6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT
TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934

For the month of  July 2007

Commission File Number: 0 - 22346

HOLLINGER INC.

120 Adelaide Street West

Suite 512

Toronto, Ontario

M5H 1T1

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

Form 20-F þ   Form 40-F ¨

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):

  Yes  ¨ No  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)(7):

  Yes  ¨ No  þ

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g-3 under the Securities Exchange Act of 1934.

  Yes ¨ No  þ

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

EXHIBIT LIST:

99.1 First Supplemental Indenture, dated September 30, 2004, among Hollinger Inc., Ravelston Management Inc., 504468 N.B. Inc., The Ravelston Corporation Limited, Sugra Limited, and Wachovia Trust Company, National Association, to the Indenture, dated March 10, 2003, governing the First Senior Secured Notes.

99.2 Indenture, dated September 30, 2004, among  Hollinger Inc., Ravelston Magagment Inc., 504468 N.B. Inc., The Ravelston Corporation Limited, Sugra Limited, and HSBC Bank USA, National Association, governing the Second Senior Secured Notes.

99.3 Support Agreement, dated March 10, 2003,  between Ravelston Management Inc. and Hollinger Inc.

99.4 Contribution Agreement, dated March 10, 2003, between Hollinger Inc., Ravelston Management Inc., and The Ravelston Corporation.

99.5 Advisory Agreement, dated November 11, 2005, between Hollinger Inc., Randy Benson, and 1379074 Ontario Inc.

99.6 Memorandum of Agreement, dated January 15, 2007, between Hollinger Inc., R.C. Benson Consulting Inc., and Randy Benson.

99.7 Agreement of Purchase and Sale (“the Lanterra Agreement”), dated June 28, 2006, between Domgroup Ltd. and Lanterra Realty Inc.   

99.8 Amendment to the Lanterra Agreement, dated August 31, 2006, between Domgroup Ltd. and Lanterra Realty.

99.9 Assignment of the Lanterra Agreement, dated October 31, 2006, between Lanterra Realty Inc., Duflaw Realty Ltd., and Domgroup Ltd.

99.10 Side Agreement, dated October 31, 2006, between Domgroup Ltd. and Duflaw Realty Ltd.

99.11 Agreement of Purchase and Sale, dated November 7, 2006, between Domgroup Ltd. and Charis Developments Ltd.

99.12 Agreement of Purchase and Sale, dated October 6, 2006, between 10 Toronto Street Inc. and Morgan Meighen & Associates Limited.

99.13 Agreement of Purchase and Sale, dated March 12, 2002, between 1330629 Ontario Inc. and Domgroup Ltd.

99.14   Consulting Services Agreement, dated June 20, 2007, between Hollinger Inc. and G. Wesley Voorhies.

99.15   Stock Purchase Agreement, dated April 6, 2007, between Hollinger Inc., SRB CR Limitada, Fred Blaster, and Rosemary Engels.

99.16   Co-operation Agreement, dated May 15, 2006, between Hollinger Inc. and the United States Attorney’s Office for the District of Northern Illinois.

99.17   Audited Annual Financial Statements, for year ended March 31, 2007.

99.18   Annual Information Form, dated June 29, 2007.

99.19   Management’s Discussion and Analysis, dated June 20, 2007.

99.20   ON Form 13-502F1 (Class 1 Reporting Issuers - Participation Fee).

99.21  Form 52-109F1 Certification of Annual Filings, dated June 29, 2007, for Chief Executive Officer.

99.22  Form 52-109F1 Certification of Annual Filings, dated June 29, 2007, for Chief Financial Officer.

99.23  Assignment and Assumption Agreement, dated June 7, 2007, between Domgroup Ltd. and Breof VTB L.P.

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.

	HOLLINGER INC.
Date: July 3, 2007	By:	/s/ G. Wesley Voorheis
		G. Wesley Voorheis
		Chief Executive Officer

EX-99.1

Exhibit 99.1

EXECUTION VERSION

HOLLINGER INC.

11.875% Senior Secured Notes due 2011

Unconditionally Guaranteed by

RAVELSTON MANAGEMENT INC. and

504468 N.B. INC.

FIRST SUPPLEMENTAL INDENTURE

Dated as of September 30, 2004

________________________________________

WACHOVIA TRUST COMPANY, NATIONAL ASSOCIATION,

Trustee

THE RAVELSTON CORPORATION LIMITED

SUGRA LIMITED

_________________________________________

Supplement to Indenture dated as of March 10, 2003

FIRST SUPPLEMENTAL INDENTURE, dated as of September 30, 2004 (this "First Supplemental Indenture"), among HOLLINGER INC., a corporation incorporated under the Canada Business Corporation Act (the "Company"),     RAVELSTON MANAGEMENT INC., a corporation incorporated under the laws of the Province of Ontario, as guarantor ("RMI"), 504468 N.B. INC., an indirect wholly owned subsidiary of the Company organized under the laws of the Province of New Brunswick, as guarantor ("NBI" and, together with RMI, the "Note Guarantors"), THE      RAVELSTON CORPORATION LIMITED, a corporation incorporated under the laws of the Province of Ontario ("RCL"), SUGRA LIMITED, a wholly owned subsidiary of the Company organized under the laws of the Province of Ontario ("Sugra"), and     WACHOVIA TRUST COMPANY, NATIONAL ASSOCIATION, as trustee (the "Trustee"), to the Indenture, dated as of March 10, 2003, between the Company, the Note Guarantors, RCL, Sugra andthe Trustee (the "Indenture").

RECITALS

WHEREAS, the Company, the Note Guarantors, RCL, Sugra andthe Trustee have heretofore executed and delivered the Indenture, pursuant to which the Company has issued its 11.875% Senior Secured Notes due 2011 (the "Notes");

WHEREAS, the Company desires to amend certain provisions of the Indenture as hereinafter set forth;

WHEREAS, Section 9.02 of the Indenture provides that the Company,  each Note Guarantor and the Trustee may enter into a supplemental indenture with the written consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Notes affected by such supplemental indenture (the "Requisite Consents");

WHEREAS, the Requisite Consents have been delivered to the Company and the Trustee, and the Company has filed evidence of such Requisite Consents with the Trustee;

WHEREAS, the Company has duly authorized the execution and delivery of this First Supplemental Indenture;

WHEREAS, each of the Note Guarantors has duly authorized the execution and delivery of this First Supplemental Indenture;

WHEREAS, each of RCL andSugra has duly authorized the execution and delivery of this First Supplemental Indenture; and

WHEREAS, all acts and things necessary have been done to make this First Supplemental Indenture a valid agreement of the Company, the Note Guarantors, RCL and Sugra, in accordance with its terms and the terms of the Indenture.

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NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained herein, and for other good and valuable consideration the receipt of which is hereby acknowledged, the parties hereto agree as follows:

ARTICLE I
Definitions

For all purposes of this First Supplemental Indenture, except as otherwise stated herein, capitalized terms used but not defined herein shall have the respective meanings assigned to them in the Indenture. Each reference to "herein", "hereof" and other words of similar import contained in the Indenture shall, after this First Supplemental Indenture becomes effective, refer to the Indentureas supplemented hereby.

ARTICLE II

Amendments

Section 2.01. Amendment of Section 1.01 of the Indenture.  (a) The definition of "Exchange Notes" in Section 1.01 of the Indenture is hereby amended and restated in its entirety as follows:

""Exchange Notes" means debt securities of the Company, substantially identical in all material respects to the Notes (except that the additional interest provisions and the transfer restrictions pertaining to the Notes will be modified or eliminated, as appropriate), to be issued pursuant to this Indenture, provided that if at any time the definition of "Exchange Notes" in Section 1 of the Registration Rights Agreement is amended or modified to permit the Exchange Notes to be issued pursuant to the New Notes Indenture, then this definition shall be deemed amended and modified to conform exactly to the definition of "Exchange Notes" in the Registration Rights Agreement."

(b)The following clause is hereby added to the definition of "Permitted Indebtedness" in Section 1.01 of the Indenture:

"(xiv) Indebtedness of the Company and the Note Guarantors in an aggregate amount at any time outstanding not to exceed $15 million through the issuance of new secured notes (the "New Notes") substantially similar to the Notes pursuant to the New Notes Indenture, which indenture shall be substantially similar to this Indenture."

(c)The following clause is hereby added to the definition of "Permitted Liens" in Section 1.01 of the Indenture:

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"(xiv) Liens in favor of the holders of the New Notes (or in favor of the trustee or the collateral agent with respect to theNew Notes for the benefit of the holders of the New Notes) granting such holders a security interest in the Senior Notes Collateral; provided, however, that the trustee and any collateral agent with respect to the New Notes shall have, concurrently with the execution and delivery of such New Notes Indenture, executed and delivered a New Notes Intercreditor Agreement; and provided; further, that unless and until the Company has obtained the requisite consents of Holders under Section 14.04(a)(vi) of this Indenture, any such security interest in the Senior Notes Collateral shall be second in priority to the Lien in favor of the Holders."

(d)The definition of "Security Agreement" in Section 1.01 of the Indenture is hereby amended and restated in its entirety as follows:

"Security Agreement" means the Security Agreement dated the date hereof (attached as Exhibit G to this Indenture), as the same may be amended, supplemented, waived or otherwise modified from time to time in accordance with the terms thereof, between the Company, RMI, NBI and the Trustee and the Collateral Agent governing (i) the first priority security interest granted by RMI over the Services Agreements in favor of the Collateral Agent, (ii) the first priority pledge granted by the Company and NBI over the Pledged Share Collateral in favor of the Collateral Agent and (iii) the first priority security interest granted by the Company in the Support Agreement in favor of the Collateral Agent.

(e)Section 1.01 of the Indenture is hereby amended to include the following new definitions:

""New Notes Indenture" means the indenture (including all exhibits and schedules hereto), as it may from time to time be supplemented or amended by one or more indentures supplemental thereto entered into pursuant to the applicable provisions thereof, in respect of the issuance of the New Notes."

""New Notes Intercreditor Agreement" means an intercreditor agreement among the Company, the Trustee, the Collateral Agent, the trustee and any collateral agent with respect to the New Notes, substantially in the form attached as Exhibit I to this Indenture; provided, however that any variations from Exhibit I, taken as a whole, shall not be materially less favorable to the Trustee, the Collateral Agent and the Holders than the terms and conditions reflected in Exhibit I."

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""New Notes Security Agreement" means the security agreement, as the same may be amended, supplemented, waived or otherwise modified from time to time in accordance with the terms thereof, between the Company, RMI, NBI and HSBC Bank USA, National Association ("HSBC"), as trustee and collateral agent, governing (i) the second priority security interest granted by RMI over the Services Agreements in favor of HSBC, (ii) the second priority pledge granted by the Company and NBI over the Pledged Share Collateral in favor of the HSBC and (iii) the second priority security interest granted by the Company in the Support Agreement in favor of the HSBC."

Section 2.02.  Amendment of Section 1.17 of the Indenture. The second paragraph of Section 1.17 of the Indenture is hereby amended and restated in its entirety as follows:

"Each party agrees that any service of process or other legal summons in connection with any proceeding may be served on it by mailing a copy thereof by registered mail, or a form of mail substantially equivalent thereto, postage prepaid, addressed to the served party at its address as provided for in Section 1.06 hereof. Nothing in this Section shall affect the right of the parties to serve process in any other manner permitted by law. Each of the Company and the Note Guarantors has appointed Paul Healy at Hollinger International Inc., 712 Fifth Avenue; 18th Floor, New York, NY 10019, or such other person as may be designated from time to time by the Company and the Note Guarantors by written notice to the Trustee, as its authorized agent in New York City (the "Authorized Agent," which term, as used herein, includes any successor in such capacity) upon whom process may be served in any such action, suit or proceeding arising out of or relating to this Agreement or any of the transactions contemplated hereby which may be instituted in any federal or state court in the State of New York by the Trustee or by any person who controls the Trustee."

