT A JURY. UNLESS OTHERWISE AGREED BY THE PARTIES, THE APPEAL SHALL BE CONDUCTED BEFORE THE DISTRICT COURT FOR THE DISTRICT IN WHICH THE ORIGINAL ARBITRATION OCCURRED. THE PROCEDURES SPECIFIED IN THIS SECTION 10.05 SHALL BE THE SOLE AND EXCLUSIVE PROCEDURES FOR THE RESOLUTION OF DISPUTES BETWEEN THE PARTIES ARISING OUT OF OR RELATING TO THIS AGREEMENT; PROVIDED, HOWEVER, THAT A PARTY MAY FILE A COMPLAINT TO SEEK A PRELIMINARY INJUNCTION OR OTHER PROVISIONAL JUDICIAL RELIEF, IF IN IT SOLE JUDGEMENT SUCH ACTION IS NECESSARY TO PRESERVE THE STATUS QUO PENDING APPOINTMENT OF AN ARBITRATOR. DESPITE SUCH ACTION, THE PARTIES WILL CONTINUE TO PARTICIPATE IN GOOD FAITH IN THE PROCEDURES SPECIFIED IN THIS SECTION 10.05. THE PARTIES AGREE THIS CONSTITUTES A CONSPICUOUS LEGEND.

(b) EACH PARTY UNDERSTANDS AND AGREES THAT IT WILL NOT BE ABLE TO BRING A LAWSUIT CONCERNING ANY DISPUTE THAT MAY ARISE UNDER THIS AGREEMENT WHICH IS COVERED BY THE ARBITRATION PROVISION, OTHER THAN TO PRESERVE THE STATUS QUO PENDING ARBITRATION, TO COMPEL ARBITRATION, OR TO ENFORCE AN ARBITRATION AWARD, AND THAT THE ARBITRATION AWARD SHALL BE BINDING AND FINAL SUBJECT TO THE RIGHT OF APPEAL SET FORTH IN SECTION 10.05 REGARDING ARBITRATION.

(c) WITH RESPECT TO ANY ACTION PERMITTED BY THIS SECTION 10.05, THE PARTIES HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT IN NEW YORK, NEW YORK.

Section 10.06 Counterparts. This Agreement may be executed in two or more counterparts, and by facsimile, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.

Section 10.07 Amendments; Extensions.

(a) This Agreement may not be amended except by an instrument in writing signed on behalf of each of the Parties.

(b) At any time a Party may (i) extend the time for the performance of any of the obligations or other acts of the other Party, (ii) waive any inaccuracies in the representations and warranties of the other Party contained herein or in any document delivered pursuant hereto and (iii) waive compliance with any of the covenants or agreements of the other Party contained herein. Any agreement on the part of a Party to any such extension or waiver shall be valid only

if set forth in a written instrument signed on behalf of such Party. The failure or delay of any Party to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of those rights.

Section 10.08 Entire Agreement. This Agreement and the Confidentiality Agreement constitute the entire agreement between the Parties with respect to the subject matter hereof and supersede all prior agreements, understandings and negotiations, both written and oral, between the Parties with respect to the subject matter of this Agreement. No representation, inducement, promise, understanding, condition or warranty not set forth herein has been made or relied upon by any Party. Neither this Agreement nor any provision hereof is intended to confer upon any person other than the parties hereto any rights or remedies hereunder except as expressly provided otherwise in Section 6.01(b), Section 6.05, Section 6.09(d), Section 6.13 and Article IX.

Section 10.09 Severability. If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any rule of applicable Law, or public policy (including any term or provision of Section 10.05), then such term or provision shall be severed from the remaining terms and provisions of this Agreement (including the remaining terms and provisions of Section 10.05), and such remaining terms and provisions shall nevertheless remain in full force and effect.

Section 10.10 Seller Guarantor Guaranty. Seller Guarantor is a party to this Agreement solely for the purposes of this Section 10.10. In consideration of the transactions contemplated by this Agreement, the receipt and sufficiency of which is hereby acknowledged, Seller Guarantor hereby unconditionally and irrevocably guarantees payment and performance by Seller of the obligations of Seller under this Agreement, subject to any defenses of Seller. In no event shall the aggregate liability of Seller Guarantor and Seller arising under or related to this Agreement and the transactions contemplated hereby, whether based in contract, tort, strict liability, other Law or otherwise, exceed 50% of the Final Purchase Price. Capitalized terms used in this Section 10.10 shall have the meanings given to them in Appendix I to this Agreement. The provisions of Section 9.04(b) and the remaining Sections of this Article X are incorporated in this Section 10.10, mutatis mutandis, except that notices and other communications hereunder to Seller Guarantor shall be delivered to:

Reliant Energy, Inc.
1000 Main Street, 12th Floor
Houston, Texas 77002
Attention: General Counsel
Facsimile: 713-537-7465

Section 10.11 Buyer Guarantor Guaranty. Buyer Guarantor is a party to this Agreement solely for the purposes of this Section 10.11. In consideration of the transactions contemplated by this Agreement, the receipt and sufficiency of which is hereby acknowledged, Buyer Guarantor hereby unconditionally and irrevocably guarantees Buyer’s payment in full, as and when due, of the Base Purchase Price and any amount payable by Buyer under Section 2.06(c), subject to any defenses of Buyer. For the avoidance of doubt, this is a guaranty of payment and not merely a guaranty of collection. In no event shall the aggregate liability of

Buyer Guarantor arising under or related to this Agreement and the transactions contemplated hereby, whether based in contract, tort, strict liability, other Law or otherwise, exceed 100% of the Final Purchase Price. Capitalized terms used in this Section 10.11 shall have the meanings given to them in Appendix 1 to this Agreement. This guarantee shall expire upon payment of the Final Purchase Price. The provisions of Section 9.04(b) and the remaining Sections of this Article X are incorporated in this Section 10.11, mutatis mutandis, except that notices and other communications hereunder to Seller Guarantor shall be delivered to:

Brascan Corporation
Suite 300, BCE Place
181 Bay Street, P.O. Box 762
Toronto, Ontario, Canada M5J 2T3
Attention: Harry A. Goldgut
Facsimile: (416) 363-2856

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.


		ORION POWER HOLDINGS, INC.

		By:		/s/ Daniel N. Hannon

				Daniel N. Hannon
				Senior Vice President - Finance and
				Corporate Development

		RELIANT ENERGY, INC.

		By:		/s/ Daniel N. Hannon

				Daniel N. Hannon
				Senior Vice President - Finance and
				Corporate Development

		GREAT LAKES POWER INC.

		By:		/s/ Harry Goldgut

				Harry Goldgut
				Co-Chairman and CEO

		BRASCAN CORPORATION

		By:		/s/ Brian Lawson

				Brian Lawson
				Senior VP and CFO

SIGNATURE PAGE
PURCHASE AGREEMENT

APPENDIX I
SECTION 1 - CONSTRUCTION

(a) All Article, Section, Subsection, Schedules and Exhibit references used in this Agreement are to Articles, Sections, Subsections, Schedules and Exhibits to this Agreement unless otherwise specified. The Exhibits and Schedules attached to this Agreement constitute a part of this Agreement and are incorporated herein for all purposes.

(b) If a term is defined as one part of speech (such as a noun), it shall have a corresponding meaning when used as another part of speech (such as a verb). Unless the context of this Agreement clearly requires otherwise, words importing the masculine gender shall include the feminine and neutral genders and vice versa. The words “includes” or “including” shall mean “includes without limitation” or “including without limitation,” the words “hereof,” “hereby,” “herein,” “hereunder” and similar terms in this Agreement shall refer to this Agreement as a whole and not any particular Section or Article in which such words appear and any reference to a Law shall include any amendment thereof or any successor thereto and any rules and regulations promulgated thereunder. Currency amounts referenced herein are in U.S. Dollars.

(c) Time is of the essence in this Agreement. Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified. Whenever any action must be taken hereunder on or by a day that is not a Business Day, then such action may be validly taken on or by the next day that is a Business Day.

(d) Seller may, at its option, include in the Schedules items that are not material, and any such inclusion, or any references to dollar amounts, shall not be deemed to be an acknowledgment or representation that such items are material or would cause a Material Adverse Effect, to establish any standard of materiality or to define further the meaning of such terms for purposes of this Agreement. Information disclosed in the Schedules shall constitute a disclosure for all purposes under this Agreement notwithstanding any reference to a specific Section, and all such information shall be deemed to qualify the entire Agreement and not just such Section.

(e) Each Party acknowledges that it and its attorneys have been given an equal opportunity to negotiate the terms and conditions of this Agreement and that any rule of construction to the effect that ambiguities are to be resolved against the drafting Party or any similar rule operating against the drafter of an agreement shall not be applicable to the construction or interpretation of this Agreement.

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SECTION 2 - DEFINITIONS

“1933 ACT” has the meaning set forth in Section 5.07.

“AGREEMENT” has the meaning set forth in the introductory paragraph to this Agreement.

“AFFILIATE” means any Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the Person specified. For purposes of this definition, control of a Person means the power, direct or indirect, to direct or cause the direction of the management and policies of such Person whether through ownership of voting securities or ownership interests, by contract or otherwise, and specifically with respect to a corporation, partnership, trust or limited liability company, means direct or indirect ownership of more than 50% of the voting securities in such corporation or of the voting interest in a partnership or limited liability company or of the beneficial interest in a trust.

“AFFILIATE EMPLOYEE” has the meaning set forth in Section 6.13(c).

“BASE PURCHASE PRICE” has the meaning set forth in Section 2.02(a).

“BENEFIT PLAN” means: (a) each “employee benefit plan,” as such term is defined in Section 3(3) of ERISA, (b) each plan that would be an employee benefit plan if it was subject to ERISA, such as a foreign plan or director plan, (c) each stock bonus, stock ownership, stock option, stock purchase, restricted stock, stock appreciation rights, phantom stock, or other stock or equity-related plan, program or arrangement (whether qualified or nonqualified), and (d) each pension, retirement, profit-sharing, bonus, deferred compensation, incentive compensation, change in control, severance, retention, sick leave, vacation, salary continuation, leave of absence, layoff, disability, hospitalization, medical, life insurance, accident, employee loan, educational assistance, scholarship, dependent care assistance, legal assistance, or cafeteria plan or arrangement; provided, however, that such term shall not include (1) routine employment policies and procedures developed and applied in the ordinary course of business and consistent with past practice, including wage policies, (2) workers compensation insurance, and (3) directors and officers liability insurance.

“BENEFITS COMMITTEE” has the meaning set forth in Section 6.13(k).

“BUSINESS DAY” means a day other than Saturday, Sunday or any day on which banks located in the State of New York and the State of Texas are authorized or obligated to close.

“BUYER” has the meaning set forth in the introductory paragraph to this Agreement.

“BUYER GOVERNMENTAL APPROVALS” has the meaning set forth in Section 5.03(c).

“BUYER GUARANTOR” has the meaning set forth in the introductory paragraph to this Agreement.

“BUYER INDEMNIFIED GROUP” means Buyer and Buyer’s Affiliates and their respective officers, directors, employees and agents.

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“BUYER SAVINGS PLAN” has the meaning set forth in Section 6.13(g).

“CAPITAL EXPENDITURES” means expenditures for capital additions to or replacements of property, plant and equipment included in the Purchased Assets and other expenditures or repairs on property, plant and equipment included in the Purchased Assets that would be capitalized by the Companies in accordance with their normal capitalization policies, which is in accordance with GAAP.

“CARR STREET” has the meaning set forth in the recitals to this Agreement.

“CHANGE OF LAW” means the adoption, implementation, promulgation, repeal, modification, reinterpretation or proposal of any Law of or by any Governmental Authority which occurs subsequent to the Execution Date.

“CHARTER DOCUMENTS” means with respect to any Person, the articles of incorporation or organization and by-laws, the limited partnership agreement, the partnership agreement or the limited liability company agreement, or such other organizational documents of such Person, including those that are required to be registered or kept in the place of incorporation, organization or formation of such Person and which establish the legal personality of such Person.

“CLAIM” means any demand, claim, action, investigation, legal proceeding (whether at law or in equity) or arbitration.

“CLOSING” has the meaning set forth in Section 2.03.

“CLOSING DATE” means the date on which Closing occurs.

“CLOSING DATE INTERCOMPANY PAYABLES” means the aggregate amount of Intercompany Payables as shown on the schedule attached to the Estimated Purchase Price for purposes of calculating the Estimated Purchase Price or as calculated pursuant to Section 2.06 for purposes of calculating the Final Purchase Price.

“CLOSING DATE INTERCOMPANY RECEIVABLES” means the aggregate amount of Intercompany Receivables as shown on the schedule attached to the Estimated Purchase Price for purposes of calculating the Estimated Purchase Price or as calculated pursuant to Section 2.06 for purposes of calculating the Final Purchase Price.

“COBRA” means Section 4980B of the Code and Part 6 of Subtitle B of Title I of ERISA.

“CODE” means the Internal Revenue Code of 1986, as amended.

“COLLECTIVE BARGAINING CONTRACT” means that certain Agreement between OPOS Coldwater and Local Union 97 of the International Brotherhood of Electrical Workers, AFL-CIO (effective February 8, 2001 through May 31, 2006), as the same has been amended from time to time.

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“COMMONLY CONTROLLED ENTITY” has the meaning set forth in Section 4.10(b).

“COMPANIES” means collectively Erie, Carr Street, OPNY GP II, OPOS Coldwater and OPOS Carr Street (and, in the case of OPNY GP II, OPOS Coldwater or OPOS Carr Street, any successor thereto).

“COMPANY CONSENTS” has the meaning set forth in Section 4.02 (a).

“COMPANY INTERESTS” has the meaning set forth in Section 2.01.

“COMPANY LIENS” has the meaning set forth in Section 6.08.

“COMPANY PARTICIPANTS” means (a) the Continuing Employees and (b) all former employees of the Companies who, as of the Closing Date , are not employed by Seller or a Non-Company Affiliate and who have an account balance under either or both of the Seller Savings Plans.

“COMPANY PERMITS” has the meaning set forth in Section 4.07.

“COMPANY PLAN” means each Benefit Plan that is sponsored, maintained or contributed to by Seller or any Affiliate of Seller and which Benefit Plan provides benefits solely with respect to current or former directors, officers or employees of one or more of the Companies .

“CONFIDENTIALITY AGREEMENT” has the meaning set forth in Section 6.12.

“CONTINUING EMPLOYEE” means (a) each individual who is employed by the Companies as of the Closing (including each such individual who is on a vacation, sick, military, disability or other leave of absence) and (b) each Affiliate Employee who accepts an offer of employment from Buyer or an Affiliate of Buyer as provided in Section 6.13(c).

“CONTRACT” means any contract, lease, license, evidence of indebtedness, mortgage, indenture, purchase order, binding bid, letter of credit, security agreement or other legally binding arrangement.

“CPR RULES” has the meaning set forth in Section 10.05(a).

“CREDIT RATING” means, with respect to any Person, each rating given to such Person’s long-term, unsecured, unsubordinated debt obligations not supported by third party credit enhancement by Standard & Poor’s or Moody’s, as applicable.

“DEFECTS” has the meaning set forth in Section 7.02(d).

“ENVIRONMENTAL LAW” means any federal, state, local or foreign law, statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, order, judgment, decree, injunction, requirement or agreement with any Governmental Authority relating to (a) the protection, preservation or restoration of the environment (including air, water vapor, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or (b) the exposure to, or the use, storage, recycling, treatment,

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generation, transportation, processing, handling, labeling, production, release or disposal of Hazardous Substances.

“ERIE” has the meaning set forth in the recitals to this Agreement.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ESTIMATED PURCHASE PRICE” has the meaning set forth in Section 2.05(a).

“ESTIMATED PURCHASE PRICE ALLOCATION” has the meaning set forth in Section 2.07.

“EXECUTION DATE” has the meaning set forth in the introductory paragraph to this Agreement.

“EXCLUDED ASSETS” has the meaning set forth in Section 6.06.

“FACILITIES” has the meaning set forth in the recitals to this Agreement.

“FEBRUARY 29 BALANCE SHEETS” has the meaning set forth in Section 4.04.

“FEBRUARY 29 INTERCOMPANY PAYABLES” means the aggregate amount of Intercompany Payables as shown on the February 29, 2004 Balance Sheets.

“FEBRUARY 29 INTERCOMPANY RECEIVABLES” means the aggregate amount of Intercompany Receivables as shown on the February 29, 2004 Balance Sheets.

“FERC” means the Federal Energy Regulatory Commission.

“FINAL PURCHASE PRICE” has the meaning set forth in Section 2.06(c).

“FINAL PURCHASE PRICE ALLOCATION” has the meaning set forth in Section 2.07.

“GAAP” means generally accepted accounting principles in the United States of America.

“GOOD OPERATING PRACTICES” means, with respect to the Facilities, the practices, methods and acts generally engaged in or approved by a significant portion of the independent electric power industry in the United States for similarly situated facilities in the United States during a particular time period, or any of such practices, methods and acts, which, in the exercise of reasonable judgment in light of the facts known at the time a decision is made, would be expected to accomplish the desired result in a manner consistent with applicable Law, safety, and economy, and taking into consideration the requirements of this Agreement, the Material Contracts and the other Contracts affecting the operation of the business of the Companies. “Good Operating Practices” are not intended to be limited to the optimum practices, methods or acts, to the exclusion of all others, but rather to include a spectrum of possible practices, methods or acts generally acceptable in the region during the relevant period in light of the circumstances.

“GOVERNMENTAL AUTHORITY” means any court, tribunal, arbitrator, authority, agency, commission, official or other instrumentality of the United States or any state, county, city or

-5-

other political subdivision or similar governing entity, and including any governmental, quasi-governmental or non-governmental body administering, regulating or having general oversight over gas, electricity, power or other markets.

“HAZARDOUS SUBSTANCE” means any substance presently listed, defined, designated or classified as a pollutant, contaminant, hazardous substance, toxic substance, hazardous waste, solid waste, or special waste, or that is otherwise regulated, under any Environmental Law.

“HSR ACT” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

“INDEMNIFIED PARTY” has the meaning set forth in Section 9.05(a).

“INDEMNIFYING PARTY” has the meaning set forth in Section 9.05(a).

“INTELLECTUAL PROPERTY” means all of the rights arising from or in respect of the following, whether protected, created or arising under the laws of the United States or any other jurisdiction: (i) patents, including any reexaminations or reissues thereof, and patent applications, (ii) all trademarks, service marks, trade names, logos, service names, brand names, common law trademarks and service marks, Internet addresses, sites and domain names, trademark and service mark registrations and applications therefor and all goodwill associated therewith throughout the world, (iii) all copyrights and registrations and applications therefor, works of authorship and mask work rights and registrations and applications therefor, and (iv) trade secrets, confidential information, and confidential know-how, including but not limited to all confidential discoveries, concepts, ideas, research and development, know-how, designs, formulas, algorithms, ideas, improvements, graphs, drawings, reports, analyses, inventions, manufacturing and production processes and techniques, technical data, procedures, designs, drawings, databases and data collections (including without limitation, historical data), computer programs (whether in source code or object code or human readable form), customer lists, supplier lists, pricing and cost information, and business and marketing plans and proposals.

“INTERCOMPANY ADJUSTMENT AMOUNT” means the result of: (February 29 Intercompany Receivables - February 29 Intercompany Payables) - (Closing Date Intercompany Receivables - Closing Intercompany Payables).

“INTERCOMPANY PAYABLES” means the aggregate amount of payables of the Companies to the Seller and the Non-Company Affiliates.

“INTERCOMPANY RECEIVABLES” means the aggregate amount of receivables of the Companies from the Seller and the Non-Company Affiliates.

“INTEREST RATE” means the prime per annum rate of interest as published by the Wall Street Journal.

“INTEREST START DATE” has the meaning set forth in Section 2.02(b)(ii).

“INTERIM PERIOD” means the period of time from the Execution Date until the Closing Date or termination of this Agreement.

-6-

“INVESTMENT GRADE” means an entity having long term, unsecured, unsubordinated debt not supported by third party credit enhancement that is rated “BBB-” or higher by Standard & Poor’s, and “Baa3” or higher by Moody’s, and that in either case is not on negative credit watch.

“IRS” has the meaning set forth in Section 4.09.

“KNOWLEDGE” means, in the case of Seller, the actual knowledge (as opposed to any constructive or imputed knowledge) of the individuals listed on Schedule I-1, without inquiry, and in the case of Buyer, the actual knowledge (as opposed to any constructive or imputed knowledge) of the individuals listed on Schedule I-2, without inquiry.

“LAWS” means all laws, statutes, rules, regulations, ordinances and other pronouncements having the effect of law of any Governmental Authority.

“LIEN” means any mortgage, pledge, assessment, security interest, lien or other similar encumbrance.

“LOSSES” means any and all judgments, losses, liabilities, amounts paid in settlement, damages, fines, penalties, deficiencies, losses and expenses (including interest, court costs, reasonable fees of attorneys, accountants and other experts or other reasonable expenses of litigation or other proceedings or of any claim, default or assessment).

“MATERIAL ADVERSE EFFECT” means any change or event or effect that is or would reasonably be expected to be materially adverse to the business, results of operations, assets or condition (financial or otherwise) of the Companies, taken as a whole, in each case, except for any such change, event or effect resulting from or arising out of (a) changes in economic conditions generally or in the industry in which the Companies operate, (b) changes in international, national, regional, state or local wholesale or retail markets for electric power or fuel or related products including those due to actions by competitors, (c) changes in general regulatory or political conditions, including any acts of war or terrorist activities, (d) changes in national, regional, state or local electric transmission or distribution systems, (e) strikes, work stoppages or other labor disturbances, (f) increases in the costs of commodities or supplies, including fuel, (g) effects of weather or meteorological events, (h) any Change of Law, (i) any change in the financial condition or results of operations of a Company caused by the pending sale of such Company to Buyer, and (j) any actions to be taken pursuant to or in accordance with this Agreement (except in the case of clause (c) (as to acts of war or terrorist activities only) to the extent such changes, individually or in the aggregate, affect the Companies disproportionately).

“MATERIAL CONTRACTS” has the meaning set forth in Section 4.08(a).

“MOODY’S” means Moody’s Investors Services, Inc., and its successors.

“NON-COMPANY AFFILIATES” means Affiliates of Seller other than the Companies.

“OPNY CORPORATE REORGANIZATION” means the corporate reorganization of OPNY GP II described on Schedule 6.02.

-7-

“OPNY GP” has the meaning set forth in the recitals to this Agreement.

“OPNY GP II” has the meaning set forth in the recitals to this Agreement

“OPNY LLC” has the meaning set forth in the recitals to this Agreement.

“OPNY LP” has the meaning set forth in the recitals to this Agreement.

“OPOS CARR STREET” has the meaning set forth in the recitals to this Agreement.

“OPOS COLDWATER” has the meaning set forth in the recitals to this Agreement.

“OPOS CORPORATE REORGANIZATION” means the corporate reorganization of OPOS Coldwater and OPOS Carr Street described on Schedule 6.02.

“OPOS PARENT” has the meaning set forth in the recitals to this Agreement.

“ORION POWER CAPITAL” has the meaning set forth in the recitals to this Agreement.

“PARTIES” means each of Buyer and Buyer Guarantor, on the one hand, and Seller and Seller Guarantor, on the other hand.

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

“PERMITTED EXCEPTIONS” means (i) all defects, exceptions, restrictions, easements, rights of way and encumbrances disclosed in policies of title insurance which have been made available to Buyer; (ii) statutory liens for current Taxes, assessments or other governmental charges not yet delinquent or the amount or validity of which is being contested in good faith by appropriate proceedings, provided an appropriate reserve is established therefor; (iii) mechanics’, carriers’, workers’, repairers’ and similar Liens arising or incurred in the ordinary course of business that are not material to the business, operations and financial condition of the property so encumbered and that are not resulting from a breach, default or violation by the Companies of any Contract or Law; (iv) zoning, entitlement and other land use and environmental regulations by any Governmental Authority, provided that such regulations have not been materially violated; and (v) such other imperfections in title, charges, easements, restrictions and encumbrances which do not materially detract from the value of or materially interfere with the present use of any property subject thereto or affected thereby.

“PERSON” means any natural person, corporation, general partnership, limited partnership, limited liability company, proprietorship, other business organization, trust, union, association or Governmental Authority.

“PERSONAL PROPERTY LEASES” has the meaning set forth in Section 4.08(a)(xvi).

“PROPERTY” means the real property on which a Facility is located, including easements and rights-of-way appertaining thereto.

-8-

“PURCHASED ASSETS” means all of the assets of the Companies excluding the Excluded Assets.

“REPRESENTATIVES” means officers, directors, employees, counsel, accountants, financial advisers or consultants of either Seller or Buyer, as applicable.

“RETIREMENT PLAN” means the Erie Boulevard Hydropower, L.P. Pension Plan, as amended.

“SELLER” has the meaning set forth in the introductory paragraph to this Agreement.

“SELLER CONSENTS” has the meaning set forth in Section 3.03(b).

“SELLER DOCUMENTS” means this Agreement and each other agreement, document, or instrument or certificate contemplated by this Agreement or to be executed by Seller in connection with the consummation of the transactions contemplated by this Agreement.

“SELLER ENTITIES” means Seller, OPNY LP, OPNY GP and OPOS Parent.

“SELLER GOVERNMENTAL APPROVALS” has the meaning set forth in Section 3.03(c).

“SELLER GROUP” has the meaning set forth in Section 6.09(a)(i).

“SELLER GUARANTOR” has the meaning set forth in the introductory paragraph to this Agreement.

“SELLER INDEMNIFIED GROUP” means Seller and Seller’s Affiliates and their respective officers, directors, employees and agents.

“SELLER MARKS” has the meaning set forth in Section 6.04.

“SELLER PLAN” means each Benefit Plan (other than the Company Plans) that is sponsored, maintained or contributed to by Seller or by any trade or business, whether or not incorporated, that together with Seller would be a “single employer” within the meaning of Section 4001(b) of ERISA.

“SELLER SAVINGS PLANS” has the meaning set forth in Section 6.13(g)

“SELLER’S DISCLOSURE SCHEDULE” means the schedules provided pursuant to Article III and Article IV.

“SELLER’S POST-CLOSING ESTIMATE” has the meaning set forth in Section 2.06(a).

“STANDARD & POOR’S” means Standard & Poor’s Ratings Group (a division of McGraw Hill, Inc.), and its successors.

“SUPPORT OBLIGATIONS” has the meaning set forth in Section 6.05(a).

-9-

“TAX” or “TAXES” means any income, profits, franchise, withholding, ad valorem, personal property (tangible and intangible), employment, payroll, sales and use, social security, disability, occupation, property, severance, excise and other taxes and charges, fees, imposts, levies, duties and assessments of any kind imposed by a Taxing Authority, including any interest, penalty or addition thereto, and any liability in respect of the foregoing payable by reason of contract, assumption, transferee or successor liability, operation of Law, Treasury Regulation 1.1502-6(a) (or any predecessor or successor thereof or any analogous or similar provision of Law) or otherwise.

“TAX ITEMS” has the meaning set forth in Section 6.09(a)(i).

“TAX RETURNS” means any return, report or similar statement required or permitted to be filed with respect to any Taxes (including any attachments, Schedules of other supporting information and any amendment thereto) including any information return, claim for refund, amended return and declaration of estimated Tax.

“TAXING AUTHORITY” means, with respect to any Tax, the Governmental Authority or political subdivision thereof that imposes such Tax, and the agency (if any) charged with the collection of such Tax for such entity or subdivision.

“TAX PROCEEDING” has the meaning set forth in Section 6.09(b).

“TERMINATED CONTRACTS” has the meaning set forth in Section 6.07.

“TERMINATION DATE” has the meaning set forth in Section 8.01(b)(i).

“TITLE NOTICE” has the meaning set forth in Section 7.02(d).

“TRANSFER TAXES” means all transfer, real property transfer, sales, use, goods and services, value added, documentary, stamp duty, gross receipts, excise, and conveyance Taxes and other similar Taxes, duties, fees or charges, as levied by any Taxing Authority in connection with the transactions contemplated by this Agreement, including any real property transfer Taxes imposed by the City of New York or by the State of New York.

“UNION” has the meaning set forth in Section 6.13(b).

“UPDATED REPORTS” has the meaning set forth in Section 7.02(d).

“WELFARE BENEFITS” has the meaning set forth in Section 6.13(h).

-10-

EXHIBIT A

FACILITIES

Gas Plant

1. Carr Street Generating Station

Hydroelectric Generating Stations

1.   Allens Falls

2.   Baldwinsville

3.   Beardslee

4.   Beebee Island

5.   Belfort

6.   Bennetts Bridge

7.   Black River

8.   Blake

9.   Browns Falls

10.   Chasm

11.   Colton

12.   Deferiet

13.   E. J. West

14.   Eagle

15.   East Norfolk

16.   Eel Weir

17.   Effley

18.   Elmer

19.   Ephratah

20.   Feeder Dam

21.   Five Falls

22.   Flat Rock

23.   Franklin Falls

24.   Fulton

25.   Glenwood

26.   Granby

27.   Hannawa

28.   Herrings

29.   Heuvelton

30.   High Falls

31.   Higley

32.   Hogansburg

33.   Hydraulic Race

34.   Inghams

35.   Johnsonville

36.   Kamargo

37.   Lighthouse Hill

38.   Lower Newton Falls

A-1

39.   Macomb

40.   Minetto

41.   Moshier

42.   Norfolk

43.   Norwood

44.   Oak Orchard

45.   Oswegatchie

46.   Oswego Falls East

47.   Oswego Falls West

48.   Parishville

49.   Piercefield

50.   Prospect

51.   Rainbow

52.   Raymondville

53.   Schaghticoke

54.   School Street

55.   Schuylerville

56.   Sewalls

57.   Sherman Island

58.   Soft Maple

59.   South Colton

60.   South Edwards

61.   Spier Falls

62.   Stark

63.   Stewarts Bridge

64.   Stuyvesant Falls

65.   Sugar Island

66.   Talcville

67.   Taylorville

68.   Trenton Falls

69.   Upper Newton Falls

70.   Varick

71.   Water port

72.   Yaleville

A-2

EX-99.6 7 t16149exv99w6.htm EX-99.6 exv99w6

Exhibit 99.6

ASSET PURCHASE AGREEMENT

Entered into on February 17, 2005 between

COASTAL ACQUISITION LTD.

as Buyer

- and -

WEYERHAEUSER COMPANY LIMITED

as Seller

TABLE OF CONTENTS


				PAGES
1.	INTERPRETATION			1
		1.1	Defined Terms	1
		1.2	Knowledge of the Seller	25
		1.3	Currency	26
		1.4	Articles , Sections and Headings	26
		1.5	Number, Gender and Persons	26
		1.6	Accounting Terms and Definitions	26
		1.7	Entire Agreement	27
		1.8	Time of Essence	27
		1.9	Applicable Law	27
		1.10	Successors and Assigns	27
		1.11	Assignment	27
		1.12	Severability	29
		1.13	Conflict	29
		1.14	Amendments and Waivers	29
		1.15	Schedules	29
		1.16	Statutory References	29
		1.17	Performance on Holidays	29
		1.18	Interest	30

2.	PURCHASE AND SALE OF PURCHASED ASSETS			30
		2.1	Purchased Assets	30
		2.2	Excluded Assets	30
		2.3	Grant of Licences	30
		2.4	Third Party Consents	30
		2.5	Timber Reallocation Agreement	31
		2.6	Quota	31

3.	PURCHASE PRICE			32
		3.1	Purchase Price	32
		3.2	Payment of Purchase Price	32
		3.3	Reforestation Payments	32
		3.4	Working Capital Statement	33
		3.5	Forestry Liabilities Adjustment	34
		3.6	Capital Expenditure Adjustment	35
		3.7	Roads and Loss of Timber	36
		3.8	Allocation of Purchase Price	36
		3.9	Adjustments	37
		3.10	Deposit	37
		3.11	Redeemable Shares	37
		3.12	Pre-Closing Transactions	38
		3.13	Real Estate Sales Adjustment	38
		3.14	Acquired Entities Adjustment	38
		3.15	RFR Lands	38

-i-


				PAGES
4.	TAX MATTERS			39
		4.1	Sales Tax	39
		4.2	Transfer Taxes	39
		4.3	Elections	40

5.	ASSUMPTION OF LIABILITIES			40
		5.1	Assumption of Certain Liabilities by the Buyer	40
		5.2	Excluded Liabilities	40
		5.3	Insurance	40

6.	REPRESENTATIONS AND WARRANTIES OF THE SELLER			41
		6.1	Organization	41
		6.2	Acquired Entities	42
		6.3	Authorization	42
		6.4	No Other Agreements to Purchase	42
		6.5	No Violation	43
		6.6	Sufficiency of Purchased Assets	43
		6.7	Title to Personal Property	43
		6.8	Location of Real Property	44
		6.9	Title to Real Property	44
		6.10	Aboriginal Claims	45
		6.11	Leased Real Property	45
		6.12	Intellectual Property	46
		6.13	Licence Agreements	46
		6.14	No Expropriation	46
		6.15	Agreements and Commitments	46
		6.16	Compliance with Laws; Governmental Authorization	47
		6.17	Consents and Approvals	47
		6.18	Financial Statements	48
		6.19	Books and Records	48
		6.20	Absence of Changes	48
		6.21	Taxes	48
		6.22	Legal Proceedings	49
		6.23	Residency	49
		6.24	Guarantees, Warranties and Discounts	49
		6.25	Employee Plans	50
		6.26	Collective Agreements	51
		6.27	Employees	51
		6.28	Employee Accruals	52
		6.29	Contractual Restrictions on Doing Business	52
		6.30	Bankruptcy	52
		6.31	Forestlands	52
		6.32	Timber Inventory Data	53
		6.33	Inventories	54

7.	REPRESENTATIONS AND WARRANTIES OF THE BUYER			54
		7.1	Organization	54
		7.2	Authorization	54
		7.3	No Violation	54

-ii-


				PAGES
		7.4	Investment Canada	55
		7.5	Consents and Approvals	55
		7.6	Litigation	55

8.	SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS			55
		8.1	Survival of Representations and Warranties of the Seller	55
		8.2	Survival of Representations and Warranties of the Buyer	55
		8.3	Survival of Covenants	55