Section 2.03. Amendment of Section 3.08 of the Indenture. Section 3.08 of the Indenture is hereby amended by adding the following to the beginning of Section 3.08:

"(i) The Company shall be permitted, without the consent of any Person, to direct the Trustee and the Collateral Agent by Company Order made not less than 15 days prior to any Interest Payment Date to apply up to $10.5 million, in the aggregate, of any Senior Notes Collateral consisting of cash, Cash Equivalents or readily marketable securities then being held by the Trustee and/or the Collateral Agent to the punctual payment of all or any portion of

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the interest due and payable on the Outstanding Notes on such Interest Payment Date and following receipt of such Company Order the Trustee shall cause the interest on the Notes which is payable on such Interest Payment Date to be punctually paid and duly provided for on such Interest Payment Date from such Senior Notes Collateral, to the extent provided in the Company Order and only to the extent that Senior Notes Collateral is sufficient therefor, to the Persons in whose name the Notes are registered at the close of business on the Regular Record Date for such interest payment in accordance with the terms of this Indenture.

(ii)       Upon obtaining consents from the Holders of not less than a majority in aggregate principal amount of the Outstanding Notes, theCompany shallbe permitted to direct the Trustee and the Collateral Agent by Company Order made not less than 15 days prior to any Interest Payment Date to apply such amount, in the aggregate, in excess of and addition to the $10.5 million provided for in Section 3.08(i) as such Holders shall have consented to, of any Senior Notes Collateral consisting of cash, Cash Equivalents or readily marketable securities then being held by the Trustee and/or the Collateral Agent to the punctual payment of all or any portion of the interest due and payable on the Outstanding Notes on such Interest Payment Date and following receipt of such Company Order, the Trustee shall cause the interest on the Notes which is payable on such Interest Payment Date to be punctually paid and duly provided for on such Interest Payment Date from such Senior Notes Collateral, to the extent provided in the Company Order and only to the extent that Senior Notes Collateral is sufficient therefor, to the Persons in whose names that the Note are registered at the close of business on the Regular Record Date for such interest payment in accordance with the terms of this Indenture.

(iii)       If the requisite consents of Holders shall have been obtained as provided in Section 3.08(ii), the Company may direct the Trustee and the Collateral Agent as described in Section 3.08(ii) in respect of each Interest Payment Date thereafter, unless the Holders of not less than a majority in aggregate principal amount of the Outstanding Notes shall have notified the Company and the Trustee in writing at least 30 days prior to any such subsequent Interest Payment Date, that such election is no longer available to the Company.

(iv)         For purposes of this Section 3.08, the Collateral Agent may sell any Senior Notes Collateral consisting of Cash Equivalents or readily marketable securities at market prices, in any manner that

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the Collateral Agent deems reasonable, in such amounts as the Collateral Agent deems required in order to make such payment of interest on the Notes. In no event shall the Trustee or the Collateral Agent be liable if the amount of Senior Notes Collateral is insufficient to pay interest on the Notes on any Interest Payment Date; any liability resulting from such insufficiency shall rest solely with the Company and the Note Guarantors."

Section 2.04. Amendment of Article V of the Indenture. A new section 5.17 is hereby added to Article V of the Indenture as follows:

"Section 5.17. Failure to File Reports. If there shall be a default in the performance of the Company's obligations pursuant to Section 10.17(b), then the Company shall pay to the Holders an amount equal to 0.50% of the principal amount of the Notes Outstanding as of December 31, 2005. Any such payment shall be made by the Company no later than January 9, 2006."

Section 2.05. Amendment of Section 5.01(c) of the Indenture. Section 5.01(c) of the Indenture is hereby amended and restated in its entirety to read as follows:

"(i) there shall be a default in the performance, or breach, of any covenant or agreement of the Company under this Indenture (other than a default in the performance, or breach of a covenant or agreement which is specifically dealt with in Section 5.01(a) or (b), in clauses (ii) or (iii) of this Section 5.01(c) or Section 5.17 (other than, solely with respect to Section 5.17, a default in making any payment required thereby)), and such default or breach shall continue for a period of 30 days after written notice has been given, by certified mail, (x) to the Company by the Trustee or (y) to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Outstanding Notes; (ii) there shall be a default in the performance or breach of the provisions of Article VIII; or (iii) the Company shall have failed to make or consummate a Change of Control Offer in accordance with the provisions of Section 10.14;"

Section 2.06. Amendment of Section 5.01(k) of the Indenture. Section 5.01(k) of the Indenture is hereby amended and restated in its entirety to read as follows:

"in any quarterly period after January 1, 2006, the Company fails to receive in cash a minimum aggregate amount of at least $3.055 million from (i) payments made by RMI during such quarter pursuant to the terms of the Support Agreement, (ii) any management fees paid by Hollinger International and its Subsidiaries directly to the Company or its Wholly Owned

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Restricted Subsidiaries during such quarter, and (iii) the Net Dividend Amount, calculated on a quarterly basis, paid by Hollinger International on its Capital Stock held by the Company and its Wholly Owned Restricted Subsidiaries during such quarter (provided that with respect to any period that is less than a fiscal quarter, the minimum aggregate amount of $3.055 million shall be reduced pro rata by reference to the number of days in such period, calculated on the basis of a 360-day year of twelve 30-day months); or"

Section 2.07. Amendment of Article VI of the Indenture. A new Section 6.14 is hereby added to Article VI of the Indenture as follows:

"SECTION 6.14: Authorization to Enter Into First Priority Intercreditor Agreement. The Trustee shall be authorized and permitted to enter into the First Priority Intercreditor Agreement, dated as of September 30, 2004, among the Company, the Trustee and HSBC."

Section 2.08. Amendment of Section 7.04 of the Indenture. Section 7.04 of the Indenture is hereby amended and restated in its entirety to read as follows:

"SECTION 7.04. Reports by the Company. (a) The Company shall do the following:

(i) from and after January 1, 2006, file with the Trustee, in accordance with Section 10.17 hereof, and in any event within 30 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company is required to file with the Commission separately or together with the Note Guarantors pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports pursuant to either of said Sections, then it shall (A) deliver to the Trustee annual audited financial statements of the Company and its Restricted Subsidiaries, prepared on a Consolidated basis in conformity with GAAP, within 120 days after the end of each fiscal year of the Company, and (B) file with the Trustee and the Commission, in accordance with, and so long as not prohibited by, the rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Exchange Act in respect of a security listed and registered on a

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national securities exchange as maybe prescribed from time to time in such rules and regulations;

(ii)file with the Trustee and the Commission, in accordance with the rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this Indenture as is required from time to time by such rules and regulations (including such rules and regulations, if any,referred to in Trust Indenture Act Section 314(a)); and

 (iii)transmit by mail to all Holders or any other persons entitled to receive a report pursuant to Trust Indenture Act Section 313(c), within 30 days after the filing thereof with the Trustee, in the manner and to the extent provided in Trust Indenture Act Section 313(c), such summaries of any information, documents and reports required to be filed by the Company pursuant to Section 10.17 hereunder and subsections (i) and (ii) of this Section as are required and not prohibited by rules and regulations prescribed from time to time by the Commission.

(b) For so long as the Company qualifies as a foreign private issuer (as defined in Rule 3b-4 under the Exchange Act) (a "Foreign Private Issuer"), the Company may comply with the filing requirements of Section 7.04(a)(î) at the times, and in the manner, required of Foreign Private Issuers under the Exchange Act."

Section 2.09. Amendment of Section 10.13(b) of the Indenture. Section 10.13(b)(ii) of the Indenture is hereby amended and restated in its entirety to read as follows:

"(ii) second, to the extent of the balance of such Net Cash Proceeds after application, if any, in accordance with clause (i) above, to make an Offer to purchase Notes pursuant to and subject to the conditions set forth below (including, without limitation, the condition in Section 10.13(c) that the aggregate amount of Excess Proceeds equals or exceeds $5,000,000); provided, however, that if the Company elects (or is required by the terms of any Pari Passu Indebtedness), such Offer may be made ratably to purchase the Notes and any Pari Passu Indebtedness of the Company (any Net Cash Proceeds from Asset Sales (excluding any Deficiency resulting from an Offer made using Allocated Proceeds pursuant to clause (b)(i)(B)) that are not applied as provided in clause (i) above shall constitute "Excess Proceeds"); and"

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Section 2.10. Amendment of Section 10.17 of the Indenture. Section 10.17 of the Indenture is hereby amended and restated in its entirety to read as follows:

"Provision of Financial Statements. (a) Whether or not the Company is subject to Section 13(a) or 15(d) of the Exchange Act, from and after January 1, 2006, the Company and RMI will, to the extent permitted under the Exchange Act, file with, or furnish to, the Commission the annual reports and other documents that they are or would have been required to_: file with, or furnish to, the Commission pursuant to such Section 13(a) or 15(d), including any information relating to the Company and RMI as may be required by Regulation S-X under the Exchange Act or by the Commission, if they were so subject, such documents to be filed with, or furnished to, the Commission on or prior to the respective dates by which they would have been required so to file, or to furnish, such documents if they are or were so subject (in each case, at the times, and in the manner, required of Foreign Private Issuers under the Exchange Act if the Company or RMI, as the case may be, qualifies as a Foreign Private Issuer) (the "Required Filing Dates"); provided that, RMI may satisfy its obligations under this paragraph through the inclusion in the Company's annual reports and other documents filed with or furnished to the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act (or the provisions of this Indenture) of such financial information of RMI as may be required to be contained therein by Regulation S-X under the Exchange Act. The Company will in any event, from and after January 1, 2006, (x) within 15 days of such Required Filing Date (i) transmit by mail to all Holders, as their names and addresses appear in the Note Register, without cost to such Holders and (ii) file with the Trustee copies of the annual reports and other documents which the Company would have been required to file with, or to furnish to, the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act if it was subject to such Sections and (y) if filing or furnishing such documents by the Company with the Commission is not permitted under the Exchange Act, promptly upon written request and payment of the reasonable cost of duplication and delivery, supply copies of such documents to any Holders at the Company's cost.

(b) On or prior to December 31, 2005, the Company will file with, or furnish to, the Commission and transmit by mail to the Trustee and all Holders an annual report on Form 20-F (or any other form available for the purpose) pursuant to the Exchange Act, including audited Consolidated financial statements for the fiscal years ended December 31, 2003 and December 31, 2004."

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Section 2.11. Amendment of Section 10.23 of the Indenture. The introductory clause of Section 10.23 of the Indenture is hereby amended and restated in its entirety as follows:

"Except in connection with the New Notes, RMI shall not:"

Section 2.12. Amendment of Section 14.01 of the Indenture. The last paragraph of Section 14.01 of the Indenture is hereby amended and restated in its entirety to read as follows:

"The Senior Notes Collateral shall secure (i) the Indenture Obligations and the obligations under the Guarantees, and performance of all other obligations of the Company and Note Guarantors, up to the amount outstanding from time to time under the Notes and (ii) subject to the terms, conditions and limitations of the New Notes Security Agreement and the New Notes Intercreditor Agreement, the obligations of the Company and the Note Guarantors under the New Notes and the New Notes Indenture, up to the amount outstanding from time to time under the New Notes. The claims of Holders against the Senior Notes Collateral will be subject to the Intercreditor Agreement. The claims of the holders of New Notes against the Senior Notes Collateral will be subject to the New Notes Intercreditor Agreement. The Holders hereby authorize and direct the Trustee, or a Co-Trustee appointed by the Trustee, to enter into the Intercreditor Agreement and the New Notes Intercreditor Agreement on their behalf."

ARTICLE III

Miscellaneous

Section 3.01. Effectiveness; Termination. Upon the execution hereof by the parties hereto, the amendments to the Indenture set forth in Article II of this First Supplemental Indenture shall become effective, the Indenture shall be modified in accordance therewith, this First Supplemental Indenture shall form part of the Indenture for all purposes and every Holder of a Note heretofore or hereafter authenticated and delivered under the Indenture shall be bound by the Indenture as modified by this Supplemental Indenture.

Section 3.02. GOVERNING LAW. THIS FIRST SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF).

Section 3.03. Counterparts. This First Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument.

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Section 3.04. Successors and Assigns. All covenants and agreements in this First Supplemental Indenture by the Company, any Note Guarantor, RCL or Sugra shall bind its successors and assigns, whether so expressed or not.

Section 3.05. Conflicts. In the event of a conflict between the terms and conditions of the Indenture and the terms and conditions of this First Supplemental Indenture, the terms and conditions of this First Supplemental Indenture shall prevail.

Section 3.06. Headings. The Article and Section headings in this First Supplemental Indenture are for convenience only and shall not affect the construction hereof.

Section 3.07. Separability Clause. In case any provision in this First Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 3.08. Benefits of First Supplemental Indenture. Nothing in this First Supplemental Indenture, express or implied, shall give to any Person (other than the parties hereto and their successors hereunder, any Paying Agent and the Holders) any benefit or any legal or equitable right, remedy or claim under this First Supplemental Indenture.

Section 3.09. The Trustee. The recitals herein shall be taken as statements of the Company and the Note Guarantors and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this First Supplemental Indenture.

Section 3.10. Notice to Holders. The Company and the Note Guarantors shall notify the Holders of the effectiveness of this First Supplemental Indenture reasonably promptly after the date of such effectiveness.

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IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed, all as of the day and year first above written.

HOLLINGER INC.
By	/s/ Peter G. White
	Name:           Peter G. White
	Title:           Co-Chief Operating Officer

RAVELSTON MANAGEMENT INC., solely in its capacity as Note Guarantor
By	/s/ Peter G. White
	Name:           Peter G. White
	Title:           Executive Vice President

504468 N.B. INC., solely in its capacity as Note Guarantor
By	/s/ Peter G. White
	Name:           Peter G. White
	Title:           Executive Vice President

THE RAVELSTON CORPORATION LIMITED
By	/s/ Peter G. White
	Name:           Peter G. White
	Title:           Executive Vice President

SUGRA LIMITED
By	/s/ Peter G. White
	Name:           Peter G. White
	Title:           President

WACHOVIA TRUST COMPANY NATIONAL ASSOCIATION, not in its individual capacity, but solely as Trustee
By	/s/ Steven A. Finklea
	Name:           Steven A. Finklea, CCTS
	Title:           Vice President

EXHIBIT I

FORM OF NEW NOTES INTERCREDITOR AGREEMENT

EX-99.2

Exhibit 99.2

EXECUTION VERSION

HOLLINGER INC.

11.875% Senior Secured Notes due 2011

Unconditionally Guaranteed by

RAVELSTON MANAGEMENT INC. and

504468 NB. INC.

INDENTURE

Dated as of September 30, 2004

HSBC BANK USA, NATIONAL ASSOCIATION,

Trustee

THE RAVELSTON CORPORATION LIMITED

SUGRA LIMITED

TABLE OF CONTENTS

	Page
PARTIES	1
RECITALS	1
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 1.01.  Definitions	1
SECTION 1.02.  Other Definitions	26
SECTION 1.03.  Compliance Certificates and Opinions	27
SECTION 1.04.  Form of Documents Delivered to Trustee	28
SECTION 1.05.  Acts of Holders	28
SECTION 1.06.  Notices, etc., to Trustee and the Company	29
SECTION 1.07.  Notice to Holders; Waiver	30
SECTION 1.08.  Conflict with Trust Indenture Act	30
SECTION 1.09.  Effect of Headings and Table of Contents	30
SECTION 1.10.  Successors and Assigns	30
SECTION 1.11.  Separability Clause	30
SECTION 1.12.  Benefits of Indenture	30
SECTION 1.13.  GOVERNING LAW	30
SECTION 1.14.  Legal Holidays	31
SECTION 1.15.  Schedules and Exhibits	31
SECTION 1.16.  Counterparts	31
SECTION 1.17.  Jurisdiction and Service of Process	31
SECTION 1.18.  Judgment Currency	32
ARTICLE II
FORM OF NOTE
SECTION 2.01.  Form Generally	32
SECTION 2.02.  Form of Trustee’s Certificate of Authentication	33
SECTION 2.03.  Form of Guarantees	33
ARTICLE III
THE NOTES
SECTION 3:01.  Execution, Authentication, Delivery and Dating	34
SECTION 3.02. Temporary Notes	35
SECTION 3.03.  Registration, Registration of Transfer and Exchange	36
SECTION 3.04.  Global Note Provisions	37
SECTION 3.05.  Legends	38
SECTION 3.06.  Special Transfer Provisions	38

SECTION 3.07.  Mutilated, Destroyed, Lost or Stolen Notes	41
SECTION 3.08.  Payment of Interest; Interest Rights Preserved	42
SECTION 3.09.  Persons Deemed Owners	43
SECTION 3.10.  Cancellation	43
SECTION 3.11.  Computation of Interest	43

SECTION 3.12.  Additional Interest Under Registration Rights Agreement 44

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ARTICLE IV
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 4.01.  Company’s Option to Effect Defeasance or Covenant Defeasance	44
SECTION 4.02.  Defeasance and Discharge	44
SECTION 4.03.  Covenant Defeasance	44
SECTION 4.04.  Conditions to Defeasance or Covenant Defeasance	45
SECTION 4.05.  Deposited Money and U.S. Government Obligations to be Held in Trust;	47
Other Miscellaneous Provisions
SECTION 4.06.  Reinstatement	48
ARTICLE V
REMEDIES
SECTION 5.01.  Events of Default	48
SECTION 5.02.  Acceleration of Maturity; Rescission and Annulment	50
SECTION 5.03.  Collection of Indebtedness and Suits for Enforcement by Trustee	51
SECTION 5.04.  Trustee May File Proofs of Claim	52
SECTION5.05.   Trustee May Enforce Claims Without Possession of Notes	53
SECTION 5.06.  Application of Money Collected	53
SECTION 5.07.  Limitation on Suits	53
SECTION 5.08.  Unconditional Right of Holders to Receive, Principal, Premium and Interest	54

SECTION 5.09.  Restoration of Rights and Remedies	54
SECTION 5.10.  Rights and Remedies Cumulative	54
SECTION 5.11.  Delay or Omission Not Waiver	55
SECTION 5.12.  Control by Holders	55
SECTION 5.13.  Waiver of Past Defaults	55
SECTION 5.14.  Undertaking for Costs	55
SECTION 5.15.  Waiver of Stay, Extension or Usury Laws	56
SECTION 5.16.  Remedies Subject to Applicable Law	56
ARTICLE VI
THE TRUSTEE
SECTION 6.01.  Duties of Trustee	56
SECTION 6.02.  Notice of Defaults	57
SECTION 6.01   Certain Rights of Trustee	58
SECTION 6.04.  Trustee Not Responsible for Recitals, Dispositions of Notes or Application of Proceeds Thereof	59
SECTION 6.05.  Trustee and Agents May Hold Notes; Collections; etc	59
SECTION 6.06.  Money Held in Trust	59
SECTION 6.07   Compensation and Indemnification of Trustee and Its Prior Claim	59
SECTION 6.08.  Conflicting Interests	60
SECTION 6.09.  Corporate Trustee Required; Eligibility	60
SECTION 6.10.  Resignation and Removal; Appointment of Successor Trustee	60
SECTION 6.11.  Acceptance of Appointment by Successor	62
SECTION 6.12.  Merger, Conversion, Consolidation or Succession to Business	63
SECTION 6.13.  Preferential Collection of Claims Against the Company	63

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ARTICLE VII
HOLDERS’ LISTS AND REPORTS BY TRUSTEE AND THE COMPANY
SECTION 7.01.  Company to Furnish Trustee Names and Addresses of Holders	63
SECTION 7.02:  Disclosure of Names and Addresses of Holders	64
SECTION 7.03.  Reports by Trustee	64
SECTION 7.04.  Reports by the Company	64
ARTICLE VIII
CONSOLIDATION, MERGER, SALE OF ASSETS
SECTION 8.01.  Company May Merge, Consolidate, etc., Only on Certain Terms	65
SECTION 8.02.  Successor Substituted	67
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01.  Supplemental Indentures and Agreements Without Consent of Holders	68
SECTION 9.02.  Supplemental Indentures and Agreements with Consent- of Holders	69
SECTION 9.03.  Execution of Supplemental Indentures and Agreements	70
SECTION 9.04.  Effect of Supplemental Indentures	70
SECTION 9.05.  Conformity with Trust Indenture Act	71
SECTION 9.06.  Reference in Notes to Supplemental Indentures	71
SECTION 9.07.  Record Date	71
ARTICLE X
COVENANTS
SECTION 10.01. Payment of Principal, Premium and Interest	71
SECTION 10.02. Maintenance of Office or Agency	71
SECTION 10.03. Money for Note Payments to be Held in Trust	72
SECTION 10:04. Corporate Existence	73
SECTION 10.05. Payment of Taxes and Other Claims	73
SECTION 10.06. Maintenance of Properties	73
SECTION 10.07. Insurance	74
SECTION 10.08. Limitation on Indebtedness	74
SECTION 10.09. Limitation on Restricted Payments	74
SECTION 10.10. Limitation on Transactions with Affiliates	78
SECTION 10.11. Limitation on Liens .	79
SECTION.10.12. Limitation on Issuances of Guarantees of Indebtedness	80
SECTION 10.13. Limitation on Sale of Assets	80
SECTION 10.14. Purchase of Notes upon a Change of Control	86
SECTION 10.15. Limitation on Issuance and Sale of Capital Stock of Restricted Subsidiaries	90
SECTION 10.16. Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries	90
SECTION 10.17. Provision of Financial Statements	91
SECTION 10.18. Statement by Officers as to Default	91
SECTION 10.19. Waiver of Certain Covenants	92
SECTION 10.20. Limitation on the Designation of Unrestricted Subsidiaries	92
SECTION 10.21. Additional Amounts	92
SECTION 10.22. Covenants of RCL and Sugra	94
SECTION 10.23. Limitation on RMI’s Business Activities	94

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ARTICLE XI
REDEMPTION OF NOTES
SECTION 11.01. Right of Redemption	94
SECTION 11.02. Applicability of Article	95
SECTION 11.03. Election to Redeem; Notice to Trustee	95
SECTION 11.04. Selection by Trustee of Notes to be Redeemed	95
SECTION 11.05. Notice of Redemption	96
SECTION 11.06. Deposit of Redemption Price	97
SECTION 11.07. Notes Payable on Redemption Date	97
SECTION 11.08. Notes Redeemed or Purchased in Part	97
ARTICLE XII
SATISFACTION AND DISCHARGE
SECTION 12.01. Satisfaction and Discharge of Indenture	98
SECTION 12.02. Application of Trust Money	99
ARTICLE XIII
GUARANTEES
SECTION 13.01. Guarantees	99
SECTION 13.02. Continuing Guarantee; No Right of Set-Off; Independent Obligation	99
SECTION 13.03. Guarantees Absolute	100
SECTION 13.04  Right to Demand Full Performance	102
SECTION 13:05. Waivers	102
SECTION 13.06. Note Guarantors Remain Obligated in Event the Company Is No Longer.                              Obligated to Discharge Indenture Obligations	103
SECTION 13.07. Waiver of Rights	103
SECTION 13.08. Guarantees Are in Addition to Other Security	103
SECTION 13.09. Release of Security Interests	103
SECTION 13.10. No Bar to Further Actions	104
SECTION 13.11. Failure to Exercise Rights Shall Not Operate as a Waiver, No Suspension of Remedies .	104
SECTION 13.12. Trustee’s Dirties; Notice to Trustee	104
SECTION 13.13  Successors and Assigns	105
SECTION 13.14  Release of Guarantee	105
SECTION 13.15  Execution of Guarantees.	105
SECTION 13.16. Payment Permitted by Note Guarantors if No Default	105
ARTICLE XIV
SECURITY
SECTION 14.01  Security	106
SECTION 14.02. Additional Security	107
SECTION 14.03  Recording and Opinions	107
SECTION 14.04. Release and Disposition of Collateral	108
SECTION 14.05  Enforcement of Claims Against Collateral	110
SECTION 14.06  Authorization of Actions To Be Taken by the Trustee.	110
SIGNATURES	114
SCHEDULE 1 – Permitted Indebtedness
EXHIBIT A – Form of Note
EXHIBIT B – Form of Transfer Certificate for Transfer to QIB
EXHIBIT C – Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S
EXHIBIT D – Form of Rule 144 Certification
EXHIBIT E – Form of Intercreditor Agreement
EXHIBIT F – RMI. Subordination Agreement
EXHIBIT G – Security Agreement
EXHIBIT H – Form of First Priority Intercreditor Agreement

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CROSS-REFERENCE TABLE

TRUST INDENTURE ACT
SECTION	INDENTURE SECTION
310          (a)(1)	6.09
(a)(2)	6.09
(a)(5)	6.11; 6.12
(b)	6.08; 6.10
311          (a)	6.13
(b)	6.13
312          (a)	7.01
(c)	7.02
313          (a)	7.03
(c)	7.03
314          (a)(1)	7.04(a)
(a)(2)	7.04(b)
(a)(3)	7.04(c)
(a)(4)	10.18
(b)(1)	14.03(a)
(b)(2)	14.03(b)
(c)(1)	1.03
(c)	1.03
315          (a)	6.01(b)
(b)	6.02
(c)	6.01(a)
(d)	6.01(c)
(e)	5.14
316          (a)(last sentence)	1.01 (“Outstanding”)
(a)(1)(A)	5.12
(a)(1)(B)	5.13
(b)	5.08
(c)	9.07
317          (a)(1)	5.03
(a)(2)	5.04
(b)	10.03
318          (a)	1.08

_____________________

Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a part of this Indenture.