9.	COVENANTS			56
		9.1	Access to Purchased Business and Purchased Assets	56
		9.2	Conduct of Purchased Business Before Closing	57
		9.3	Risk of Loss	59
		9.4	Exclusivity	59
		9.5	Commercially Reasonable Effort to Obtain Consents	59
		9.6	Post Closing Receipts	59
		9.7	Co-operation Regarding Tax Returns and Audits	60
		9.8	Compliance with Agreement	60
		9.9	Compliance with the Forest Act	61
		9.10	Fees	61
		9.11	Combined Contracts	61
		9.12	Personal Information	62
		9.13	Off-Site Books and Records	62
		9.14	Updating Financial Statements	62
		9.15	Approval of the Transfer of Forestry Liabilities	62
		9.16	Information for Competition Bureau	63
		9.17	Consents Not Obtained Before Closing	63
		9.18	Leases/Subleases of Premises	64
		9.19	Poplar Interests	64
		9.20	Sproat Lot 98 Interests	66
		9.21	Litigation Management Agreement	67
		9.22	New Encumbrances	67
		9.23	Boot Lagoon Access	68
		9.24	Beach Camp Access	68
		9.25	Distribution Services	69

10.	ENVIRONMENTAL MATTERS			69
		10.1	Environmental Representations and Warranties	69
		10.2	Covenant and Limitations on Liability	71
		10.3	Process	73
		10.4	Notice	73
		10.5	Sole Recourse and Release	73
		10.6	Subrogation	74
		10.7	Control of Remediation	74
		10.8	Dispute Resolution for Environmental Work	75
		10.9	Waiver of Site Profile	75

11.	EMPLOYEES			76
		11.1	Salaried Employees	76

-iii-


				PAGES
		11.2	Union Employees	77
		11.3	Remittances	77
		11.4	Benefit Plans	77

12.	CONDITIONS OF CLOSING			78
		12.1	Conditions of Closing in Favour of the Buyer	78
		12.2	Conditions of Closing in Favour of the Seller	80

13.	CLOSING DATE AND TRANSFER OF POSSESSION			81
		13.1	Transfer	81
		13.2	Place of Closing	81
		13.3	Delivery of Closing Documents	81
		13.4	Further Assurances	83
		13.5	Registration of Transfer of Real Property	83
		13.6	Post-Closing Notification	84

14.	INDEMNIFICATION			84
		14.1	Indemnification by the Seller	84
		14.2	Indemnification by the Buyer	85
		14.3	Notice of Claim	86
		14.4	Direct Claims	87
		14.5	Third Party Claims	87
		14.6	Settlement of Third Party Claims	87
		14.7	Co-operation	88
		14.8	Thresholds	88
		14.9	Reduction	88
		14.10	Limitations	89
		14.11	Cap	89
		14.12	As Is, Where Is	89
		14.13	Assumed Liabilities	89
		14.14	Subrogation	90
		14.15	Exclusive Remedy	90

15.	TERMINATION			90
		15.1	Termination	90

16.	MISCELLANEOUS			91
		16.1	Notices	91
		16.2	Commissions, etc	92
		16.3	Consultation	92
		16.4	Disclosure	92
		16.5	Retention of Books and Records	92
		16.6	Confidentiality	93
		16.7	Non-Solicitation	93
		16.8	Disclosure Letter	94
		16.9	Costs and Expenses	94
		16.10	Third Parties	94
		16.11	Counterparts	95

-iv-

THIS AGREEMENT made as of the 17th day of February, 2005,

BETWEEN: COASTAL ACQUISITION LTD., a corporation existing under the laws of British Columbia

(the “BUYER”)

AND: WEYERHAEUSER COMPANY LIMITED, a corporation existing under the laws of Canada

(the “SELLER”)

WITNESSES THAT WHEREAS the Seller has agreed to sell and the Buyer has agreed to purchase certain assets and properties of the Seller relating to the Purchased Business (as defined herein) upon and subject to the terms and conditions contained in this Agreement;

THEREFORE in consideration of the respective covenants, agreements, representations, warranties and indemnities of the parties herein contained and for other good and valuable consideration (the receipt and sufficiency of which are acknowledged by each party) the parties agree as follows:

1. INTERPRETATION

1.1 DEFINED TERMS

For the purposes of this Agreement, unless the context otherwise requires, the following terms shall have the respective meanings set out below and grammatical variations of such terms shall have corresponding meanings:

(a)   “AAC” means allowable annual cut;

(b)   “ABORIGINAL CLAIMS” means, in respect of the Purchased Business and Purchased Assets, any and all claims to aboriginal rights or title or interest or treaty rights, and any and all Legal Proceedings and Liabilities, arising or incurred as a result of, or in relation to: (i) Claims of aboriginal rights or title or interest or treaty rights, made by or on behalf of any Aboriginal Group whether or not they are: (A) made before or after the Closing Date; (B) proven in a court of law; or (C) made in Legal Proceedings; and (ii) any duty or obligation to share information with, consult or accommodate or receive consent from any Aboriginal Group;

(c)   “ABORIGINAL GROUP” means any Indian band, first nation or aboriginal group, house, tribal council or other aboriginal organization;

(d)   “ACCOUNTS RECEIVABLE” means, in respect of third parties other than Affiliates of Seller, all accounts receivable, trade accounts receivable, advances, notes receivable, insurance claims and any other debts due or accruing to the Seller

-1-

    including any refunds and rebates, and the benefit of all security (including cash deposits), guarantees and other collateral and security for those accounts, advances, notes and debts to the extent that they relate primarily to or arise primarily from the Purchased Business and they arise or exist as at the Time of Closing, and any claim, remedy or other right related to any of the foregoing and, for greater certainty, excluding Tax refunds and rebates and CVD/AD refunds;

(e)   “ACQUIRED ENTITIES” means the following entities in which the Seller holds an Ownership Interest: Boom Chain Transportation Company Limited, Marine Leasing Ltd., Iisaak Forest Resources Ltd., Mid-Island Reman Inc., MacMillan Bloedel Kabushaki Kaisha Ltd., Weyer haeuser (Imports) Pty. Limited, 486286 British Columbia Ltd., and Gulf Log Salvage Co-operative Association provided that the parties acknowledge that the Seller’s interest in Boom Chain Transportation Company Limited may be dissolved or sold before the Closing and in that event, the term “Acquired Entities” shall mean all of the listed entities as above other than Boom Chain Transportation Company Limited;

(f)   “ADDITIONAL INTERESTS” means the Poplar Interests and the Sproat Lot 98 Interests;

(g)   “AFFILIATE” in respect of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person where “control” means, with respect to the relationship between or among two or more Persons, the possession, directly or indirectly or as trustee, personal representative or executor of the power to direct or cause the direction of the affairs or management of the Person, whether through the ownership of Voting Securities, as trustee, personal representative or executor, by contract, credit arrangement or otherwise, including without limitation, the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person;

(h)   “AGREEMENT” means this asset purchase agreement including the recitals and schedules hereto, as amended, supplemented or restated from time to time;

(i)   “APPLICABLE LAW” with respect to any Person, property, transaction or event, means all present laws, statutes, regulations, treaties, judgments and decrees applicable to that Person, property, transaction or event, Environmental Laws, Forestry Laws and all applicable requirements, directives, rules, consents, approvals, authorizations, orders and policies of any Governmental Authority having the force of law over that Person, property, transaction or event;

(j)   “APPROVALS” means approvals, certificates, authorizations, consents, permits, grants, licences, notifications, privileges, rights, orders, judgments, rulings, directives, ordinances, decrees, registrations and filings, including, without limitation, the Approvals set out in Schedule 1.1(j);

-2-

(k) “ASSUMED LIABILITIES” means the following Liabilities of the Seller to the extent relating to or arising with respect to the Purchased Business or the Purchased Assets whether arising before or after the Time of Closing:

(i) under all Contracts including, without limitation:

(A) foreign exchange losses in respect of sales agreements denominated in foreign currencies; and

(B) those Contracts listed in Schedule 1.1(k)(i),

but excluding:

(C)   the Timber Reallocation Agreement (except to the extent such agreement is partially assigned to the Buyer);

(D)   those Liabilities, other than Environmental Liabilities, arising from the breach of a Contract that occurred prior to the Time of Closing;

(E)   Liabilities for retroactive rate or payment adjustments arising in respect of matters that occurred prior to the Time of Closing and based on the terms of such Contracts as they existed prior to the Time of Closing, provided always that the Buyer has first consulted with the Seller in respect of any adjustment that requires or is based upon the Buyer’s involvement in or approval of such adjustment; and

(F)   Liabilities of the Seller to banks, financial institutions or other Persons for borrowed money;

(ii)   with respect to the Union Employees and the Salaried Employees as set forth in Article 11 including, without limitation, the severance obligations referenced in Section 14.2(b);

(iii)   under all Licences and Permits other than Environmental Permits, including without limitation those listed in Schedule 1.1(k)(iii), but excluding those Liabilities, other than Environmental Liabilities, arising from the breach of a Licence or Permit (other than Environmental Permits) that occurred before the Time of Closing;

(iv)   Liabilities disclosed on the Working Capital Statement;

(v)   with respect to Permitted Encumbrances, other than Taxes payable by the Seller (unless covered by Section 3.9), Liabilities of the Seller to banks, financial institutions or other Persons for borrowed money and under Contracts, to the extent excluded under (i)(C), (D) or (E) above;

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(vi)   with respect to all Forestry Liabilities, notwithstanding the amount paid for the assumption thereof by the Seller to the Buyer;

(vii)   under the Timber Tenures, other than in respect of stumpage and waste billings arising in respect of harvesting or failure to harvest before the Time of Closing and not included in the Working Capital Statement;

(viii)   with respect to roads, bridges, dumps, culverts and other improvements associated with the Real Property and the Timber Tenures, regardless of when or how constructed or used, but excluding any Liabilities resulting from breaches of Forestry Laws by the Seller before the Time of Closing to the extent that such breach results in any prosecution, charge, ticket or administrative or other monetary penalty under the Forestry Laws;

(ix)   under the Forestry Laws but excluding: (A) any Liabilities resulting from breaches of Forestry Law by the Seller before the Time of Closing to the extent that such breach results in any prosecution, charge, ticket or administrative or other monetary penalty under the Forestry Laws, and (B) stumpage and waste billings arising in respect of harvesting or failure to harvest before the Time of Closing and not included in the Working Capital Statement;

(x)   Environmental Liabilities and Environmental Permits;

(xi)   Liabilities to anyone formerly employed in the Purchased Business as contemplated in Section 11.2(c);

(xii)   with respect to Aboriginal Claims; and

(xiii)   with respect to the Legal Proceedings listed in Part 1 or
Part 2 (except as set forth therein) of Schedule 1.1(k) (xiii );

(l) “BEACH CAMP LANDS” means the lands and premises legally described as Parcel Identifier : 025-571-281, Lot B, Section 17, Township 1, Rupert District, Plan VIP 74604, see plan as to limited access;

(m) “BENEFIT PLANS” means all plans, agreements, programs, policies, practices or undertakings (whether oral or written, formal or informal, funded or unfunded, insured or uninsured, registered or unregistered) that the Seller is a party to or bound by or in which the Employees of the Purchased Business participate, or under which the Seller has or will have any liability or contingent liability, for compensation or benefits additional to base pay or salary including without limitation surplus entitlement, with respect to any of the Employees of the Purchased Business (or their spouses, dependants, survivors or beneficiaries), whether or not subject to any Applicable Law, relating to pension, superannuation, retirement or retirement savings benefits (including any defined benefit pension plan, defined contribution pension plan, registered retirement

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    savings plan, retirement compensation arrangement, and supplemental pension plan) or any bonus, deferred compensation, incentive compensation, share based compensation (including any share purchase, share appreciation, share option or phantom stock plans) severance or termination pay, hospitalization or other medical benefits, life or other insurance, dental, disability, salary continuation, vacation, paid time off and overtime, supplemental unemployment benefits, profit-sharing, mortgage and relocation assistance, car allowances, professional dues, club dues, employee loan, employee assistance, post retirement benefits and each other employee benefit plan or agreement , except that the term “BENEFIT Plans” will not include any statutory plans of general application with which the Seller is required to comply by reason of being an employer, including by way of example the Canada Pension Plan and plans administered pursuant to applicable provincial health tax, workers’ compensation, workplace safety and insurance and employment insurance legislation and except that, for the purposes of Section 11.4(b), the term Benefit Plan will be deemed not to include any entitlement to notice of termination or any severance payment in lieu thereof;

(n)   “BOOKS AND RECORDS” means the On-Site Books and Records and Off-Site Books and Records;

(o)   “BOOT LAGOON LANDS” means the lands and premises legally described as Parcel Identifier : 008-572-763, District Lot 284, Alberni District;

(p)   “BUSINESS DAY” means any day, other than a Saturday, Sunday or a statutory holiday in British Columbia and which Business Day is deemed to end at 5:00 p.m. (local time) on that day;

(q)   “BUYER INDEMNIFIED PARTY” means the Buyer and its shareholders, directors, officers, employees, agents, representatives, successors and assigns;

(r)   “CLAIM” means any notice (including a notice of defect or non-compliance), assessment, reassessment, order, summons, citation, directive, no-action letter, ticket, charge, fine, penalty, judgment, order, liability, expense, cost, damage, loss, investigation, letter or other written communication, claim, remediation cost recovery action, demand, suit, action, complaint, grievance, legal assertion, prosecution, petition or proceeding from any Person or any Governmental Authority;

(s)   “CLOSING” means the completion of the Purchase at the Time of Closing;

(t)   “CLOSING CONSENTS” means those consents set forth in Schedule 1.1(t);

(u)   “CLOSING DATE” means the first Monday after the date that is the later of the first Business Day after the expiry of the notice period set out in Section 11.2(b) and twelve Business Days after the day on which the last of the conditions set out in Sections 12.1(c), (d), (i), (j) and (k) and Sections 12.2(f), (g) and (h) have been satisfied or waived as contemplated herein by the Buyer or the Seller, as the case

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    may be, or such other date as may be agreed to in writing between the Seller and the Buyer;

(v)   “CLOSING GUARANTEE” means the guarantee executed by Brascan Corporation on the date hereof, guaranteeing the performance of the obligations of the Buyer hereunder during the Interim Period;

(w)   “COASTAL AMOUNT” of any Quota means the amount of any Quota that may be received by the Seller or to which the Seller may be entitled based on the criteria for the determination of Quota (the “CRITERIA”) applied to the Purchased Business for the time before Closing, and, if the Seller receives or is entitled to any Quota based on such Criteria for the time before Closing but the actual amount of the Quota received by the Seller or to which the Seller is entitled based on the application of the Criteria to the Purchased Business for the time before Closing can not be separately determined from any of the other Quota that the Seller may receive or be entitled to, then the Coastal Amount of any Quota will be determined on the basis of:

(i) the annual average of the volume of softwood lumber reported by the Seller to the Department of Foreign Affairs and International Trade as having been sold by the Purchased Business into the United States during the relevant period of time before Closing used to allocate the Quota, and in the absence of any such period of time, during the twenty-four months immediately before the date of this Agreement (as the numerator);

relative to:

(ii) the annual average of the volume of softwood lumber reported by the Seller to the Department of Foreign Affairs and International Trade as having been sold by all of the Seller’s businesses in Canada into the United States during that time (as the denominator);

(x)   “COLLECTIVE AGREEMENTS” means the collective agreements described in Schedule 1.1(x);

(y)   “COMPETITION ACT” means the Competition Act (Canada), as amended;

(z)   “COMPETITION ACT APPROVAL” means:

(i) the issuance of an advance ruling certificate by the Commissioner under Subsection 102(1) of the Competition Act to the effect that the Commissioner is satisfied that the Commissioner would not have sufficient grounds upon which to apply to the Competition Tribunal for an order under section 92 of the Competition Act with respect to the transactions contemplated by this Agreement or otherwise in connection with the transfer of the Purchased Assets to the Buyer; or

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(ii) the applicable waiting period under section 123 of the Competition Act will have expired or the Commissioner will, in accordance with paragraph 113(c) of the Competition Act, have waived the obligation to provide a pre-merger notification in accordance with Part IX of the Competition Act because substantially similar information was previously supplied in relation to a request for an advance ruling certificate pursuant to subsection 102(1) of the Competition Act, and the Buyer will have received a “no-action” letter from the Commissioner, which letter confirms that the Commissioner is of the view that there are not sufficient grounds to initiate proceedings before the Competition Tribunal under the merger provisions of the Competition Act with respect to the transactions contemplated herein or otherwise in connection with the transfer of the Purchased Assets to the Buyer; or

(iii) where, in lieu of the requirements in (i) and (ii) above, at the Buyer’s election, the waiting period under section 123 of the Competition Act will have expired or the Commissioner will, in accordance with paragraph 113(c) of the Competition Act, have waived the obligation to provide a pre-merger notification in accordance with Part IX of the Competition Act because substantially similar information was previously supplied in relation to a request for an advance ruling certificate pursuant to subsection 102(1) of the Competition Act, and neither the Seller nor the Buyer will have been advised in writing by the Commissioner that :

(A) the Commissioner has determined to make an application for an order under section 92, 100 or 104 of the Competition Act with respect to the transactions contemplated by this Agreement or otherwise in connection with the transfer of the Purchased Assets to the Buyer, or to commence an inquiry with respect to such transactions or transfer under section 10 of the Competition Act; or

(B) an application under section 9 of the Competition Act has been made to the Commissioner with respect to the transactions contemplated by this Agreement or otherwise in connection with the transfer of the Purchased Assets to the Buyer;

(aa) “CONTAMINANTS” means any radioactive materials, asbestos, asbestos-containing materials, urea formaldehyde, hydrocarbons, polychlorinated biphenyls (“PCBs”), PCB-containing equipment or materials, pollutants, contaminants, mould, deleterious substances, dangerous substances or goods, hazardous, corrosive or toxic substances, hazardous waste, waste, wood waste leachate, pesticides, defoliants or any other substance, solid, liquid, gas, vapour, odour, radiation or any combination thereof, the storage, manufacture, handling, disposal, treatment, generation, use, transport, remediation or Release into, or presence in, the

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    environment of which is prohibited, controlled, regulated or defined under Environmental Laws whether such Environmental Laws come into force before or after the Time of Closing;

(bb)   “CONTAMINATED SITE” has the meaning given to it at the Time of Closing in the British Columbia Environmental Management Act and the regulations pursuant thereto;

(cc)   “CONTRACT” means any agreement, indenture, contract, lease, deed of trust, licence, option, instrument or other commitment, whether written or oral, relating primarily to the Purchased Business, including the Personal Property Leases, the Real Property Leases, the Real Property Interests, quotations, orders, tenders for any contract that remain open for acceptance, warranties or guarantees (express or implied) but not including any national purchase contracts between the Seller and the various suppliers of goods and/or services to the Seller’s other operations and business in common with the Purchased Business as listed in Schedule 1.1(cc);

(dd)   “CVD/AD” means all countervailing and anti-dumping duties, and similar duties, taxes and levies;

(ee)   “DEPOSIT” means the sum of $75,000, 000 held by the Escrow Agent from time to time;

(ff)   “DIRECT CLAIM” means a Claim that is not a Third Party Claim;

(gg)   “DISCLOSURE LETTER” means the letter delivered by the Seller to the Buyer concurrently with the execution and delivery of this Agreement setting out certain exceptions to the representations and warranties of the Seller and signed on behalf of the Seller, by the Seller’s President;

(hh)   “DRAFT WORKING CAPITAL STATEMENT” has the meaning set forth in Section 3.4;

(ii)   “EMPLOYEES” means Salaried Employees and Union Employees who are employed in the Purchased Business including the employees on long term disability, leave of absence, maternity leave or other absence and who have a contractual, legal, Collective Agreement or other right to return to employment with the Seller, all of whom are set out in Schedule 1.1(ii);

(jj)   “ENCUMBRANCE” means any charge, mortgage, lien, pledge, claim, legal notation, hypothec, legal or conventional, personal or real, or security interest, whether created or arising by agreement, statute or otherwise at law, attaching to property, interests or rights and shall be construed in the widest possible terms and principles known under the law applicable to such property , interests or rights and whether or not they constitute specific or floating charges;

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(kk) “ENVIRONMENTAL CONDITION” means:

(i) the presence or Release, whether before or after the Time of Closing, of any Contaminants in, on, at, under, to or from: (A) any Real Property, or (B) the lands underlying the Timber Tenures and lands and waters subject to the Licences and Permits (including Environmental Permits) to the extent not included in Real Property, (C) lands and waters adjacent to or, in the vicinity of, the lands and waters described in subparagraphs (A) and (B) upon which the Purchased Business has encroached; or (D) any building or other structure on the Real Property or any other property described in the immediately preceding subparagraphs (B) and (C); and

(ii) any other circumstance, condition, matter, occurrence, issue, event or requirement relating to the environment (which includes , without limitation, any building or structure on, or forming part of, the Purchased Assets), environmental assessment, health, occupational health and safety or transportation of dangerous goods that arises from, is caused (directly or indirectly) by, or relates to, the operation of the Purchased Business or the Purchased Assets whether before or after the Time of Closing other than breaches of Forestry Laws that occurred before the time of Closing to the extent that such breach results in any prosecution, charge, ticket or administrative or other monetary penalty under the Forestry Laws;

(ll)   “ENVIRONMENTAL COVENANT” means the covenants of the Seller set out in Section 10;

(mm)   “ENVIRONMENTAL EXPERT” means an individual who is qualified as a professional with a recognized geotechnical, engineering, or environmental consulting firm;

(nn)   “ENVIRONMENTAL LAWS” means all statutes, laws, regulations, orders, by-laws, standards, directions, protocols (provided that such standards, directions and protocols have the force of law but including, with respect to any real property subject to federal jurisdiction, the CCME Standards), and other lawful requirements of any Governmental Authority having jurisdiction over the Purchased Assets or the Purchased Business relating to the environment, environmental assessment, health, occupational health and safety, or transportation of dangerous goods and that are applicable to the Purchased Assets, including the principles of common law and equity and that are in force at the Time of Closing but excluding Forestry Laws; provided that, for the purposes of the representations and warranties in Section 6.16(b) and Article 10: (A) Environmental Laws includes all provisions of Forestry Laws that relate to Environmental Conditions; and (B) Forestry Laws excludes all provisions of Forestry Laws that relate to Environmental Conditions;

(oo)   “ENVIRONMENTAL LIABILITY” means any Claim or Legal Proceedings and any Liability or Loss, whether or not a rising as a result of a Claim or Legal Proceeding, arising out of, related to, or resulting from any Environmental

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Condition, whether such Environmental Condition occurred or came into existence before or after the Time of Closing, but excluding:

(i) those Environmental Conditions for which the Seller is or becomes responsible pursuant to Article 10 of this Agreement to the extent set out in, and subject to the limitations in, Article 10; and

(ii) any Formal Legal Proceedings issued before the Time of Closing with respect to Environmental Conditions that occurred before the Time of Closing where such Formal Legal Proceedings are not listed in Part 1 or Part 2 (except as set forth therein) of Schedule 1.1(k) (xiii);

(pp)   “ENVIRONMENTAL PERMITS” means all Licences and Permits required under Environmental Laws, including, without limitation, those set out in Schedule 1.1(pp);

(qq)   “ESCROW AGENT” means Computershare Trust Company of Canada, who shall serve as escrow agent for the Deposit;

(rr)   “ETA” means Part IX of the Excise Tax Act (Canada), as amended from time to time;

(ss)   “EXCLUDED ASSETS” means the following assets, properties, rights and interests of the Seller:

(i)   Contracts relating primarily to the Excluded Assets;

(ii)   the Combined Contracts;

(iii)   the Excluded IP;

(iv)   insurance policies held by the Seller and any proceeds of such policies;

(v)   Taxes and instalments of Taxes paid by the Seller and the right to receive any refund of Taxes paid by the Seller and investment tax credits refundable to the Seller, scientific research and experimental development tax credit refunds, workers’ compensation premiums refundable and similar premiums refundable and rebates and credits and all interest thereon and any amounts recorded by the Seller as Taxes in accordance with GAAP;

(vi)   the Seller’s corporate charters, minute and share record books, documents and records and corporate seals of the Seller, Tax records and other financial records to the extent not reasonably required by the Buyer as successor to the Purchased Business and the Purchased Assets;

(vii)   the Benefit Plans of the Seller;

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(viii)   rebates and refunds of monies paid or payable to the Seller in connection with the Purchased Business or Purchased Assets before the Closing Date, including without limitation with respect to performance bonds, remediation order bonds and reforestation programs;

(ix)   cash and other security deposits made by the Seller including those made under the Timber Tenures, Real Property or Environmental Permits unless included in the calculation of the Net Working Capital and which are listed in Schedule 1.1(ss) (ix) ;

(x)   any guarantees, letters of credit or similar security arrangements made by the Seller in connection with the Purchased Assets and which are listed in Schedule 1.1(ss) (x) (replacements for which, the Buyer will be responsible for as of the Time of Closing except where the Purchased Asset to which such matter relates is not acquired by the Buyer at the Time of Closing);

(xi)   any funds, deposits, accruals or reserves relating to any deferred profit-sharing plan, salary deferral arrangement, employee trust, retirement benefits or retirement compensation arrangements;

(xii)   cash and cash equivalent in bank accounts;

(xiii)   certain information systems and technology as set out in Schedule 1.1(ss) (xiii);

(xiv)   the business and assets of Northwest Hardwoods (including two foreshore leases and a lot at or near the facility) and certain related Licences of alder timber tenure set out in Schedule 1.1(ss) (xiv);

(xv)   the box plant lot near the New Westminster sawmill, as legally described in Schedule 1.1(ss) (xv);

(xvi)   certain lots on Flores Island that the Seller has agreed to donate to the Province of British Columbia, as legally described in Schedule 1.1(ss) (xvi);

(xvii)   the business and assets of all distribution facilities anywhere in the world and all agreements relating to the distribution by such facilities of products produced by the Purchased Business other than the business and assets associated with the distribution facilities in China, Japan and Australia as set out in Schedule 1.1(ss) (xvii);

(xviii)   refunds, bonds and deposits relating to CVD/AD up to the Time of Closing;

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(xix)   the Real Property that is the subject of Permitted Sales that have closed prior to the Closing Date or that are subject to an executed purchase and sale agreement with a Third Party prior to the Time of Closing and are still in effect as at the Closing Date and any proceeds therefrom payable to the Seller in accordance with Section 3.13;

(xx)   the mortgages held by the Seller with respect to sales of interests in real property before the date of this Agreement as described in Schedule 1.1(ss) (xx) and retained mineral rights in respect of the sale of real property before the date of this Agreement;

(xxi)   Trus Joist property, assets, rights and interests of whatever nature or kind;

(xxii)   the Canadian White Pine and K3 sites, as legally described in Schedule 1.1(ss) (xxii); and all associated property, assets, rights and interests of whatever nature or kind, including two foreshore leases that are the subject of ongoing remediation and two foreshore leases which relate to land created by fill at the Canadian White Pine and K3 site;

(xxiii)   the Off-Site Books and Records;

(xxiv)   compensation under the Timber Reallocation Agreement as described in Section 2.5;

(xxv)   the lease agreement dated August 24, 1990, as amended, between the Seller and Shon Georgia Investments Ltd., in respect of the office space at 925 West Georgia Street;

(xxvi)   except as set forth in the Transitional Services Agreement, certain rights in respect of the Seller’s non-arms’ length supply arrangements including, without limitation:

(A)   log sales to Weyerhaeuser Company;

(B)   log sales to Seller’s Kamloops sawmill; and

(C)   lumber sales to Weyerhaeuser Building and Materials Distribution;

(xxvii) all assets, rights and interests relating to “Spacekraft” currently owned by MacMillan Bloedel Kabushiki Kaisha Ltd.;

(xxviii) the issued and outstanding shares of MacMillan Guardiana, S.A. de C.V.;

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(xxix)   all intercompany amounts owing to the Seller from its Affiliates (other than the Acquired Entities) and all intracompany amounts owing to the Purchased Business as disclosed on the Financial Statements;

(xxx)   subject to Section 3.15, the real property described in Schedule 1.1(ss) (xxx);

(xxxi)   the sum of $371,000 owed to the Seller by the Province of British Columbia in respect of legal fees relating to the settlement of a confidential lawsuit and a right of related set-off in the approximate amount of $1,229,000 by way of credit against amounts asserted to be payable by the Seller arising out of the timber licence transfer associated with the transfer of MacMillan Bloe del Limited timber licences to Weyerhae user Company Limited on or about November 1, 1999;

(xxxii)   any asset of the Seller not held for use and not used primarily in the Purchased Business, which for greater certainty excludes those assets described in sub- paragraphs (i) to (xxi) of the definition of Purchased Assets;

(tt)   “EXCLUDED IP” means all Intellectual Property owned by the Seller, and all of the Seller’s Intellectual Property Rights therein, that are not Transferred IP;

(uu)   “FEE SIMPLE REAL PROPERTY” means the real property set out in Schedule 1.1 (uu);

(vv)   “FINANCIAL EXPERT” means PricewaterhouseCoopers LLP;

(ww)   “FINANCIAL STATEMENTS” means the unaudited financial statements of the Seller relating to the Purchased Business for the financial years ending on December 28, 2003 and December 26, 2004;

(xx)   “FORESTRY LAWS” means the Forest Act (British Columbia), the Forest Practices Code of British Columbia Act, the Private Managed Forest Land Act (British Columbia), the Forest and Range Practices Act (British Columbia) and any Applicable Law relating to wildfires, if any, and all regulations and rules under those statutes, and the Fisheries Act (Canada) and all regulations and rules thereunder but solely as the Fisheries Act (Canada) and all regulations and rules thereunder apply to timber harvesting, roads, silviculture and other forestry management activities;

(yy)   “FORESTRY LIABILITIES” means all silviculture, reforestation, road deactivation and road reclamation Liabilities associated with the Timber Tenures and under any Contract that relate to attaining the reforestation or road deactivation standards under the Forestry Laws or that Contract for any harvested tracts or roads, including but not limited to any reforestation needed to ensure the reforestation will be met, conducting surveys of harvested blocks, re-surveying blocks that meet conditionally satisfactory reforested levels, deactivation and site reclamation

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    of road rights of way and re-treating harvested blocks that had been deemed not to meet the reforestation standards, determined in the manner set out in the calculations and principles set out in Schedule 1.1(yy);

(zz)   “FORESTRY LIABILITIES ADJUSTMENT” means the difference between the Forestry Liabilities at the Time of Closing and the Forestry Liabilities Statement determined as contemplated by Section 3.5;

(aaa)   “FORESTRY LIABILITIES STATEMENT” means a statement of the Forestry Liabilities as at the Time of Closing determined by the Seller using the principles and procedures set forth in Schedule 1.1(yy);

(bbb)   “FORMAL LEGAL PROCEEDINGS” means any litigation, action, prosecution, charge, ticket, summons or other legal proceeding or judgment;

(ccc)   “GAAP” means generally accepted accounting principles in effect in Canada, including the accounting recommendations published in the handbook of the Canadian Institute of Chartered Accountants;

(ddd)   “GOVERNMENT” means any federal, provincial, state, territorial, local or municipal government of Canada or a foreign country and “GOVERNMENTAL” has a corresponding meaning;

(eee)   “GOVERNMENTAL APPROVALS” means Approvals issued or granted under any Applicable Law or by any Governmental Authority;

(fff)   “GOVERNMENTAL AUTHORITY” means any Government agency or Government department, tribunal, board, commission, court or other authority exercising or purporting to exercise executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, Government, as well as any arbitrator, arbitration tribunal or other tribunal or any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing;

(ggg)   “GST” means all Taxes payable under the ETA and any reference to a specific provision of the ETA shall refer to any successor provision thereto of like or similar effect;

(hhh)   “HSR COMPLIANCE” means that the parties have completed the filing of all forms required by the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976, as amended, in respect of the transactions contemplated by this Agreement, and the waiting periods (or any extensions thereof) applicable under that Act have terminated or expired;

(iii)   “INDEMNIFIED PARTY” means a Buyer Indemnified Party or Seller Indemnified Party, as applicable;

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(jjj)   “INDEMNIFYING PARTY” means a party from whom indemnification is sought by an Indemnified Party under Article 14;

(kkk)   “INTELLECTUAL PROPERTY” means intellectual, industrial and intangible property of whatever nature and kind in any jurisdiction, including trademarks, official marks, brand names, business names, trade names, domain names, trading styles, logos , trade secrets, innovations, discoveries, developments, product formulations, software (including object code, source code and related documentation), proprietary manufacturing information, and know how, equipment and parts list and descriptions, inventions, inventor’s notes and research data, unpatented blue prints, drawings and designs, industrial property, formulae, processes, technology, databases, works of authorship, works subject to copyright, guides, manuals and designs, in all cases whether patented or patentable, whether registered or unregistered, and in any medium whatsoever;

(lll)   “INTELLECTUAL PROPERTY RIGHTS” means any and all rights in respect of Intellectual Property, whether pursuant to statute, common law or other laws, including any and all:

(i)   rights in respect of trademarks and trade names;

(ii)   copyrights and the benefit of any waivers of moral rights;

(iii)   database rights;

(iv)   rights in respect of industrial designs, integrated circuit topographies, and mask works;

(v)   patents and patent applications;

(vi)   rights and obligations in respect of trade secrets; and

(vii)   all applications, registrations, renewals, extensions, continuations, divisions, reissues, and restorations relating to any such rights (where applicable), now or hereafter in force and effect throughout the world (including any rights in any of the foregoing).