INDENTURE, dated as of September 30 2004; among HOLLINGER INC., a corporation incorporated under the Canada Business Corporation Act (as more fully defined below, the “Company”), RAVELSTON MANAGEMENT INC., a corporation incorporated under the laws of the Province of Ontario, as guarantor (“RMI”), 504468 N.B. INC., an indirect wholly owned subsidiary of the Company organized under the laws of the Province of New Brunswick, as guarantor (“NBI” and, together with RMI, as more fully defined below, the “Note Guarantors”), THE RAVELSTON CORPORATION LIMITED, a corporation incorporated under the laws of the Province of Ontario (“RCL”), SUGRA LIMITED, a wholly owned subsidiary of the Company organized under the laws of the Province of Ontario (“Sugra”), and HSBC BANK USA, NATIONAL ASSOCIATION, as trustee (the “Trustee”).

RECITALS

The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of its senior secured notes, to be issued pursuant to Articles II and III hereof or a supplemental indenture (each a “Note” and collectively the “Notes”).

Each of the Note Guarantors has duly authorized the issuance of a guarantee (the “Guarantee”) of the Notes, of substantially the tenor as hereinafter set forth, and to provide therefor, each of the Note Guarantors has duly authorized the execution and delivery of this Indenture in its capacity as a Note Guarantor hereunder.

Each of RCL and Sugra has duly authorized the execution and delivery of this Indenture to provide certain covenants with respect to the Notes.

This Indenture is subject to, and shall be governed by, the provisions of the Trust Indenture Act that are required to be part of and to govern indentures qualified under the Trust Indenture Act.

All acts and things necessary have been done to make (i) the Notes, when executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid obligations of the Company and (ii) this Indenture a valid agreement of the Company, RCL, Sugra and the Note Guarantors in accordance with the terms of this Indenture.

NOW, THEREFORE, in consideration of the premises and the purchase of the Notes by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders, as follows:

ARTICLE I

Definitions and Other Provisions of General Application

SECTION 1.01. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:

(a)           the terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular;

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(b)           all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein;

(c)           all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP;

(d)           the words “herein”, “hereof’ and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or  other subdivision; and

(e)           all references to Cdn. $ shall refer to the lawful currency of Canada and all references to $, including U.S. dollars or United States dollars, shall refer to the lawful currency of the United States of America. In all events, all payments to be made hereunder shall be made in United States dollars.

The following terms shall have the meanings set forth in this Section:

“Acceleration Right” means a right, which at the time is immediately exercisable (without further notice or lapse of time), by the holders or a trustee to cause the acceleration of the maturity of Indebtedness of the Company or a Restricted Subsidiary having an aggregate principal amount outstanding of at least $2,500,000.

“Acquired Indebtedness” means Indebtedness of a Person (including an Unrestricted Subsidiary) (i) existing at the time such Person becomes a Restricted Subsidiary or (ii) assumed in connection with the acquisition of assets from such Person, in each case, other than Indebtedness Incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary or such acquisition. Acquired Indebtedness will be deemed to be Incurred on the date of the related acquisition of assets from any Person or the date the acquired Person becomes a Restricted Subsidiary.

“Adjusted Net Cash Flow” means, for any period, the Net Cash Flow plus the Annual Support Amount.

“Affiliate” means, with respect to any specified Person, (i) any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person or (ii) any other Person that owns, directly or indirectly, 10% or more of such Person’s equity ownership or Voting Stock or any officer or director of any such Person, or other Person or, with respect to any natural Person, any person having a relationship with such Person by blood, marriage or adoption not more remote than first cousin. For the purposes of  this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person directly or indirectly, whether through ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Agent” means the relevant agent bank under any Credit Facility established by the Company, and such agent bank’s successors and assigns.

“Annual Support Amount” has. the meaning set forth in the Support Agreement.

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“Asset Sale” means any sale, issuance, conveyance, transfer, lease or other disposition (including, without limitation, by way of merger, amalgamation, consolidation or sale and leaseback transaction but not the grant of a pledge or security interest) (collectively, a “transfer”), directly or indirectly, in one or a series of related transactions, of (i) any Capital Stock of any Restricted Subsidiary; (ii) all or substantially all of the .properties and assets of any division or line of business of the Company or any of its Restricted Subsidiaries; or (iii) any other properties or assets (other than cash) of the Company or any Restricted Subsidiary, other than in the ordinary course of business. For the purposes of this definition, the term “Asset Sale” shall not include (A) any transfer of properties and assets, in a single transaction or series of related transactions, that is governed by the provisions of Article VIII, (B) any transfer of properties and assets from any Restricted Subsidiary to the Company in accordance with the terms of this Indenture, (C) any transfer of properties and assets, in a single transaction or series of related transactions, having a market value of less than $1,000,000 (it being understood that, if the market value of the properties or assets being transferred exceeds $1,000,000, the entire value and not just the portion in excess of $1,000,000 shall be deemed to have been the subject of an Asset Sale), (D) any transfer of properties and assets which are obsolete (in the case of equipment) to the Company’s and its Restricted Subsidiaries’ businesses, (E) any transfer of properties and assets to any Restricted Subsidiary, (F) any transfer of properties and assets from any Restricted Subsidiary to any other Restricted Subsidiary, and (G) any release of the Senior Notes Collateral permitted under and made in accordance with the provisions hereof or of the Security Documents.

“Average Life to Stated Maturity” means, as of the date of determination with respect to any Indebtedness, the quotient obtained by dividing (i) the sum of the product of (a) the number of years from the date of determination to the date or dates of each successive scheduled principal payment of such Indebtedness multiplied by (b) the amount of each such principal payment by (ii) the sum of all such principal payments.

“Bankruptcy Law” means Title Eleven of the United States Code, as amended, or any similar United States federal or state or foreign law (including, without limitation, the Bankruptcy and Insolvency Act (Canada) and the Companies’ Creditors Arrangement Act (Canada)) relating to bankruptcy, insolvency, receivership, winding-up, liquidation, consolidation, reorganization or relief of debtors or any amendment to, succession to or change in any such law.

“Board of Directors” means the board of directors of the Company or any duly authorized committee of such board.

“Board Resolution” means a copy of a resolution certified by an Officer of the Company to have been duly adopted by such Board of Directors of the Company or a duly authorized committee of such board and to be in full force and effect on the date of such certification, and delivered to the Trustee.

“Business Day” means, each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in The City of New York are authorized or obligated by law or executive order to remain closed.

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“Capital Lease Obligation” of any Person means any obligation of such Person and its subsidiaries on a consolidated basis under any capital lease of real or personal property, which, in accordance with GAAP, has been recorded as a capitalized lease obligation.

“Capital Stock” of any Person means any and all shares, interests, participations or other equivalents (however designated) of such Person’s capital stock and options, warrants or other rights to acquire such Person’s capital stock.

“Cash Equivalents” means (i) any evidence of Indebtedness with a maturity of 180 days or less issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof); (ii) certificates of deposit or acceptances with a maturity of 180 days or less of any financial institution that is a member of the Federal Reserve System having combined capital and surplus and undivided profits of not less than $500,000,000; (iii) commercial paper with a maturity of 180 days or less issued by a corporation that is not an Affiliate of the Company organized under the laws of any state of the United States or the District of Columbia and rated A-1 (or higher) according to S&P or P-I (or higher) according to Moody’s or at least an equivalent rating category of another nationally recognized securities rating agency; (iv) any money Market deposit accounts issued or offered by a domestic commercial bank having capital and surplus in excess of $500,000,000; and (v) repurchase agreements and reverse repurchase agreements relating to marketable direct obligations issued or unconditionally guaranteed by the government of the United States of America or issued by any agency thereof and backed by the full faith and credit of the United States of America, in each case maturing within 180 days from the date of acquisition; provided that the terms of such agreements comply with the guidelines set forth in the Federal Financial Agreements of Depository Institutions with Securities Dealers and Others, as adopted by the Comptroller of the Currency on October 31, 1985.

“Certificated Note” means any Note issued in registered certificated form (other than a Global Note), which shall be substantially in the form of Exhibit A, with appropriate legends as specified in Section 3.05 and Exhibit A.

“Change of Control” means the occurrence of any of the following:

(a)           there is a report filed on Schedule 13D, 14D-I or 14D-IF (or any successor schedule, form or report) pursuant to the Exchange Act, disclosing that any person (for purposes of this definition, as the tern “person” is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision to either of the foregoing), other than any person consisting solely of Lord Black (or his heirs, executors or legal representatives) and his Affiliates, has become the beneficial owner (as the term “beneficial owner” is defined under Rule 13d-3 or any successor rule or regulation promulgated under the Exchange Act) of Voting Stock representing 50% or more of the total voting power attached to all Voting Stock of the Company or RMI then outstanding; provided, however, that a person shall not be deemed to be the beneficial owner of, or to own beneficially, (i) any securities tendered pursuant to a tender or exchange offer made by or on behalf of such person or any of such person’s Affiliates until such tendered securities are accepted for purchase or exchange thereunder, or (ii) any securities if such beneficial ownership (A) arises solely as a result of a revocable proxy delivered in response to a proxy or consent solicitation made pursuant to applicable law and (B) is not also then reportable on Schedule 13D (or any successor schedule) under the Exchange Act;

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(b)           there is a report filed or required to be filed with any securities commission or securities regulatory authority in Canada, disclosing (expressly or otherwise) that any offeror (as the term “offeror” is defined in Section 89(1) of the Securities Act (Ontario) for the purpose of Section 101 of such Securities Act or any successor provision of the foregoing and which term shall include, for greater certainty, any person who directly or indirectly acquires beneficial ownership within the meaning of such Securities Act of, or control or direction over, voting or equity securities of the Company), other than any person consisting solely of Lord Black (or his heirs, executors legal representatives) and his Affiliates, has directly or indirectly acquired beneficial ownership (within the meaning of the Securities Act (Ontario)) of, or the power to exercise control or direction over, voting or equity securities, or securities convertible into voting or equity securities, of the Company that together with such offeror’s securities (as the term “offeror’s securities” is defined in Section 89(1) of the Securities Act (Ontario) or any successor provision thereto in relation to the voting or equity shares of the Company) would constitute Voting Stock of the Company representing 50% or more of the total voting power attached to all Voting Stock of the Company then outstanding;

(c)           any person, other than any person consisting solely of Lord Black (or his heirs, executors or legal representatives) and his Affiliates, directly or indirectly acquires beneficial ownership (within the meaning of the Securities Act (Ontario)) of, or the power to exercise control or direction over, voting or equity securities, or securities convertible into voting or equity securities, of RMI that together with such person’s securities (the term “person’s securities” to have the same meaning as “offeror’s securities” as defined in Section 89(1) of the Securities Act (Ontario) or any successor provision thereto in relation to the voting or equity shares of the RMI) would constitute Voting Stock of RMI representing 50% or more of the total voting power attached to all Voting Stock of RMI then outstanding;

(d)           there is consummated a consolidation (involving a business combination), merger or amalgamation of the Company or RMI, as the case may be, (i) in which the Company or RIM, as the case may be, is not the continuing or surviving corporation or (ii) pursuant to which any Voting Stock of the Company or RMI, as the case may be, would be reclassified, changed or converted into or exchanged for cash, securities or other property, other than (in each case) a consolidation, merger or amalgamation of the Company or RMI, as the case may be, in which the holders of the Voting Stock of the Company or RMI, as the case may be, immediately prior to the consolidation, merger or amalgamation have, directly or indirectly, 50% or more of the Voting Stock of the continuing or surviving corporation immediately after such transaction;

(e)           during any period of 12 consecutive months, individuals who at the beginning of such period constituted the Board of Directors of the Company or RMI (together with any new directors whose election by such Board of Directors, or whose nomination for election by the stockholders of the Company or RMI, as the case may be, was approved by a vote of at least a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of such Board of Directors then in office; or

5

(f)           Lord Black (or his heirs, executors and legal-representatives) and his Affiliates cease to beneficially own and control the voting of, directly or indirectly, Voting Stock of the Company or MI representing a greater percentage of the total voting power attached to the Voting Stock of the Company or RMI than the percentage beneficially owned and controlled, directly or indirectly, by any other single shareholder of the Company or RMI together with its Affiliates (a “Designated Transaction”) and there shall occur a Rating Decline.

For purposes hereof, “Rating Decline” means an event that will be deemed to have occurred if, on any date within the period (the “Rating Period”) beginning on the date (the “Reference Date”) of the earlier to occur of (A) the first public announcement by the Company or any other Person of an intention to effect any Designated Transaction and (B) the occurrence of such Designated Transaction, and ending on the date 90 days thereafter, either of the following events has occurred: (1) the Notes (or any other securities of the Company which are rated by a Rating Agency on the date which is 61 days prior to the Reference Date (the “Rating Date”)) shall be rated by any Rating Agency at any time during the Rating Period at a rating which is lower than the rating of the Notes (or such other securities of the Company, as the case may be) by such Rating Agency on the Rating Date by one or more gradations (including gradations within Rating Categories as well as between Rating Categories) or (2) any Rating Agency shall have withdrawn its rating of the Notes (or such other securities of the Company, as the case may be) during the Rating Period.

“Class A Common Stock” means the Class A common stock, par value $0.01 per share, of Hollinger International.

“Class B Common-Stock” means the Class B common stock, par value $0.01 per share, of Hollinger International.

“Class B Shares” means the 14,990,000 shares of Class B Common Stock pledged pursuant to the First Priority Notes Security Agreement and the Security Agreement as security for the Company’s obligations under the First Priority Notes and the Notes and NBI’s obligations under the NBI guarantee of the First Priority Notes and the NBI Guarantee, as such number may be adjusted from time to time as permitted by this Indenture or the Security Agreement.

“Code” means the Internal Revenue of 1986, as amended.

“Collateral” means any property, assets, proceeds or other items that maybe pledged as security for the Notes, whether pursuant to Section 10.11, Article XIV or otherwise.

6

“Collateral Account” means a collateral account established by the Company with the Collateral Agent or another financial institution pursuant to and in accordance with the Security Agreement.

“Collateral Agent” means the collateral agent under the Indenture, the Intercreditor Agreement and the Security Agreement, which initially shall be the Trustee, acting in its capacity as Collateral Agent under such agreements on behalf of and for the benefit of the Trustee and the Holders.

“Commission” means the Securities and Exchange Commission as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.

“Company” means Hollinger Inc., a corporation incorporated under the Canada Business Corporation Act, until a successor Person shall have become such pursuant to Article VIII of this Indenture and thereafter “Company” shall mean such successor Person. To the extent necessary to comply with the requirements of the provisions of Trust Indenture Act Sections 310 through 317 as they are applicable to the Company, the term “Company” shall include any other obligor with respect to the Notes for purposes of complying with such provisions, including any Note Guarantor.

“Company Request” or “Company Order” means a written request or order signed in the name of the Company by any one of its Chairman of the Board, its Vice Chairman, its President or a Vice President (regardless of Vice Presidential designation), and by any one of its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and in form and substance reasonably satisfactory to the Trustee and delivered to the Trustee.

“Consolidated Assets” means, with respect to the Company, the total assets shown on the balance sheet of the Company and its Restricted Subsidiaries, as determined on a consolidated basis in accordance with GAAP, as of the Company’s latest full fiscal quarter.

“Consolidated Interest Expense” means, with respect to any period, the sum of (i) the interest expense of the Company and the Restricted Subsidiaries for such period, determined on a Consolidated basis in accordance with GAAP (other than any dividends paid by the Company on the Series II Preferred Shares or any Capital Stock issued in replacement therefor), including, without limitation, (a) amortization of debt discount, (b) the net payments, if any, under interest rate contracts (including amortization of discounts), (c) the interest portion of any deferred payment obligation and (d) accrued interest, plus (ii) the interest component of Capital Lease Obligations paid, accrued and/or scheduled to be paid or accrued by the Company and the Restricted Subsidiaries during such period, and all capitalized interest of the Company and the Restricted Subsidiaries, in each case as determined on a Consolidated basis in accordance with GAAP.

“Consolidated Net Worth” means the common and preferred stockholders’ equity of the Company and its Restricted Subsidiaries (exclusive of any redeemable capital stock), as determined on a Consolidated basis and in accordance with GAAP.

7

“Consolidation” means, with respect to any Person, the consolidation of the accounts of such Person and each of its subsidiaries if and to the extent the accounts of such Person and each of its subsidiaries would not normally be consolidated with those of such Person, all in accordance with GAAP; provided, however, that the accounts of any Unrestricted Subsidiary shall not be consolidated with the Company but instead the interest of the Company or any Restricted Subsidiary therein will be accounted for as an investment on an equity basis. The term “Consolidated” shall have a correlative meaning.

“Contribution Agreement” means the contribution agreement among RCL, RMI and the Company dated March 10, 2003, as amended or supplemented from time to time in accordance with the Indenture.

“Corporate Trust Office” means the office of the Trustee at which at any particular time the corporate trust business for the purposes of this Indenture shall be principally administered, which office at the date of execution of this Indenture is located at 452 Fifth Avenue, New York NY 10018, Attention: Corporate Trust.

“Coverage Ratio” means, with respect to the Company and its Restricted Subsidiaries, the ratio of (x) the sum of Adjusted Net Cash Flow and Consolidated Interest Expense, to (y) the Consolidated Interest Expense for the preceding four quarter period.

“Credit Facility” means an agreement that the Company and NBI may enter into with one or more Canadian chartered banks and other financial institutions with respect to a credit facility providing for up to Cdn. $15 million in borrowings by the Company and NBI on a revolving line of credit basis, which borrowings may (i) at the option of the Company and subject to such conditions as may be set forth in such agreement, be converted into a term loan having an Average Life to Stated Maturity and Stated Maturity sooner than those of the Notes, provided that at the time of such conversion no Default or Event of Default under the Notes or the Credit Facility has occurred and is continuing, and (ii) be secured by a first priority lien on any of the assets, properties and rights of the Company or NBI not pledged as collateral for the Notes pursuant to the Security Agreement or the First Priority Note Security Agreement, as such credit agreement may be amended, amended and restated, renewed, extended, substituted, refinanced, restructured, replaced, supplemented, waived, deferred or otherwise modified from time to time, in each case whether with the same and/or different lenders, and also including all related guarantees, security or pledge arrangements, hedging arrangements and other instruments and agreements executed in connection therewith; provided further that the Agent, any collateral agent and each lender under such Credit Facility shall, concurrently with the execution and delivery of such credit agreement have executed and delivered an Intercreditor Agreement.

“Currency Agreements” means one or more of the following agreements which shall be entered into with one or more financial institutions: foreign exchange contracts, currency swap agreements or other similar agreements or arrangements designed to protect against fluctuations in currency values.

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“Current Market Price” means, with respect to any share of Class A Common Stock or Class B Common Stock of Hollinger international on any date, the simple average of the daily closing prices for the 45 consecutive Trading Days ending on the date of determination or the date on which any of the Pledged Share Collateral is to be released as permitted under Section 14.04(a)(ii) or (v) of this Indenture, as the context requires. The closing price for each day shall be the last reported sales price of the Class A Common Stock or, in case no such reported sale takes place on such date, the average of the reported closing bid and asked prices of the Class A Common Stock in either case on the New York Stock Exchange (the “NYSE”) or, if the Class A Common Stock is not listed or admitted to trading on the NYSE, on the principal national securities exchange on which the Class A Common Stock is listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, the closing sales price of the Class A Common Stock as quoted by NASDAQ or, in case no reported sale takes place, the average of the closing bid arid asked prices as quoted by NASDAQ or any comparable system or, if the Class A Common Stock is not quoted on NASDAQ or any comparable system, the closing sales price or, in case no reported sale takes place, the average of the closing bid and asked prices, as furnished by any two members of the National Association of Securities Dealers, Inc. selected from time to time by the Company for that purpose. If no such prices are available, the Current Market Price per share shall be the fair value of a share of Class A Common Stock as determined by the Independent Directors of the Company.

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

“Designated Transaction” shall have the meaning assigned to such term in paragraph (f) of the “Change of Control” definition.

“Distribution Compliance Period” means, in respect of any Regulation S Global Note, the 40 consecutive days beginning on and including the later of (a) the day on which any Notes represented thereby are offered to persons other than distributors (as defined in Regulation S under the Securities Act) pursuant to Regulation S and (b) the issue date for such Notes.

“Dividend Offset Amount” means the excess of any Net Dividend Amount received by the Company and NBI in the relevant fiscal year over $4.65 million

“Dollar Equivalent” means, with respect to any monetary amount in a currency other than U.S. dollars, at any time of determination thereof, the amount of U.S. dollars obtained by converting such foreign currency involved in such computation into U.S. dollars at the spot rate for the purchase of U.S. dollars with the applicable foreign currency as published in The Wall Street Journal in the “Exchange Rates” column under the heading “Currency Trading” on the date two Business Days prior to such determination.

“DTC” means The Depository Trust Company, its nominees and their respective successors and assigns, or such other depositary institution hereinafter appointed by the Company that is a clearing agency registered under the Exchange Act.

“Event of Default” has the meaning specified in Article V.

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

“Exchange Notes” means debt securities of the Company, substantially identical in all material respects to the Notes (except that the additional interest provisions and the transfer restrictions pertaining to the Notes will be modified or eliminated, as appropriate), to be issued pursuant to this Indenture in an aggregate principal amount up to the aggregate principal amounts outstanding under both the Notes and the First Priority Notes as of the date such debt securities are first issued.

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“Exchange Offer Registration Statement” shall have the meaning assigned to such tern in the Registration Rights Agreement.

“First Priority Intercreditor Agreement” means the intercreditor agreement among the Company, the Trustee, the Collateral Agent, and the trustee and collateral agent under the First Priority Notes Indenture, dated as of the date hereof, in the form attached as Exhibit H to this Indenture, as the same may be amended or supplemented from time to time in accordance with this Indenture.

“First Priority Notes” means any of the Company’s outstanding 11.875% Senior Secured Notes due 2011 issued and authenticated pursuant to the First Priority Notes Indenture.

“First Priority Notes Indenture” means the Indenture, dated as of March 10, 2003, among the Company, as issuer, RMI and MIT, as guarantors, RCL, Sugra and Wachovia Trust Company, National Association, as trustee, as amended or supplemented from time to time.

“First Priority Notes Security Agreement” means the Security Agreement, dated as of March 10, 2003, among the grantors referred to therein and Wachovia Trust Company, National Association, as trustee and collateral agent, entered into in connection with the First Priority Notes Indenture, as amended or supplemented from time to time.

“Floor Amount” means.$14,000,000 in each fiscal year, less (i) the aggregate amount of management fees paid in cash by Hollinger international and its subsidiaries directly to the Company or to its Wholly Owned Restricted Subsidiaries in such fiscal year, and (ii) any Dividend Offset Amount in such fiscal year. With respect to any period that is less than a fiscal year, the Floor Amount shall be calculated pro rata by reference to the number of days in such period, computed on the basis of a 360-day year of twelve 30-day months.

“Generally Accepted Accounting Principles” or “GAAP” means generally. accepted accounting principles in Canada, consistently applied, which were in effect as of March 10, 2003.

“Global Note” means any Note issued in registered certificated form to DTC (or its nominee), as depositary for the beneficial owners thereof, which shall be substantially in the form of Exhibit A, with appropriate legends as specified in Section 3.05 and Exhibit A.

“Guaranteed Debt” of any Person means, without duplication, all Indebtedness of any other Person referred to in the definition of “Indebtedness” guaranteed directly or indirectly. in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (i) to pay or purchase such Indebtedness or to advance or supply funds for the payment or purchase of such Indebtedness (or to indemnify another Person for the costs thereof), (ii) to purchase; sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Indebtedness or to assure the holder of such Indebtedness against loss, (iii) to supply funds to, or in any other manner invest in, the debtor (including any agreement to pay for property or services without requiring that such property be received or such services be rendered), (iv) to maintain working capital or equity capital of the debtor, or otherwise to maintain the net worth, solvency or other financial condition of the debtor, or (v) otherwise to assure a creditor against loss, provided that the term “guarantee” shall not include endorsements for collection or deposit, in either case in the ordinary course of business.