(mmm)   “INTERIM PERIOD” means the period commencing on the date of execution of this Agreement and ending at the Time of Closing;

(nnn)   “INVENTORY” means all inventories of the Purchased Business including logs and other raw materials, work in process, supplies and spare parts, except for any wraps or other supplies bearing the Seller’s name or marks;

(ooo)   “LEASED REAL PROPERTY” means the real property set out in Schedule 1.1(ooo);

(ppp)   “LEGAL PROCEEDING” means any litigation, action, suit, prosecution, investigation, hearing, claim, demand, complaint, grievance, notice of non-compliance or

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    defect, citation, directive, legal charge, arbitration proceeding or other legal notice or legal proceeding, judgment, order or decree and includes any appeal or review and any application for appeal or review;

(qqq)   “LIABILITIES” means obligations, liabilities, settlement payments, awards, judgments, fines, penalties, damages, losses, all Taxes, including Taxes arising as a result of an assessment or reassessment, costs (including remediation costs) and expenses (including reasonable fees and disbursements of legal counsel, consultants, expert witnesses and other professionals and including any other costs incurred in investigating, defending or pursuing any Legal Proceeding), deficiencies and other charges;

(rrr)   “LICENCE AGREEMENTS” means all right, title and interest in and to all licence agreements, service agreements, supply agreements, franchise agreements, computer hardware and software agreements and technical services agreement relating primarily to the Purchased Business;

(sss)   “LICENCES AND PERMITS” means all permits, licences, consents, authorizations, approvals, privileges, waivers, exemptions, orders, certificates, rulings, agreements and other concessions required from or issued by any Governmental Authority in connection with the Purchased Business;

(ttt)   “LICENSED IP” means the Intellectual Property owned by the Seller and required for the Purchased Business as of the Closing Date, and all of the Seller’s Intellectual Property Rights therein, but excluding: (i) the Transferred IP; (ii) the Seller’s domain names, trademarks and trade-names and goodwill associated with such names, and (iii) all copyrightable subject matter and trade dress in advertising, promotional materials, marketing brochures, pamphlets, store display, product wraps and website content owned by the Seller;

(uuu)   “LOSSES” means, with respect to any matter, all losses, claims, damages, liabilities, deficiencies, costs, expenses (including, without limitation, all costs of investigation, legal and other professional fees and disbursements, interest, penalties and amounts paid in settlement) or diminution of value, whether or not involving a Third Party Claim arising directly as a consequence of such matter, however specifically excluding consequential, special and indirect losses, loss of profit and loss of opportunity;

(vvv)   “LOT 98” means the lands and premises legally described as Parcel Identifier: 008-408-106, District Lot 98, Alberni District, Except Part in Plans 4087, 4786 and 14235;

(www)   “MATERIAL CONTRACTS” means any Contract (other than the Timber Tenures) with respect to the Purchased Business: (i) involving remaining payments to or by the Seller in excess of $2,000,000 in any one year; (ii) that is outside the ordinary course of the Purchased Business; (iii) that restricts in any material way the Purchased Business or the use of the Purchased Assets or activities of Seller or

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    Buyer (upon the acquisition of the Purchased Assets by the Buyer); or (iv) that would, in the event of a termination, default, acceleration or loss of rights thereunder, have a Materially Adverse effect on the Purchased Assets or the Purchased Business;

(xxx)   “MATERIALLY ADVERSE” means, with respect to the Purchased Business or the Purchased Assets, a fact, circumstance, event, occurrence or term that individually or together with other facts, circumstances, changes, events, occurrences or terms, does or could reasonably be expected to materially and adversely affect (i) the financial condition, business, assets, operations, results, Liabilities, obligations (whether absolute, accrued, conditional or otherwise) or prospects of the Purchased Business, (ii) the value of the Purchased Assets or the Purchased Business, or (iii) the ability of a party to perform any material obligations under this Agreement, other than, in the case of clauses (i) and (ii), any such affect arising out of or resulting from (x) changes in economic, regulatory or political developments applicable to the forestry industry generally in British Columbia that do not have a disproportionate effect on such Person, (y) changes in financial markets generally, or (z) the identity, nature or conduct of the Buyer as the buyer of the Purchased Business;

(yyy)   “MILL PROPERTY” means the lands listed on Schedule 1.1 (yyy) and any improvements thereon;

(zzz)   “MODIFICATIONS” means all corrections, modifications, enhancements, improvements, supplements or derivative works;

(aaaa)   “NET WORKING CAPITAL” means the amount by which the aggregate of current assets included in the Purchased Assets, including the percentage of the current assets of each Acquired Entity that is proportionate to the extent of the Seller’s Ownership Interest therein, exceeds the aggregate of the current liabilities being assumed by the Buyer, including the percentage of the current liabilities of each Acquired Entity that is proportionate to the extent of the Seller’s Ownership Interest therein, all in accordance with GAAP (consistently applied with those applicable to the Financial Statements) except for those items set out in Schedule 1.1 (aaaa) which will be accounted for in accordance with the principles set out therein (even if such principles are inconsistent with GAAP) and an amount receivable or payable between a Person, including the Seller, having an interest in an Acquired Entity that would be an Ownership Interest if owned by the Seller and an Acquired Entity shall be considered a current asset or a current liability, as the case may be;

(bbbb)   “NET WORKING CAPITAL ADJUSTMENT” means the difference between the Net Working Capital at the Time of Closing and the Net Working Capital Estimate determined as contemplated in Section 3.4;

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(cccc)   “NET WORKING CAPITAL ESTIMATE” means the estimate of Net Working Capital as at the Time of Closing provided in writing by the Seller to the Buyer no later than five Business Days before the Closing Date;

(dddd)   “OFF-SITE BOOKS AND RECORDS” means all books, records, books of account, sales and purchase records, employee records, lists of suppliers and customers, credit and pricing information, files, ledgers, correspondence, lists, manuals, reports, texts, notes, engineering, environmental or feasibility studies, memoranda, invoices, receipts, accounts, financial statements, financial working papers, computer disks, tapes or other means of electronic storage, and all other records or documents of any nature or kind whatsoever of or relating to the Purchased Business (and each business unit within the Purchased Business) and not located at the locations of the Purchased Assets at the Time of Closing, other than all such documents related primarily to the Purchased Business and located on the 4th floor of 925 West Georgia Street, and which, having used commercially reasonable efforts, the Seller is unable to segregate from records of the Seller unrelated to the Purchased Business, and all emergency backup, electronic tapes and data that contain historical information, data and records pertaining to the business affairs generally of the Seller, including the Purchased Business;

(eeee)   “ON-SITE BOOKS AND RECORDS” means all books, records, books of account, sales and purchase records, employee records, lists of suppliers and customers, credit and pricing information, files, ledgers, correspondence, lists, manuals, reports, texts, notes, engineering, environmental or feasibility studies, memoranda, invoices, receipts, accounts, financial statements, financial working papers, computer discs, tapes or other means of electronic storage, and all other records or documents of any nature or kind whatsoever of or relating to the Purchased Business (and each business unit within the Purchased Business) other than the Off- Site Books and Records;

(ffff)   “OWNERSHIP INTERESTS” means shares, partnership or joint venture interests or other ownership interest of the Seller in an Acquired Entity and includes any amount owing to the Seller by an Acquired Entity that is not otherwise a Purchased Asset but, for greater certainty, excludes any amount owing by an Acquired Entity to the Seller that is included in the computations of Net Working Capital;

(gggg)   “PERMITTED ENCUMB RANCES” means :

(i) liens for Taxes and governmental charges, if such Taxes or Governmental charges are not due and payable;

(ii) servitudes, easements, restrictions, rights-of-way and other similar rights in the Real Property or any interest therein, provided they are not of such a nature as to materially adversely impair or affect the use of the Real Property in the operation of the Purchased Business as currently conducted;

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(iii)   inchoate liens for Taxes not due and payable;

(iv)   undetermined or inchoate liens, charges and privileges incidental to current construction or current operations of the Purchased Business and that have not at the Time of Closing been filed pursuant to Applicable Law and that relate to obligations not due or delinquent (provided that the Seller shall at all times remain responsible for all liabilities other than Assumed Liabilities);

(v)   the reservations, exceptions, limitations, provisos and conditions in any original grants from the Crown, or contained in any other grant or disposition from the Crown, of any of the Real Property or interest therein and statutory exceptions to title;

(vi)   the reservations, exceptions, limitations, provisos and conditions to which any of the Timber Tenures are subject;

(vii)   encroachments over any of the Real Property used in the operation of the Purchased Business by any buildings, structures, improvements or appurtenances situate on lands adjacent to that Real Property and permitted under agreements with the Seller disclosed to the Buyer or that do not materially impair the use of the Real Property in the operation of the Purchased Business as currently conducted;

(viii)   Aboriginal Claims that may be made or established (provided that nothing in this Agreement is to be construed or taken by either party or any other Person to be an acknowledgement or admission of the validity of any such Aboriginal Claim) and all Encumbrances arising as a result of an Aboriginal Claim;

(ix)   all Encumbrances that secure the Assumed Liabilities;

(x)   those Encumbrances against the Real Property disclosed in Schedule 1.1(gggg) (x);

(xi)   Encumbrances registered in the Land Title Office in respect of the Real Property as of November 2, 2004;

(xii)   Encumbrances on Real Property that is not Mill Property that are registered in the Land Title Office or granted after November 2, 2004 that arise in the ordinary course of the Purchased Business and that do not materially affect the continued use or operation of that asset for the intended purpose, or are not financial Encumbrances securing monetary obligations, or do not prevent the transfer or assignment of the Real Property to which the Encumbrance attaches;

(xiii)   Encumbrances approved by the Buyer, such approval not to be unreasonably withheld;

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(xiv)   a statutory right of way or easement for emergency vehicles’ access over a portion of the Island Phoenix Mill Site required for the subdivision of the Dodd Narrows lands;

(xv)   the limitations, prohibitions, provisos and conditions under the Land Act (British Columbia), the Private Managed Forest Land Act (British Columbia ) and the Agricultural Land Commission Act (British Columbia);

(xvi)   the limitations, prohibitions, provisos and conditions associated with the Tenure Take-Back and the Timber Reallocation Agreement;

(hhhh)   “PERMITTED SALES” means sales of Real Property by the Seller that are permitted to occur during the Interim Period in accordance with the terms of this Agreement, which Real Property is more particularly set out in Schedule 1.1 (ss) (hhhh) hereto;

(iiii)   “PERSON” means an individual, legal person or representative, corporation, body corporate, firm, partnership, trust, trustee, syndicate, joint venture, limited liability company, association, unincorporated organization, union, Aboriginal Group or Governmental Authority;

(jjjj)   “PERSONAL INFORMATION” means any personal information protected by any Applicable Laws governing privacy matters and the protection of personal information;

(kkkk)   “PERSONAL PROPERTY LEASES” means all rights, titles and interests in and to the leases of personal or chattel property relating exclusively to the Purchased Business, including all purchase options, pre-paid rents, security deposits and, to the extent transferable, Licences and Permits relating thereto and all leasehold improvements thereon, as described in Schedule 1.1(kkkk);

(llll)   “POPLAR INTERESTS” has the meaning set out in Section 9.19;

(mmmm)   “POPLAR LANDS” means the lands and premises legally described in Schedule 1.1 (mmmm);

(nnnn)   “POPLAR LICENCES” means the licences in respect of portions of the Poplar Lands described in Schedule l.l (nnnn);

(oooo)   “POST CLOSING GUARANTEE” means a guarantee of the indemnities of the Purchaser substantially as set out in Schedule 1.1 (oooo) hereto;

(pppp)   “PRIME RATE” for any day means the rate of interest expressed as a rate per annum that the Canadian Imperial Bank of Commerce establishes at its primary branch in Vancouver as a reference rate of interest that it will charge on that day for Canadian dollar demand loans to its corporate customers in Canada and that it refers to as its prime rate;

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(qqqq)   “PST” means the social services tax under the Social Service Tax Act (British Columbia);

(rrrr)   “PURCHASE” means the transaction of purchase and sale contemplated by this Agreement;

(ssss)   “PURCHASE PRICE” has the meaning set out in Section 3.1;

(tttt)   “PURCHASE PRICE ADJUSTMENT” means any Net Working Capital Adjustment and any adjustment pursuant to Section 3.6, 3.7, 3.12(b), 3.13, 3.14, 3.15 and 9.3;

(uuuu)   “PURCHASED ASSETS” means all of the Seller’s rights, title and interests in and to the following property, assets, rights and interests that are held for use or used primarily in the Purchased Business:

(i)   the Fee Simple Real Property (including all mineral, undersurface and other interests associated therewith), together with the buildings, structures, roads, bridges, culverts and other improvements and appurtenances situated on the Real Property;

(ii)   rights, titles and interests (whether as lessee or lessor) under the Real Property Leases, including all purchase options, prepaid rents and security deposits relating thereto together with all leasehold improvements thereon (except those owned by lessees other than the Seller);

(iii)   rights, titles and interest in and to the Real Property Interests;

(iv)   rights, titles and interest in and to the Personal Property Leases;

(v)   rights, titles and interest in and to all other Contracts to which the Seller is a party or has the benefit of, relating to the Purchased Business (other than those Contracts relating primarily to the Excluded Assets and the unassigned portion of the Timber Reallocation Agreement), including orders for the provision of goods and services (whether as buyer or seller) and including, without limitation, the Material Contracts described in Schedule 1.1(k)(i);

(vi)   all machinery, equipment, underground and above ground tanks and the contents thereof, office furniture, fixed or used, furniture, furnishings, parts, tools, supplies and accessories and fixed assets immobilized by nature or by destination and situate at the Real Property or at the lands underlying the Timber Tenures;

(vii)   any interest of the Seller in any active, inactive and closed roads, bridges, dumps, camps, quarries or other facilities located on the Real Property and lands subject to the Timber Tenures and the other Licenses and Permits;

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(viii)   all trucks, cars and other vehicles, rolling stock and vessels used or held for use primarily in the Purchased Business, whether owned or leased, including those described in Schedule 1.1(uuuu)(viii);

(ix)   assets, property, rights and interests of whatever nature or kind in respect of the aviation operations relating to the Purchased Business including those assets described in Schedule 1.1(uuuu)(ix);

(x)   Accounts Receivable, Inventory and all other assets of the Purchased Business disclosed in the Working Capital Statement;

(xi)   the Timber Tenures and the Environmental Permits;

(xii)   other Licences and Permits, including those described in Schedule 1.1(k)(iii);

(xiii)   subject to Applicable Laws, the Coastal Amount of any Quota;

(xiv)   the business and assets associated with the distribution facilities in China, Japan and Australia described in Schedule 1.1(ss)(xvii);

(xv)   Transferred IP;

(xvi)   the On-Site Books and Records;

(xvii)   computer and telephone hardware that are used primarily in and required for the Purchased Business, including the computer and telephone hardware described in Schedule 1.1(uuuu)(xvii);

(xviii)   the goodwill, customer lists and supplier relationships of the Purchased Business and the exclusive right for the Buyer to represent itself as carrying on the Purchased Business in succession to the Seller, other than all national purchase contracts between the Seller and the various suppliers of goods and/or services as listed in Schedule 1.1(cc);

(xix)   the Ownership Interests in each of the Acquired Entities;

(xx)   warranty rights relating to the Purchased Assets against manufacturers or suppliers supplying the Purchased Business; and

(xxi)   all Claims of the Seller against Third Parties relating to the Purchased Assets, whether choate or inchoate, known or unknown, contingent or non-contingent, except those associated with the Excluded Assets and except those associated with Liabilities other than the Assumed Liabilities;

but excluding the Excluded Assets;

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(vvvv)   “PURCHASED BUSINESS” means the Seller’s coastal British Columbia business and operations as currently conducted (except as this definition applies to the definitions of “ABORIGINAL CLAIMS” and “ENVIRONMENTAL LIABILITIES”, where this definition shall mean as conducted at any time), consisting of the harvesting of timber and the manufacture and sale of logs, lumber, wood chips, and other wood products produced by those operations, including, without limitation, the Real Property, the Timber Tenures, the Personal Property Leases, three remanufacturing facilities and five sawmills, and any business ancillary to any of the foregoing, all (other than the Personal Property Leases) as more particularly set out on the map in Schedule 1.1 (vvvv); but for greater certainty, shall not include any business or operations (i) related to an Excluded Asset, (ii) conducted on real property other than the Real Property or on the lands underlying the Timber Tenures, or (iii) which has been sold or otherwise disposed of by the Seller to a Third Party prior to the Time of Closing;

(wwww)   “QUOTA” means any quota, export rights, sales rights or similar rights or exemptions from duty or constraint imposed or granted by a Governmental Authority on participants in the Canadian lumber industry in connection with the ongoing softwood lumber dispute between Canada and the United States or otherwise;

(xxxx)   “REAL PROPERTY” means the Fee Simple Real Property, the Leased Real Property, the Real Property Interests and the Additional Interests;

(yyyy)   “REAL PROPERTY INTERESTS” means all easements, rights of way, licences of occupation, permits and other interests in real property that are used primarily in the Purchased Business and held by the Seller, other than the Leased Real Property;

(zzzz)   “REAL PROPERTY LEASES” has the meaning set out in Section 6.11;

(aaaaa)   “RELEASE” means releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, migrating, escaping, leaching, disposing, pumping, injecting, dumping, depositing, spraying burying, abandoning, incinerating, seeping, placing, or any other similar action;

(bbbbb)   “REMEDIATION” means the work, plans, and investigations, including but not limited to removal, treatment, isolation, risk assessment and management or decontamination of Contaminants, substances, wastes, equipment, buildings, structures, appurtenances, land or water, necessary to achieve applicable Remediation Standards;

(ccccc)   “REMEDIATION STANDARDS” means the risk-based or numerical remediation standards, as elected by the Seller, established pursuant to Environmental Laws for the use of the relevant property at the Time of Closing, provided that “Remediation Standards” is limited to the numerical remediation standards described above if such numerical standards are required by a Governmental

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    Authority for the continued use or operation of the Purchased Assets as they are being used at the Time of Closing or to meet the requirements of a Government Order or a final court order;

(ddddd)   “SALARIED EMPLOYEES” means the salaried employees identified as such in Schedule 1.1(ii);

(eeeee)   “SELLER INDEMNIFIED PARTY” means the Seller and its shareholders, directors, officers, employees, agents, representatives, successors and assigns;

(fffff)   “SILVICULTURE EXPERT” means KPMG LLP;

(ggggg)   “SPROAT LOT 98 INTERESTS” has the meaning set out in Section 9.20;

(hhhhh)   “TAXES” means all present and future taxes, surtaxes, duties, levies, imposts, rates, fees, premiums, assessments, withholdings, dues and other charges of any nature imposed by any Governmental Authority, including income, profits, capital (including large corporations) , stumpage, withholding, consumption, sales, use, transfer, goods and services or other value-added, excise, customs, anti-dumping, countervail, net worth, stamp, registration, franchise, payroll, employment, health, education, business, school, property, local improvement, development, education development and occupation taxes, surtaxes, duties, levies, imposts, rates, fees, assessments, withholdings, dues and charges, together with all fines, interest, penalties on or with respect to, or in lieu of or for non-collection of, those taxes, surtaxes, duties, levies, imposts, rates, fees, assessments, withholdings, dues and other charges;

(iiiii)   “TENURE TAKE - BACK” means, with respect to the Timber Tenures, the reduction in AAC and area of Crown land under the British Columbia Forestry Revitalization Act (as amended);

(jjjjj)   “THIRD PARTY” means a Person that is not a party to this Agreement;

(kkkkk)   “THIRD PARTY CLAIM” means a Claim by a Third Party but excluding any Claim by a Person that is not dealing at arm’s length with a party to this Agreement;

(lllll)   “TIMBER REALLOCATION AGREEMENT” means the agreement dated September 14, 2004 between the Seller and the Province of British Columbia which sets out, amongst other things, the compensation for the Tenure Take-Back and the principles under which the Province of British Columbia will acquire roads and improvements from the Seller;

(mmmmm)   “TIMBER TENURES” means, in respect of the Purchased Business, the rights of the Seller or any Affiliate to harvest timber from certain lands owned by the Province of British Columbia, all as more particularly set out in Schedule 1.1 (mmmmm);

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(nnnnn)   “TIMBERWEST LICENCE” means licence G-4705 dated July 19, 2001 between the Seller and Timberwest Forest Company, a partnership (as successor to TFL Forest Ltd.) in respect of the portion of Lot 98 more particularly described in the licence;

(ooooo)   “TIME OF CLOSING” means 9:00 a.m. (Vancouver time) on the Closing Date or such other time as the parties agree;

(ppppp)   “TRANSFER ARRANGEMENT” means an arrangement with the Ministry of Forests for the payment to the Province of British Columbia of all money required to be paid to the government in relation to the Timber Tenures under the circumstances set out in subsection 130 (1.1) of the Forest Act (British Columbia) arising on or before the Closing Date;

(qqqqq)   “TRANSFERRED EMPLOYEES” means Employees who accept an offer of employment from the Buyer;

(rrrrr)   “TRANSFERRED IP” means the Intellectual Property owned by the Seller and used exclusively in the Purchased Business as of the Closing Date , and all of the Seller’s Intellectual Property therein, but excluding: (i) all domain names, trademarks and trade- names owned by Seller, and all goodwill associated with such names; and (ii) all copyrightable subject matter and trade dress in advertising, promotional materials, marketing brochures, pamphlets, store display, product wraps and website content owned by the Seller;

(sssss)   “TRANSITIONAL SERVICES AGREEMENT” means the Transitional Services Agreement to be entered into between the Seller and the Buyer on the Closing Date, substantially in the form set forth in Schedule 1.1(sssss); will provide for the provision, on commercially reasonable terms, of administrative (including accounting and IT) services on an 18 month, interim basis;

(ttttt)   “UNION EMPLOYEES” means the Employees that are subject to the Collective Agreements;

(uuuuu)   “VOTING SECURITIES” means securities with capital stock of any class of any corporation, partnership units in the case of a partnership, membership interests in the case of a limited liability company, trust units in the case of a trust, interest in a joint venture or other evidence of ownership serving similar purposes, in each case, carrying voting rights under all circumstances; and

(vvvvv)   “WORKING CAPITAL STATEMENT” means a statement of the Net Working Capital as at the Time of Closing, calculated using the principles and procedures set forth in this Agreement, together with a report provided by KPMG LLP on specified procedures carried out by them in the form set out in Schedule 1.1 (vvvvv).

1.2   KNOWLEDGE OF THE SELLER

Any statement in this Agreement expressed to be made to “the Seller’s knowledge” and any other references to the knowledge of the Seller shall be understood to be made on the basis of the

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Seller’s actual knowledge, which means the actual knowledge, after conducting reasonably diligent investigation considering the existence of the relevant fact or other matter, of any of :

Brian Corrall
Anne Giardini
Tom Holmes
Scott Marshall
Sandy McDade
Craig Neeser
Alex Shorten
Charles Smith
Ken Young
Richard Young

For greater clarity, reasonably diligent investigation shall not be deemed to include any requirement to conduct any new environmental site assessment, audit or study or to make enquiries of Third Parties. Each party hereto acknowledges that no personal liability will attach to any of the individuals described above as a result of a breach of any representation or warranty in this Agreement, and in particular, as a result of such representation or warranty having been qualified by the phrase “the Seller’s knowledge” or any phrase or expression having a similar effect or as otherwise contemplated in this Section 1.2.

1.3 CURRENCY

Unless otherwise indicated, all dollar amounts in this Agreement are expressed in Canadian dollars and all payments shall be made in Canadian dollars.

1.4 ARTICLES, SECTIONS AND HEADINGS

The division of this Agreement into articles, sections and subsections and the insertion of headings are for convenience of reference only and shall not affect the interpretation of this Agreement. Unless otherwise indicated, any reference in this Agreement to an article, section, subsection or Schedule refers to the specified article, section or subsection of or Schedule to this Agreement.

1.5 NUMBER, GENDER AND PERSONS

In this Agreement, words importing the singular number only shall include the plural and vice versa, words importing gender shall include all genders and words importing persons shall include individuals, corporations, partnerships, associations, trusts, unincorporated organizations, governmental bodies and other legal or business entities of any kind whatsoever.

1.6 ACCOUNTING TERMS AND DEFINITIONS

Unless otherwise specified herein or in a Schedule hereto, all accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with GAAP, consistently applied with prior periods . For greater certainty, the determination of whether a particular financial disclosure, presentation or result is in accordance with GAAP shall

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be determined as a whole, and not as to whether any specific item or number has been prepared in accordance with GAAP.

1.7 ENTIRE AGREEMENT

Other than the confidentiality agreement entered into by the parties on October 28, 2004, which shall continue in full force and effect, this Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether written or oral.

1.8 TIME OF ESSENCE

Time shall be of the essence of this Agreement. Unless otherwise specified, references to time of day or date mean local time or date in the City of Vancouver, British Columbia.

1.9 APPLICABLE LAW

This Agreement shall be construed, interpreted and enforced in accordance with, and the respective rights and obligations of the parties shall be governed by, the laws of the Province of British Columbia and the federal laws of Canada applicable therein and the parties hereby attorn to the jurisdiction of the courts of the Province of British Columbia.

1.10 SUCCESSORS AND ASSIGNS

This Agreement shall enure to the benefit of and shall be binding on and enforceable by the parties and, where the context so permits, their respective successors (including any successor by reason of the amalgamation of any party) and permitted assigns.

1.11 ASSIGNMENT

(a) The Seller may not assign any of its rights or obligations under this Agreement without the prior written consent of the Buyer. Except as set out below, the Buyer may not assign any of its rights or obligations under this Agreement without the prior written consent of the Seller. The Buyer may assign all or a portion of its rights and obligations hereunder to a corporation, partnership (including a limited partnership) or trust that is, directly or indirectly, wholly owned by the Buyer or Brascan Corporation, provided that:

(i) the assignee has delivered to the Seller a duly executed notice that it has become an assignee as permitted by this Section 1.11, and acknowledging that it is bound by the terms of this Agreement to the extent of such assignment;

(ii) the Buyer or Brascan Corporation, as the case may be, has entered into an agreement with the Seller pursuant to which the Buyer or Brascan Corporation, as the case may be, covenants that it will not sell or otherwise dispose of its interest in the assignee, or sell, dispose of, or otherwise cease to wholly own the assignee prior to Closing or permit the

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assignee to assign any of its rights under this Agreement, or agree to do any of the foregoing or grant any option or right to any Person with respect to the foregoing, or announce its intention to do any of the foregoing with respect to any particular Person (each of which is referred to herein as a “Disposition Event”), without first obtaining the written consent of the Seller to such Disposition Event, which consent may not be unreasonably withheld;

(iii) if the assignee acquires all or substantially all of the Fee Simple Real Property (other than the Mill Property), it agrees with the Seller to deliver, on Closing, the Post- Closing Guarantee; and

(iv) the Buyer has covenanted in writing with the Seller that the assignee’s obligations in respect of Closing are covered by the Closing Guarantee.

A withholding of consent by the Seller to a Disposition Event shall be deemed to be unreasonable if the Buyer establishes that:

(v) the Disposition Event will not materially increase the risk that any or all of the conditions to Closing contained in Sections 12.1 and 12.2 will not be met, and will not materially delay the completion of the Purchase beyond the date the Closing could reasonably be expected to occur in the absence of such Disposition Event, including for this purpose that the time required to meet the conditions to Closing set out in Sections 12.1(k), 12.2(f), 12.2(g) and 12.2(h) will not be materially increased as the result of the Disposition Event;

(vi) after completion of the Disposition Event and the Closing, the entity that will beneficially own all or substantially all of the Fee Simple Real Property (other than the Mill Property) will be the guarantor under the Post-Closing Guarantee, and that entity has agreed with the Seller that any subsequent assignee or transferee of, or successor in interest to, all or substantially all of the Fee Simple Real Property will be required to assume the guarantor’s obligations under the Post-Closing Guarantee.

(b) Prior to the sixth anniversary of the Closing Date, the Buyer shall not transfer or assign (whether by agreement, operation of law or otherwise) all or substantially all of its interest in the Fee Simple Real Property (other than the Mill Property) without the Seller’s written consent (which right to consent may be exercised in its absolute discretion) unless the transferee, assignee or successor in interest:

(i) grants or assumes the Post-Closing Guarantee; and

(ii) has given the Seller a covenant substantially similar to that contained in this Section 1.11(b).

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1.12 SEVERABILITY

Each provision of this Agreement is hereby declared to be separate, severable and distinct. If any provision of this Agreement is determined to be invalid, illegal or unenforceable in any respect, the remainder of this Agreement shall not be affected thereby and shall be applied and construed as if such invalid, illegal or unenforceable provision had been omitted unless such provision or provisions are so material that its or their invalidity, illegality or unenforceability would materially change the transactions contemplated hereby so as to make them unreasonable and contrary to the intentions of the parties.

1.13 CONFLICT

If there is a conflict between any provision of this Agreement and any provision of any other document contemplated by or delivered under or in connection with this Agreement, the relevant provision of this Agreement is to prevail, unless such other document expressly states that it prevails over this Agreement.

1.14 AMENDMENTS AND WAIVERS

No amendment or waiver of any provision of this Agreement shall be binding on either party unless consented to in writing by such party. No waiver of any provision of this Agreement shall constitute a waiver of any other provision nor shall any waiver constitute a continuing waiver unless otherwise provided.

1.15 SCHEDULES

The Schedules listed in Schedule 1.15 are attached to and form part of this Agreement.

During the Interim Period, the Seller will continue to operate the Purchased Business in the normal course and may, with the Buyer’s consent (which may not be unreasonably withheld), amend, modify or add to the existing information contained in the Schedules to this Agreement to include new information arising out of ongoing operations and not in existence at the time of execution and delivery of this Agreement; provided that such new, amended or modified information is not material with respect to the operation of the Purchased Business or the value of the Purchased Assets.

1.16 STATUTORY REFERENCES

Unless otherwise stated herein, any reference to a statute includes all regulations made under that statute and includes all amendments made to the statute and the regulations in force from time to time, and any statute or regulation that supplements or replaces that statute or regulation.

1.17 PERFORMANCE ON HOLIDAYS

If any action is required to be taken pursuant to this Agreement on or by a specified date, which is not a Business Day, then such action will be valid if taken on or by the next succeeding Business Day.

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1.18 INTEREST

Any amount owed by one party to another party hereunder that is not paid when due, will bear interest until paid at a rate per annum equal to the Prime Rate plus 1%, compounded monthly on the last Business Day of each month, both before and after default and judgment, with interest on overdue interest at the same rate.

2. PURCHASE AND SALE OF PURCHASED ASSETS

2.1 PURCHASED ASSETS

Subject to the provisions of this Agreement, the Seller hereby agrees to sell, assign and transfer to the Buyer and the Buyer hereby agrees to purchase, acquire and accept from the Seller, effective as of the Time of Closing, as a going concern, all of the Purchased Assets.

2.2 EXCLUDED ASSETS

The Excluded Assets shall be excluded from and shall not be included in or comprise part of the Purchased Assets.

2.3 GRANT OF LICENCES

(a) The Buyer, effective on Closing, hereby grants to the Seller a fully-paid, royalty free, worldwide, perpetual, and non-exclusive licence to use the Transferred IP, and to make, have made and use Modifications to the Transferred IP. Any Modifications made by the Seller after the Time of Closing to the Transferred IP shall be the exclusive property of the Seller.

(b) The Seller, effective on Closing, hereby grants to the Buyer a fully-paid, royalty free, worldwide, perpetual, and non-exclusive licence to use the Licensed IP, and to make, have made and use Modifications to the Licensed IP. Any Modifications made by the Buyer to the Licensed IP after the Time of Closing shall be the exclusive property of the Buyer.

2.4 THIRD PARTY CONSENTS

The Seller hereby declares that with respect to any Purchased Asset or interest in any Purchased Assets intended to be sold, conveyed, assigned, granted, transferred or set over to the Buyer by this Agreement, the unencumbered title to which may not have passed the Buyer by virtue of this Agreement because the interest is not assignable without the consent of any Person or satisfaction of a condition imposed by Applicable Law or by any Governmental Authority or legal right in favour of any Person, the Seller shall hold the same in trust for the Buyer and shall forthwith sell, convey, grant, assign, transfer and set over the same to the Buyer upon the required consent being obtained or satisfaction of any other applicable condition. Until such time, the Seller shall to the extent reasonably necessary, at the request and consent of the Buyer, perform all obligations with respect to the Purchased Assets in the name of the Buyer and all benefits derived there from and costs relating thereto shall be for the account of the Buyer.

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2.5 TIMBER REALLOCATION AGREEMENT

That portion of the Timber Reallocation Agreement that relates to the Purchased Business shall be assigned by the Seller to the Buyer at the Closing, however the rights, benefits and obligations of the Seller and the Buyer under the assigned portion of the Timber Reallocation Agreement will be apportioned as between the Buyer and Seller as follows:

(a)   compensation in respect of the Tenure Take-Back, as described in Sections 8 and 9 of the Timber Reallocation Agreement, will be for the benefit of the Seller;

(b)   compensation in respect of the right of the Province of British Columbia to expropriate or use roads or facilities, as described in Section 3 of the Timber Reallocation Agreement on Real Property, will be for the benefit of the Buyer;

(c)   compensation under Section 4 of the Timber Reallocation Agreement in respect of roads, improvements and soft costs relating to those lands identified by the Province of British Columbia as Tenure Take-Back lands as of the date of this Agreement on the map attached as Schedule 1.1(vvvv) for the British Columbia Timber Sales Program under the Forest Act will be for the benefit of the Seller;

(d)   compensation under Section 4 of the Timber Reallocation Agreement in respect of roads, improvements and soft costs, other than those described in paragraph (c), will be for the benefit of the Buyer; and

(e)   the Seller will be responsible for any Liabilities to the Province of British Columbia arising under the Timber Reallocation Agreement in respect of roads, facilities or soft costs:

(i) for which the Seller was compensated under the Timber Reallocation Agreement; and

(ii) for which the Buyer was compensated under the Timber Reallocation Agreement to the extent that Liabilities exceed the amount of compensation received by the Buyer for the road, facilities, or soft costs in respect of which the Liability arose except with respect to any Environmental Conditions which occurred or came into existence after the Time of Closing for which the Buyer will be responsible and except that the Buyer shall also be responsible for all other Liabilities that arise in connection with events or circumstances occurring after the Time of Closing or that would otherwise be limited by Section 14.10(b).

2.6 QUOTA

If after the Closing Date the Seller becomes entitled to any Quota, then the Seller will, subject to Applicable Laws, transfer the Coastal Amount of that Quota to the Buyer at no additional cost to the Buyer. However, the Buyer acknowledges and agrees that if the Buyer receives or becomes entitled to any Quota after or as a result of acquiring the Purchased Business which is based on the criteria for determination of Quota relating to the Purchased Business for the time before

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Closing and which, if an equivalent amount of that Quota is included in the Coastal Amount of any Quota, would in effect result in the Buyer benefiting twice or to some extent greater than what is due for the time before Closing, the equivalent amount of that portion of the Quota is not included in and will be deducted from the Coastal Amount of any Quota and, if it is or has at that time already been transferred by the Buyer to the Seller, will be transferred by the Buyer back to the Seller. The Seller shall use its commercially reasonable efforts in its dealings with Governmental Authorities, to ensure that the Coastal Amount of the Quota is allocated by such Governmental Authority to the Buyer in the first instance. If the Seller is prevented by Applicable Laws from transferring the Coastal Amount of the Quota to the Buyer, then the Seller and the Buyer shall discuss, in good faith, ways in which the Seller may be able to provide the Buyer with the benefit of the Coastal Amount of the Quota.

3. PURCHASE PRICE

3.1 PURCHASE PRICE

The aggregate purchase price (the “PURCHASE PRICE”) payable by the Buyer to the Seller for the Purchased Assets shall be $1,221,500,000 (as adjusted by Section 3.12(b)), plus the Net Working Capital and the amount of the Assumed Liabilities (other than the Forestry Liabilities) and adjusted as described herein by the Purchase Price Adjustment. Any amount payable (or receivable) by either party pursuant to any of Sections 3.4, 3.6, 3.7, 3.12(b), 3.13, 3.14, 3.15, or 9.3 shall be a decrease or increase, as the case may be, in the Purchase Price. All amounts payable under Sections 9.19 or 9.20 shall be satisfied by crediting a portion of the Purchase Price thereto.

3.2 PAYMENT OF PURCHASE PRICE

The Purchase Price shall be paid and satisfied as follows, subject to the provisions of this Agreement:

(a)   as to the amount of $1,221,500,000, plus the Net Working Capital Estimate, by wire transfer to the bank account of the Seller at the Time of Closing;

(b)   as to any Purchase Price Adjustment, in accordance with Sections 3.4, 3.6, 3.7, 3.12(b), 3.13, 3.14, 3.15 and 9.3 herein; and

(c)   by the Buyer assuming the Assumed Liabilities (other than the Forestry Liabilities), at the Time of Closing as provided in Section 5.1.

3.3 REFORESTATION PAYMENTS

The Seller shall pay by wire transfer to the bank account of the Buyer, at the Time of Closing the amount specified in the Forestry Liabilities Statement delivered on the Closing Date, which amount is to be paid by the Seller to the Buyer in consideration for the Buyer assuming the Forestry Liabilities at the Time of Closing.

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3.4 WORKING CAPITAL STATEMENT

On or promptly after the Closing Date, the Seller and the Buyer shall jointly conduct an evaluation of the Net Working Capital as at the Time of Closing. Within sixty days of the Closing Date, the Seller shall deliver to the Buyer the Working Capital Statement in draft form (the “Draft Working Capital Statement”) together with advice from KPMG LLP that they have completed their review procedures and, upon approval of the Draft Working Capital Statement will deliver its opinion in the form set out in Schedule 1.1(vvvvv). For the purpose of preparing the Draft Working Capital Statement, the Buyer agrees to grant the Seller’s authorized representatives reasonable access to relevant records, facilities and personnel of the Buyer. The Seller shall provide the Buyer and the Buyer’s representatives with all cooperation and supporting audit working papers as they may reasonably require to enable them to review the Draft Working Capital Statement. The Buyer shall have a period of thirty days from the date it receives the Draft Working Capital Statement from the Seller in which to review the Draft Working Capital Statement, and:

(a)   APPROVAL OF WORKING CAPITAL STATEMENT - if no objection to the Draft Working Capital Statement is given to the Seller by the Buyer within that thirty day period, the Draft Working Capital Statement shall be deemed to have been approved as of the last day of that thirty day period or, if the Buyer gives notice to the Seller that it approves the Draft Working Capital Statement, on the date that notice is given. Upon approval or deemed approval, the Seller will deliver to the Buyer the final Working Capital Statement including the auditors report.

(b)   OBJECTION TO WORKING CAPITAL STATEMENT - if the Buyer objects to the Draft Working Capital Statement within that thirty day period by giving notice to the Seller setting out in reasonable detail the nature of the objection, the parties agree to attempt to resolve the matters in dispute within thirty days from the date the Buyer gives the notice to the Seller. If all matters in dispute are resolved by the parties, the Draft Working Capital Statement shall be modified to the extent required to give effect to that resolution and shall be deemed to have been approved as of the date of that modification.Upon resolution, the Seller will deliver to the Buyer the final Working Capital Statement including auditors report.

(c)   RESOLUTION BY FINANCIAL EXPERT - If the parties cannot resolve all matters in dispute within the thirty day period, all unresolved matters shall be submitted to the Financial Expert for resolution, and the Financial Expert shall be given access to all materials and information reasonably requested by it for that purpose and will be provided with all other materials or submissions as either party considers to be relevant, acting reasonably. The Financial Expert will act as an expert and not as an arbitrator. As promptly as practicable, the Financial Expert will deliver a written report to the parties setting forth its opinion as to the resolution of the matters in dispute. The Financial Expert’s opinion of all of the matters in dispute shall be final and binding on both parties absent error and shall not be subject to appeal by either party absent error. The fees and expenses of the Financial Expert shall be borne equally by the parties. The Draft Working Capital Statement shall

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be modified to the extent required to give effect to the Financial Expert’s opinion and shall be deemed to have been approved as of the date of that modification.

Once the Working Capital Statement has been deemed to have been approved or approved by the Buyer or determined by the Financial Expert:

(d) ADJUSTMENT PAYMENT BY THE SELLER - if the Net Working Capital is less than the Net Working Capital Estimate the Seller shall pay to the Buyer as a reduction of that portion of the Purchase Price allocated to Net Working Capital the Net Working Capital Adjustment on the tenth Business Day following the date on which the Working Capital Statement has been approved or determined by the Financial Expert; or

(e) ADJUSTMENT PAYMENT BY THE BUYER - if the Net Working Capital is more than the Net Working Capital Estimate, the Buyer shall pay to the Seller as an increase in that portion of the Purchase Price allocated to Net Working Capital the amount of the Net Working Capital Adjustment on the tenth Business Day following the date on which the Working Capital Statement has been approved or determined by the Financial Expert;

subject to any set-offs of the above payments that may be agreed to by the parties.

3.5 FORESTRY LIABILITIES ADJUSTMENT

The Seller shall deliver to the Buyer the Forestry Liabilities Statement on the Closing Date. The Buyer shall have a period of ninety days from the date it receives the Forestry Liabilities Statement from the Seller in which to review the Forestry Liabilities Statement, and:

(a) APPROVAL OF FORESTRY LIABILITIES STATEMENT - if no objection to the Forestry Liabilities Statement is given to the Seller by the Buyer within that ninety day period, the Forestry Liabilities Statement shall be deemed to have been approved as of the last day of that ninety day period or, if the Buyer gives notice to the Seller that it approves the Forestry Liabilities Statement, on the date that notice is given.

(b) OBJECTION TO FORESTRY LIABILITIES STATEMENT - if the Buyer objects to the Forestry Liabilities Statement within that ninety day period by giving notice to the Seller setting out in reasonable detail the nature of the objection, the parties agree to attempt to resolve the matters in dispute within thirty days from the date the Buyer gives the notice to the Seller. If all matters in dispute are resolved by the parties, the Forestry Liabilities Statement shall be modified to the extent required to give effect to that resolution and shall be deemed to have been approved as of the date of that modification. If the parties cannot resolve all matters in dispute within the thirty day period, all unresolved matters shall be submitted to the Silviculture Expert for resolution, and the Silviculture Expert shall be given access to all materials and information reasonably requested by it for that purpose and will be provided with all other materials or submissions as either party considers to be relevant, acting reasonably. The Silviculture Expert will act as an

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expert and not as an arbitrator. The Silviculture Expert will only make a determination as to whether the Forestry Liabilities Statement has been prepared in accordance with the principles set out in Schedule 1.1(yy), and shall not impose his or her own views as to the appropriate valuation principles to apply. As promptly as practicable, the Silviculture Expert will deliver a written report to the parties setting forth its opinion as to the resolution of the matters in dispute. Absent manifest error, the Silviculture Expert’s opinion of all of the matters in dispute shall be final and binding on both parties and shall not be subject to appeal by either party. The fees and expenses of the Silviculture Expert shall be borne equally by the parties. The Forestry Liabilities Statement shall be modified to the extent required to give effect to the Silviculture Expert’s opinion and shall be deemed to have been approved as of the date of that modification.

Once the Forestry Liabilities Statement has been deemed to have been approved or approved by the Buyer or determined by the Silviculture Expert:

(c) ADJUSTMENT PAYMENT BY THE SELLER - if the amount paid to the Buyer under Section 3.3 is less than the amount determined by the Silviculture Expert, the Seller shall pay to the Buyer the difference on the tenth Business Day following the date on which the modified Forestry Liabilities Statement has been approved or determined by the Silviculture Expert; or

(d) ADJUSTMENT PAYMENT BY THE BUYER - if the amount paid to the Buyer under Section 3.3 is more than the amount determined by the Silviculture Expert, the Buyer shall pay to the Seller the difference on the tenth Business Day following the date on which the modified Forestry Liabilities Statement has been approved or determined by the Silviculture Expert.

subject to any set-offs of the above payments that may be agreed to by the parties.

3.6 CAPITAL EXPENDITURE ADJUSTMENT

The Seller shall make the maintenance expenditures and the mutually agreed capital expenditures in the capital plan and budget described in Schedule 3.6 (the “CAPITAL PLAN”) during the Interim Period in accordance with the Capital Plan. If the Seller does not make the maintenance expenditures and the mutually agreed capital expenditures in the Capital Plan during the Interim Period, the parties will reduce the Purchase Price by an amount equal to the difference between the amount shown in the Capital Plan and the amount actually expended. Amounts in respect of any partial month in the Interim Period will be prorated to the number of days from that month in the Interim Period.

The Buyer shall have 60 days following the Closing to send the Seller notice that the maintenance expenditures and/or the mutually agreed capital expenditures required by the Capital Plan during the Interim Period have not been made and setting out the amount. The Seller shall have 30 days from the receipt of that notice to object to its contents and if no objection is made by the Seller within that period, the Seller will be deemed to have accepted the Buyer’s notice. The Seller shall pay to the Buyer within 10 Business Days of the deemed

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acceptance or final resolution of the difference between the Seller’s actual expenditures and the amount set out in the Capital Plan.

3.7 ROADS AND LOSS OF TIMBER

(a) The Seller shall carry out road construction on the Real Property and Timber Tenures during the Interim Period in accordance with Schedule 3.7(a). If the Seller does not expend the amounts shown in Schedule 3.7(a) during the Interim Period, the Parties will reduce the Purchase Price by an amount equal to the difference between the amount shown in Schedule 3.7(a) and the amount actually expended. Amounts in respect of any partial month in the Interim Period will be prorated to the number of days from that month in the Interim Period.

The Buyer shall have 60 days following the Closing to send the Seller notice that the road construction expenditures required of the Seller during the Interim Period have not been made and setting out the amount. The Seller shall have 30 days from receipt of that notice to object to its content and if no objections are made by the Seller within that period, the Seller will be deemed to have accepted the Buyer’s notice. The Seller shall pay to the Buyer within 10 Business Days of the deemed acceptance or final resolution of the difference between the Seller’s actual expenditures and the amount required in accordance with Schedule 3.7(a).

(b) The parties acknowledge that losses of timber may occur during the Interim Period as a result of, but not limited to:

(i)   theft, fire, flood, storm, wind, war, sabotage, insurrection, natural disaster, disease, insects or any other casualty;

(ii)   acts of Governmental Authorities; or

(iii)   unauthorized timber harvest by Third Parties.

In the event of any such loss during the Interim Period in excess of $500,000 as determined by the Destruction Value Table set out in Schedule 3.7(b), the parties agree to adjust the Purchase Price, for the amount in excess of $500,000, at Closing based upon the Destruction Value Table. In no event shall the cumulative adjustments for the matters described in this Section 3.7 exceed 20% of the Purchase Price.

3.8 ALLOCATION OF PURCHASE PRICE

The Seller and the Buyer agree to allocate the Purchase Price among the Purchased Assets in accordance with Schedule 3.8 and, for greater certainty, the Purchase Price allocated to an Ownership Interest in an Acquired Entity shall include the Net Working Capital of that Acquired Entity. The Seller and the Buyer agree that the values so attributed to the Purchased Assets are the respective fair market values thereof, and each party shall report the sale and purchase of the Purchased Assets for all federal, provincial, state and local tax purposes in mutually agreeable form and in a manner consistent with such allocation. Each party will promptly notify the other

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if it receives notice that a taxing authority proposes any allocation that is different from the allocation in Schedule 3.8.

3.9 ADJUSTMENTS

To the extent not included in Net Working Capital or otherwise dealt with in this Agreement, all adjustments relating to the Fee Simple Real Property and Timber Tenures, both incoming and outgoing, including without limitation annual rents, property taxes, local improvement charges, utilities, deposits and interest thereon, if any, and all other similar matters customarily pro-rated in the sale of real property shall be pro-rated between the parties as of the Closing Date, so that the Seller shall bear and pay all such expenses in respect of the period before the Closing Date and the Buyer shall bear all expenses in respect of the period on and after the Closing Date.

3.10 DEPOSIT

(a) Upon execution of this Agreement, the Buyer shall deposit in escrow with the Escrow Agent the Deposit, which amount shall be held by the Escrow Agent in escrow in an interest bearing account. At the Closing, the Deposit shall, at the Seller’s election, either be credited against the Purchase Price or returned to the Buyer.

(b) If the Buyer fails to consummate the purchase of the Purchased Business when it is otherwise obligated to do so hereunder, then the Deposit shall be paid over to the Seller, the same being agreed upon as liquidated damages for such failure. The Seller agrees to accept and take the Deposit as its total damages and relief and as the Seller’s sole and exclusive remedy hereunder. The parties agree and acknowledge that:

(i)   the Seller would suffer damages by reason of a failure of this transaction to close;

(ii)   the exact amount of such damages would be difficult to ascertain and to prove with certainty;

(iii)   the Deposit constitutes a fair and reasonable estimate of the actual damages the Seller would suffer; and

(iv)   the parties have negotiated and attempted, in good faith, to estimate the amount of such damages and to compensate the Seller therefore as set forth herein.

3.11 REDEEMABLE SHARES

Notwithstanding Section 3.2(a), the Seller agrees to accept as payment for the amount of the Purchase Price allocated to the purchase of Purchased Assets in respect of which PST is exigible the issuance by the Buyer to the Seller of redeemable preferred shares (“PREFERRED SHARES”) having a redemption price equal to the amount of the Purchase Price so allocated; and the Buyer agrees to advance to the Seller at the Closing as an interest-free loan an amount equal to such

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allocated amount of the Purchase Price and recourse of the Buyer against the Seller under such loan shall be limited to the Preferred Shares. The Seller agrees not to redeem the Preferred Shares until at least eight months and one day after the Closing Date. Upon redemption of such Preferred Shares by the Seller, the redemption price thereof may be set off by the Buyer against the amount of such loan outstanding. The Seller has the right to redeem the Preferred Shares at any time that is at least eight months and one day after Closing by way of set-off against the full amount of the interest free loan from the Buyer to the Seller. The Buyer agrees to indemnify the Seller for all costs and Liabilities to the Seller with respect to this arrangement.

3.12 PRE - CLOSING TRANSACTIONS

(a) During the Interim Period, the Seller, at its sole discretion, may undertake any of the transactions described in Schedule 3.12.

(b) If the amount of a debt owing by an Acquired Entity to the Seller arising from a transaction described in Schedule 3.12 exceeds the net working capital of the Acquired Entity without taking into account such debt (an “Excess”) then (i) $1,221,500,000 shall be reduced by the aggregate of each such Excess and (ii) the related portion of the Purchase Price allocated on Schedule 3.8 to the Ownership Interest in each such Acquired Entity shall be reduced by such Excess.

3.13 REAL ESTATE SALES ADJUSTMENT

If the Seller enters into one or more executed purchase and sale agreements with Third Parties in respect of Real Property that have closed prior to the Closing Date or that are still in effect as of the Closing Date, the Purchase Price shall be reduced by:

(a) if the sale(s) is in respect of Real Property other than a Permitted Sale, 90% of the proceeds from the disposition for all such sales; or

(b) if the sale(s) is in respect of Real Property which is a Permitted Sale, by 90% of the amount that the proceeds of the disposition for all such sales exceeds $18 million multiplied by the number of days from January 1, 2005 to the Closing Date divided by 365.

3.14 ACQUIRED ENTITIES ADJUSTMENT

In the event that, as a result of the exercise of any right to purchase held by a Third Party, the Seller is unable to deliver any Ownership Interest, the Purchase Price shall be reduced by the purchase price paid or payable to the Seller, upon the exercise of that right by the Third Party.

3.15 RFR LANDS

The Seller shall take all steps required by the applicable right of first refusal to permit the Seller to transfer to the Buyer fee simple title to the properties subject to the right(s) of first refusal in favour of a Third Party registered under No. EM52257 and No. ED2363. If the applicable Third Party does not exercise the right of first refusal then the property subject to the right of first refusal shall form part of the Fee Simple Real Property and shall be transferred to the Buyer on

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Closing. If the Third Party exercises the right of first refusal then the Purchase Price shall be reduced by the purchase price paid or payable to the Seller. The Buyer shall take all reasonable steps to cooperate and assist the Seller with respect to the Seller’s obligations under this Section.

4. TAX MATTERS

4.1 SALES TAX

(a)   The Seller hereby represents that it is duly registered for the purpose of the GST under number 103440624RT0001.

(b)   The Buyer hereby represents that it is duly registered for the purpose of the GST under number 856513833RT0001.

(c)   The Buyer and the Seller shall, on the Closing Date, elect jointly under section 167(1)(b) of the ETA, in the prescribed form and containing the prescribed information to permit the Purchased Assets to be conveyed without GST being payable with respect to the purchase and sale thereof hereunder. The Buyer and the Seller shall jointly complete the election forms with respect to such elections and the Buyer covenants to file the said election forms no later than the due date for the Buyer’s GST return for the first reporting period in which GST would, in the absence of such elections, become payable in connection with the transactions contemplated by this Agreement and provide the Seller with a copy of such filing.

(d)   The Buyer shall deliver to the Seller, and the Seller shall collect from the Buyer on Closing, the amount of the PST imposed on the Buyer with respect to the sale and purchase of the Purchased Assets under this Agreement, except where the Buyer is required to pay such PST directly to a Governmental Authority in connection with the registration of the transfer of assets. The Seller shall remit the full amount of the PST collected from the Buyer and file the appropriate return with the applicable taxation authorities in respect thereof. The parties agree that the Buyer will not require the Seller to comply, or to assist the Buyer to comply, with the provisions of Section 99 of the Social Service Tax Act (British Columbia) which requires the Buyer to obtain a clearance certificate with respect to the bulk sale of assets, applicable to the purchase and sale of the Purchased Assets pursuant to this Agreement. Notwithstanding the foregoing, the Seller hereby agrees to compensate, indemnify, defend and hold harmless the Buyer for, from and against all Claims that may be made or brought against the Buyer and Losses that the Buyer may suffer or incur as a result of, or in connection with, such non-compliance with Section 99 of the Social Service Tax Act.

4.2 TRANSFER TAXES

The Buyer shall be liable for and shall pay all federal, provincial and state sales taxes (including any GST, PST, sales taxes and land transfer taxes) and all other Taxes (other than income taxes) and registration fees of any jurisdiction properly payable in connection with the transfer of the Purchased Assets by the Seller to the Buyer. Without limiting the generality of the foregoing,

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the parties shall claim the benefit of any provisions of Applicable Law that allows all or any part of the Purchased Assets to be transferred by the Seller to the Buyer without payment of any Tax, including, any exemption for sales tax relating to production equipment or for goods acquired for resale.

4.3 ELECTIONS

(a) The Seller and the Buyer shall execute jointly an election in the form prescribed in the Income Tax Act (Canada) to have Section 22 of the Income Tax Act (Canada) apply in respect of the transfer of any debts included in the Seller’s income for purposes of the Income Tax Act (Canada) and of any loans made in the ordinary course of the Purchased Business.

(b) If requested by the Seller, the Seller and the Buyer shall jointly elect under subsection 20(24) of the Income Tax Act (Canada) in respect of an undertaking of the Seller for which the Seller has included an amount in income under paragraph 12(1)(a) of the Income Tax Act (Canada) and where such undertaking is being assumed by the Buyer.

5. ASSUMPTION OF LIABILITIES

5.1 ASSUMPTION OF CERTAIN LIABILITIES BY THE BUYER

Subject to the provisions of this Agreement, the Buyer hereby agrees to assume, and agrees to pay, satisfy, discharge, perform and fulfil the Assumed Liabilities from and after the Time of Closing. The Buyer shall also be responsible for all Liabilities with respect to the operations of the Purchased Business and the ownership of the Purchased Assets arising from and after the Time of Closing, and shall, in accordance with Article 14, indemnify and hold harmless the Seller from and against the Assumed Liabilities and all Liabilities with respect to the operations of the Purchased Business and the ownership of the Purchased Assets arising from and after the Time of Closing.

5.2 EXCLUDED LIABILITIES

Other than as expressly assumed pursuant to this Agreement, the Buyer shall not assume any liability other than the Assumed Liabilities, and the Seller shall be solely responsible for and shall, in accordance with Article 14, indemnify and hold harmless the Buyer from and against all Liabilities other than the Assumed Liabilities, provided that the Seller shall not be required to provide any indemnity to the Buyer in respect of any Liabilities of the Acquired Entities.

5.3 INSURANCE

The Seller’s insurance polices do not provide any coverage to the Buyer or to any entities acquired by the Buyer on or after the Closing. The Buyer will arrange its own insurance coverage commencing from the Time of Closing with respect to the Purchased Assets and the Purchased Business including all property and liability coverage.

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6. REPRESENTATIONS AND WARRANTIES OF THE SELLER

The Seller represents and warrants to the Buyer as at the time of execution and delivery of this Agreement as follows and acknowledges that the Buyer is relying on the accuracy of each representation and warranty of the Seller set out in Article 6 in entering into this Agreement. In Sections 6.4 through 6.33 references to the “Seller” shall mean the Seller and the Acquired Entities (other than Boom Chain Transportation Company Limited, Gulf Log Salvage Co-Operative Association, Marine Leasing Ltd. and Iisaak Forest Resources Ltd.) on a consolidated basis.

The Buyer agrees that, notwithstanding that the Seller’s representations and warranties in any Section of this Agreement may refer to a specific Schedule to this Agreement, the Seller will not be in breach of a representation or warranty made pursuant to this Agreement if the true facts with respect to the representation or warranty are disclosed in the Disclosure Letter, in any of the other Schedules, or directly in the text of this Agreement; provided however, that the following are exceptions to that general principle:

(a) the disclosure of information described in Schedules 10.1 (Environmental Matters) and 1.1(k)(xiii) (Legal Proceedings) shall only act as disclosure in respect of those specific Schedules; and

(b) the exceptions to the representations and warranties contained in the Schedules referenced in Sections 6.5, 6.6, 6.8, 6.9, 6.15, 6.17, 6.18 and 6.29 and in the Disclosure Letter, shall be the sole and only disclosures with respect to the representation or warranty to which the specific Schedule relates.

Except for the representations and warranties of the Seller set out in this Article 6 and Section 10.1, in executing this Agreement the Buyer relies wholly upon its own judgment and that of its advisors. The Buyer acknowledges that it has not been influenced by and is not relying on any representations or statements regarding any matter made by any Person, except the representations and warranties of the Seller set out in this Article 6 and Section 10.1.

6.1 ORGANIZATION

The Seller is a corporation duly constituted and organized and validly subsisting under the laws of Canada and has the corporate power and capacity and is duly qualified to own or lease its property, to carry on the Purchased Business as now being conducted by it and to enter into this Agreement and each of the agreements, documents and instruments to be entered into by the Seller in connection with this Agreement and to perform its obligations hereunder and thereunder. The Seller is duly qualified as a corporation to do business in each jurisdiction in which the nature of the Purchased Business or the Purchased Assets makes such qualification necessary.

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6.2 ACQUIRED ENTITIES

With respect to each Acquired Entity at the Closing Time:

(a)   the Seller will own and have good and marketable title to the Ownership Interest in such Acquired Entity set forth in Schedule 6.2(a) as the legal and beneficial owner thereof, free and clear of all Encumbrances other than Permitted Encumbrances;

(b)   all such Ownership Interests will be outstanding as fully paid and non-assessable equity in the capital of each Acquired Entity and such equity will be duly and validly issued;

(c)   any debt duly owing by an Acquired Entity to the Seller will be included in the calculation of Net Working Capital, and each such debt will be valid and outstanding in accordance with its terms; and

(d)   except as set out in Schedule 6.2(d), no Person will have any agreement or option or any right capable at any time of becoming an agreement to:

(i) purchase or otherwise acquire the Ownership Interest in, or outstanding debt of the Acquired Entities; or

(ii) require the Seller to sell, transfer, assign, pledge, charge, mortgage or in any other way dispose or encumber any of the Ownership Interest or outstanding debt of the Acquired Entities to the Seller, other than pursuant to the terms of this Agreement.

6.3 AUTHORIZATION

Subject to the Approvals required under Schedule 1.1(j), this Agreement and each of the agreements, documents and instruments of the Seller contemplated hereby has been or on the Closing Date will have been duly authorized, executed and delivered by the Seller, and is a legal, valid and binding obligation of the Seller, enforceable against the Seller by the Buyer in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency and other Applicable Laws affecting the rights of creditors generally and except that equitable remedies may be granted only in the discretion of a court of competent jurisdiction. No other corporate proceedings or approvals on the part of the Seller or its shareholders are necessary to authorize this Agreement and each of the agreements, documents and instruments contemplated hereby.

6.4 NO OTHER AGREEMENTS TO PURCHASE

No Person other than the Buyer has any Contract or any right or privilege (whether by law, pre-emptive or contractual) capable of becoming a Contract for the purchase or acquisition from the Seller of any of the Purchased Assets or any material assets of an Acquired Entity, other than in the normal course of the Purchased Business or as provided in the Permitted Encumbrances or rights of first refusal in respect of certain Ownership Interests.

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6.5 NO VIOLATION

Except as described in Schedule 6.5, the execution and delivery of this Agreement by the Seller and the consummation of the transactions herein provided for will not result in:

(a) the breach or violation of any of the provisions of, or constitute a default under, or conflict with or cause or give rise to a right of termination, cancellation, loss of rights, purchase or sale rights or payment obligations or the acceleration of, any obligation of the Seller under:

(i)   any Material Contract to which the Seller is a party or by which it is or its properties are bound;

(ii)   any provision of the constating documents or by-laws or resolutions of the board of directors (or any committee thereof) or shareholders of the Seller;

(iii)   any judgment, decree, order or award of any Governmental Authority having jurisdiction over the Seller;

(iv)   any material Licence or Permit held by the Seller or necessary to the operation of the Purchased Business; or

(v)   any Applicable Law, which in any event would have a Material Adverse effect on the Purchased Assets or Purchased Business; or

(b) the creation or imposition of any Encumbrance (other than a Permitted Encumbrance) on any of the Purchased Assets.

6.6 SUFFICIENCY OF PURCHASED ASSETS

Except: (i) as set forth in Schedule 6.6; (ii) as to be set forth in the Transitional Services Agreement; (iii) the Excluded Assets; and (iv) the assets to be acquired by the Seller from EDS as a condition of Closing as contemplated in Section 12.1(l), the Purchased Assets owned, leased or held by the Seller are sufficient to carry on the Purchased Business in all material respects as it is presently conducted.

6.7 TITLE TO PERSONAL PROPERTY

Except for assets to be acquired by the Seller from EDS as a condition of Closing as contemplated in Section 12.1(l), the Purchased Assets (other than the Real Property or any leased personal property) are owned beneficially by the Seller with a good and marketable title thereto, free and clear of all Encumbrances other than Permitted Encumbrances. No other Person owns any assets that are being used in or necessary for the conduct of the Purchased Business, except for the Leased Real Property, the Leased Personal Property and the real property in respect of which the Real Property Interests were granted.

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6.8 LOCATION OF REAL PROPERTY

Except for the Excluded Assets, Schedule 1.1(uu) sets forth the legal descriptions of all the real property that is used in the Purchased Business and of which the Seller is the beneficial or registered owner of the fee simple. Schedule 1.1(ooo) sets forth the description of all the real property that is used in the Purchased Business and leased by or to the Seller as lessee. Schedule 6.8 sets forth the description of all of the real property relating to the Purchased Business and in respect of which the Seller holds Real Property Interests.

6.9 TITLE TO REAL PROPERTY

With respect to the Purchased Business, the Seller is not the beneficial or registered owner of and has not agreed to acquire any real property or any interest in any real property other than the Real Property. The Seller has the exclusive right to possess, use and occupy and has good and marketable title to the Fee Simple Real Property and the Real Property is held by the Seller and will be conveyed to the Buyer free and clear of all Encumbrances other than Permitted Encumbrances. Without limiting the generality of the foregoing:

(a)   all accounts for work and services performed and materials placed or furnished upon or with respect to the Real Property at the request of the Seller have been fully paid and satisfied, and no Person is entitled to claim a lien or any other form of security under any applicable construction lien legislation against the Real Property or any part thereof, other than current accounts with respect to which the payment due date has not yet passed;

(b)   there is nothing owing with respect to the Real Property by the Seller to any municipal corporation or to any other corporation or commission owning or operating a public utility for water, gas, electrical power or energy, steam or hot water, or for the use thereof, other than current accounts with respect to which the payment due date has not yet passed;

(c)   there are no overdue material levies, charges or fees assessed against the Real Property by any public authority (including development or improvement levies, charges or fees);

(d)   to the knowledge of the Seller, the Seller has not received any deficiency notices, requests or written advice of any material breach of any Applicable Law in respect of the Real Property or the Seller’s improvements thereon that could, if not corrected, become a material work order or could require performance of material work or expenditure of money to correct;

(e)   other than the Tenure Take-Back and as set out in Schedule 6.9(e), to the knowledge of the Seller, no material part of the Real Property has been taken or expropriated by any Governmental Authority nor has any notice or proceeding in respect thereof been given to the Seller or commenced; and

(f)   except as set out in Schedule 6.9(f), in respect of the Mill Property: (i) there are no material encroachments of the Seller’s improvements beyond the boundaries of

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the Real Property; (ii) the use of each Mill Property for the principal purposes it is being used is permitted as of right under the applicable zoning legal requirements or constitutes a permitted nonconforming use and the land for each owned sawmill and remanufacturing facility on Real Property abuts on and has direct vehicular access to a public road or has access to a public road via a permanent, irrevocable, appurtenant easement benefiting such land and comprising a part of the Real Property; (iii) the Seller has not received written notice of any existing or proposed plan to modify or realign any street or highway that would result in the taking of all or any material part of any facility or that would prevent or materially hinder the conduct of the Purchased Business.

6.10 ABORIGINAL CLAIMS

The Seller, the Purchased Business, and the Purchased Assets have been, are and in the future may be subject to a number of Aboriginal Claims. To the Seller’s knowledge as of the date of this Agreement, the materials referenced in Schedule 6.10 and the discussions to date between representatives of the Seller and the Buyer disclose the material Aboriginal Claims. The Seller does not provide any representation or warranty with respect to the basis for or outcome of any such Aboriginal Claims or the effect of such Aboriginal Claims, or any outcome thereof, on the Purchased Assets or Purchased Business.

6.11 LEASED REAL PROPERTY

(a)   The Seller is not a party to or bound by or subject to nor has the Seller agreed or become bound to enter into any lease or agreement to lease with respect to any real property relating to the Purchased Business, whether as lessor or lessee, other than the leases (the “REAL PROPERTY LEASES”) described in Schedule 6.11. Schedule 6.11 sets out the parties to each of the Real Property Leases, their commencement dates and expiry dates, any options to renew, the locations of the leased lands and premises and the rent payable thereunder. Except as set out in Schedule 6.11, each of the Real Property Leases is in good standing in all material respects and in full force and effect, and neither the Seller nor, to the knowledge of the Seller, any other party thereto is in breach of any material covenants, conditions or obligations contained therein and the Seller is entitled to all rights thereunder. The Seller has provided a true and complete copy of each Real Property Leases and all amendments thereto to the Buyer.

(b)   The Seller is exclusively entitled to all rights and benefits as lessee under the Real Property Leases for which the Seller is the lessee, and except as described in Schedule 6.11, the Seller has not sublet, assigned, licensed or otherwise conveyed any rights in the Leased Real Property to any other Person.

(c)   Except as set forth in Schedule 6.11, all rental and other material payments and other material obligations required to be paid and performed by the Seller pursuant to the Real Property Leases have been duly paid and performed.

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(d) Except as set forth in Schedule 6.11, the terms and conditions of the Real Property Leases will not be affected by, nor will any of the Real Property Leases be in default as a result of, the completion of the Purchase.

6.12 INTELLECTUAL PROPERTY

(a) Schedule 6.12 lists all material Transferred IP. Except as specified in Schedule 6.12 and except for the Seller and its affiliates, no Person has been granted any interest in or right to use the material Transferred IP.

(b) Except as specified in Schedule 1.1(k)(xiii), the Seller has no knowledge of a claim or any infringement of Intellectual Property Rights of any other Person that arises out of the conduct of the Purchased Business, nor has the Seller received any notice, complaint, threat or claim alleging that the conduct of the Purchased Business infringes upon any Intellectual Property Rights of any other Person.

6.13 LICENCE AGREEMENTS

Schedule 1.1(k)(i) lists all Licence Agreements that are Material Contracts, entered into by the Seller in connection with the Purchased Business and complete and correct copies of all of the agreements constituting the Material Contracts that are Licence Agreements have been provided to the Buyer. Except as disclosed herein or as set out in the Schedules, none of the Licence Agreements listed in Schedule 1.1(k)(i) grant to any Person any authority to incur any liability or to enter into any agreement on behalf of the Seller and no proceeding is pending, or to the knowledge of the Seller, threatened to revoke or limit any Licence Agreement that is a Material Contract.