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“Guarantee Obligations” means the obligations of the Guarantors under the Indenture, the Notes and the Guarantees to pay principal, premium, if any, and interest when due and payable, and all other amounts due or to become due under or in connection with this Indenture and the Notes, and the performance of all other obligations to the Trustee, the Paying Agent and the Holders under this Indenture and the Notes, according to the terms thereof.

“Guarantees” means the RMI Guarantee and the NBI Guarantee and, if the context requires, the guarantee by any Restricted Subsidiary of the Indenture Obligations.

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

“Hollinger International” means Hollinger International Inc., a corporation incorporated under the laws of Delaware.

“Incur” means create, issue, assume, guarantee or otherwise in any manner become directly or indirectly liable for or with respect to or otherwise incur.

“Indebtedness” means, with respect to any Person, without duplication, (i) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (or other obligations to former owners of acquired businesses), excluding any trade payables and other accrued current liabilities arising in the ordinary course of business, but including, without limitation, all obligations, contingent or otherwise, of such Person in connection with any letters of credit issued under letter of credit facilities, acceptance facilities or other similar facilities and in connection with any agreement to purchase, redeem, exchange, convert or otherwise acquire for value any Capital Stock of such Person, or any warrants, rights or options to acquire such Capital Stock, now or hereafter outstanding, (ii) all obligations of such Person evidenced by bonds, notes, debentures or other similar instruments, (iii) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even if the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), but excluding trade payables arising in the ordinary course of business, (iv) all obligations under Interest Rate Agreements and Currency Agreements of such Person related to the settlement or termination of those agreements as of the date of determination, (v) all Capital Lease Obligations of such Person, (vi) all Indebtedness referred to in clauses (i) through (v) above of other Persons and all dividends of other Persons, the Payment of which is secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien, upon or with respect to property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, (vii) all Guaranteed Debt of such Person, (viii) all Redeemable Capital Stock and (without duplication) all Preferred Stock of Restricted Subsidiaries other than Preferred Stock held by Restricted Subsidiaries or the Company, valued at the greater of its voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid dividends, and (ix) any amendment, supplement, modification, deferral, renewal, extension, refunding or refinancing of any Indebtedness of the types referred to in clauses (i) through (viii) above. For purposes hereof, the “maximum fixed repurchase price” of any Redeemable Capital Stock or Preferred Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Redeemable Capital Stock or Preferred Stock as if such Redeemable Capital Stock or Preferred Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the fair market value of such Redeemable Capital Stock or Preferred Stock, such fair market value to be determined in good faith by the Board of Directors of such Person.

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“Indenture” means this instrument as originally executed (including all exhibits and schedules hereto) and as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and shall include the terms of the Notes established as contemplated by Section 2.01.

“Indenture Obligations” means the obligations of the Company under this Indenture or under the Notes to pay principal, premium, if any, and interest when due and payable, and all other amounts due onto become due under or in connection with this Indenture and the Notes, and the performance of all other obligations to the Trustee, the Paying Agent and the Holders under this Indenture and the Notes, according to the terms thereof.

“Independent Director” means a member of the board of directors of a Person that is not an officer, employee or former officer or employee of such Person or one of its Affiliates and, with respect to any transaction or series of related transactions, a member of the board of directors who does not have any material direct or indirect financial interest in or with respect to such transaction or series of related transactions (including for such purpose the interest of any other Person with respect to whom such director is also a director, officer or employee).

“Intercreditor Agreement” means an intercreditor agreement among the Trustee, the Collateral Agent, the Agent, and any collateral agent and lenders under the Credit Facility, substantially in the form attached as Exhibit E to this Indenture; provided, however that (i) any variations from Exhibit E, taken as a whole, shall not be materially less favorable to the Trustee, Collateral Agent and the Holders than the terms and conditions reflected in Exhibit E and (ii) the Company and the Note Guarantors shall, at the time such Intercreditor Agreement is entered into, have delivered to the Trustee and the Collateral Agent an Opinion of Counsel confirming the matters set forth in clause (i) of this proviso and such other matters as this Indenture may require and as the Trustee or Collateral Agent may request.

“Interest Payment Date” means the Stated Maturity of a regular installment of interest on the Notes or the Special Payment Date with respect to Defaulted Interest.

“Interest Rate Agreements” means one or more of the following agreements which shall be entered into from time to time with one or more financial institutions interest rate protection agreements (including, without limitation, interest rate swaps, caps, floors, collars and similar agreements) and or other types of interest rate hedging agreements.

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“International Intercompany Note” means that certain Amended Promissory Note dated as of March 10, 2003 from NBI to Hollinger International in the principal amount of $20,349,216.49. The International Intercompany Note (x) shall (i) be deemed to include any promissory note(s) issued by NBI to Hollinger International from time to time in payment of interest accrued on the Amended Promissory Note (and on any such notes previously issued in payment of interest) and (ii) have (A) a Stated Maturity occurring later than the Stated Maturity of the Notes and (B) an Average Life to Stated Maturity greater than the Average Life to Stated Maturity of the Notes, and (y) may be assigned by Hollinger International to any of its Affiliates.

“Investment” means, with respect to any Person, directly or indirectly, any advance, loan (including guarantees), or other extension of credit or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase, acquisition or ownership by such Person of any Capital Stock, bonds, notes, debentures or other securities issued or owned by, any other Person and all other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP.

“Issue Date” means the first date of issuance of Notes under this Indenture.

“Issue Date Notes” means the $15,000,000 aggregate principal amount of Notes originally issued on the Issue Date, and any replacement Notes and Exchange Notes issued therefor in accordance with this Indenture.

“Lien” means any mortgage, charge, pledge, lien (statutory or otherwise), security interest, hypothecation or other encumbrance upon or with respect to any property of any kind, real or personal, movable or immovable, now owned or hereafter acquired.

“Lord Black” means Lord Black of Crossharbour, PC(C), CO, KCSG.

“Material Restricted Subsidiary” means each Restricted Subsidiary of the Company which (i) for the most recent fiscal year of the Company accounted for more than 5% of the Consolidated revenues of the Company and its Restricted Subsidiaries or (ii) at the end of such fiscal year was the owner (beneficial or otherwise) of more than 5% of the Consolidated Assets of the Company and its Restricted Subsidiaries, all as shown on the Company’s Consolidated financial statements for such fiscal year.

“Maturity” when used with respect to any Note means the date on which the principal of such Note becomes due and payable as therein provided or as provided in this Indenture, whether at Stated Maturity, the Purchase Date or the Redemption Date and whether by declaration of acceleration, Offer in respect of Excess Proceeds, Change of Control, call for redemption or otherwise.

“NBI” means 504468 N.B. Inc., an indirect wholly owned subsidiary of the Company organized under the laws of the Province of New Brunswick.

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“NBI Guarantee” means the guarantee by NBI of the Indenture Obligations.

“Negative Net Cash Flow” means Net Cash Flow that is less than zero.

“Net Cash Flow” means, for any period, Net Income plus, without duplication, (i) the amount of all non-cash items reducing Net Income, (ii) all amounts deducted in the calculation of Net Income on account of depreciation and amortization, and (iii) all taxes provided for in the calculation of Net Income, less, without duplication, (iv) any non-cash items increasing Net Income, (v) all taxes paid in cash during such period, (vi) all capital expenditures made in cash during such period, and (vii) all dividends (excluding dividends on the Company’s retractable common shares) made during such period; all calculated in accordance with GAAP as of the last day of any period. The Net Cash Flow of the Company will be calculated in U.S. dollars; any monetary amount in a currency other than U.S. dollars will be converted into U.S. dollars at the average exchange rate prevailing during the relevant period.

“Net Cash Proceeds” means (a) with respect to any Asset Sale by any Person, the proceeds thereof in the form of cash or Cash Equivalents including payments of principal and interest in respect of deferred payment obligations when received in the form of, or stock or other assets when disposed of for, cash or Cash Equivalents (except to the extent that such obligations are financed or sold with recourse to the Company or any Restricted Subsidiary) net of (i) brokerage commissions and other reasonable fees and expenses (including fees and expenses of counsel and investment bankers) related to such Asset Sale, (ii) provisions for all taxes payable as a result of such Asset Sale, (iii) payments made to retire indebtedness where payment of such indebtedness is secured by the assets or properties the subject of such Asset Sale, (iv) amounts required to be paid to any Person (other than the Company or any Restricted Subsidiary) owning a beneficial interest in the assets subject to the Asset Sale and (v) appropriate amounts to be provided by the Company or any Restricted Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against any liabilities associated with such Asset Sale and retained by the Company or any Restricted Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, all as determined and reflected in an Officers’ Certificate delivered to the Trustee, and (b) with respect to any issuance or sale of Capital Stock or options, warrants or rights to purchase Capital Stock, or debt securities or Capital Stock that has been converted into or exchanged for Capital Stock, as referred to in Section 10.09, the proceeds of such issuance or sale in the form of Cash Equivalents, including payments in respect of deferred payment obligations when received in the form of, or stock or other assets when disposed of for, Cash Equivalents (except to the extent that such obligations are financed or sold with recourse to the Company or any Restricted Subsidiary), net of attorneys’ fees, accountants’ fees and brokerage, consultation, underwriting and other fees and expenses actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof.

“Net Dividend Amount” means the net cash dividend amount received by the Company and NBI in the relevant fiscal year on the shares of Class A Common Stock and Class B Common Stock held by them (including, without limitation, any such shares pledged to the Collateral Agent as Pledged Share Collateral), after deducting (i) any withholding taxes or income taxes paid or payable in cash by the Company or NBI in respect of such dividends, and (ii) any dividends received by the Company or NBI on such number of shares of Hollinger International held by the Company or NBI that corresponds to the number of shares of Class A Common Stock into which the Series II Preferred Shares are exchangeable.

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“Net Income” of the Company means, for any period, the unconsolidated net income (or loss (and treating a loss as a negative number)) of the Company for such period, adjusted by excluding, without duplication, to the extent included in calculating such net income (or loss), (i) all extraordinary gains and losses, (ii) the net income (or loss) of any Person acquired during the specified period attributable to any period prior to the date of such acquisition, (iii) any gain or loss realized upon the termination of any employee pension benefit plan, (iv) aggregate gains and losses (less all fees and expenses relating thereto) in respect of dispositions of assets other than in the ordinary course of business (provided that any sale of Capital Stock of Hollinger International for cash would be considered a disposition in the ordinary course of business), (v) any gain from the collection of proceeds of life insurance policies and (vi) any gain or loss arising from the acquisition of any securities of the Company, or the extinguishment, under GAAP, of any Indebtedness of the Company. The Net Income of the Company will be calculated in U.S. dollars; any monetary amount in a currency other than U.S. dollars will be convened into U.S. dollars at the average exchange rate prevailing during the relevant period.

“Note Custodian” means the custodian with respect to any Global Note appointed by DTC, or any successor Person thereto, and shall initially be the Trustee.

“Note Guarantors” means RMI and NBI and, if the context requires, any Restricted Subsidiary guarantor of the Indenture Obligations.

“Notes” means any of the Company’s 11.875% Senior Secured Notes due 2011 issued and authenticated pursuant to this Indenture.

“Officer” when used with respect to the Company means the Chairman of the Board, Vice Chairman; President or a Vice President (regardless of Vice Presidential designation), Treasurer, Secretary or an Assistant Secretary of the Company.

“Officers’ Certificate” means a certificate signed by the Chairman of the Board, Vice Chairman, President or a Vice President (regardless of Vice Presidential designation), and by the Treasurer, Secretary an Assistant Secretary, of the Company, in form and substance reasonably satisfactory to, and delivered to, the Trustee.

“Opinion of Counsel” means a written opinion of counsel, inform and substance reasonably satisfactory to the Trustee, who may be counsel for the Company or the Trustee, and who shall be reasonably acceptable to the Trustee, including but not limited to an Opinion of   Independent Counsel.

“Opinion of Independent Counsel” means a written opinion, in form and substance reasonably satisfactory to the Trustee, by someone who is not an employee or former employee of the Company, and who shall be reasonably acceptable to the Trustee.