6.14 NO EXPROPRIATION

Except for the Tenure Take-Back and the Timber Reallocation Agreement and as set out in Schedule 6.9(e), no material part of the Purchased Assets has been taken or expropriated by any Governmental Authority, nor has any notice or proceeding in respect thereof been given or commenced, nor does the Seller have any knowledge of any intent or proposal to give any such notice or commence any such proceedings.

6.15 AGREEMENTS AND COMMITMENTS

Schedule 1.1(k)(i) sets out a list of all Material Contracts included in the Purchased Assets, including all material amendments, each of which is valid and legally binding on the parties thereto. Except as described in Schedule 1.1(k)(i), the Seller is not a party to or bound by or subject to, nor has the Seller agreed to become bound to enter into any Material Contract relating to the Purchased Business or the Purchased Assets. The Seller has performed all of the material obligations required to be performed by it and is entitled to all material benefits under, and neither the Seller, nor to the knowledge of the Seller, the counterparty thereto, is in default or alleged to be in any material default with respect to, any Material Contract relating to the Purchased Business or the Purchased Assets to which it is a party or by which the Seller is bound. To the knowledge of the Seller, no event, condition or occurrence exists that, after notice or lapse of time or both, would constitute a material default under any of the foregoing. The

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Seller has provided to the Buyer a true and complete copy of each Material Contract listed or described in the Schedules to this Agreement and all amendments thereto.

6.16 COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATION

(a) Except with respect to:

(i)   Environmental Laws, as to which Article 10 shall apply;

(ii)   Aboriginal Claims, as to which Sections 6.10 and 14.12 shall apply;

(iii)   Forestry Laws, as to which Section 6.16(b) shall apply; and

(iv)   those matters disclosed in Schedule 6.16(a) ,

the Seller has complied in all material respects with all Applicable Laws that apply to the Purchased Business and the Purchased Assets . Schedule l.l(k) (iii) sets out a complete and accurate list of all Licences and Permits held by or granted to the Seller, and, except for Aboriginal Claims, to the knowledge of the Seller, there are no other Licences and Permits necessary to carry on the Purchased Business or to own or lease any of the Purchased Assets in the same manner as currently carried on by the Seller. Except with respect to Environmental Permits, as to which Article 10 shall apply and except for Aboriginal Claims as to which Sections 6.10 and 14.12 shall apply and Forestry Laws, as to which Section 6.16(b) shall apply, to the knowledge of the Seller, each Licence and Permit is valid, subsisting and in good standing in all material respects and the Seller is not in material default or breach of any Licence and Permit and no proceeding is pending or, to the knowledge of the Seller, threatened to revoke, amend or limit any Licence and Permit.

(b) Except as disclosed in Schedule 6.16(b), the Purchased Business and the Purchased Assets have been, since January 1, 2000, and are now owned and operated in compliance with all Forestry Laws in all material respects, and there are no outstanding notices or, to the Seller’s knowledge, ongoing investigations by any Governmental Authority of any actual or alleged, defect or non-compliance under Forestry Laws with respect to any of the Purchased Assets or the Purchased Business.

6.17 CONSENTS AND APPROVALS

Except for:

(a)   Aboriginal Claims, as to which Sections 6.10 and 14.12 shall apply;

(b)   the Closing Consents described in Schedule 1.1(t); and

(c)   Approvals that are not material or that relate solely to the identity of the Buyer or the nature of any business carried on by the Buyer;

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there is no requirement to make any filing with, give any notice to or obtain any Approval from any Governmental Authority or from any Person:

(d)   as a condition to the lawful consummation of the transactions contemplated by this Agreement;

(e)   to avoid the withdrawal of any material Licence and Permit;

(f)   to avoid the violation, breach or termination of, or default under, or the creation of any material Encumbrance under the terms of any Applicable Law; or

(g)   to enable the Purchased Business to continue to be carried on as currently conducted following Closing.

6.18 FINANCIAL STATEMENTS

The Financial Statements (and, as of the date thereof, the financial statements referred to in Section 9.14) have been prepared, except as disclosed in Schedule 6.18, in accordance with GAAP applied on a basis consistent with prior periods , are correct and complete, and present fairly the assets, Liabilities (whether accrued, absolute, contingent or otherwise) and financial position of the Purchased Business as at the date of the Financial Statements and the sales, earnings and results of operations of the Purchased Business for the period covered by the Financial Statements. A true and complete copy of the Financial Statements is set out in Schedule 6.18. The Financial Statements, other than those referred to in Section 9.14, are qualified by the fact that the Purchased Business has not operated as a separate “stand-alone” entity within the Seller and that the Purchased Business has not been separately audited.

6.19 BOOKS AND RECORDS

The Books and Records fairly and correctly set out and disclose the financial position of the Seller and the Purchased Business as at the date hereof, and all material financial transactions of the Seller relating to the Purchased Business have been accurately recorded in such Books and Records.

6.20 ABSENCE OF CHANGES

Except as set out in Schedule 6.20, since December 26, 2004 the Purchased Business has been carried on only in the normal course consistent with past practice and there has been no Materially Adverse change in the business operations, prospects, results of operations or condition (financial or otherwise) of the Purchased Business, taken as a whole and to the knowledge of the Seller there are no facts or conditions that are likely to cause any Material Adverse change in the condition of the Purchased Assets or the Purchased Business, taken as whole, in the future.

6.21 TAXES

With respect to the Purchased Business, the Seller has duly filed on a timely basis all Tax returns required to be filed by it and has paid, or contested in good faith, all material Taxes that are due

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and payable, and all assessments, reassessments, Governmental charges, penalties, interest and fines due and payable by it, the non-payment of which could result in an Encumbrance on the Purchased Assets. The Seller is not now the subject of a Legal Proceeding or Claim concerning any Tax that could result in an Encumbrance against the Purchased Assets. There are no Encumbrances for Taxes other than Permitted Encumbrances upon any of the Purchased Assets and no event has occurred that with the passage of time or the giving of notice, or both, could reasonably be expected to result in an Encumbrance for Taxes other than Permitted Encumbrances on any of the Purchased Assets.

6.22 LEGAL PROCEEDINGS

Except as described in Schedule 1.1(k) (xiii) :

(a)   there are no Legal Proceedings pending or, to the knowledge of the Seller, threatened by or against or affecting the Purchased Business or the Purchased Assets that might result in any material adverse change in the business, affairs or prospects of the Purchased Business, financial or otherwise, or that might Materially Adversely effect the ability of the Seller to enter into this Agreement or to consummate the Purchase;

(b)   there is no judgment, decree, injunction, ruling, order or award of any Governmental Authority outstanding against or affecting the Seller relating to the Purchased Business or the Purchased Assets that would materially impair the operation or use of the Purchased Assets as the Purchased Business; and

(c)   to the Seller’s knowledge, no facts or circumstances exist that could reasonably be expected to lead to any of the above.

6.23 RESIDENCY

The Seller is not a non-resident of Canada within the meaning of the Income Tax Act (Canada) .

6.24 GUARANTEES, WARRANTIES AND DISCOUNTS

Except as described in Schedule 6.24:

(a) the Seller has not given any guarantee or warranty relating to the Purchased Business with respect to the products sold or the services provided by it, except warranties made in the normal course of the Purchased Business, and in the form of the Seller’s standard written warranties, and except for warranties implied by Applicable Law;

(b) the Seller is not required to provide any letters of credit, bonds or other financial security arrangements in connection with any transactions with its suppliers or customers of the Purchased Business; and

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(c) the Seller has not given any other material guarantee of any obligation to any Third Party in respect of the Purchased Business or the Purchased Assets, and copies of any such guarantee or other obligation have been disclosed to the Buyer.

6.25 EMPLOYEE PLANS

Schedule 6.25 identifies each Benefit Plan. Except as specifically described in Schedule 6.25:

(a)   the Pension Plan for the Employees of Mid-Island Reman Inc. has been established, registered, qualified, amended, amalgamated, reorganized, administered and invested in compliance, in all material respects, with the terms thereof and all Applicable Laws, including the applicable pension and Tax legislation;

(b)   all material contributions to, and payments from, the Pension Plan for the Employees of Mid-Island Reman Inc. that may have been required to be made in accordance with the terms of any such Benefit Plan, or with the recommendation of the actuary for such Benefit Plan, and Applicable Law, and have been made in a timely manner and there have been no improper withdrawals, applications or transfers of assets relating thereto; and the policy or other contract or agreement affecting the Pension Plan for the Employees of Mid-Island Reman Inc. does not require nor permit any retroactive increase in premiums or payments thereunder;

(c)   all material reports, returns and similar documents (including applications for approval of contributions) with respect to the Pension Plan for the Employees of Mid-Island Reman Inc. required to be filed with any Governmental Authority or distributed to any such Benefit Plan participant have been duly filed or distributed in a timely manner and there have been no improper withdrawals, applications or transfers of assets relating thereto and have been prepared in accordance with GAAP, generally accepted standard of practice issued by the Canadian Institute of Actuaries and Applicable Law;

(d)   there are no pending investigations by any Governmental Authority involving or relating to the Pension Plan for Employees of Mid-Island Reman Inc., no threatened or pending claims (except for claims for benefits payable in the normal operation of such Benefit Plan), suits or proceedings against such Benefit Plan or asserting any rights or claims to benefits under such Benefit Plan that could give rise to a material liability nor are there any facts that could give rise to any material liability in the event of such investigation, claim, suit or proceeding;

(e)   no notice has been received by the Seller of any material complaints or other proceedings of any kind involving the Seller or any of the Employees or former employees of Mid-Island Reman Inc. before any pension board or committee relating to the Pension Plan for Employees of Mid-Island Reman Inc. or to the Purchased Business or the Purchased Assets;

(f)   the Pension Plan for the Employees of Mid-Island Reman Inc. is a registered pension plan under the Tax Act and the PBSA and is not subject to the pension

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standards legislation of any jurisdiction other than the Province of British Columbia; and

(g) other than the Pension Plan for the Employees of Mid-Island Reman Inc., there is no pension plan or post-retirement non-pension benefit plan for the Employees of any Acquired Entity, that will result in a Liability on or subsequent to the Time of Closing in an Acquired Entity relating to a period prior to the Closing.

6.26 COLLECTIVE AGREEMENTS

Except as described in Schedule 1.1(x) (copies of which have been provided to the Buyer), the Seller is not required to recognize and has not made any Contracts with any labour union or employee association or any agent having bargaining rights for the Employees nor made commitments to or conducted negotiations with any labour union or employee association with respect to any future agreements. The Seller has provided copies of all local agreements associated with such Collective Agreements. Other than: (i) grievances brought in the ordinary and normal course of the Purchased Business, none of which could, individually or collectively with other such grievances, have a Materially Adverse effect on the Purchased Business or the right or the ability of the Seller or the Buyer to carry on the Purchased Business substantially in the manner in which it has heretofore been carried on, and (ii) grievances listed in Schedule l.l(x) which describes, as at February 13, 2005, all current and pending grievances under the Collective Agreements that have reached “Stage 2” or later under the grievance process under the Collective Agreements, there are no grievances against the Seller of which the Seller has received a written notice under any Collective Agreements.

6.27 EMPLOYEES

(a) Schedule l.l(ii) contains a complete and accurate list of the names of all Employees (classified into union and non-union Employees) specifying the employee status ( full-time, part-time, away) length of service (actual and deemed), title or classification and rate of salary or hourly pay for each such Employee. The Seller has provided to the Buyer copies of all written employment contracts, other than written offer letters and similar written communications to Employees that might constitute a “written employment contract”, none of which provides a Salaried Employee with a contractual severance entitlement. In addition, Schedule l.l(ii) specifically identifies all Employees, including those on lay-off (but other than those in receipt of benefits under workers’ compensation legislation), who have been absent continually from work for a period in excess of one month, and the reason for their absence.

(b) Schedule l.l(ii) specifically identifies all Employees with respect to whom the Seller has been advised by the Workers’ Compensation Board that such Employees are in receipt of benefits under the Workers Compensation Act (British Columbia). With respect to the Purchased Business, the Seller is in material compliance with the Employment Standards Act (British Columbia), and other Applicable Law in relation to employment matters and, without limiting the

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generality of the foregoing and except as disclosed in Schedule 1.1(gg) , with respect to the Purchased Business:

(i)   there are no appeals pending before the Workers’ Compensation Board of British Columbia involving the Seller;

(ii)   all material levies, assessments and penalties made against the Seller pursuant to the Workers Compensation Act (British Columbia) have been paid by the Seller;

(iii)   the Seller does not know of any audit currently being performed by the Workers’ Compensation Board of British Columbia; and

(iv)   the Seller does not know of any liability for any material damages to any Employee resulting from the violation or alleged violation of any Applicable Law in relation to employment matters.

6.28 EMPLOYEE ACCRUALS

All accruals for unpaid vacation pay, premiums for unemployment insurance, health premiums, Canada Pension Plan premiums, accrued wages, salaries and commissions and other benefits have been reflected in the books and records of the Seller relating to the Purchased Business in accordance with GAAP applied on a basis consistent with prior practices.

6.29 CONTRACTUAL RESTRICTIONS ON DOING BUSINESS

The Seller is not a party to or bound by any Contract that would materially restrict or limit the rights of the Buyer to carry on the Purchased Business or compete in any business or activity or to solicit business from any Person or in any geographical area or otherwise to conduct the Purchased Business as currently conducted.

6.30 BANKRUPTCY

The Seller is not insolvent and has not: (a) proposed a compromise or arrangement to any of its creditors generally; (b) had any petition or receiving order in bankruptcy filed against it; (c) taken any proceeding with respect to a compromise or arrangement or become subject to such proceeding; (d) taken or become subject to any proceeding to have it liquidated, dissolved, declared bankrupt or wound-up; (e) taken any proceeding or become subject to any proceeding to have a receiver appointed over any part of its assets; (f) had any encumbrancer take possession of any of its property; or (g) had any execution or distress become enforceable or become levied upon any of its property.

6.31 FORESTLANDS

Except for Aboriginal Claims, as to which Sections 6.10 and 14.12 shall apply:

(a) each Timber Tenure is validly subsisting and all levies, fees, rentals, charges, dues, stumpage, royalties and other costs payable up to the Time of Closing under

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    each Timber Tenure have been or will be paid by the Seller except for levies, fees, charges, dues, rentals, stumpage and other costs to the extent that they will be included as Liabilities deducted from the calculation of the Net Working Capital in the Working Capital Statement and included in Assumed Liabilities. Schedule l.l(mmmmm) sets forth the 2004 and 2005 AAC under the forest licences and the 2004 and 2005 AAC under the management plans for the tree farm licences that are included in the Timber Tenures and the actual timber harvested pursuant to the forest licences and under the tree farm licences that are included in the Timber Tenures;

(b)   the Seller has observed and performed in all material respects all covenants, agreements and obligations on its part to be observed or performed under the provisions of the Timber Tenures, the Forestry Laws and other Applicable Laws relating to the Timber Tenures;

(c)   the Seller has not received any notice of breach by the Seller of any of the Timber Tenure or Forestry Law that has not been remedied by Seller or abandoned by the Person alleging such breach;

(d)   the Seller has all material Licences and Permits and the other permissions necessary or advisable to provide unrestricted access in and out of the Timber Tenures and to transport logs to the mills and conversion facilities included in the Purchased Assets as the Purchased Business is currently conducted;

(e)   other than as contemplated by the Forestry Revitalization Act (British Columbia) and the Timber Reallocation Agreement, no Governmental Authority has given any written notice to the Seller with respect to one or more of the Timber Tenures concerning any matter which would have the effect of reducing, impairing, suspending or terminating in a material manner such Timber Tenures or any rights or privileges attached thereto;

(f)   the Seller has not made a “forestry revitalization proposal” under the Timber Harvesting Contract and Subcontract Regulation and has made no Contracts with any Person in relation thereto.

6.32 TIMBER INVENTORY DATA

The Seller has made available to the Buyer all material information maintained by the Seller with respect to the timber inventory on the Fee Simple Real Property. Such information has been prepared in accordance with the procedures and practices described in Schedule 6.32. Notwithstanding any other provision of this Agreement, the Seller’s sole obligation to the Buyer in respect of the quantity, quality, species mix, age or value of the timber inventory are contained in this Section 6.32 and the related indemnification in Article 14 and no actions with respect to Claims or Losses suffered or incurred by the Buyer may be brought against the Seller unless the Seller has breached its obligations pursuant to this Section 6.32.

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6.33 INVENTORIES

Inventory levels are, in all material respects, at such amounts as are required and adequate for the normal operation of the Purchased Business as now conducted, in the ordinary course.

7. REPRESENTATIONS AND WARRANTIES OF THE BUYER

The Buyer represents and warrants to the Seller at the time of execution and delivery of this Agreement as follows and acknowledges that the Seller is relying on the accuracy of each such representation and warranty in entering into this Agreement and completing the Purchase. Except for the representations and warranties of the Buyer set out in this Article 7, in executing this Agreement, the Seller relies wholly upon its own judgment and that of its advisors. The Seller acknowledges that it has not been influenced by and is not relying on any representations or statements regarding any matter made by any Person, except the representations and warranties of the Buyer set out in this Article 7.

7.1 ORGANIZATION

The Buyer is a company duly constituted and organized and validly subsisting under the laws of British Columbia and has the corporate power to enter into this Agreement and each of the agreements, documents and instruments to be entered into by the Buyer in connection with this Agreement and to perform its obligations hereunder and thereunder.

7.2 AUTHORIZATION

This Agreement and each of the agreements, documents and instruments of the Buyer contemplated hereby has been duly authorized, executed and delivered by the Buyer and is a legal, valid and binding obligation of the Buyer, enforceable against the Buyer by the Seller in accordance with its terms, except as such enforcement may be limited by bankruptcy, in solvency and other Applicable Laws affecting the rights of creditors generally and except that equitable remedies may only be granted in the discretion of a court of competent jurisdiction. No other corporate proceedings or Approvals on the part of the Buyer or its shareholder are necessary to authorize this Agreement and each of the agreements, documents and instruments contemplated hereby, except for the approval by the Buyer’s Board of Directors and, if applicable, by its shareholder.

7.3 NO VIOLATION

Subject to the Closing Consents being obtained, the execution and delivery of this Agreement by the Buyer and the consummation of the transactions herein provided for will not result in the breach or violation of, or constitute a default under, or conflict with or cause a right of termination, cancellation or the acceleration of, any obligation of the Buyer under:

(a) any material contract to which the Buyer is a party or by which it or its properties is bound;

(b) any provision of the constating documents or by-laws or resolutions of the board of directors (or any committee thereof) or shareholders of the Buyer;

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(c) any judgment, decree, order or award of any Governmental Authority or arbitrator having jurisdiction over the Buyer; or

(d) any Applicable Law.

7.4 INVESTMENT CANADA

The Buyer is a Canadian within the meaning of the Investment Canada Act.

7.5 CONSENTS AND APPROVALS

Except for the Closing Consents, there is no requirement to make any filing with, give any notice to or obtain any consent or approval from any Governmental Authority or other Person as a condition to the lawful consummation by the Buyer of the transactions contemplated by this Agreement in accordance with all Applicable Laws.

7.6 LITIGATION

Except as set out in Schedule 7.6, there are no legal proceedings pending or threatened by the Buyer, or to the knowledge of the Buyer, pending or threatened against the Buyer that might have a Materially Adversely affect on the ability of the Buyer to enter into this Agreement or to consummate the transactions contemplated hereby, and to the knowledge of the Buyer no state of facts exist which could constitute the basis of any such legal proceedings.

8. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS

8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE SELLER

Subject to Articles 10 and 14, the representations and warranties of the Seller contained in this Agreement shall survive the Closing and shall continue in full force and effect.

8.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE BUYER

Subject to Article 14, the representations and warranties of the Buyer contained in this Agreement shall survive the Closing and shall continue in full force and effect.

8.3 SURVIVAL OF COVENANTS

Any provision of this Agreement that is capable of being performed after but that has not been performed (and in respect of which performance has not been duly waived) at or before the Time of Closing and all covenants of the parties contained in this Agreement (including, without limitation, the indemnity covenants but excluding any covenant the performance of which has been waived) or in any agreement or other document delivered or given pursuant to or in connection with this Agreement shall survive the Closing and shall continue in full force and effect in accordance with their terms.

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9. COVENANTS

9.1 ACCESS TO PURCHASED BUSINESS AND PURCHASED ASSETS

Subject to the provisions of this Agreement, during the Interim Period the Seller shall forthwith make available to the Buyer and its authorized representatives all Books and Records. During the Interim Period the Seller shall afford the Buyer and its authorized representatives reasonable access to the Purchased Assets on reasonable prior notice and will permit the Buyer and its authorized representatives to make such investigations of the Purchased Business and its assets, Liabilities, condition (financial or otherwise), Claims, obligations, operations, prospects, results of operations and legal or regulatory status or affairs as the Buyer, acting reasonably, deems necessary or advisable. At the request of the Buyer, the Seller shall execute such consents, authorizations and directions as may be necessary to permit any inspection of the Purchased Business or any of the Purchased Assets or to enable the Buyer or its authorized representatives to obtain full access to all files and records relating to any of the Purchased Assets maintained by Governmental Authorities . At the Buyer’s reasonable request, the Seller shall co-operate with the Buyer in arranging any such meetings as the Buyer should reasonably request with Employees and suppliers or others except customers who have or have had a business relationship with the Seller with respect to the Purchased Business. Such meetings may be held for the Buyer’s due diligence purposes or for the purposes of planning post-Closing management and workforce integration.

In particular, without limitation, the Seller shall permit the Buyer’s representatives or consultants to conduct all such testing and inspection with respect to forest inventory and environmental matters at such locations of the Purchased Business as the Buyer may determine, in its sole discretion and its sole cost, as may be reasonably required to satisfy the Buyer with respect to such matters; provided, however, that the Buyer shall be responsible, at its own cost, for restoring all such property or items tested or inspected by its representatives or consultants to the condition in which such property or items were immediately before such testing or inspection. The Buyer shall provide the Seller with any data, reports, test results or other recorded information obtained as a result of any testing or inspection with respect to environmental matters at the Purchased Business. Furthermore, without limitation, the Buyer and the Seller shall conduct, in co-operation with each other, such physical review of the Purchased Business as is necessary so as to enable the confirmation of the values carried on the Working Capital Statement with respect to such assets, to the reasonable satisfaction of the Buyer. The Buyer assumes full responsibility and all risk of conducting any testing and inspections. The Buyer will indemnify the Seller for any damage caused by the Buyer or by any Person for whom the Buyer is responsible at law during the Interim Period while on the premises of the Seller. It is the Buyer’s sole responsibility to evaluate the lands, roads, bridges, improvements, access, hazards whether obvious or concealed, and all other factors, and to decide whether and in what manner to conduct testing and inspections. The Buyer releases the Seller from any and all Claims that the Buyer or its successors in interest, predecessor firms, related entities and affiliates, agents, contractors and subcontractors, and each of their officers, directors, shareholders, servants, employees and agents, and each of their heirs, executors, administrators, successors and assigns may have in any way connected with any such testing and inspections except to the extent caused by the negligence of the Seller.

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9.2 CONDUCT OF PURCHASED BUSINESS BEFORE CLOSING

Without in any way limiting any other obligations of the Seller hereunder, except as contemplated by Section 3.12, during the Interim Period:

(a)   the Seller shall conduct the Purchased Business only in the ordinary and normal course consistent with past practice and the Seller shall not enter into any transaction or refrain from doing any action that, if effected before the date of this Agreement, would constitute a material breach of any representation, warranty, covenant or other obligation of the Seller contained herein, and the Seller shall not enter into any supply arrangements relating to the Purchased Business or make any material decisions or enter into, amend or surrender any Material Contracts with respect to the Purchased Business without the consent of the Buyer, which consent shall not be unreasonably withheld;

(b)   during the Interim Period, the Seller shall provide to the Buyer, on a timely basis, monthly reconciliations of actual and budgeted operating and capital expenditures and the Seller shall not commence any capital expenditure project (other than maintenance expenditures) other than those set out in Schedule 9.2(b);

(c)   without limiting paragraphs (a) and (b), the Seller shall harvest timber, conduct forest engineering and planning and conduct reforestation activities in the ordinary and normal course of business consistent with past practice and substantially in accordance with its operational plans and budgets;

(d)   except as otherwise provided in Schedule 9.2(b) and except in the normal course of business consistent with past practice, the Seller shall not, make any general or specific increase in the remuneration of the Employees and service agents of the Purchased Business, nor grant them any additional benefits;

(e)   the Seller shall use its commercially reasonable efforts to preserve the Purchased Business and the Purchased Assets and to carry on the Purchased Business as currently conducted and to keep available the services of the Transferred Employees, and the Seller shall use its commercially reasonable efforts to promote and preserve for the Buyer the goodwill of suppliers, customers and others having business relations with the Seller that relate to the Purchased Business;

(f)
(i) other than a Permitted Sale, the Seller shall not sell, assign, lease or otherwise transfer or dispose of any asset used in the Purchased Business, to any Person or otherwise, or compromise any of its rights or claims, in a single transaction or series of related transactions if such transactions will in the aggregate have a value in excess of $250,000, other than in the ordinary course of business, without the consent of the Buyer, which consent may not be unreasonably withheld; for greater certainty, the Seller acknowledges that it would be out of the ordinary course to consummate

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any sale of Fee Simple Real Property or to grant any option to purchase any Fee Simple Real Property, other than a Permitted Sale;

(ii) with respect to a Permitted Sale, the Seller shall not enter into a definitive purchase and sale agreement with a Third Party with respect to any property set out on Schedule 1.1(hhhh), for less than 90% of the amount listed in the Disclosure Letter;

(g)   the Seller shall pay and discharge its Liabilities relating to the Purchased Business in the normal course in accordance and consistent with its previous practice, except those contested in good faith by it and the Seller will not agree to incur any Liability outside of the normal course in accordance and consistent with its previous practice, which is likely to remain an Assumed Liability on the Closing Date, whether in a single transaction or in a series of related transactions, if such transactions will in the aggregate exceed $250,000;

(h)   to the extent commercially reasonable, the Seller shall attempt to complete the Purchase, during the Interim Period, from the entity known as EDS, the computer hardware, routers, switches and other equipment that are currently leased by the Seller from that entity and that are required in connection with the operation of the Purchased Business for the sale to the Buyer under this Agreement;

(i)   the Seller will not create, assume or permit to be created or imposed any Encumbrances (other than Permitted Encumbrances) upon any of the Purchased Assets and shall use all commercially reasonable efforts to obtain by the Time of Closing discharges of all Encumbrances disclosed for the purpose of this Section 9.2(i) in Schedule 1.1(gggg)(x);

(j)   the Seller shall promptly advise the Buyer of the occurrence of any event that would render any representation or warranty of the Seller contained in this Agreement untrue or inaccurate in a material way;

(k)   the Seller shall promptly notify the Buyer in writing of the occurrence and circumstances of any Environmental Condition arising after the date hereof;

(l)   the Seller will consult with the Buyer and will permit the Buyer to participate in discussions in respect of material decisions or commitments with respect to, the matters set forth in Schedule 9.2(l); and

(m)   the Seller shall, within ten business days after the end of each calendar month, provide the Buyer with monthly financial and operating statements by operating division, including a monthly statement of management’s estimate of Net Working Capital.

The Seller will not deviate from the requirements of this Section 9.2 without first obtaining the consent of the Buyer, which consent will not be unreasonably withheld, and with respect to subparagraphs (c), (d), (f), (g), (h), (i) and (j) will cause the Acquired

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Entities to comply with those subsections as if each Acquired Entity was the Seller and its business was the Purchased Business.

9.3 RISK OF LOSS

Until the Time of Closing, the Purchased Assets will remain at the risk of the Seller. Subject to: (i) the Buyer’s right not to complete the transactions contemplated hereby pursuant to Section 12.1; (ii) those matters which are the subject of Section 3.8; and (iii) ordinary wear and tear, if any destruction or damage occurs to those Purchased Assets which are physical assets having an aggregate value in excess of .1% of the Purchase Price during the Interim Period, or, other than as disclosed in this Agreement, if Purchased Assets are appropriated, expropriated or seized by a Governmental Authority, having an aggregate value in excess of .1% of the Purchase Price during the Interim Period, the Seller shall forthwith give notice thereof to the Buyer and the Purchase Price will be reduced by an amount equal to the replacement value of the affected Purchased Assets.

9.4 EXCLUSIVITY

Until the earlier of the termination of this Agreement and the Time of Closing, the Seller shall not, and shall take reasonable steps to ensure that the directors, officers, employees, agents or advisors of the Seller do not, directly or indirectly enter into any Contract for, or take any action to continue, solicit, initiate, entertain, discuss or consider any offers, enquiries or proposals relating to the possible disposition or transfer of the Purchased Assets whether by way of sale, amalgamation, merger, partnership arrangement or otherwise.

9.5 COMMERCIALLY REASONABLE EFFORT TO OBTAIN CONSENTS

The Seller shall use its commercially reasonable efforts to obtain during the Interim Period, the Approvals and the Closing Consents that are its responsibility and to assist the Buyer to obtain, during the Interim Period, the Approvals and the Closing Consents that are the Buyer’s responsibility. The Buyer shall use its commercially reasonable efforts to obtain, at or before the Time of Closing, the Approvals and Closing Consents that are its responsibility and shall use its commercially reasonable efforts to assist the Seller to obtain, at or before the Time of Closing, the Approvals and Closing Consents that are the Seller’s responsibility. The parties acknowledge and agree that, for all purposes of this Agreement, an obligation on the part of either party to use commercially reasonable efforts to obtain or help in obtaining any Approval or Closing Consent shall not require that party to make any payment to any Person for the purpose of procuring that Approval or Closing Consent, other than payments for amounts due and payable to that Person, payments for incidental expenses incurred by that Person and any payments required by any Applicable Law.

9.6 POST CLOSING RECEIPTS

(a) If at any time following the Time of Closing, the Seller receives, or comes into possession of, any of the Purchased Assets or any receipts, proceeds, cheques, securities or other property of any kind comprising, arising out of or derived from the Purchased Assets (including any cheques, notes or cash in payment of any Account Receivable and any other intangible constituting part of the Purchased

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Assets), or any invoices for amounts included in the Assumed Liabilities that are payable by the Buyer, the Seller shall immediately deliver that Purchased Asset or receipt, proceed, cheque, security or other property or invoice to the Buyer, with any endorsements, transfers or assignments that may be necessary or desirable to ensure that the Buyer receives the immediate and full benefit of that Purchased Asset or receipt, proceed, cheque, security or other property or any other information available to the Seller that is required to allow the Buyer to pay the invoice;

(b) If at any time following the Time of Closing, the Buyer receives, or comes into possession of, any asset or any receipts, proceeds, cheques, securities or other property of any kind that is retained by the Seller pursuant to this Agreement, (excluding any cheques, notes or cash in payment of any Account Receivable) or any invoices for amounts that are not included in the Assumed Liabilities that are payable by the Seller, the Buyer shall immediately deliver that asset or receipt, proceed, cheque, security or other property or invoice to the Seller, with any endorsements, transfers to assignments as may be necessary or desirable to ensure that the Seller receives the immediate and full benefit of that asset or receipt, proceed, cheque, security or other property or any other information available to the Buyer that is required to allow the Seller to pay the invoice.

9.7 CO-OPERATION REGARDING TAX RETURNS AND AUDITS

After the Closing Date, the Buyer shall furnish or cause to be furnished to the Seller, upon request, as promptly as practicable, such information (including access to Books and Records) and assistance relating to the Purchased Business or the Purchased Assets as is reasonably necessary for the filing by the Seller of any return relating to Taxes, for the preparation for any audit or for the prosecution or defence of any Legal Proceeding or proposed adjustment relating to Taxes of the Seller relating to the Purchased Business or the Purchased Assets.

9.8 COMPLIANCE WITH AGREEMENT

Subject to the terms and conditions provided in this Agreement, each of the parties will take such commercially reasonable actions as are within its power to control and will use commercially reasonable efforts to cause, or cause to be taken other actions that are not within its power to control so as to ensure compliance with each of the terms and conditions and covenants set forth in this Agreement that are for the benefit of any other party, including to satisfy the conditions to Closing of each party as set out in Article 12; provided that, the Buyer’s obligation to execute and deliver the Transitional Services Agreement is conditional upon the Seller being able to substantially provide the services set out therein. The parties will, with reasonable diligence, do all such things and provide all such reasonable assurances as may be required to consummate the transactions contemplated by this Agreement and each party will provide such further documents or instruments (on commercially reasonable terms) required by any other party as may be reasonably required or desirable to effect the purpose of this Agreement and to carry out its provisions, whether before or after the Closing.

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9.9 COMPLIANCE WITH THE FOREST ACT

The Seller and the Buyer will cooperate and assist each other in completing the notification process under section 54 of the Forest Act (British Columbia) and obtaining a notice to proceed from the Minister of Forests under section 54.1 of the Forest Act (British Columbia) in connection with the transfer of the Timber Tenures from the Seller to the Buyer as provided in this Agreement, including, but without limitation, responding to any inquiries the Ministry of Forests may make of the Buyer and the Seller in order to satisfy the Minister of Forests that the transfer of the Timber Tenures from the Seller to the Buyer will not unduly restrict competition in the standing timber markets, log markets or chip markets. The Buyer acknowledges that under the Forest Act (British Columbia) the Buyer may be required to enter into a Transfer Arrangement on or before the Closing Date. The Buyer agrees that it will enter into the Transfer Arrangement, provided that amounts arising before the Closing Date and payable under the Transfer Arrangement are adjusted for pursuant to the Net Working Capital Adjustment.

9.10 FEES

The Buyer and the Sellers shall bear equally all fees in connection with obtaining the Competition Act Approval and HSR Compliance.

9.11 COMBINED CONTRACTS

The parties acknowledge and agree that the contracts (the “COMBINED CONTRACTS”) set out in Schedule 9.11 hereto pertain in part to the Purchased Business and in part to business activities of the Seller unrelated to the Purchased Business. The parties will use commercially reasonable efforts to split the Combined Contracts into agreements pertaining to the Purchased Business and agreements unrelated to the Purchased Business on terms and conditions acceptable to the parties, acting reasonably. If the parties are unable to complete the splitting of the Combined Contracts by the Time of Closing then:

(a) the Seller shall hold that portion of the Combined Contracts pertaining to the Purchased Assets in trust for the Buyer and shall forthwith sell, convey, grant, assign, transfer and set over the same to the Buyer upon the splitting of such Combined Contract (in the manner described above) and until such time, the Seller shall, to the extent reasonably necessary, at the request and cost of the Buyer, perform all obligations with respect to such portion of such Combined Contracts pertaining to the Purchased Business in the name of the Buyer and all benefits derived therefrom shall be for the account of the Buyer; and

(b) if the Seller notifies the Buyer that it will be unable to obtain a splitting of any Combined Contract, the Buyer shall, as soon as reasonably practicable, use commercially reasonable efforts to enter into, at the sole cost and expense of the Buyer, alternative contractual arrangements in respect of the subject matter of the Combined Contract that pertains to the Purchased Business and the Buyer shall have no Claim for any Losses suffered as a result of the Seller’s inability to split a Combined Contract or the Buyer’s obligation to enter into a new contractual arrangement in respect thereof.

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9.12 PERSONAL INFORMATION

In respect of any Personal Information contained in the Books and Records, the Buyer covenants and acknowledges:

(a)   during the Interim Period, to use the Personal Information solely for purposes relating to the transactions contemplated by this Agreement;

(b)   if the transactions contemplated by this Agreement proceed, to use and disclose any such Personal Information only for the same purposes for which it was collected, used or disclosed by the Seller; and

(c)   to the extent required by Applicable Law, any Person whose Personal Information has been disclosed to the Buyer through the Books and Records will be notified by the Buyer that the transactions contemplated by this Agreement have taken place and that such Personal Information was disclosed to the Buyer as a consequent of such transactions.

9.13 OFF-SITE BOOKS AND RECORDS

The Buyer shall have access to the Off-Site Books and Records as the Buyer may reasonably require for the normal day to day operation of the Purchased Business after Closing, upon reasonable prior written notice to the Seller, provided such access is not unduly disruptive of the Seller’s operations and is limited as far as reasonably possible to information relating solely to the Purchased Business. The Seller shall provide the Buyer with reasonable confidential access to backup tapes and data if any comprised in the Off-Site Books and Records on a strictly need to have and know basis if the On-Site Books and Records acquired by the Buyer on Closing are destroyed or lost. The Buyer shall maintain the confidentiality of any information relating to the Seller’s operations as may be contained in the Off-Site Books and Records, to at least the same extent as the Buyer maintains for its own confidential information. The Buyer shall take appropriate measures to protect the confidentiality of any information or data that may be combined or commingled with the information data the Buyer has a right of access to hereunder. The Seller will use commercially reasonable efforts to segregate Off-Site Books and Records that primarily relate to the Purchased Business for delivery at the Time of Closing.

9.14 UPDATING FINANCIAL STATEMENTS

The Seller shall deliver to the Buyer audited financial statements of the Purchased Business for the financial years ended on December 29, 2003 and December 26, 2004 as soon as such statements are available.

9.15 APPROVAL OF THE TRANSFER OF FORESTRY LIABILITIES

Upon execution and delivery of this Agreement, the Seller and the Buyer shall cooperate and assist each other in preparing and submitting to the British Columbia Ministry of Forests for the approval of the Minister of Forests under section 29 or, if it has then come into effect, section 29.1, of the Forest and Range Practices Act (British Columbia), an assignment and assumption agreement in the form to be signed at Closing pursuant to which the Seller will

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transfer to the Buyer, and the Buyer shall assume and agree to perform, all of the Forestry Liabilities.

9.16 INFORMATION FOR COMPETITION BUREAU

For a period ending on the first anniversary of the Closing Date, the Seller shall use its commercially reasonable efforts to assist the Buyer in providing to the Buyer such information that may be reasonably requested by the Buyer as part of any application that may be made by the Buyer to the Canadian Competition Bureau relating to any subsequent dealings by the Buyer with the Purchased Assets or the Purchased Business.

9.17 CONSENTS NOT OBTAINED BEFORE CLOSING

(a) If there are any Approvals that have not been obtained as of the Time of Closing, Buyer may either:

(i)   elect to have Seller continue its efforts to obtain the Approvals, in which case the Seller shall continue to use its commercial reasonable efforts to obtain the Approvals;

(ii)   accept the assignment of such Contract or Licence and Permit, in which case, as between Buyer and Seller, such Contract or License and Permit shall, to the maximum extent practicable and notwithstanding the failure to obtain the applicable consent, be transferred to the Buyer and the representation contained in Section 6.5 shall be deemed to be modified accordingly; or

(iii)   if such Contract or Licence and Permit is not legally and validly assignable without consent, and the required consent is not obtained by the Seller within one year from the Closing Date (other than Contracts in respect of which consent has not been obtained by the Seller as a result of concerns raised by the counterparty to the Contract about the creditworthiness of the Buyer), elect to have the Seller retain that Contract or License and Permit and all Liabilities arising therefrom or relating thereto;

(b) If Buyer elects to have Seller continue its efforts to obtain any consent in respect of a Contract or Licence and Permit which cannot be legally and validly assigned without such consent, neither this Agreement nor any other document related to the consummation of the sale and purchase of the Purchased Business shall constitute a sale, assignment, assumption, transfer, conveyance or delivery or an attempted sale, assignment, assumption, transfer, conveyance or delivery of that Contract or Licence and Permit, and following the Closing, the Parties shall use commercial reasonable efforts, and cooperate with each other, to obtain the consent relating to each such Contract or Licence and Permit as quickly as practicable. Pending the obtaining of such consents, the Parties shall cooperate with each other in any reasonable and lawful arrangements designed to provide to Buyer the benefits of use of the affected Contract or Licence and Permit for its

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term (or any right or benefit arising thereunder, including the enforcement for the benefit of Buyer of any and all rights of Seller against a party to that Contract or License and Permit). Once the consent is obtained, Seller shall promptly assign, transfer, convey and deliver such Contract or Licence and Permit to Buyer, and Buyer shall assume the obligations under such Contract or Licence and Permit assigned to Buyer from and after the date of assignment to Buyer.

9.18 LEASES/SUBLEASES OF PREMISES

The Buyer and the Seller shall, at the Time of Closing, enter into:

(a)   a sublease for a portion of the office premises at 925 West Georgia Street, Vancouver;

(b)   a lease for a portion of the Trus Joist office premises;

(c)   a sublease for a portion of the premises used by MBKK personnel in Tokyo;

in each case in accordance with the term sheets set out in Schedule 9.18.

9.19 POPLAR INTERESTS

The Seller shall grant the following interests (collectively, the “POPLAR INTERESTS”) to the Buyer on the Closing Date :

(a) a timber reservation entitling the Buyer to all timber on the Poplar Lands, other than any poplar plantation that is the subject of a Poplar Licence , and the right to harvest such timber, in consideration of the fair market value of such timber which shall be payable on the Closing Date and shall form part of the Purchase Price;

(b) a lease of the Poplar Lands for a term ending on August 31, 2011, provided that where any Poplar Licence expires or terminates earlier than May 31, 2011, the lease shall terminate from time to time with respect to the parcels comprised in any such Poplar Licence, only, on the 90th day after the expiry or termination of the Poplar Licence applicable to such parcels, without affecting in any way the Seller and Buyer’s continuing rights and obligations under the lease with respect to the balance of the Poplar Lands. The lease shall be a triple net lease under which the Buyer shall be responsible for all maintenance, repair, replacements, insurance and any and all other matters or costs relating to the Poplar Lands, including an allocation of environmental liabilities on the same basis as is applicable to the Fee Simple Real Property pursuant to this Agreement which, for greater certainty, means that the Buyer assumes, and will indemnify the Seller for, all Environmental Liabilities with respect to the Poplar Lands except for those Environmental Liabilities that are subject to an indemnity to be provided by the Seller on the same terms and conditions and subject to the same time, thresholds and limits of liability set out in Article 10 and Article 14. The Buyer shall pay basic rent in a lump sum at the Time of Closing, which will form part of the

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Purchase Price, that gives the Seller a 5% annual return on the fair market value of the Poplar Lands excluding the timber. The Seller shall assign and the Buyer shall assume the rights and obligations of the Seller under the Poplar Licences; and

(c) an option to purchase the Poplar Lands exercisable in respect of the parcels under each Poplar Licence by written notice to the Seller within 60 days of the expiry or termination of the Poplar Licence applicable to such parcels. The consideration for the option shall be as follows:

(i) an option fee payable at the Time of Closing equal to the amount by which that portion of the Purchase Price otherwise allocated to the Poplar Interests exceeds the aggregate of the payments made by the Buyer to the Seller under Sections 9.19(a) and 9.19(b), which shall form part of the Purchase Price; and

(ii) one dollar in respect of the parcels under each Poplar Licence payable on each closing date under the option to purchase.

Any purchase of parcels under the option to purchase shall close 30 days after the Buyer exercises the option in respect of such parcels, with the Buyer being responsible for any taxes or registration fees in respect of the purchase, including property transfer tax. The option shall also contain a put whereby the Seller may, within 60 days of the expiry or termination of a Poplar Licence, give written notice to the Buyer requiring the Buyer to acquire the parcels which are the subject of the Poplar Licence for one dollar and the Buyer shall close the purchase of those parcels 30 days after the Seller exercises the put in respect of those parcels. On any acquisition of all or any part of the Poplar Lands, the Buyer assumes, and will indemnify the Seller for all Environmental Liabilities with respect to the acquired lands on the same terms and conditions as set out in this Agreement with respect to Fee Simple Real Property.

The Seller represents, warrants and covenants to the Buyer that the grant of the timber reservation, lease and option to purchase shall not constitute a breach of the Poplar Licences and will not invoke the right of first refusal to purchase the Poplar Lands contained in the Poplar Licences. The Seller shall indemnify and save harmless the Buyer Indemnified Parties from and against all Liabilities suffered or incurred by the Buyer as a result of or arising directly or indirectly out of or in connection with the breach or inaccuracy of this representation, warranty and covenant. On the Closing Date, the Seller shall grant to the Buyer a registrable lease and option to purchase incorporating the terms of this Section which shall be registered in priority to any financial charges affecting the Poplar Lands. Notwithstanding the provisions of clauses (b) and (c) where portions of a parcel are comprised in more than one Poplar Licence, the expiry date of the lease and commencement of the period for exercise of the option to purchase and put shall be based on the latest expiry or termination of the Poplar Licences applicable to such parcel. The Buyer acknowledges and agrees that the Poplar Interests shall be subject to the Permitted Encumbrances, which include, without limitation, the Poplar Licences. The Seller shall, following execution and delivery of this Agreement, request Pacifica Poplars Ltd. to waive

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the rights of first refusal to purchase the Poplar Lands contained in the Poplar Licences with respect to this transaction (provided the Buyer agrees to honour such Licences). If Pacifica Poplars Ltd. agrees to so waive its rights of first refusal to purchase, the Seller agrees to convey fee simple title to the Poplar Lands to the Buyer at the Time of Closing in lieu of granting the Poplar Interests and in such event the Poplar Licences, including the rights of first refusal to purchase therein, shall continue to be Permitted Encumbrances.

9.20 SPROAT LOT 98 INTERESTS

The Seller shall grant the following interests (collectively, the “SPROAT LOT 98 INTERESTS”) to the Buyer on the Closing Date :

(a)   a timber reservation entitling the Buyer to all timber on Lot 98, and the right to harvest such timber, in consideration of the fair market value of such timber which shall form part of the Purchase Price;

(b)   a lease of Lot 98 for a term ending on October 31 , 2006, provided that if the Timberwest Licence expires or terminates earlier than July 18, 2006, the lease shall terminate on the 90th day after the expiry or termination of the Timberwest Licence. The lease shall be a triple net lease under which the Buyer shall be responsible for all maintenance, repair, replacements, insurance and any and all other matters or costs relating to Lot 98, including an allocation of environmental liabilities on the same basis as is applicable to the Fee Simple Real Property pursuant to this Agreement which, for greater certainty, means that the Buyer assumes, and will indemnify the Seller for, all Environmental Liabilities with respect to Lot 98 except for those Environmental Liabilities that are subject to an indemnity to be provided by the Seller on the same terms and conditions and subject to the same time, thresholds and limits of liability set out in Article 10 and Article 14. The Buyer shall pay basic rent in a lump sum on the Closing Date that gives the Seller a 5% annual return on the fair market value of Lot 98 excluding the timber. The Seller shall assign and the Buyer shall assume the rights and obligations of the Seller under the Timberwest Licence;

(c)   an option to purchase Lot 98 exercisable by written notice to the Seller within 60 days of the expiry or termination of the Timberwest Licence. The consideration for the option shall be as follows:

(i) an option fee payable on the Closing Date of this Agreement equal to the amount by which that portion of the Purchase Price otherwise allocated to the Sproat Lot 98 Interests exceeds the aggregate of the payments made by the Buyer to the Seller under Sections 9.20 (a) and 9.20(b), which shall form part of the Purchase Price; and

(ii) one dollar on the closing date under the option to purchase.

The purchase under the option to purchase shall close 30 days after the Buyer exercises the option, with the Buyer being responsible for any taxes or registration fees in respect of the purchase, including property transfer tax. The option shall also contain a put

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whereby the Seller may, within 60 days of the expiry or termination of the Timberwest Licence, give written notice to the Buyer requiring the Buyer to acquire Lot 98 for one dollar and the Buyer shall close the purchase of Lot 98 30 days after the Seller exercises the put. On the acquisition of Lot 98, the Buyer assumes, and will indemnify the Seller for all Environmental Liabilities with respect to the acquired lands on the same terms and conditions as set out in this Agreement with respect to Fee Simple Real Property; and

(d) an assignment of the sale proceeds if and when payable under the Option to Purchase (Right of First Refusal) G-4707 dated July 19, 2001 between the Seller and Timberwest Forest Company, a partnership (as successor to TFL Forest Ltd.). The Buyer shall, at its own cost, perform the Seller’s obligations to subdivide Lot 98 as provided in Option to Purchase (Right of First Refusal) G-4707 and shall otherwise administer that agreement at its own cost on behalf of the Seller. The Seller shall, at the request of the Buyer, cooperate with the Buyer to execute and deliver such documents and plans at the Buyer may request to effect such subdivision and sale.

The Seller represents, warrants and covenants to the Buyer that the grant of the Sproat Lot 98 Interests shall not constitute a breach of the Option to Purchase (Right of First Refusal) G-4707 and will not invoke the right of first refusal to purchase Lot 98 contained therein. The Seller shall indemnify and save harmless the Buyer Indemnified Parties from and against all losses suffered or incurred by the Buyer as a result of or arising directly or indirectly out of or in connection with the breach or inaccuracy of this representation, warranty and covenant. On the Closing Date, the Seller shall grant to the Buyer a registrable lease and option to purchase incorporating the terms of this Section which shall be registered in priority to any financial charges affecting Lot 98. The Buyer acknowledges and agrees that the Sproat Lot 98 Interests shall be subject to the Permitted Encumbrances, which include, without limitation, the Timberwest Licence and Option to Purchase (Right of First Refusal) G-4707. The Seller shall, following execution and delivery of this Agreement, request Timberwest Forest Company to waive such Right of First Refusal with respect to this transaction (provided the Buyer agrees to honour the Timberwest Licence and Option to Purchase (Right of First Refusal) G-4707). If Timberwest Forest Company agrees to so waive its Right of First Refusal, the Seller agrees to convey fee simple title to Lot 98 to the Buyer on the Closing Date in lieu of granting the Sproat Lot 98 Interests and in such event the Timberwest Licence and Option to Purchase (Right of First Refusal) G-4707 shall continue to be Permitted Encumbrances.

9.21 LITIGATION MANAGEMENT AGREEMENT

On the Closing Date, the parties shall enter into a litigation management agreement substantially in the form set out as Schedule 9.21 (the “LITIGATION MANAGEMENT AGREEMENT”).

9.22 NEW ENCUMBRANCES

During the Interim Period, the Seller shall provide written notice to the Buyer of all new Encumbrances registered against Real Property.

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9.23 BOOT LAGOON ACCESS

The Buyer and the Seller shall grant to the other the following on the Closing Date:

(a) the Buyer shall grant to the Seller a permanent, irrevocable easement for access and services over the Fee Simple Real Property designated as F-0338 and F-0022 in Schedule 1.1(uu) for the benefit of the Seller’s Boot Lagoon Lands, which easement shall be in a form satisfactory to the Seller and the Buyer, each acting reasonably. The easement shall be a blanket easement, but shall contain a covenant whereby the access and utility works shall be limited to the location of Ash River Main to be shown by a sketch plan appended to the easement and to be 66 feet wide. The easement shall also contain a covenant of the Buyer and Seller to execute and deliver, at the request of the other and at the cost of the Buyer, a replacement easement with a Land Title Office survey plan limiting the easement area to the location of Ash River Main. The Buyer shall cause the easement and any replacement easement to be registered against that Fee Simple Real Property in priority to any financial Encumbrances securing monetary obligations. The Buyer shall, at its own cost, be responsible for repair and maintenance of the road in the easement area; and

(b) the Seller shall grant to the Buyer a permanent, irrevocable easement for access and services over the Boot Lagoon Lands for the benefit of the Fee Simple Real Property designated as F-0021 in Schedule 1.1(uu). The easement shall otherwise contain the same provisions as set forth in subsection (a) above. The Seller shall also grant to the Buyer a statutory right of way for the same purposes over the Boot Lagoon Lands and containing the same provisions as set forth in subsection (a) above.

9.24 BEACH CAMP ACCESS

The Buyer shall grant to the Seller on the Closing Date a permanent, irrevocable easement for access and services over the Fee Simple Real Property designated as F-4059 and F-2329 in Schedule 1.1(uu) for the benefit of the Seller’s Beach Camp Lands, which easement shall be in a form satisfactory to the Seller and the Buyer, each acting reasonably. The easement shall be a blanket easement, but shall contain a covenant whereby the access and utility works shall be limited to the location of the existing access road to be shown by a sketch plan appended to the easement and to be 66 feet wide. The easement shall also contain a covenant of the Buyer and the Seller to execute and deliver, at the request of the other and at the cost of the Buyer, a replacement easement with a Land Title Office survey plan limiting the easement area to the location of that road. The Buyer shall cause the easement and any replacement easement to be registered against that Fee Simple Real Property in priority to any financial Encumbrances securing monetary obligations. The Buyer and Seller shall share the repair and maintenance costs of the road based on annual usage. The Buyer shall dedicate the road at the request of the Seller if the Seller develops the Beach Camp Lands in the future, but any such dedication shall be at the cost of the Seller.

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9.25 DISTRIBUTION SERVICES

For a period of six months following the Closing Date, the Seller agrees to provide or to cause the Seller’s distribution Affiliate (the “Seller Distributor”) to provide to the Buyer such services (the “Distribution Services”) as the Buyer may reasonably require to market and distribute the products produced by the Purchased Business and either forming a part of the Purchased Assets or produced by the Purchased Business. The Distribution Services shall be provided by the Seller and/or the Seller Distributor to the Buyer on the following general terms and conditions:

(a)   the Seller Distributor shall not be obligated to provide any Distribution Services other than those marketing and distribution services of the nature of those provided by the Seller Distributor to the Purchased Business during the one year period prior to the Closing Date (the “Benchmark Period”);

(b)   the Seller Distributor shall provide the Distribution Services of a quantity and quality consistent with the quantity and quality provided by the Seller Distributor to the Purchased Business as well as other Third Parties during the Benchmark Period;

(c)   the Seller Distributor shall provide the Distribution Services to the Buyer at a price similar to prices charges by the Seller Distributor to Third Parties for similar products and services; and

(d)   the Distribution Services shall be provided on terms and conditions with respect to billing, method of payment, terms of payment, and other commercial terms and conditions as are substantially similar to such terms and conditions as are in place between the Seller Distributor and other Third Parties for similar products and services.

10. ENVIRONMENTAL MATTERS

10.1 ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES

The Seller represents and warrants to the Buyer at the date of execution and delivery of this Agreement as follows, and acknowledges that the Buyer is relying on the accuracy of each of the following representations and warranties of the Seller in entering into this Agreement and completing the Purchase:

(a) COMPLIANCE WITH ENVIRONMENTAL LAWS - to the Seller’s knowledge and except as disclosed in Schedule 10.1 or in the documents listed in Schedule 10.1:

(i) the Purchased Assets are now owned and the Purchased Business is currently conducted in compliance with all Environmental Laws in all material respects; and

(ii) there are no outstanding notices or any on-going or current investigations by any Governmental Authority of any actual or alleged material default

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or non-compliance under Environmental Laws with respect to the Purchased Business or any of the Purchased Assets;

(b) ENVIRONMENTAL PERMITS - to the Seller’s knowledge, and except as disclosed in Schedule 10.1 or in the documents listed in Schedule 10.1:

(i)   the Seller or the Acquired Entities hold all Environmental Permits required to own, use and operate the Purchased Assets and carry on the Purchased Business as currently conducted and all such Environmental Permits are described in Schedule 10.1;

(ii)   all of the Environmental Permits are valid, subsisting and in good standing and in full force and effect in accordance with their terms, are being complied with in all material respects, and the Seller is not in material default or breach of any of the Environmental Permits;

(iii)   no Formal Legal Proceeding has been served or commenced and there have been no Claims from any Governmental Authority to revoke, modify, replace or limit any of the Environmental Permits in any respect that would have a materially adverse effect on the portion of the Purchased Business to which that Environmental Permit relates;

(iv)   the Seller is not actively seeking to amend any of the Environmental Permits, in any respect the failure to obtain which would have a materially adverse effect on the portion of the Purchased Business to which that Environmental Permit relates; and

(v)   subject to any consents required under Environmental Laws being obtained, none of the Environmental Permits will become void or be in default as a result of this Agreement or the completion of the transactions contemplated in this Agreement;

(c) CONTAMINATION - to the Seller’s knowledge and except as disclosed in Schedule 10.1 or in the documents listed in Schedule 10.1:

(i) none of the Fee Simple Real Property is at the Time of Closing a Contaminated Site and no Remediation of any of the Fee Simple Real Property is being conducted by any Person; and

(ii) none of the Leased Real Property or the property subject to the Real Property Interests is a Contaminated Site as a result of the operations or activities of the Purchased Business before the Time of Closing and no Remediation of any of the Leased Real Property or the property subject to the Real Property Interests is being conducted by any Person where such Remediation is related to the operations or activities of the Purchased Business before the Time of Closing;

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(d) REPORTS AND RECORDS UNDER ENVIRONMENTAL LAWS - to the Seller’s knowledge and except as disclosed in Schedule 10.1 or in the documents listed in Schedule 10.1, the Seller has truthfully and completely completed and filed in all material respects all data, reports and notices required under Environmental Laws in connection with the Purchased Assets within the time required under Environmental Laws; and

(e) ENVIRONMENTAL DISCLOSURE - to the knowledge of the Seller and except as disclosed in Schedule 10.1 or the documents listed in Schedule 10.1:

(i) there are no material Claims by or against the Seller with respect to the Environmental Condition of the Purchased Assets; and

(ii) there is no Environmental Condition that could reasonably be expected to have a Materially Adverse effect on the Purchased Assets or the Purchased Business.

The Buyer acknowledges that the sole representations and warranties made by the Seller with respect to the Environmental Condition of the Purchased Assets and the Purchased Business are set out in this Section 10 and all other representations and warranties in Article 6 or elsewhere in this Agreement or in any documents delivered pursuant to this Agreement are deemed to, and will be construed to, exclude such matters.

10.2 COVENANT AND LIMITATIONS ON LIABILITY

The Seller covenants (the “ENVIRONMENTAL COVENANTS”) that if at any time before the date that is:

(a)   18 months after the Closing Date the Buyer provides to the Seller written notice of any breach by the Seller of, or any inaccuracy in, any of the representations and warranties made by the Seller in Section 10.1, other than subsection (c), then, subject to the limitations in Article 14 and this Article 10, the Buyer will be indemnified by the Seller from and against all Liability or Losses suffered or incurred by the Buyer as a result of or arising directly or indirectly out of or in connection with that breach or inaccuracy;

(b)   18 months after the Closing Date the Buyer provides to the Seller written notice of a breach by the Seller of, or any inaccuracy in, the representation made by the Seller in subsection (c) then, subject to the limitations in Article 14 and this Article 10, the Seller shall carry out Remediation at that Contaminated Site to the extent required to achieve material compliance with the Remediation Standards as applicable to the use of that site at the Closing Date; or

(c)   18 months after the Closing Date the Buyer provides to the Seller written notice of:

(i) a breach by the Seller of, or any inaccuracy in, the representation made by the Seller in subsection 10.1(c); and

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(ii) that the Buyer is subject to Formal Legal Proceedings commenced by an arm’s length Third Party (excluding any Third Party to which the Buyer has transferred the Contaminated Site after the Time of Closing) with respect to Contaminants that were at the site at the Time of Closing,

then, subject to the limitations in Article 14 and this Article 10, the Seller shall indemnify the Buyer from and against all Losses suffered or incurred by the Buyer in connection with the Formal Legal Proceeding, provided that the Seller shall be entitled to assume control of the negotiation, settlement or defence of the Formal Legal Proceeding in accordance with Article 14;

(d) Notwithstanding subsection 10.2 (b) and (c):

(i) the Seller shall only be required to carry out Remediation with respect to those Contaminants that were present on the Contaminated Site at the Time of Closing and the Buyer will be solely responsible for the costs of remediating all other Contaminants; and

(ii) the Buyer will be solely responsible for all costs of remediating any Contaminants and all Losses or Liabilities for any Contaminants to the extent such remediation, Losses or Liabilities relate to standards that are more stringent than the Remediation Standards;

(e) For greater certainty, but without limiting the Seller’s obligations under subsection 10.2(c), if Remediation is required pursuant to this Section 10.2 then such Remediation is the Buyer’s sole remedy for breach of the representation in subsection 10.1(c) and all other representations in Section 10.1 are deemed to exclude all matters that are subject to the representation in Section 10.1(c);

(f) Section 10.2 shall not require the Seller to pay or satisfy any Liability or Loss or to provide any indemnity for or to carry out any Remediation with respect to:

(i)   any consequential, indirect, punitive or special losses or damages, including loss of profit or loss of opportunity;

(ii)   any business interruption that may be suffered by the Buyer, except to the extent the Seller breaches its obligation pursuant to Section 10.7 to conduct the Remediation work in a manner that does not unreasonably interfere with the conduct of the Purchased Business;

(iii)   any Environmental Condition or Remediation of any Contaminated Site to the extent that any act or omission of the Buyer or any other Person after the Time of Closing aggravated or worsened, or materially contributed to, or otherwise increased the cost of remedying the Environmental Condition or Remediating the Contaminated Site, provided that closure or decommissioning of a mill, plant, camp or other facilities or improvements that are included in the Purchased Assets will not, by itself, be considered to be an aggravation, worsening or contribution to or increase in cost of

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remedying an Environmental Condition or Remediating a Contaminated Site;

(iv) any Environmental Condition or Remediation of any Contaminated Site where the requirement to remedy the Environmental Condition or to Remediate the Contaminated Site arises as a result of any change in use of the Purchased Assets after the Time of Closing.

10.3 PROCESS

The provisions of Article 14 apply to any Claim to enforce this Article 10, mutatis mutandis.

10.4 NOTICE

The Buyer shall promptly notify the Seller of any pending or threatened Formal Legal Proceedings that might give rise to a Claim by the Buyer against the Seller pursuant to the Environmental Covenants and the Seller may elect, at its expense, to participate in or assume control of the negotiation, settlement or defence of the pending or threatened Formal Legal Proceedings or to carry out Remediation pursuant to the Environmental Covenants at the site subject to the pending or threatened Formal Legal Proceedings and the provisions of this Article 10, including without limitation, Section 10.7 shall apply to such Remediation.

10.5 SOLE RECOURSE AND RELEASE

The Buyer agrees that its sole recourse against the Seller with respect to any Environmental Condition shall be recourse under the Environmental Covenants and the Buyer and its Affiliates and the shareholders, directors, officers, agents, employees, representatives, successors and assigns of the Buyer and its Affiliates (the “BUYER PARTIES”) hereby release the Seller and its Affiliates and the shareholders, directors, officers, agents, employees, representatives, successors and assigns of the Seller and its Affiliates (the “SELLER PARTIES”) from any Claims, Legal Proceedings, Liabilities and Losses (whether or not, such Liabilities or Losses arise out of a Claim or Legal Proceeding), which the Buyer Parties have, may have or will have arising from or in any way related directly or indirectly to any Environmental Liability or any Environmental Condition related to or involving the Purchased Assets or the Purchased Business except for a claim to enforce the Environmental Covenants. The Buyer Parties shall not directly or indirectly commence, assert or pursue, or threaten to commence, assert or pursue, any type of Claim or Legal Proceeding (including an order issued by a Governmental Authority) against any of the Seller Parties relating to any Environmental Condition involving the Purchased Assets or the Purchased Business other than a claim to enforce the Environmental Covenants, including:

(a) knowingly facilitating, assisting, promoting or encouraging any other Person or Governmental Authority to commence, assert or pursue or threaten to commence, assert or pursue a Claim or Legal Proceeding provided that compliance by the Buyer with any obligations under Applicable Laws to report, provided that any such report is limited to those facts that are required to be reported under Applicable Laws, an Environmental Condition, will not be considered to be a breach of this subsection; or

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(b) directly or indirectly (including encouraging any Person or Governmental Authority to) taking any material step or knowingly doing anything that is intended to directly or indirectly circumvent the objective or intent of the foregoing release.

If the Buyer breaches any of its covenants pursuant to this Section 10.5, the Seller shall not be required to provide any indemnity to the Buyer in respect of the matter with respect to which the Buyer has breached its covenant or covenants (including, without limitation) any Claim or Legal Proceeding that may arise with respect to that matter and the Buyer shall bear the cost of any Claim or Legal Proceeding arising as a result of such breach regardless of any limitations in subsection 14.13(b) of this Agreement.

10.6 SUBROGATION

To the extent that a Third Party caused or is liable with respect to an Environmental Condition for which the Buyer is successful in obtaining recourse against the Seller under this Agreement, the Seller shall be subrogated to all rights of the Buyer with respect to those causes of action and Claims against the Third Party, and the Buyer shall provide all reasonable assistance and cooperation the Seller may request from time to time in respect of such causes of action and Claims including providing all relevant On-Site Books and Records and witnesses the Seller may require to pursue such causes of action and Claims.

10.7 CONTROL OF REMEDIATION

(a) Subject to subsection (b), the Seller shall direct and control any Remediation of Contaminated Sites the Seller is required to carry out pursuant to the Environmental Covenants including, by way of example and not of limitation, the selection and appointment of consultants and contractors required to carry out the Remediation, the establishment of the scope, strategy, schedule and budget for Remediation, the selection of materials, methods and protocols to accomplish the Remediation and the selection of the applicable Remediation standards, provided that the Remediation does not unreasonably interfere with the operation of the Purchased Assets and the carrying on of the Purchased Business as a going concern and provided the Remediation meets the Remediation Standards required under this Agreement. The Buyer shall permit the Seller and its employees, contractors and agents reasonable access to the Purchased Assets upon prior notice to inspect, test, obtain samples of substances or environmental media and to carry out Remediation.

(b) In controlling Remediation under subsection (a), the Seller will retain only qualified environmental consultants and contractors to perform Remediation studies and work, will comply with all Applicable Laws, and will conduct the Remediation in a manner that does not unreasonably interfere with the conduct of the Buyer’s operations and business. The Seller will indemnify the Buyer against any Third Party Claims for personal injury or damage to property arising from any negligence by the Seller or its consultants or contractors in the conduct of the Remediation work and, on completion of the Remediation, will restore the

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Buyer’s property to substantially the condition it was before the commencement of the Remediation. The Buyer may at its sole expense (and with or without its own consultants) monitor the Remediation, including any field work undertaken by the Seller or its consultants and is entitled to copies of all reports, studies, investigations, analysis, correspondence and field notes prepared in connection with the Remediation. The Seller will provide the Buyer with progress reports on the Remediation so that the Buyer is kept informed on the status of the Remediation. If the Seller does not commence and diligently perform the Remediation in accordance with Section 10.2(b), the Buyer may, after providing written notice of such default and allowing the Seller a reasonable time in the circumstances to correct such default, undertake the Remediation at Seller’s cost, in which event the Seller will pay the amount of the Buyer’s reasonable costs of Remediation.

10.8 DISPUTE RESOLUTION FOR ENVIRONMENTAL WORK

If there is a dispute over whether a particular Environmental Condition existed before the Closing Date or the scope or adequacy of any Remediation required under the Environmental Covenants, the parties agree to attempt to resolve the matters in dispute within sixty days from the date either party gives notice of the dispute to the other. If the parties cannot resolve the dispute within that sixty (60) day period, each party shall identify an Environmental Expert to provide a non-binding, advisory opinion. If the parties are unable to agree on a mutually acceptable Environmental Expert, either party may apply to the Association of Professional Engineers to have an Environmental Expert appointed, which may involve appointment of an Environmental Expert from among the two individuals initially proposed by the parties or from a more extensive list of candidates provided by the parties. The Environmental Expert shall be given access to existing materials and information reasonably requested by him or her and shall be provided with all other materials or submissions as either party considers to be material, acting reasonably. The Environmental Expert will act as an expert and not as an arbitrator and shall render a non-binding, advisory opinion in a written report to the parties setting forth her or his opinion as to the resolution of the matters in dispute. The parties waive any objection to the offering into evidence of the Environmental Expert’s report and opinion or related testimony in the event of any administrative or judicial proceeding or arbitration between them. The fees and expenses of the Environmental Expert shall be borne by the parties in equal shares. If after receipt of the Environmental Expert’s report, the parties are unable to resolve the matter in dispute, either party may have recourse to the courts of British Columbia.

10.9 WAIVER OF SITE PROFILE

The Buyer waives the requirement, if any, under the Environmental Management Act (British Columbia) or any replacement legislation, for the Seller to provide a site profile for any of the Real Property.