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“Outstanding” when used with respect to Notes means, as of the date of determination, all Notes theretofore authenticated and delivered under this Indenture, except:

(a)           Notes theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;

(b)           Notes, or portions thereof, for whose payment or redemption money in the necessary amount has been theretofore irrevocably deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders; provided that, if the Notes are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor reasonably satisfactory to the Trustee has been made;

(c)           Notes, except to the extent provided in Sections 4.02 and 4.03, with respect to which the Company has effected defeasance or covenant defeasance as provided in Article IV; and

(d)           Notes in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this Indenture, other than any such Notes in respect of which there shall have been presented to the Trustee and the Company proof reasonably satisfactory to each of them that such Notes are held by a bona fide purchaser in whose hands the Notes are valid obligations of the Company;

provided, however, that, in determining whether the Holders of the requisite principal amount of Outstanding Notes have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Notes owned by the Company or any other obligor upon the Notes or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes which the Trustee actually knows to be so owned shall be so disregarded. Notes so owned which have been pledged in good faith may be regarded as outstanding if the pledgee establishes to the reasonable satisfaction of the Trustee the pledgee’s right so to act with respect to such Notes and that the pledgee is not the Company or any other obligor upon the Notes or any Affiliate of the Company or such other obligor.

“Pari Passu Indebtedness” means any Indebtedness of the Company that is pari passu in right of payment with the Notes.

“Paying Agent” means any Person authorized by the Company to pay the principal, premium, if any, or interest on any Notes on behalf of the Company. The Company initially authorizes the Trustee to act as Paying Agent for the Notes on its behalf. The Company may at any time and from time to time authorize one or more Persons to act as Paying Agent in addition to or in place of the Trustee with respect to any Notes issued under this Indenture.

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“Permitted Indebtedness” means the following:

(i)           Indebtedness of the Company (including as guarantor of NBI) or NBI under a Credit Facility to be established by the Company in a maximum aggregate principal amount at any one time outstanding (including any refinancings thereof) not to exceed Cdn$15,000,000; provided that, if any portion of the Credit Facility is comprised of term loans (defined as loans with an amortizing schedule of principal repayment), such maximum amount shall be reduced to the extent of any permanent repayment of any Indebtedness under such term loans pursuant to Section 10.13 of this Indenture;

(ii)           Indebtedness of the Company pursuant to the Notes or the Exchange Notes and Indebtedness of any Restricted Subsidiary constituting a Guarantee of the Notes;

(iii)           Indebtedness of the Company pursuant to the First Priority Notes Indenture and the First Priority Notes and Indebtedness of any Restricted Subsidiary in connection therewith;

(iv)           Indebtedness of the Company or any Restricted Subsidiary outstanding as of March 10, 2003 and listed on Schedule 1 hereto and under or in respect of the International Intercompany Note;

(v)           Indebtedness (a) of the Company owing to a Restricted Subsidiary, or (b) of a Restricted Subsidiary owing to another Restricted Subsidiary or the Company; provided that any such Indebtedness is made pursuant to an intercompany note setting forth the principal amount, interest rate and payment dates, the maturity or similar terms and, in the case of indebtedness of the Company owing to a Restricted Subsidiary, is subordinated in right of payment from and after such time as the Notes shall become due and payable (whether at Stated Maturity, acceleration or otherwise) to the payment and performance of the Company’s obligations under the Notes; provided further that (x) any disposition, pledge or transfer of any such Indebtedness to a Person (other than (A) to the Company or a Restricted Subsidiary or (B) a pledge of such Indebtedness to secure Indebtedness existing at such time under, and pursuant to the terms of, the Credit Facility) will be deemed to be an incurrence of such Indebtedness by the obligor not permitted by this clause (iv) and (y) any transaction pursuant to which any Restricted Subsidiary that has Indebtedness owing to the Company or any other Restricted Subsidiary ceases to be a Restricted Subsidiary will be deemed to be the Incurrence of Indebtedness by the Company or such other Restricted Subsidiary that is not permitted by this clause (iv);

(vi)           obligations of the Company or any Restricted Subsidiary pursuant to Interest Rate Agreements or Currency Agreements designed to protect the Company or any Restricted Subsidiary against fluctuations in interest rates or currency exchange rates in respect of Indebtedness of the Company or any of its Restricted Subsidiaries, the notional amount of which (in the case of Interest Rate Agreements) and the notional or exchange amount of which (in the case of Currency Agreements) do not exceed the aggregate principal amount of such Indebtedness;

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                                 (vii)         guarantees by Restricted Subsidiaries of Indebtedness of the Company otherwise permitted to be Incurred under the definition of “Permitted Indebtedness” and in accordance with the provisions of Section 10.12 of this Indenture;

(viii)         Redeemable Capital Stock or Preferred Stock issued by the Company from time to time to finance retractions or redemptions of its outstanding Retractable Common Shares and Series II Preferred Shares (other than any such shares held by Affiliates of the Company);

(ix)            any renewals, extensions, substitutions, refundings, refinancings or replacements (collectively, a “refinancing”) of any Indebtedness Incurred as described in paragraphs (ii), (iii), (iv), (vii), and (x) of this definition of “Permitted Indebtedness,” by the Company or by the obligor of such Permitted Indebtedness, including any successive refinancings, so long as (a) such refinancing does not increase the aggregate principal amount of Indebtedness represented thereby and, in the ease of Pari Passu Indebtedness or Subordinated Indebtedness, such refinancing does not reduce the Average Life to Stated Maturity or the Stated Maturity of such Indebtedness and (b) any such refinancing Indebtedness shall not be senior in right of payment to the Indebtedness so refinanced;

(x)             Indebtedness of the Company or any Restricted Subsidiary in an aggregate amount at any time outstanding not to exceed $1,000,000 in respect of purchase money obligations, provided (a) such Indebtedness is Incurred within 180 days of the purchase of the relevant assets, (b) such Indebtedness does not exceed the actual purchase price of such assets and (c) any related Liens do not extend to any assets other than those being purchased;

(xi)            Subordinated Indebtedness of the Company owing to RMI, where the loans representing such Subordinated Indebtedness have been made by RMI to the Company pursuant to the terms of, and RMI’s obligations under, the Support Agreement, provided that such Indebtedness has a Stated Maturity occurring after the Maturity of the Notes and such Indebtedness is expressly subordinated in right of payment to the Notes in accordance with the RMI Subordination Agreement; and

(xii)           Subordinated Intercompany Loans of the Company owed to RCL or RMI, representing amounts received by the Company from RCL or RMI, respectively, through voluntary cash contributions by RCL or RMI to the Company after March 10, 2003.

For purposes of determining compliance with any U.S. dollar denominated restriction on the Incurrence of Indebtedness where the Indebtedness Incurred is denominated in a different currency, the amount of such Indebtedness will be the Dollar Equivalent determined on the date of the Incurrence of such Indebtedness; provided, however, that, if any such Indebtedness denominated in a different currency is subject to a Currency Agreement with respect to U.S. dollars covering all principal, premium, if any, and interest payable on such Indebtedness, the amount of such Indebtedness expressed in U.S. dollars will be as provided in such Currency Agreement. The principal amount of any refinancing Indebtedness Incurred in the same currency as the Indebtedness being refinanced will be the Dollar Equivalent of the Indebtedness refinanced, except to the extent that (i) such Dollar Equivalent was determined based on a Currency Agreement, in which case the refinancing Indebtedness will be determined in accordance with the preceding sentence, and (ii) the principal amount of the refinancing Indebtedness exceeds the principal amount of the Indebtedness being refinanced, in which case the Dollar Equivalent of such excess will be determined on the date such refinancing Indebtedness is Incurred.

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“Permitted Investment” means any of the following:

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

  (ii)             Investments in the Notes;

 (iii)            Indebtedness owing to a Restricted Subsidiary or the Company as described under clause (v) of the definition of “Permitted Indebtedness”;

 (iv)           Temporary Cash Investments;

  (v)            Investments acquired by the Company or any Subsidiary in connection with an Asset Sale permitted under Section 10.13 to the extent such Investments are non-cash consideration as permitted under such covenant;

 (vi)           Investments in existence as of March 10, 2003; and

(vii)          in addition to the Investments described in clauses (i) through (vi) of this definition of “Permitted Investment,” Investments in any Unrestricted Subsidiary or in any joint venture or other entity in an amount not to exceed $500,000 in the aggregate since March 10, 2003.

“Permitted Liens” means:

   (i)             Liens for taxes, assessments, governmental charges or claims that are not yet delinquent or are being contested in good faith by appropriate legal proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made;

  (ii)            statutory and common law Liens of landlords and carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other similar Liens (including maritime Liens) arising in the ordinary course of business and with respect to amounts not yet delinquent or being contested in good faith by appropriate legal proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made;

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 (iii)           Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security;

 (iv)           Liens incurred or deposits made to secure the performance of tenders, bids, leases, statutory or regulatory obligations, bankers’ acceptances, surety and appeal bonds, government contracts, performance and return of money bonds and other obligations of a similar nature incurred in the ordinary course of business (exclusive of obligations for the payment of borrowed money);

 (v)            easements, rights-of-way, municipal and zoning ordinances and similar charges, encumbrances, title defects or other irregularities that do not materially interfere with the ordinary course of business of the Company or any of its Restricted Subsidiaries;

(vi)            Liens (including extensions, renewals and replacements thereof) upon real or personal property, including Capital Stock, acquired after March 10, 2003; provided, that (a) such Lien is created solely for the purpose of securing Indebtedness Incurred in accordance with clause (x) of the definition of “Permitted Indebtedness”;

(vii)           Liens on property of, or on shares of Capital. Stock or Indebtedness of, any Person existing at the time such Person becomes, or becomes a part of, any Restricted Subsidiary; provided that such Liens do not extend to or cover any property or assets of the Company or any Restricted Subsidiary other than the property or assets acquired;

(viii)          Liens in favor of the Company or any Restricted Subsidiary;

 (ix)            Liens securing reimbursement obligations with respect to letters of credit that encumber documents and other property relating to such letters of credit and the products and proceeds thereof;

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

 (xi)            Liens encumbering customary initial deposits and margin deposits, and other Liens that are within the general parameters customary in the industry and incurred in the ordinary course of business, in each case, securing Indebtedness under Interest Rate Agreements and Currency Agreements;

(xii)           Liens arising out of or pursuant to this Indenture, the Notes, the Security Agreement, the First Priority Notes Indenture, the First Priority Notes or the First Priority Notes Security Agreement;

(xiii)          Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business; and

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(xiv)          Liens granted by the Company on or after March 10, 2003 in favor of Hollinger International in and to the Company’s rights under the guarantee by RCL of RMI’s obligations to the Company under the Contribution Agreement and the Support Agreement.

“Permitted Transfer” means an assignment (duly consented to by the Note Guarantors) to (a) the Company or (b) any other existing or new direct or indirect Subsidiary of RCL provided that such entity is (i) formed under the laws of Canada or any province thereof or the United States of America or any state thereof, (ii) has a Consolidated Net Worth at least equal to that of RMI and (iii) has no greater Indebtedness or other liabilities required to be recorded on its balance sheet (as reflected on the most recently available financial statements of such entity) by GAAP or United States Generally Accepted Accounting Principles, as applicable, or contingent obligations than those reflected on RMI’s most recent balance sheet.

“Person” means any individual, corporation, limited liability company, limited or general partnership, joint venture, association, joint stock company, trust, unincorporated. organization or government or any agency or political subdivisions thereof.

“Pledged Agreement” means (i) the fee and other contract rights under the Services Agreement pledged as security for the obligations of RMI under its Guarantee pursuant to the First Priority Notes Security Agreement, the Security Agreement and (ii) the support payment and other contract rights under the Support Agreement pledged as security for the Company’s obligations under the Notes pursuant to the First Priority Notes Security Agreement and the Security Agreement.

“Pledged Share Collateral” means the Class B Shares.

“Predecessor Note” of any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purposes of this definition, any Note authenticated and delivered under Section 3.07 in exchange for a mutilated Note or in lieu of a lost, destroyed or stolen Note shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Note.

“Preferred Stock” means, with respect to any Person, any Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over the Capital Stock of any other class in such Person.

“QIB” means any “qualified institutional buyer” (as defined in Rule 144A).

“Qualified Capital Stock” of any Person means any and all Capital Stock of such Person other than Redeemable Capital Stock.

“Rating Agency” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. and its successors (“S&P”) and Moody’s Investors Service, Inc. and its successors (“Moody’s”) or, if S&P and Moody’s or both shall not make a rating of the Notes publicly available, a nationally recognized United States statistical rating agency or agencies substituted for S&P or Moody’s or both, as the case may be.