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11. EMPLOYEES

11.1 SALARIED EMPLOYEES

(a)   The Buyer shall contemporaneously with the Time of Closing, offer employment to all active Salaried Employees (other than Employees employed by the Acquired Entities) listed on Schedule 1.1(ii) as updated to the Time of Closing in accordance with the terms of this agreement, and restate that offer on request of the Seller, provided that the request is made on a timely basis following Closing.

(b)   The Buyer shall also offer employment to all Salaried Employees (other than Employees employed by the Acquired Entities) on authorized leave of absence or temporary leave of absence, including absence for workers compensation leave, short term or long term disability, parental and maternity leave, upon any such Employee becoming eligible for reinstatement for active employment.

(c)   All offers contemplated in (a) and (b) above shall (i) be at a base salary no less than the Employee’s base salary at the Time of Closing (ii) provide for a pension benefit entitlement which commences accruing from and after the Time of Closing and which entitlement is initially on substantially the same terms as are applicable to such Employees as of the Time of Closing (iii) provide for non-pension benefits as shall be competitive in the forest industry and (iv) shall recognize the service of the Employees for the purposes of vacation, service awards and safety awards and all severance and termination obligations, as if they had been employed by the Buyer since their individual dates of hire by the Seller or predecessor of the Seller.

(d)   If applicable, for the purpose of determining the eligibility of a Transferred Employee for membership or benefits under a non-pension benefit plan established by the Buyer for Transferred Employees that are Salaried Employees:

(i) their period of employment shall include employment as recognized with both the Seller and the Buyer and shall be deemed not to have been interrupted by the transactions contemplated hereby; and

(ii) their period of membership shall include membership in both the relevant benefit plan of the Seller and the relevant benefit plan of the Buyer and shall be deemed not to have been interrupted by the transactions contemplated hereby.

(e) All Transferred Employees that are Salaried Employees shall be entitled to benefits under any relevant non-pension benefit plans established by the Buyer with respect to any condition existing at or event occurring before the Time of Closing, to the extent such condition was eligible for benefits under a Benefit Plan of the Seller and to the extent that the condition would otherwise be covered under the non-pension benefit plans established by the Buyer if such condition had occurred after the Time of Closing and provided the Seller disclosed in writing to the Buyer the existence of such condition and the occurrence of the event before

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the Closing Date or promptly following the time of the Seller first having knowledge of the existence of such condition and the occurrence of the event. The Transferred Employees shall begin to accrue benefits under the non-pension benefit plans established by the Buyer as of the Time of Closing with respect to their employment by the Buyer. For greater certainty, nothing contained in this Section 11.1(e) shall in any way limit the Buyer’s discretion in determining the benefits which are or are not provided by the Buyer’s non-pension benefit plans.

11.2 UNION EMPLOYEES

(a)   The Buyer acknowledges and agrees that it will be a successor employer and will assume all obligations to Union Employees in respect of (including obligations thereunder to employ Union Employees that are not currently actively employed in the Purchased Business as and when required under the Collective Agreements) and be bound by the terms of the Collective Agreements as required by Applicable Law until their termination, expiration or replacement and will make such offers of employment to all Union Employees as are required in connection therewith.

(b)   The Seller shall deliver all notices required under the Collective Agreements or under Applicable Law in a manner sufficient to provide appropriate notice of Closing as required by the Collective Agreements.

(c)   The Buyer acknowledges and agrees that all grievances, references and arbitrations under the Collective Agreements, that are made, filed, commenced or instituted before or after the Closing Date, including those based substantially on events or circumstances that occurred, existed or were initiated before the Closing Date, will be the sole responsibility of the Buyer. For greater certainty, the Buyer acknowledges that it will be solely responsible for any Liabilities that may arise as a result of any labour relations board decisions involving or affecting persons formerly employed in the Purchased Business under a Collective Agreement relating to the transactions set out in the Disclosure Letter.

11.3 REMITTANCES

The Seller shall remit promptly to the Buyer any reimbursements received by the Seller from all relevant workers compensation boards or other Governmental Authorities after the Time of Closing with respect to any and all claims filed by the Employees with respect to periods after the Time of Closing. The Buyer shall remit promptly to the Seller any reimbursements received by the Buyer from all relevant workers compensation boards or other Governmental Authorities after the Time of Closing with respect to any and all claims filed by the Employees with respect to periods before the Time of Closing.

11.4 BENEFIT PLANS

(a) Effective as of the Time of Closing: the Buyer shall become the administrator of the Pension Plan for Employees of Mid-Island Reman Inc. and the Seller shall

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assign to the Buyer Standard Life Assurance Company Policy No. RS100400-0131; and

(b) The Seller acknowledges that it is solely responsible for all obligations to Employees and former employees of the Purchased Business under its Benefit Plans (including, without limitation, any Benefit Plan contemplated in the letter dated October 22, 2003 from Weyerhaeuser confirming the continuation of certain post retirement benefits previously provided by MacMillan Bloedel to retired employees), including, without limitation, any benefits to which an Employee would have been entitled upon voluntary termination of employment (by way of retirement or otherwise) at the Time of Closing and that any Liabilities of the Seller for failure to provide or otherwise be responsible for such benefits and any changes made by the Seller to its Benefit Plans constitute Liabilities that are not Assumed Liabilities for the purposes of Section 5.2 and the Buyer’s obligations under this agreement, including without limitation the obligations of the Buyer to indemnify the Seller pursuant to Section 14.2(b) shall be deemed not to include any amount related to the matters for which the Seller has responsibility for under this Section 11.4(b).

12. CONDITIONS OF CLOSING

12.1 CONDITIONS OF CLOSING IN FAVOUR OF THE BUYER

The Purchase is subject to the following terms and conditions for the exclusive benefit of the Buyer, to be performed or fulfilled at or before the Time of Closing:

(a)   the representations and warranties of the Seller contained in this Agreement, as may be modified pursuant to Section 1.15, shall be true and correct in all material respects at the Time of Closing with the same force and effect as if such representations and warranties were made at and as of such time, and a certificate of a senior officer of the Seller, dated the Closing Date, to that effect shall have been delivered to the Buyer, such certificate to be in form and substance satisfactory to the Buyer, acting reasonably;

(b)   all of the terms, covenants and conditions of this Agreement to be complied with or performed by the Seller at or before the Time of Closing shall have been complied with or performed in all material respects and a certificate of a senior officer of the Seller, dated the Closing Date, to that effect shall have been delivered to the Buyer, such certificate to be in form and substance satisfactory to the Buyer, acting reasonably;

(c)   all of the Closing Consents shall have been obtained in each case in form and substance satisfactory to the Buyer, acting reasonably;

(d)   the Seller and the Buyer shall have entered into the Transitional Services Agreement;

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(e)   no injunction or restraining order of a court or administrative tribunal of competent jurisdiction shall be in effect which enjoins or prohibits the Purchase;

(f)   there shall have been no Materially Adverse change in the condition (financial or otherwise), assets, Liabilities, operations, earnings, business or prospects of the Purchased Business or the Purchased Assets since the date of the most recent of the Financial Statements; provided however, that, without limiting the generality of the foregoing, any change that results directly or indirectly in the diminution of value of the Purchased Business or the Purchased Assets by more than 20% of the Purchase Price shall be deemed to be Materially Adverse;

(g)   all actions, proceedings, instruments and documents required from the Seller to implement this Agreement, or that are instrumental thereto, shall have been taken, executed or delivered, as the case may be, by the Seller;

(h)   the Seller shall have delivered to the Buyer a favourable opinion of counsel to the Seller in form and substance reasonably satisfactory to the Buyer and its counsel;

(i)   the Minister of Forests of British Columbia has provided a written notice to proceed under Section 54.1 of the Forest Act (British Columbia) with respect to the transfer of the Timber Tenures from the Seller to the Buyer on terms mutually acceptable to the Buyer and Seller, each acting reasonably, and the Closing shall occur by the date specified in that notice as the latest date by which the Purchase must be completed;

(j)   the Minister of Forests of British Columbia has approved the assignment and assumption agreement in the form to be signed at Closing pursuant to which the Seller will transfer to the Buyer, and the Buyer shall assume and agree to perform, all of the Forestry Liabilities;

(k)   the Competition Act Approval shall have been obtained and HSR Compliance shall have occurred, in each case, without conditions that would have a Materially Adverse effect on the Buyer, the business of the Buyer or the value of the Purchased Assets or the Purchased Business, provided that any consent order or other agreement reached with a Governmental Authority in order to obtain such Approvals shall not be considered in the determination of whether there has been a Materially Adverse effect on the Buyer, the business of the Buyer or the value of the Purchased Assets or Purchased Business; and

(l)   the Seller shall have purchased on or before the Time of Closing, from the entity known as EDS, the computer hardware, routers, switches and other equipment that is currently leased by the Seller from that entity and that is required in the operation of the Purchased Business, or otherwise made the use of that computer hardware, routers, switches and other equipment available to the Buyer at a nominal fee in perpetuity from and after the Time of Closing.

If any of the conditions contained in this Section 12.1 shall not be performed or fulfilled at or before the Time of Closing or such earlier time as noted in this Section 12.1 to the satisfaction of

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the Buyer, acting reasonably, the Buyer may, by notice to the Seller, terminate this Agreement and the obligations of the Seller and the Buyer under this Agreement, other than the obligations contained in Sections 16.3 and 16.4, shall terminate forthwith.

12.2 CONDITIONS OF CLOSING IN FAVOUR OF THE SELLER

The Purchase is subject to the following terms and conditions for the exclusive benefit of the Seller, to be performed or fulfilled at or before the Time of Closing:

(a)   the representations and warranties of the Buyer contained in this Agreement shall be true and correct in all material respects at the Time of Closing with the same force and effect as if such representations and warranties were made at and as of such time, and a certificate of a duly authorized officer of the Buyer, dated the Closing Date, to that effect shall have been delivered to the Seller, such certificate to be in form and substance satisfactory to the Seller, acting reasonably;

(b)   all of the terms, covenants and conditions of this Agreement to be complied with or performed by the Buyer at or before the Time of Closing shall have been complied with or performed in all material respects, and a certificate of a duly authorized officer of the Buyer dated the Closing Date, to that effect shall have been delivered to the Seller, such certificate to be in form and substance satisfactory to the Seller, acting reasonably;

(c)   no injunction or restraining order of a court or administrative tribunal of competent jurisdiction shall be in effect which enjoins or prohibits the Purchase;

(d)   all actions, proceedings, instruments and documents required from the Buyer to implement this Agreement, or that are instrumental thereto, shall have been taken, executed or delivered, as the case may be, by the Buyer;

(e)   the Buyer shall have delivered to the Seller a favourable opinion of counsel to the Buyer in form and substance reasonably satisfactory to the Seller and its counsel;

(f)   the Minister of Forests of British Columbia shall have provided a written notice to proceed under section 54.1 of the Forest Act (British Columbia) with respect to the transfer of the Timber Tenures from the Seller to the Buyer on terms acceptable to the Buyer and the Seller, each acting reasonably, and the Closing shall occur by the date specified in that notice as the latest date by which the Purchase must be completed;

(g)   the Minister of Forests of British Columbia shall have approved the assignment and assumption agreement in the form to be signed at Closing pursuant to which the Seller will transfer to the Buyer, and the Buyer shall assume and agree to perform, all of the Forestry Liabilities; and

(h)   all of the Closing Consents shall have been obtained in each case in form and substance satisfactory to the Seller, acting reasonably.

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If any of the conditions contained in this Section 12.2 shall not be performed or fulfilled at or before the Time of Closing to the satisfaction of the Seller acting reasonably, the Seller may, by notice to the Buyer, terminate this Agreement and the obligations of the Seller and the Buyer under this Agreement, other than the obligations contained in Sections 16.3 and 16.4, shall terminate forthwith.

13. CLOSING DATE AND TRANSFER OF POSSESSION

13.1 TRANSFER

Subject to compliance with the terms and conditions hereof, the transfer of ownership and possession of the Purchased Assets shall be deemed to occur and take effect as at the Time of Closing.

13.2 PLACE OF CLOSING

The closing shall take place on the Closing Date at the offices of Borden Ladner Gervais LLP in Vancouver.

13.3 DELIVERY OF CLOSING DOCUMENTS

(a) On or before the Closing Date, the Seller shall deliver or arrange for the delivery to the Buyer:

(i)   all necessary deeds, conveyances, bills of sale, assurances, transfers, assignments and any other documentation necessary or reasonably required to transfer the Purchased Assets to the Buyer with good title thereto, free and clear of all Encumbrances, except for Permitted Encumbrances in registrable form, as applicable;

(ii)   payment of the amount of the Forestry Liabilities pursuant to Section 3.3;

(iii)   a certificate of a senior officer of the Seller (in his or her representative and not personal capacity), dated the Closing Date with respect to Subsection 12.1(a) and 12.1(b);

(iv)   a copy certified by a senior officer of the Seller (in his or her representative and not personal capacity) as of the Closing Date of the resolution of the directors of the Seller authorizing the execution, delivery and performance by the Seller of this Agreement and any material documents to be provided by it pursuant to the provisions of this Agreement;

(v)   the GST election pursuant to Section 4.1(c) duly signed by the Seller;

(vi)   the Transitional Services Agreement and Litigation Management Agreement duly signed by the Seller;

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(vii)   an opinion of the Seller’s counsel in form and substance satisfactory to the Buyer and the Buyer’s counsel, acting reasonably;

(viii)   the Closing Consents to be delivered by the Seller;

(ix)   the lease and sublease documents for Trus Joist, Tokyo and 925 W. Georgia; and

(x)   such other documents relevant to the closing of the transactions contemplated hereby as the Buyer, acting reasonably, may request.

(b) On or before the Closing Date, the Buyer shall deliver or arrange for the delivery to the Seller:

(i)   confirmation of payment of the amount of $1,221,500,000 (as adjusted by Section 3.12(b)) and the Net Working Capital Estimate pursuant to Subsection 3.2(a);

(ii)   all documents necessary or reasonably required with respect to the assumption by the Buyer from and after the Time of Closing of the Assumed Liabilities, including without limitation, an assumption agreement with respect to the Assumed Liabilities each in form and substance acceptable to the Seller and Buyer acting reasonably;

(iii)   copies certified by a senior officer of the Buyer (in his or her representative and not personal capacity) as of the Closing Date of the resolution of the directors of the Buyer authorizing the execution, delivery and performance by the Buyer of this Agreement and any documents to be provided by it pursuant to the provisions of this Agreement;

(iv)   a certificate of a senior officer of the Buyer (in his or her representative and not personal capacity) dated the Closing Date pursuant to Subsection 12.2(a) and 12.2(b);

(v)   the GST election pursuant to Section 4.1(c) duly signed by the Buyer;

(vi)   the Transitional Services Agreement and Litigation Management Agreement duly signed by the Buyer;

(vii)   an opinion of the Buyer’s counsel in form and substance satisfactory to the Seller and the Seller’s counsel, acting reasonably;

(viii)   the lease and sublease documents for Trus Joist, Tokyo and 925 West Georgia;

(ix)   the Closing Consents to be delivered by the Buyer; and

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(x) such other documents relevant to the closing of the transactions contemplated hereby as the Seller, acting reasonably, may request.

13.4 FURTHER ASSURANCES

Each party to this Agreement covenants and agrees that it will at all times after the Closing Date, at the expense of the requesting party, promptly execute and deliver all such documents, including, without limitation, all such additional conveyances, transfers, consents and other assurances and do all such other acts and things as the other party, acting reasonably, may from time to time request be executed or done in order to better evidence or perfect or effectuate any provision of this Agreement or of any agreement or other document executed pursuant to this Agreement or any of the respective obligations intended to be created hereby or thereby.

13.5 REGISTRATION OF TRANSFER OF REAL PROPERTY

All closing documents shall be executed and placed into escrow at the offices of the Seller’s Solicitors at 9:00 a.m. on the third Business Day prior to the Closing Date. The Buyer shall provide the monies referred to in subsection 3.2(a) to its solicitors in trust by the same deadline. The closing documents and those shall then be held in escrow until released as provided in this Section. Upon all closing documents being escrowed and receipt by the Seller’s solicitors of written confirmation from the Buyer’s solicitors that they hold the monies referred to in Subsection 3.2(a) in trust, the transfers and assignments in respect of the Real Property which are to be registered in the Land Title Office shall be released to the Buyer’s solicitors and the Buyer shall cause the Buyer’s solicitors to submit the transfers and assignments for registration in the applicable Land Title Office. Upon making application for registration of such transfers and assignments and upon the Buyer’s solicitors, acting reasonably, being satisfied on conducting a post-filing for registration check of the title to such Real Property that such post-filing for registration checks disclose only the following:

(a)   the existing title numbers to such Real Property;

(b)   the Permitted Encumbrances;

(c)   pending numbers assigned to the transfers and assignments; and

(d)   pending numbers assigned to any Encumbrances granted by or filed against the Buyer,

the Buyer’s solicitors shall provide written notification of same to the Seller’s solicitors and the Buyer shall cause its solicitors to deliver to the Seller at the Closing the monies referred to in Subsection 3.2(a), the Seller shall cause its solicitors to deliver to Buyer the monies referenced to in Section 3.3 and the closing documents held in escrow pursuant to this Section shall be delivered at the Closing to the appropriate party, subject to the satisfaction or waiver of any other applicable conditions in this Agreement. If such post-filing for registration checks are not received by the Time of Closing, or if the other transactions contemplated by this Agreement to occur at the Closing have not occurred, and the monies referred to in Subsections 3.2(a) and 3.3 have not been paid or tendered to and accepted by the receiving party in the manner contemplated herein, then the Buyer shall, upon the written request of the Seller or its solicitors,

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forthwith cause its solicitors to make application to the Land Title Office for withdrawal of the transfers and assignments and execute and deliver to the Seller all instruments required to reconvey such Real Property to the Seller, all without prejudice to any rights or remedies of the parties under this Agreement, and upon receipt by such solicitors of the transfers and assignments and delivery of same to the Seller, the solicitors for the Buyer shall release the monies referred to in Subsection 3.2(a) to the Buyer, together with any and all interest earned thereon, the solicitors for the Seller shall release the monies referred to in Section 3.3 to the Seller, together with any and all interest earned thereon and the remaining documents held by the solicitors shall be redelivered to the relevant maker or makers thereof for cancellation, without in any way impairing the rights and obligations of the parties to one another under this Agreement. Any interest earned on the monies referred to in subsection 3.2(a) during the escrow period shall be for the Buyer’s account.

13.6 POST-CLOSING NOTIFICATION

Upon completion of the Closing, the Buyer and the Seller will confirm the completion in writing to the Minister of Forests of British Columbia within twenty-one (21) days after the completion as required by section 54.2 of the Forest Act (British Columbia).

14. INDEMNIFICATION

14.1 INDEMNIFICATION BY THE SELLER

Subject to Article 10 and the other provisions of this Article 14, the Seller agrees to indemnify and save harmless the Buyer Indemnified Parties from and against all Losses suffered or incurred by the Buyer as a result of or arising directly or indirectly out of or in connection with:

(a)   REPRESENTATIONS AND WARRANTIES - any breach by the Seller of, or any inaccuracy in, any representation or warranty of the Seller contained in this Agreement or in transfer document, certificate, document or instrument delivered by the Seller to the Buyer pursuant to this Agreement, but excluding the representations in Section 10.1;

(b)   LIABILITIES AND TAXES - all Liabilities of the Seller, contingent or otherwise, existing on the Closing Date other than the Assumed Liabilities and Taxes that are the responsibility of the Buyer under Section 4.2;

(c)   COVENANTS - any breach or non-performance by the Seller of any covenant to be performed by the Seller that is contained in this Agreement or in any transfer document, certificate, document or instrument delivered by the Seller to the Buyer pursuant to this Agreement;

(d)   SECTION 54.6 LIABILITIES - any joint and several liabilities imposed on the Buyer by subsection 54.6(2) of the Forest Act (British Columbia) for any Liabilities of the Seller that are not Assumed Liabilities to the extent the Buyer is not otherwise indemnified by the Seller for any such liability; and

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(e) TIMBER REALLOCATION AGREEMENT - any Claim made by the Province of British Columbia under the Timber Reallocation Agreement in respect of a road, facility or soft costs for which the Seller is responsible under Section 2.5.

No claims for indemnification arising out of a breach or inaccuracy of any representation or warranty of the Seller under subsection 14.1(a) may be made by the Buyer Indemnified Parties pursuant to this section 14.1 unless notice of the claim in accordance with section 14.3 is given by the Buyer Indemnified Parties to the Seller:

(f)   REPRESENTATIONS AND WARRANTIES - in the case of a claim with respect to a representation and warranty, except as expressly provided below, within a period of 18 months from the Closing Date;

(g)   TITLE MATTERS - In the case a claim with respect to the representations and warranties contained in any of Sections 6.2(a), 6.3, 6.4, 6.7 or 6.9, as to which a claim may be made at any time;

(h)   TAXES - in the case of a claim with respect to the representation and warranty contained in section 6.21 within a period commencing on the Closing Date and ending on a date which is 60 days after the date on which the last applicable limitation period under any Applicable Law relating to Tax matters expires with respect to any taxation year that is relevant in determining any liability with respect to those Tax matters;

and upon the expiry of the relevant limitation period, the Seller shall have no further liability to the Buyer Indemnified Parties with respect to the representations and warranties referred to in those clauses except with respect to claims that have been made within the times and in accordance with the provisions set forth above. The Buyer agrees that its sole recourse against the Seller in the event of any breach by the Seller of, or any inaccuracy in, any representation or warranty of the Seller contained in this Agreement shall be recourse to a claim for indemnification under this Article 14 and Article 10, if applicable.

14.2 INDEMNIFICATION BY THE BUYER

(a) Subject to the other provisions of this Article 14, the Buyer agrees to indemnify and save harmless the Seller Indemnified Parties from and against all Losses suffered or incurred by the Seller Indemnified Parties as a result of or arising directly or indirectly out of or in connection with:

(i)   REPRESENTATIONS AND WARRANTIES - any breach by the Buyer of, or any inaccuracy in, any representation or warranty contained in this Agreement;

(ii)   COVENANTS - any breach or non-performance by the Buyer of any covenant to be performed by the Buyer that is contained in this Agreement;

(iii)   SECTION 54.6 LIABILITIES - any joint and several liability imposed on the Seller by subsection 54.6(2) of the Forest Act (British Columbia) for any

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Liabilities that are Assumed Liabilities to the extent the Seller is not otherwise indemnified by the Buyer for any such liability; and

(iv) POST-CLOSING - the operations of the Purchased Business and ownership of the Purchased Assets after the Time of Closing including, without limitation, any failure by the Buyer to pay, satisfy, discharge, perform or fulfil any of the Assumed Liabilities or any of the other obligations and Liabilities of the Seller to be assumed by the Buyer in accordance with the provisions of this Agreement.

No claim for indemnification arising out of a breach or inaccuracy of a representation or warranty of the Buyer under subsection 14.2(a) may be made by the Seller Indemnified Parties pursuant to this section 14.2 unless notice of the claim in accordance with section 14.3 is given by the Buyer Indemnified Parties to the Seller Indemnified Parties within a period of 18 months from the Closing Date and, upon the expiry of that limitation period, the Buyer shall have no further liability to the Seller Indemnified Parties with respect to any of those representations or warranties, except with respect to Claims that have been made within the times and in accordance with the provisions set forth above. The Seller agrees that its sole recourse against the Buyer in the event of any breach by the Buyer of, or any inaccuracy in, any representation or warranty of the Buyer contained in this Agreement shall be recourse to a claim for indemnification under this Article 14; and

(b) The Buyer will indemnify and save harmless the Seller from any and all statutory and common law severance, wrongful dismissal obligations, constructive dismissal obligations, and layoff or severance obligations under the Collective Agreements relating to Employees to whom the Buyer is required to offer employment pursuant to Article 11 of this Agreement arising at or subsequent to the Time of Closing.

14.3 NOTICE OF CLAIM

If an Indemnified Party shall become aware of any Claim with respect to which the Indemnifying Party agreed to indemnify an Indemnified Party pursuant to this Agreement, the Indemnified Party shall promptly give written notice thereof to the Indemnifying Party. Such notice shall specify whether the Claim arises as a result of a Third Party Claim or whether it is a Direct Claim, and shall also specify with reasonable particularity (to the extent that the information is available):

(a) the factual basis for the Claim; and

(b) the amount of the Claim, if known.

If, through the fault of the Indemnified Party, the Indemnifying Party does not receive notice of any Claim in time to effectively contest the determination of any liability susceptible of being contested, the Indemnifying Party shall be entitled to set off against the amount claimed by the

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Indemnified Party the amount of any Losses incurred by the Indemnifying Party resulting from the Indemnified Party’s failure to give such notice on a timely basis.

14.4 DIRECT CLAIMS

With respect to any Direct Claim, following receipt of notice from the Indemnified Party of the Claim, the Indemnifying Party shall have thirty days to make such investigation of the Claim as is considered necessary or desirable. For the purpose of such investigation, the Indemnified Party shall make available to the Indemnifying Party the information relied upon by the Indemnified Party to substantiate the Claim, together with all such other information as the Indemnifying Party may reasonably request. If both parties agree at or before the expiration of such thirty day period (or any mutually agreed upon extension thereof) to the validity and amount of such Claim, the Indemnifying Party shall immediately pay to the Indemnified Party the full agreed upon amount of the Claim.

14.5 THIRD PARTY CLAIMS

With respect to any Third Party Claim, the Indemnifying Party shall have the right, at its expense, to participate in or assume control of the negotiation, settlement or defence of the Claim and, in such event, the Indemnifying Party shall reimburse the Indemnified Party for all of the Indemnified Party’s out-of-pocket expenses as a result of such participation or assumption. If the Indemnifying Party elects to assume such control, the Indemnified Party shall have the right to monitor, but not participate in the negotiation, settlement or defence of, such Third Party Claim and to retain counsel to act on its behalf, provided that the fees and disbursements of such counsel shall be paid by the Indemnified Party unless the Indemnifying Party consents to the retention of such counsel or unless the named parties to any action or proceeding include both the Indemnifying Party and the Indemnified Party and a representation of both the Indemnifying Party and the Indemnified Party by the same counsel would be inappropriate due to the actual or potential differing interests between them (such as the availability of different defences). If the Indemnifying Party, having elected to assume such control, thereafter fails to defend the Third Party Claim within a reasonable time, the Indemnified Party shall be entitled to assume such control and the Indemnifying Party shall be bound by the results obtained by the Indemnified Party with respect to such Third Party Claim. If any Third Party Claim is of a nature such that the Indemnified Party is required by Applicable Law to make a payment to any Third Party with respect to the Third Party Claim before the completion of settlement negotiations or related Legal Proceedings, the Indemnified Party may make such payment and the Indemnifying Party shall, forthwith after demand by the Indemnified Party, reimburse the Indemnified Party for such payment. If the amount of any liability of the Indemnified Party under the Third Party Claim with respect to which such a payment was made, as finally determined, is less than the amount that was paid by the Indemnifying Party to the Indemnified Party, the Indemnified Party shall, forthwith after receipt of the difference from the Third Party, pay the amount of such difference to the Indemnifying Party.

14.6 SETTLEMENT OF THIRD PARTY CLAIMS

If the Indemnifying Party fails to assume control of the defence of any Third Party Claim, the Indemnified Party shall have the exclusive right to contest, settle or pay the amount claimed.

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Whether or not the Indemnifying Party assumes control of the negotiation, settlement or defence of any Third Party Claim, the Indemnifying Party shall not settle any Third Party Claim without the written consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed; provided, however, that the liability of the Indemnifying Party shall be limited to the proposed settlement amount if any such consent is not obtained for any reason.

14.7 CO-OPERATION

The Indemnified Party and the Indemnifying Party shall co-operate fully with each other with respect to Third Party Claims, and shall keep each other fully advised with respect thereto (including supplying copies of all relevant documentation promptly as it becomes available).

14.8 THRESHOLDS

Notwithstanding any other provision of this Agreement (other than section 14.13), neither party shall assert against the other party any Claim (including, without limitation under Article 10) unless the aggregate amount of the Claim or Claims asserted is at least 1.0% of the Purchase Price, without counting any Claim under 0.05% of the Purchase Price. Once the amount of such Claims reaches at least 1.0% of the Purchase Price in the aggregate, the obligation to indemnify shall apply (in which case the Indemnifying Party will be obliged to indemnify for only that portion of such Claims over 1.0% of the Purchase Price in aggregate) with respect to all Claims having a value of at least 0.05% of the Purchase Price. The thresholds set forth in this Section 14.8 shall not apply to indemnification for breaches of warranties under Sections 6.1, 6.2, 6.3, 6.4, 6.5, 6.7, 6.9, 6.21, 7.1, 7.2, 7.3 or to any breach by the Indemnifying Party of any covenant or obligation in this Agreement and the Indemnifying Party, subject to Section 14.10, shall be liable for all damages with respect to any such breaches. For the purposes of determining whether the thresholds in this Section 14.8 have been met: (i) the amount of the Claim is the amount of the Loss or Liability suffered or incurred by the party making the Claim, and (ii) the Purchase Price shall not include the Assumed Liabilities.

14.9 REDUCTION

The liability of the Indemnifying Party pursuant to this Article 14 shall be reduced to the extent:

(a) COLLECTIBLE INSURANCE - that the Indemnified Party is entitled to be indemnified for any Loss by valid and collectible insurance; and

(b) TAXATION - of any related reasonably determinable Tax benefits available to the Indemnified Party as a result of the matters giving rise to the Indemnified Party’s Claim so that the Indemnified Party is in the same position the Indemnified Party would have been, and not in a better position or a worse position than the Indemnified Party would have been, on an after Tax basis in the absence of the events or circumstances that gave rise to the Claim;

and the Indemnified Party shall have a duty to take all reasonable steps to mitigate its Losses.

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14.10 LIMITATIONS

The liability of an Indemnifying Party with respect to any Claims under this Agreement shall, in the aggregate, be limited as follows:

(a)   an Indemnifying Party shall have no responsibility for any Losses with respect to indirect, consequential, punitive or special damages or damages for loss of profit, loss of opportunity or business interruption;

(b)   an Indemnifying Party shall have no responsibility for any Losses to the extent that any act or omission of the Indemnified Party or any other Person after the Time of Closing aggravated or worsened, or materially contributed to, or otherwise increased the Losses; and

(c)   an Indemnified Party shall not be entitled to make a Claim if the Indemnified Party has been advised in writing or otherwise has actual knowledge before the Time of Closing of the inaccuracy of a representation or warranty or breach or non-performance of a covenant of the Indemnifying Party that is the basis of that Claim and the Indemnified Party completes the transactions contemplated in this Agreement notwithstanding that inaccuracy, breach or non-performance.

14.11 CAP

In no event shall either party be liable to the other for Claims including, without limitation, pursuant to Article 10, to the extent that the aggregate value of such Claims exceeds $150,000,000.

14.12 AS IS, WHERE IS

Notwithstanding any other provision of this Agreement and for greater certainty, the Seller’s sole obligations in respect of Aboriginal Claims are contained in Section 6.10 and no actions with respect to Claims or Losses suffered or incurred by the Buyer in respect of Aboriginal Claims (including without limitation any Claims with respect to title to any Purchased Asset) may be brought against the Seller unless there is a breach of the representation and warranty contained in Section 6.10.

14.13 ASSUMED LIABILITIES

(a) Notwithstanding any other provision of this Article 14, but subject to subsection 14.13(b) there are no limits or thresholds: (i) to the obligations of the Buyer in respect of the matters described in subsections 14.2(a) (iv) and 14.2(b); (ii) to the obligations of the Seller in respect of matters described in Section 5.2; and (iii) to the obligations of the parties in respect of the matters described in Section 16.2.

(b) The Buyer shall not be liable to the Seller for Claims pursuant to subsection 14.2(a) (ii) and (iv) in respect of Environmental Conditions that came

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into existence or occurred before the Time of Closing to the extent that the aggregate value of such Claims exceeds $100,000,000.

14.14 SUBROGATION

In the event that an Indemnified Party has a right of recovery against any Third Party with respect to any Third Party Claim or Direct Claim in connection with which a payment is made to such Indemnified Party by an Indemnifying Party, then:

(a) such Indemnifying Party will, to the extent of such payment, be subrogated to all of the rights of recovery of such Indemnified Party against such Third Party with respect to such Third Party Claim or Direct Claim; and

(b) such Indemnified Party will execute all documents reasonably required and take all action necessary to secure such rights, including the execution of such documents as are reasonably necessary to enable such Indemnifying Party to bring suit to enforce such rights.

14.15 EXCLUSIVE REMEDY

The provisions of Articles 10 and 14 will be the parties’ exclusive remedies with respect to any claim for breach of any covenant, representation, warranty or other provision of this Agreement or any agreement, instrument or certificate executed and delivered pursuant to this Agreement (other than a claim for specific performance or injunctive relief) with the intent that all such claims will be subject to the limitations and other provisions contained in Articles 10 and 14.

15. TERMINATION

15.1 TERMINATION

This Agreement may be terminated at any time:

(a) by the written agreement of the parties;

(b) by either party at any time after June 30, 2005 if Closing has not occurred, other than by reason of a breach of, or default under, a term of this Agreement by the party seeking to terminate this Agreement.

Any termination of this Agreement made by a party pursuant to paragraph (b) above will be without prejudice to such party’s rights and remedies under this Agreement accrued to the date of termination, including any related to any breach of any representation, warranty or covenant of another party.

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16. MISCELLANEOUS

16.1 NOTICES

(a) Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be delivered in person, transmitted by telecopy or similar means of recorded electronic communication or sent by registered mail, charges prepaid, addressed as follows with the mention “Strictly Confidential”:


		(i)		if to the Seller:

				Weyerhaeuser Company Limited
				5th Floor
				925 West Georgia Street
				Vancouver BC V6C 3L2

				Attention: General Counsel
				Telecopier: 604.687.2314
				Email: alex.shorten@weyerhaeuser.com

		(ii)		if to the Buyer:

				Coastal Acquisition Ltd.
				c/o Brascan Asset Management
				Suite 2050, Royal Centre,
				P.O. Box 11179
				1055 West Georgia Street,
				Vancouver, B.C.
				V6E 3R5

				Attention: President
				Telecopier: 604.687.3419
				Email: rcarter@brascanam.com

		(iii)		with a copy to its counsel:
				Davis & Company
				2800 Park Place
				666 Burrard Street
				Vancouver, BC V6C 2Z7

				Attention: Al Hudec
				Telecopier: 604.605.3546
				Email: ajhudec@davis.ca

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(b)   Any such notice or other communication shall be deemed to have been given and received on the day on which it was delivered, transmitted (or, if such day is not a Business Day, on the next following Business Day) or, if mailed, on the third Business Day following the date of mailing; provided, however, that if at the time of mailing or within three Business Days thereafter there is or occurs a labour dispute or other event that might reasonably be expected to disrupt the delivery of documents by mail, any notice or other communication hereunder shall be delivered or transmitted by means of recorded electronic communication as aforesaid.

(c)   Either party may at any time change its address for service from time to time by giving notice to the other party in accordance with this Section 16.1.

(d)   Any notice sent by electronic mail must have been acknowledged by the recipient as having been received before the notice is deemed to have been given.

16.2 COMMISSIONS, ETC.

The Seller agrees to indemnify and save harmless the Buyer from and against all Losses suffered or incurred by the Buyer with respect to any commission or other remuneration payable or alleged to be payable to any broker, agent or other intermediary who purports to act or have acted for or on behalf of the Seller. The Buyer agrees to indemnify and save harmless the Seller from and against all Losses suffered or incurred by the Seller with respect to any commission or other remuneration payable or alleged to be payable to any broker, agent or other intermediary who purports to act or have acted for or on behalf of the Buyer.

16.3 CONSULTATION

The parties shall consult with each other before issuing any press release or making any other public announcement with respect to this Agreement or the transactions contemplated hereby and, except as required by any Applicable Law or regulatory requirement, neither of them shall issue any such press release or make any such public announcement without the prior written consent of the other, which consent shall not be unreasonably withheld.

16.4 DISCLOSURE

Except for any public announcements of the transactions contemplated hereby pursuant to Section 16.3, neither party shall disclose this Agreement or any aspects of such transaction except to its board of directors, its senior management, its legal, accounting, financial or other professional advisors, any financial institutions contacted by it with respect to any financing required in connection with such transactions and counsel to such institutions, or as may be required by any Applicable Law or any regulatory authority or stock exchange having jurisdiction.

16.5 RETENTION OF BOOKS AND RECORDS

For a period of seven years after the Closing Date or such longer period as required by Applicable Laws (the “RETENTION PERIOD”), the Buyer shall retain the On-Site Books and Records and the Seller shall retain the Off-Site Books and

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Records. Following the Retention Period, any party wishing to dispose or destroy the Books and Records in its possession shall provide not less than 30 days prior written notice to the other party of such proposed action. If the recipient of such notice desires to obtain any of such Books and Records, it may do so by notifying the other party in writing at any time before the scheduled date for such destruction or disposal. Such notice must specify the Books and Records that the requesting party wishes to obtain. The parties shall then promptly arrange for the delivery of such Books and Records. All out-of-pocket costs associated with the delivery of the requested Books and Records shall be paid by the requesting party. The Seller shall, at the Buyer’s sole expense, during normal business hours, afford the Buyer and its agents reasonable access to and the opportunity to review and make copies of all cancelled cheques of the Seller relating to the Purchased Business in connection with any reasonable request of the Buyer. The Buyer shall, at the Seller’s sole expense, during normal business hours, afford the Seller and its agents reasonable access to and the opportunity to review and make copies of all On-Site Books and Records required by the Seller to defend against any Legal Proceeding and with respect to any softwood lumber duty investigation. The Seller and the Buyer shall cooperate with each other and with each other’s agents, including accounting firms and legal counsel, in connection with Tax matters relating to the Purchased Business, including (i) preparation and filing of Tax returns, (ii) determining the liability and amount of any Taxes due or the right to an amount of any refund of Taxes, (iii) examinations of Tax returns, and (iv) any administrative or judicial proceeding with respect to Taxes assessed or proposed to be assessed. Such cooperation shall include each party, to the extent reasonably requested by the other, making all Books and Records in its possession available to the other party. Each of the parties shall also make available to the other party, as reasonably requested and available, at no cost to the other party, personnel (including officers, directors, employers and agents) responsible for preparing, maintaining and interpreting information and documents relevant to Taxes, and personnel reasonably required as witnesses or for purposes of providing information or documents in connection with any administrative or judicial proceedings relating to Taxes.

16.6 CONFIDENTIALITY

For a period of two (2) years after the Closing Date, the Seller shall maintain as confidential all material non-publicly disclosed information respecting the Purchased Assets and the Purchased Business including, without limitation, all trade secrets, industrial designs and processes, inventions, current and planned manufacturing and distribution methods and customer lists, customer requirements, price lists, business plans and budgets, strategic plans, personal information of Transferred Employees and other information relating to the Purchased Assets and the Purchased Business; provided that, the Seller shall be permitted to disclose such confidential information if required to do so under Applicable Law or in conjunction with the filing of documents in connection with any Legal Proceeding in respect of this Agreement.

16.7 NON-SOLICITATION

For a period of 18 months after the Closing Date, the Seller shall not, directly or indirectly, hire, retain or attempt to hire or retain any of the Transferred Employees or in any way interfere with the relationship of the Buyer and any of the Transferred Employees, except that the Seller may hire Transferred Employees who approach the Seller seeking employment other than as a result

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of a solicitation by the Seller or who respond to an advertisement or other form of general solicitation by the Seller.

16.8 DISCLOSURE LETTER

(a) If there is any inconsistency between the statements in this Agreement and those in the Disclosure Letter (other than an exception expressly set forth as such in the Disclosure Letter with respect to a specifically identified representation or warranty), the statements in this Agreement will control;

(b) The statements in the Disclosure Letter, and those in any supplement thereto, relate only to the provisions in the section of this Agreement to which they expressly relate and not to any other provision in this Agreement.

16.9 COSTS AND EXPENSES

Except as expressly otherwise provided for in this Agreement or the Disclosure Letter, each party shall be responsible for its own costs and expenses (including, without limitation, the fees and disbursements of legal counsel) incurred in connection with this Agreement and the transactions herein contemplated.

16.10 THIRD PARTIES

Except as specifically set forth or referred to herein, nothing herein is intended or shall be construed to confer upon or give to any Person, other than the parties hereto and their respective successors (including any successor by reason of the amalgamation of any party) or assigns, any rights or remedies under or by reason of this Agreement.

[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

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16.11 COUNTERPARTS

This Agreement may be executed in counterparts, each of which shall constitute an original and all of which taken together shall constitute one and the same instrument. A party’s transmission by facsimile or electronic mail transmission of a scanned copy of this Agreement bearing that party’s signature shall constitute an effective execution and delivery of the Agreement by that party to the party receiving the transmission.

IN WITNESS WHEREOF this Agreement has been executed by the parties on the date hereinabove mentioned.

WEYERHAEUSER COMPANY LIMITED

Per:

Name:

Title:

Per:

Name:

Title:

COASTAL ACQUISITION LTD.

Per:

Name:

Title:

Per:

Name:

Title:

-95-

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BRASCAN CORPORATION
By:	/s/ Alan Dean
	Name:	Alan Dean
	Title:	Senior Vice President and Secretary

	(i)	$25.00 multiplied by 65% of the Prime Rate for the period of 90 days ending on a date which is 30 days before the end of such Dividend Payment Period

	is multiplied by

	(ii)	the result obtained when the number of days in such Dividend Payment Period is divided by 365.

	(a)	“Quarterly Dividend Rate” means, in relation to any Dividend Payment Date, one-quarter of 65% of the Prime Rate for the three calendar months ending on the last day of the calendar month immediately preceding the month during which such Dividend Payment Date falls;

	(b)	“ranking as to capital” means ranking with respect to the distribution of assets in the event of a liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or in the event of any other distribution of assets of the Corporation among its shareholders for the purpose of winding up its affairs;

	(c)	“Prime Rate” means, for any period, the arithmetic average (rounded to the nearest one-one-hundredth of one percent (0.01%)) of the Daily Prime Rate for each day during such period;

	(d)	“Daily Prime Rate” means, for any day, the Daily Prime Rate for the Bank on such date; provided that if, on such day, there shall be no Daily Prime Rate for the Bank, the Daily Prime Rate for such day shall be 1.65% above the average yields at weekly tender on 91 day Government of Canada Treasury Bills as reported by the Bank of Canada for such day;

	(e)	“Daily Prime Rate for the Bank” means, on any day, the annual prime commercial lending rate of interest established and announced as the reference rate of interest used by the Bank on such date to determine the rates of interest on Canadian dollar loans to customers in Canada and designated by the Bank as its prime rate; and

	(f)	“Bank” means Bank of Montreal or its successors.

	(i)	the number of Deposited Shares of such Retracting Shareholder held by the Corporation,

	(ii)	the intention of the Corporation to redeem on each subsequent retraction date (the “Subsequent Retraction Dates”) thereafter from all Retracting Shareholders who tendered in respect of the First Retraction Date, on a pro rata basis, that number of Deposited Shares as it is then permitted by applicable law to redeem, and

	(iii)	the right of such Retracting Shareholder to require the Corporation to return to him all of the Deposited Shares with the result that the obligation of the Corporation to redeem the Deposited Shares so returned on the First Retraction Date shall cease.

	(i)	use its best efforts to have the Series 1 Preference Shares and the Series 2 Preference Shares issuable upon the conversion of Series 1 Preference Shares listed and posted for trading on The Toronto Stock Exchange;

	(ii)	make all requisite filings under applicable Canadian securities legislation including those necessary to remain a reporting issuer not in default; and

	(iii)	give or cause to be given written notice of the issue of Series 2 Preference Shares pursuant to the exercise of the conversion rights appertaining to the Series 1 Preference Shares, in such detail as may be required, to each securities commission or similar regulatory authority in each jurisdiction in Canada in which there is legislation or regulation permitting or requiring the giving of any such notice in order that such issue of Series 2 Preference Shares and the subsequent disposition of the Series 2 Preference Shares so issued will not be subject to the prospectus qualification requirements of such legislation or regulation.

	(b)	call for redemption, redeem, purchase or otherwise pay off or retire for value any shares ranking as to capital junior to the Series 1 Preference Shares (except out of the net cash proceeds of a substantially concurrent issue of shares ranking as to capital and dividends junior to the Series 1 Preference Shares);

	(c)	call for redemption, redeem, purchase or otherwise pay off or retire for value less than all of the Series 1 Preference Shares; or

	(d)	except pursuant to any purchase obligation, sinking fund, retraction privilege or mandatory redemption provisions attaching to any series of preferred shares from time to time issued, call for redemption, redeem, purchase or otherwise pay off or retire for value any shares ranking as to capital on a parity with the Series 1 Preference Shares;

	(i)	$25.00 multiplied by 70% of the Prime Rate for the period of 90 days ending on a date which is 30 days before the end of such Dividend Payment Period

		is multiplied by

	(ii)	the result obtained when the number of days in such Dividend Payment Period is divided by 365.

	(a)	declare, pay or set apart for payment any dividends (other than stock dividends in shares of the Corporation ranking as to capital and dividends junior to the Series 2 Preference Shares) on shares ranking as to dividends junior to the Series 2 Preference Shares;

	(b)	call for redemption, redeem, purchase or otherwise pay off or retire for value, any shares ranking as to capital junior to the Series 2 Preference Shares (except out of the net cash proceeds of a substantially concurrent issue of shares ranking as to capital and dividends junior to the Series 2 Preference Shares);

	(c)	call for redemption, redeem, purchase or otherwise pay off or retire for value less than all of the Series 2 Preference Shares; or

	(d)	except pursuant to any purchase obligation, sinking fund, retraction privilege or mandatory redemption provisions attaching to any series of preferred shares from time to time issued, call for redemption, redeem, purchase or otherwise pay off or retire for value any shares ranking as to capital on a parity with the Series 2 Preference Shares,

	(a)	give such notice by publication thereof once in a daily English language newspaper of general circulation published in each of Vancouver, Calgary, Regina, Winnipeg, Toronto and Montreal, and once in a daily French language newspaper published in Montreal and such notice shall be deemed to have been validly given on the day next succeeding its publication in all of such cities: and

	(b)	fulfil the requirement to send such cheque or such share certificate by arranging for the delivery thereof to such holder by the transfer agent for the Series 2 Preference Shares at its principal offices in the cities of Vancouver, Calgary, Regina, Winnipeg, Toronto and Montreal, and such cheque and/or certificate shall be deemed to have been sent on the date on which notice of such arrangement shall have been given as provided in (a) above, provided that as soon as the directors of the Corporation determine that mail service is no longer interrupted or threatened to be interrupted such cheque or share certificate, if not theretofore delivered to such holder, shall be sent by mail as herein provided. In the event that the Corporation is required to mail such share certificate, such mailing shall be made by prepaid mail to the registered address of each person who at the date of mailing is a registered holder and who is entitled to receive such certificate.

	(a)	“Dividend Payment Date” means the Thursday following the second Wednesday of each month, except that if such Thursday is not a Business Day, the Dividend Payment Date will be the first Business Day following such Thursday;

	(b)	“Dividend Period” means the period from and including each Dividend Payment Date to but excluding the next succeeding Dividend Payment Date; and

	(c)	“Dividend Rate” means the Current Dividend Rate determined in an Auction of the Series 3 Preference Shares conducted on the Business Day next preceding the commencement of each Dividend Period, as contemplated in Part II hereof; provided that, if the Corporation fails to pay the full amount of any dividend when due (whether or not declared) or fails to redeem any Series 3 Preference Shares after it has given notice of redemption in respect thereof (A) for any reason except as a result of an accidental or inadvertent error or omission on the part of the Corporation or the Trust Company, or (B) as a result of an accidental or inadvertent error or omission on the part of the Corporation or the Trust Company which is not remedied within three Business Days from the applicable Dividend Payment Date or Redemption Date (as defined in Article 3 of this Part), as the case may be, the Dividend Rate will no longer be based on the results of an Auction and will be, during each subsequent Dividend Period, a rate per annum equal to the Bankers’ Acceptance Rate in effect on the Business Day next preceding the commencement of such Dividend Period plus 0.40%.

		Period had such Dividend Period not been interrupted by a particular date, and (3) the number of days from and including the next preceding Dividend Payment Date to but excluding such particular date, all divided by 365; and

	(b)	the amount of any accrued and unpaid dividend in respect of any Series 3 Preference Shares from the Redemption Date to the next succeeding Dividend Payment Date shall be the amount (rounded to the nearest cent) equal to the product of (1) $100,000, (2) the Dividend Rate for what would otherwise have been the applicable Dividend Period had the Corporation not exercised its option to redeem the Series 3 Preference Shares pursuant to Article 3 of this Part, and (3) the number of days from and including the Redemption Date to but excluding the next succeeding dividend Payment Date, all divided by 365.

	(a)	declare, pay or set apart for payment any dividends (other than stock dividends in shares of the Corporation ranking as to capital and dividends junior to the Series 3 Preference Shares) on the Class AA Preference Shares, Class A Limited Voting Shares or Class B Limited Voting Shares or on shares of any other class of the Corporation ranking as to dividends junior to the Series 3 Preference Shares; or

	(b)	call for redemption, redeem, purchase or otherwise pay off or retire for value any Class AA Preference Shares, Class A Limited Voting Shares or Class B Limited Voting Shares or shares of any other class of the Corporation ranking as to capital junior to the Series 3 Preference Shares (except out of the net cash proceeds of a substantially concurrent issue of shares ranking as to capital and dividends junior to the Series 3 Preference Shares); or

	(c)	call for redemption redeem, purchase or otherwise pay off or retire for value less than all of the Series 3 Preference Shares; or

	(d)	except pursuant to any purchase obligation, sinking fund, retraction privilege or mandatory redemption provisions attaching to any series of Class A Preference Shares from time to time issued, call for redemption, redeem, purchase or otherwise pay off or retire for value any shares of any other class or series of the Corporation ranking as to capital on a parity with the Series 3 Preference Shares;

	(a)	give such notice by means of telex, telecopier or telegraph or by means of publication once in each of two successive weeks in one daily English language newspaper of general circulation published in each of the Provinces of Canada and once in a daily French language newspaper of general circulation published in Montreal. Notice given by telex, telecopier or telegraph shall be deemed to have been given on the day on which it is sent and notice given by publication shall be deemed to have been given on the date on which the first publication has taken place in the last of the Provinces of Canada; and

	(b)	fulfil the requirement to send such cheque or such share certificate by arranging for the delivery thereof to such holder by the Transfer Agent at its principal office in Toronto and such cheque and/or certificate shall be deemed to have been sent on the date on which notice of such arrangement shall have been given as provided in (a) above, provided that as soon as the directors of the Corporation determine that mail service is no longer interrupted or threatened to be interrupted such cheque or share certificate, if not theretofore delivered to such holder, shall be sent by mail as herein provided. In the event that the Corporation is required to mail such share certificate, such mailing shall be made by prepaid mail to the registered address of each person who at the date of mailing is a registered holder and who is entitled to receive such certificate.

	(a)	“Auction” means the periodic operation of the procedures set forth in this Part;

	(b)	“Auction Date” means the Business Day next preceding a Dividend Payment Date;

	(c)	“Available Shares” has the meaning specified in paragraph (i) of Article 4(a) of this Part;

	(d)	“Bankers’ Acceptance Rate” means with respect to any Dividend, the rate per annum equal to: (A) the simple average of each rate per annum which is equal to the simple average of the bid and ask rates of the yields to maturity quoted by each of Dominion Securities Inc. (or any successor) and Merrill Lynch Canada Inc. (or any successor) (rounded upward to the nearest one thousandth of one percent),as at 10:00 a.m., Toronto time, on the Auction Date next preceding such Dividend Period, on 30-day bankers’ acceptances accepted by such of the Bank of Montreal, The Toronto-Dominion Bank, Canadian imperial Bank of Commerce, The Royal Bank of Canada and The Bank of Nova Scotia as are accepting 30-day bankers’ acceptances on such Auction Date; (B) in the event that one of Dominion Securities Inc. (or any successor) is unable or does not for any reason quote the bid and ask rates per annum referred to in (A) above, as at 10:00 a.m., Toronto time, on such Auction Date, the simple average of the bid and ask rates per annum referred to in (A) above quoted by the other; or (C)in the event that both Dominion Securities Inc. (or any successor) and Merrill Lynch Canada Inc. (or any successor) are unable to or do not for any reason quote rates, as at 10:00 a.m., Toronto time, on such Auction Date (including without limitation, where none of the Bank of Montreal, The Toronto-Dominion Bank, Canadian Imperial Bank of Commerce, The Royal Bank of Canada or The Bank of Nova Scotia is accepting 30-day bankers’ acceptances on such Auction Date) for the purpose of determining the Bankers’ Acceptance Rate in accordance with (A) or (B) above, the simple average of each rate per annum which is equal to the simple average of the bid and ask rates of the yields to maturity quoted by each of Dominion Securities Inc. (or any successor) and Merrill Lynch Canada inc.(or any successor) (rounded upward to the nearest one thousandth of one percent), as of 10:00 a.m.,Toronto time, on such Auction Date, on 91-day Government of Canada Treasury Bills maturing 30 days from such Auction Date plus 0.20%;

	(e)	“Bid” and “Bids” have the respective meanings specified in Article 2(a) of this Part;

	(f)	“Bidder” and “Bidders” have the respective meanings specified in Article 2(a) of this Part;

	(g)	“Business Day” means a day on which The Toronto Stock Exchange or any successor stock exchange and the Trust Company are open for business;

	(h)	“Current Dividend Rate” is the rate per annum which the Trust Company advises the Corporation has been determined in accordance with Article 4(b) of this Part;

	(i)	“Dealer” means any registered investment dealer or other entity permitted by law to perform the functions required of a Dealer in this Part that has entered into a Dealer Agreement with the Trust Company that remains effective;

	(j)	“Dealer Agreement” means an agreement between the Trust Company and a Dealer pursuant to which the Dealer agrees to participate in Auctions in compliance with the procedures set forth in this Part;

	(k)	“Existing Holder” means a person who has signed a Purchaser’s Letter to the Trust Company and is registered in the ledger maintained by the Trust Company in respect of such persons;

	(l)	“held by” with respect to any Series 3 Preference Shares registered in the name of the Trust Company as permitted by the Trust Company Agreement includes such shares beneficially owned by an Existing Holder but does not include, with respect to such shares, the Trust Company;

	(m)	“Hold Order” and “Hold Orders” have the respective meanings specified in Article 2(a) of this Part;

	(n)	“Maximum Rate” with respect to any Dividend Period means the Bankers’ Acceptance Rate plus 0.40%;

	(o)	“Order” and “Orders” have the respective meanings specified in Article 2(a) of this Part;

	(p)	“Potential Holder” means any person, including any Existing Holder, (i) who has executed a Purchaser’s Letter and delivered or caused to be delivered such Purchaser’s Letter to the Trust Company and (ii) who may be interested in acquiring Series 3 Preference Shares (or, in the case of an Existing Holder, additional Series 3 Preference Shares);

	(q)	“Purchaser’s Letter” means a letter addressed to the Trust Company and a Dealer in which a person agrees, among other things, to be bound by the procedures set forth in this Part in the event such person participates in an Auction;

	(r)	“Remaining Shares” has the meaning specified in paragraph (iv) of Article 5(a) of this Part;

	(s)	“Sell Order” and “Sell Orders” have the respective meanings specified in Article 2(a) of this Part;

	(t)	“Submission Deadline” means 11:00 a.m., Toronto time, on any Auction Date or such later time on any Auction Date, as specified by the Trust Company from time to time, by which Dealers are required to submit Orders to the Trust Company;

	(u)	“Submitted Bid” and “Submitted Bids” have the respective meanings specified in Article 4(a) of this Part;

	(v)	“Submitted Hold Order” and “Submitted Hold Orders” have the respective meanings specified in Article 4(a) of this Part;

	(w)	“Submitted Order” and “Submitted Orders” have the respective meanings specified in Article 4(a) of this Part;

	(x)	“Submitted Sell Order” and “Submitted Sell Orders” have the respective meanings specified in Article 4(a) of this Part;

	(y)	“Sufficient Clearing Bids” has the meaning specified in Article 4(a) of this Part;

	(z)	“Trust Company” means Royal Trust Corporation of Canada or any successor trust company or other person entering into a Trust Company Agreement with the Corporation in respect of the Series 3 Preference Shares;

	(aa)	“Trust Company Agreement” means an agreement made between the Trust Company and the Corporation which provides, among other things, that the Trust Company will follow the procedures set forth in this Part for the purposes of determining the Current Dividend Rate for the Series 3 Preference Shares so long as the Current Dividend Rate is to be based on the results of an Auction; and

	(A)	desires to continue to hold without regard to the Current Dividend Rate for the next succeeding Dividend Period; and/or

	(B)	desires to continue to hold, provided that the Current Dividend Rate for the next succeeding Dividend Period shall not be less than the rate per annum specified by such Existing Holder; and/or

	(C)	offers to sell without regard to the Current Dividend Rate for the next succeeding Dividend Period;

	(ii)	Potential Holders may submit to a Dealer offers to purchase Series 3 Preference Shares, provided that the Current Dividend Rate for the next succeeding Dividend Period shall not be less than the rate per annum specified by such Potential Holder.

		The communication to a Dealer of the information referred to in this Article 2(a) is an “Order” and, collectively, are “Orders”, and each Existing Holder and each Potential Holder placing an Order is a “Bidder” and, collectively, are “Bidders”; an Order containing the information referred to in subparagraph (i) (A) of this Article 2(a) is a “Hold Order” and, collectively, are “Hold Orders”; an Order containing the information referred to in subparagraph (i)(B) or paragraph (ii) of this Article 2(a) is a “Bid” and, collectively, are “Bids”; and an Order containing the information referred to in subparagraph (i)(c) of this Article 2(a) is a “Sell Order” and, collectively, are “Sell Orders”.

	(A)	the number of Series 3 Preference Shares specified in such Bid if the Winning Bid Rate determined on such Auction Date is less than the rate specified in such Bid; or

	(B)	the specified number of Series 3 Preference Shares or a lesser number to be determined as set forth in paragraph (iv) of Article 5(a) of this Part if the Winning Bid Rate determined on such Auction Date is equal to the rate specified in such Bid: or

	(C)	the number of Series 3 Preference Shares specified in such Bid if the rate specified in such Bid is higher than the Maximum Rate and Sufficient Clearing Bids do exist; or

	(D)	a lesser number of Series 3 Preference Shares to be determined as set forth in paragraph (iii) of Article 5(b) of this Part if the rate specified in such Bid is higher than the Maximum Rate and Sufficient Clearing Bids do not exist.

	(A)	the number of Series 3 Preference Shares specified in such Bid if the Winning Bid Rate determined on the applicable Auction Date is higher than the rate specified in such Bid; or

	(B)	the specified number or a lesser number of Series 3 Preference Shares to be determined as set forth in paragraph (v) of Article 5(a) of this Part if the Winning Bid Rate determined on such Auction Date is equal to the rate specified in such Bid; or

	(C)	the specified number of Series 3 Preference Shares if the rate specified in such Bid is equal to or lower than the Maximum Rate and Sufficient Clearing Bids do not exist.

	(i)	the name of the Bidder placing such Order;

	(ii)	the aggregate number of Series 3 Preference Shares that are the subject of the Order;

	(iii)	to the extent that the Bidder is an Existing Holder, the number of Series 3 Preference Shares, if any, subject to any;

	(A)	Hold Order placed by such Existing Holder;

	(B)	Bid placed by such Existing Holder and the rate specified in such Bid; and/or

	(C)	Sell Order placed by such Existing Holder; and

	(b)	If any rate specified in any Bid contains more than three figures to the right of the decimal point, the Trust Company shall round such rate up to the next highest one thousandth of one percent.

	(c)	If for any reason an Order or Orders covering in the aggregate all the Series 3 Preference Shares held by any Existing Holder is not submitted to the Trust Company prior to the Submission Deadline, the Trust Company shall deem a Hold Order to have been submitted on behalf of such Existing Holder covering the number of Series 3 Preference Shares held by such Existing Holder and not subject to Orders submitted to the Trust Company.

	(d)	If one or more Orders covering in the aggregate more than the number of Series 3 Preference Shares held by any Existing Holder are submitted to the Trust Company, such Orders shall be considered valid as follows and in the following order of priority;

	(i)	all Hold Orders shall be considered valid, but only up to and including, in the aggregate, the number of Series 3 Preference Shares held by such existing Holder, and, solely for purposes of allocating compensation among the Dealers submitting Hold Orders, if the number of Series 3 Preference Shares subject to such Hold Orders exceeds the number of Series 3 Preference Shares held by such Existing Holder, the number of Series 3 Preference Shares subject to each such Hold Order shall be reduced pro rata to cover the number of Series 3 Preference Shares held by such Existing Holder;

	(ii)	(A) any Bid shall be considered valid up to and including the excess of the number of Series 3 Preference Shares held by such Existing Holder over the number of Series 3 Preference Shares subject to any Hold Order referred to in paragraph (i) of this Article 3(d), (B) subject to subparagraph (A) hereof, if more than one Bid with the same rate is submitted on behalf of such Existing Holder and the number of Series 3 Preference Shares subject to such Bids is greater than such excess, such Bids shall be considered valid up to the amount of such excess, and, solely for purposes of allocating compensation among the Dealers submitting Bids with the same rate, the number of Series 3 Preference Shares subject to each Bid with the same rate shall be reduced pro rata to cover the number of Series 3 Preference Shares equal to such excess, (C) subject to subparagraph (A) hereof, if more than one Bid with different rates is submitted on behalf of such Existing Holder, such Bids shall be considered valid in the ascending order of their respective rates up to the amount of such excess, and (D) in any event, the number, if any, of such Series 3 Preference Shares subject to Bids not valid under this paragraph (ii) shall be treated as the subject of a Bid by a Potential Holder; and

	(iii)	all Sell Orders shall be considered valid but only up to and including in the aggregate the excess of the number of Series 3 Preference Shares held by such Existing Holder over the sum of the Series 3 Preference Shares subject to Hold Orders referred to in paragraph (i) of this Article 3(d) and valid Bids by Existing Holders referred to in paragraph (ii) of this Article 3(d).

	(i)	the excess of (a) the total number of Series 3 Preference Shares held by Existing Holders issued and outstanding over (b) the number of Series 3 Preference Shares that are the subject of Submitted Hold Orders (such excess being the “Available Shares”);

	(ii)	from the Submitted Orders, whether:

	(B)	(I) the number of Series 3 Preference Shares that are the subject of Submitted Bids by Existing Holders specifying one or more rates higher than the Maximum Rate; and

		(II) the number of Series 3 Preference Shares that are the subject of Submitted Sell Orders;

	(if such excess or equality exists (other than because all of the Series 3 Preference Shares are the subject of Submitted Hold Orders), then such Submitted Bids in subparagraph (A) hereof shall be “Sufficient Clearing Bids”); and

	(A)	(I) each Submitted Bid from Existing Holders specifying that lowest rate, and

		(II) all other Submitted Bids from Existing Holders specifying lower rates, thus entitling those Existing Holders to continue to hold the Series 3 Preference Shares that are the subject of those Submitted Bids; and

	(B)	(I) each Submitted Bid from Potential Holders specifying that lowest rate, and

		(II) all other submitted Bids from Potential Holders specifying lower rates, thus entitling those Potential Holders to purchase the Series 3 Preference Shares that are the subject of those Submitted Bids,

	would result in such Existing Holders described in subparagraph (A) hereof continuing to hold an aggregate number of Series 3 Preference Shares which, when added to the aggregate number of Series 3 Preference Shares to be purchased by such Potential Holders described in subparagraph (B) hereof, would equal not less than the number of Available Shares. This lowest rate is the “Winning Bid Rate”.

	(i)	if Sufficient Clearing Bids exist, that the Current Dividend Rate for the next succeeding Dividend Period shall be equal to the Winning Bid Rate so determined;

	(ii)	if Sufficient Clearing Bids do not exist (other than because all of the Series 3 Preference Shares are the subject of Submitted Hold Orders), that the Current Dividend Rate for the next succeeding Dividend Period shall be equal to the Maximum Rate; or

	(iii)	if all of the Series 3 Preference Shares are the subject of Submitted Hold Orders that the Current Dividend Rate for the next succeeding Dividend Period shall be equal to 50% of the Bankers’ Acceptance Rate.

	(i)	(A) the Submitted Sell Order of each Existing Holder shall be accepted and (B) the Submitted Bid of each Existing Holder specifying any rate that is higher than the Winning Bid Rate shall be rejected, thus requiring each such Existing Holder to sell the Series 3 Preference Shares that are the subject of such Submitted Sell Order and such Submitted Bid;

	(ii)	the Submitted Bid of each Existing Holder specifying any rate that is lower than the Winning Bid Rate shall be accepted, thus entitling each such Existing Holder to continue to hold the Series 3 Preference Shares that are the subject of such Submitted Bid;

	(iii)	the Submitted Bid of each Potential Holder specifying any rate that is lower than the Winning Bid Rate shall be accepted, thus requiring each such Potential Holder to purchase the Series 3 Preference Shares that are the subject of such Submitted Bid;

	(iv)	the Submitted Bid of each Existing Holder specifying a rate that is equal to the Winning Bid Rate shall be accepted, thus entitling each such Existing Holder to continue to hold the Series 3 Preference Shares that are the subject of such Submitted Bid, unless the number of Series 3 Preference Shares subject to all such Submitted Bids is greater than the total number of Available Shares minus the number of Series 3 Preference Shares subject to Submitted Bids described in paragraphs (ii) and (iii) of this Article 5(a) (the “Remaining Shares”). In this event, the Submitted Bids of each such Existing Holder described in this paragraph (iv) shall be rejected and each such Existing Holder shall be required to sell Series 3 Preference Shares, but only in an amount equal to the difference between (A) the number of Series 3 Preference Shares then held by such Existing Holder subject to such Submitted Bid and (B) the number of Series 3 Preference Shares obtained by multiplying (x) the number of Remaining Shares by (y) a fraction, the numerator of which shall be the number of Series 3 Preference Shares held by such Existing Holder subject to such Submitted Bid, and the denominator of which shall be the sum of the number of Series 3 Preference Shares subject to such Submitted Bids made by all such Existing Holders who specified a rate equal to the Winning Bid Rate; and

	(v)	the Submitted Bid of each Potential Holder specifying a rate that is equal to the Winning Bid Rate shall be accepted but only in an amount equal to the number of Series 3 Preference Shares obtained by multiplying (A) the difference between the total number of Available Shares and the number of Series 3 Preference Shares subject to Submitted Bids described in paragraphs (ii), (iii) and (iv) of this Article 5(a) by (B) a fraction, the numerator of which shall be the number of Series 3 Preference Shares subject to such Submitted Bid and the denominator of which shall be the sum of the number of Series 3 Preference Shares subject to such Submitted Bids made by all Potential Holders who specified rates equal to the Winning Bid Rate;

	(c)	If, as a result of the procedures described in Articles 5(a) or 5(b) of this Part, any Existing Holder would be entitled or required to sell, or any Potential Holder would be entitled or required to purchase, a fraction of a Series 3 Preference Share on any Auction Date, the Trust Company shall, in such manner as it shall determine in its sole discretion, round up or down the number of Series 3 Preference Shares to be purchased or sold by any Existing Holder or Potential Holder on such Auction Date so that the number of shares purchased or sold by each Existing Holder or Potential Holder on such Auction Date so that the number of shares purchased or sold by each Existing Holder or Potential Holder shall be whole Series 3 Preference Shares;

	(d)	If, as a result of the procedures described in Article 5(a) of this Part, any Potential Holder would be entitled or required to purchase a fraction of a Series 3 Preference Share on any Auction Date, the Trust Company shall, in such manner as it shall determine in its sole discretion, allocate shares for purchase among Potential Holders so that only whole Series 3 Preference Shares are purchased on such Auction Date by any Potential Holder, even if such allocation results in one or more of such Potential Holders not purchasing Series 3 Preference Shares on such Auction Date; and

	(e)	Based on the results of each Auction, the Trust Company shall determine to which Potential Holder or Potential Holders purchasing Series 3 Preference Shares an Existing Holder or Existing Holders shall sell Series 3 Preference Shares being sold by such Existing Holder or Existing Holders.