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“Rating Category” means each major rating category symbolized by (a) in the case of S&P, AAA, AA, A, BBB, BB, B, CCC, CC and C and each such Rating Category shall include pluses or minuses (“gradations”) modifying such capital letters; and (b) in the case of Moody’s, Aaa, Aa, A, Baa, Ba, B, Caa, Ca and C and each such Rating Category shall include added numerals such as 1, 2 or 3 (“gradations”) modifying such letters.

“RCL” means The Ravelston Corporation Limited, a corporation incorporated under the laws of the Province of Ontario, and any successor Person.

“RCL Repayment Amount” means, for any period, any permanent repayment of the principal amount of Indebtedness owing by RCL to the Company that is received by the Company during such period.

“Redeemable Capital Stock” means any Capital Stock that, either by its terms or by the terms of any security into which it is convertible or otherwise exchangeable, would, upon the happening of an event or passage of time, be required to be redeemed in cash prior to any Stated Maturity of the principal of the Notes. For the avoidance of doubt, “Redeemable Capital Stock” shall not be deemed to include any Capital Stock of the Company that is retractable or redeemable at the option of the holder thereof for cash or Class A Common Stock at any time prior to any such Stated Maturity, or is convertible into or exchangeable for debt securities at any time prior to any such Stated Maturity at the option of the holder thereof, solely for so long as the Company continues to qualify as a “mutual fund corporation” under the Income Tax Act (Canada).

“Redemption Date” when used with respect to any Note to be redeemed pursuant to any provision in this Indenture means the date fixed for such redemption by or pursuant to this Indenture.

“Redemption Price” when used with respect to any Note to be redeemed pursuant to any provision in this Indenture means the price at which it is to be redeemed pursuant to this Indenture.

“Registered Exchange Offer” means an exchange offer by the Company registered under the Securities Act pursuant to which Notes originally issued pursuant to an exemption from registration under the Securities Act are exchanged for Notes of like principal amount not bearing the Private Placement Legend.

“Registration Rights Agreement” means the Registration Rights Agreement, dated September 30, 2004, as amended or supplemented from time to time in accordance with this indenture, among the Company, the Note Guarantors and the Purchasers named therein and any other registration rights agreement between the Company, the Note Guarantors and one or more investment banks acting as initial purchasers in connection with any issuance of Notes under this Indenture.

“Registration Statement” means an effective Exchange Offer Registration Statement or Shelf Registration Statement.

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“Regular Record Date” for the interest payable on any Interest Payment Date relating to a particular Note means the date specified in the Board Resolution or supplemental indenture relating to such Note.

“Resale Restriction Termination Date” means, for any Restricted Note that is an Issue Date Note (or beneficial interest therein), two years (or such other period specified in Rule I44(k) under the Securities Act) from the Issue Date.

“Responsible Officer” when used with respect to the Trustee means any officer assigned to the corporate trust department of the Trustee, including the president, any vice president, any assistant vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, any trust officer or assistant trust officer or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers or any other officer appointed hereunder to whom any corporate trust matter is referred because of his or her knowledge of and familiarity with the particular subject.

“Restricted Investment” means any Investment other than a Permitted Investment.

“Restricted Note” means any Issue Date Note (or beneficial interest therein) not originally issued and sold pursuant to an effective registration statement under the Securities Act until such time as:

(i)           such Issue Date Note (or beneficial interest therein) has been exchanged for a corresponding Exchange Note pursuant to an Exchange Offer Registration Statement or has been transferred pursuant to a Shelf Registration Statement;

(ii)           the Resale Restriction Termination Date therefor has passed;

(iii)           such Note is a Regulation S Global Note and the Distribution Compliance Period therefor has terminated; or

(iv)           the Private Placement Legend therefor has otherwise been removed pursuant to Section 3.06(d), in the case of a beneficial interest in a Global Note, or such beneficial interest has been exchanged for an interest in a Global Note not bearing a Private Placement Legend.

“Restricted Subsidiary” means any Subsidiary other than an Unrestricted Subsidiary.

“RMI” means Ravelston Management Inc., a corporation incorporated under the laws of the Province of Ontario, and any successor Person.

“RMI Guarantee” means the guarantee by RMI of the Indenture Obligations.

“RMI Subordination Agreement” means the subordination agreement attached as Exhibit F to this Indenture whereby the Company and RMI agree that any Indebtedness owed by the Company to RMI under the Support Agreement shall be expressly subordinated in right of payment to the Notes.

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“Rule 144A” means Rule 144A under the Securities Act (or any successor rule);

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

“Security Agreement” means the Security Agreement dated the date hereof (attached as Exhibit G to this Indenture), as the same may be amended, supplemented, waived or otherwise modified from time to time in accordance with the terms thereof, between the Company, RMI, NBI and the Trustee and the Collateral Agent governing (i) the security interest granted by RMI over the Services Agreement in favor of the Collateral Agent, (ii) the pledge granted by the Company and NBI over the Pledged Share Collateral in favor of the Collateral Agent and (iii) the security interest granted by the Company in the Support Agreement in favor of the Collateral Agent.

“Security Documents” means the Security Agreement and the First Priority Intercreditor Agreement and all other agreements, instruments and documents entered into by the Company and the Note Guarantors from time to time for the purpose of creating and perfecting the security interests in favor of the Collateral Agent in the Senior Notes Collateral.

“Senior Notes Collateral” means the Pledged Share Collateral, the Pledged Agreement, any amounts on deposit in the Collateral Account and all other collateral securing the Notes and the Guarantees from time to time as described in the Security Agreement.

“Series II Preferred Shares” means the series of preference shares of the Company designated as Exchangeable Non-Voting Preference Shares Series II.

“Services Agreement” means (1) the Services Agreement, dated as of January 1, 1998, between Hollinger International and RCL, as assigned by RCL to RMI pursuant to the Transfer and Consent Agreement, dated July 5, 2002, and (2) the Amended and Restated Services Agreement, dated as of December 1, 1999, between HCPH (successor in interest to Southam Inc.) and RCL, as assigned by RCL to RMI pursuant to the Transfer and Consent Agreement, dated July 5, 2002, and, in each case, as the same may be amended in accordance with the terms of the First Priority Security Agreement.

“Shelf Registration Statement” shall have the meaning assigned to such term in the Registration Rights Agreement.

“Special Record Date” for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.08.

“Stated Maturity” when used with respect to any Indebtedness or any installment of interest thereon, means the dates specified in such Indebtedness as the fixed dates on which the principal of such Indebtedness or such installment of interest, as the case may be, is due and payable.

“Subordinated Indebtedness” means (i) in the case of any Person other than the Company, Indebtedness of such Person that is expressly subordinate in right of payment to any other Indebtedness of such Person pursuant to a written agreement, and (ii) in the case of the Company, Indebtedness of the Company that is expressly subordinate in right of payment to the Notes.

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“Subordinated Intercompany Loans” means Subordinated Indebtedness of the Company that, in accordance with its terms, is not required to be repaid (including, without limitation, with respect to any principal, premium, redemption amount or interest); and may not be declared due and payable by the lender, at any time prior to the Stated Maturity of the Notes, such that no cash payment is required to be made by the Company in respect of such Indebtedness (including, without limitation, in respect of interest) for so long as any Notes are outstanding.

“Subsidiary” means any Person a majority of the equity ownership of the Voting Stock of which is at the time owned, directly or indirectly, by the Company or by one or more Subsidiaries, or by the Company and one or more other Subsidiaries.

“Sugra” means Sugra Limited, a wholly owned subsidiary of the Company organized under the laws of the Province of Ontario.

“Support Agreement” means the support agreement between RMI and the Company dated March 10, 2003, as amended or supplemented from time to time in accordance with this Indenture.

“Temporary Cash Investments” means (i) any evidence of Indebtedness, maturing not more than one year after the date of acquisition, issued by the United States of America, or an instrumentality or agency thereof, and guaranteed fully as to principal, premium, if any, and interest by the United States of America, (ii) any certificate of deposit, maturing not more than. one year after the date of acquisition, issued by, or time deposit of, the Trustee or a commercial banking institution that is a member of the Federal Reserve System and that has combined capital and surplus and undivided profits of not less than $500,000,000, whose debt has a rating, at the time as of which any investment therein is made, of “P-1” (or higher) according to Moody’s or “A-1” (or higher) according to S&P, (iii) commercial paper, maturing not more than one year after the date of acquisition, issued by a corporation (other than an Affiliate or Restricted Subsidiary of the Company) organized and existing under the laws of the United States of America with a rating, at the time as of which any investment therein is made, of "P-1” (or higher) according to Moody’s or “A-1” (or higher) according to S&P, and (iv) any money market deposit accounts issued or offered by the Trustee or a domestic commercial bank having capital and surplus in excess of $500,000,000.

“Trading Day” means, with respect to a security, each Monday, Tuesday, Wednesday, Thursday and Friday, other than any day on which securities are not generally traded on the exchange or market on which such security is traded.

“Trustee” means the Person named as the “Trustee” in the first paragraph of this Indenture, until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Trustee” shall mean such successor Trustee.

“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended.

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“Unrestricted Subsidiary” means (a) as of the date of this Indenture, Hollinger International and its Subsidiaries and Domgroup Ltd. (excluding NBI, Sugra and 10 Toronto Street Inc.) and (b) any Subsidiary that is designated by the Board of Directors as an Unrestricted Subsidiary after the date of this Indenture pursuant to a Board Resolution in accordance with Section 10.20 of this Indenture; provided, however, that a Person may not be designated as an Unrestricted Subsidiary unless (i) the creditors of such Person have no direct or indirect recourse (including, but not limited to, recourse with respect to the payment of principal or interest on Indebtedness of such Subsidiary) to the Company or a Restricted Subsidiary and (ii) a default by such Person on any of its Indebtedness will not result in, or permit any holder of Indebtedness of the Company or a Restricted. Subsidiary to declare, a default on such Indebtedness of the Company or a Restricted Subsidiary or cause the payment thereof to be accelerated or payable prior to its Stated Maturity. Any subsidiary of an Unrestricted Subsidiary shall be an Unrestricted Subsidiary for purposes of this Indenture (other than, in the case of Domgroup Ltd., NBI, Sugra and 10 Toronto Street Inc.).

“Voting Stock” means stock of the class or classes pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the board of directors, managers or trustees of a corporation (irrespective of whether or not at the time stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

“Wholly Owned Restricted Subsidiary” means a Restricted Subsidiary all the outstanding Capital Stock (other than directors’ qualifying shares) of which is owned by the Company or another Wholly Owned Restricted Subsidiary.

SECTION 1.02. Other Definitions.

Term	Defined in Section
“Act”	1.05
“Additional Amounts”	10.21(b)
“Agent Members”	3.04
“Authorized Agent”	1.17
“Allocated Proceeds”	10.13
“Cash Collateralized Note Amount”	14.04
“Cash Collateralized Notes”	14.04
“Change of Control Offer”	10.14
“Change of Control Purchase Date”	10.14
“Change of Control Purchase Notice”	10.14
“Change of Control Purchase Price”	10.14
“covenant defeasance”	4.03
“Defaulted Interest”	3.08
“defeasance”	4.02
“Defeasance Redemption Date”	4.04
“Defeased Notes”	4.01
“Deficiency”	10.13
“Event of Default”	5.01
“Excess Proceeds”	10.13
“Excluded Holder”	10.21(b)

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“Excluded Taxes”	10.21(b)
“Foreign Private Issuer”	7.04(b)
“Issuance Proceeds”	10.11(f)
“Judgment Currency”	3.06
“Non-U.S. Person”	10.1
“Note Amount”	3.06
“Note Register”	3.03
“Note Registrar”	3.03
“Offer”	10.13
“Offered Price”	10.13
“Pari Passu Debt Amount”	10.13
“Pad Passu Offer”	10.13
“Permitted Payment”	10.09
“Private Placement Legend”	3.05
“Purchase Date”	10.13
“rate of exchange”	1.18
“refinancing”	10.09
“Regulation S Global Note”	2.01(e)
“Relevant Taxing Jurisdiction”	10.21(a)
“Required Filing Dates”	10.17
“Restricted Payments”	10.09
“RP Available Amount”	10.09
“Rule 144A Global Note”	2.01(d)
“Senior Representative”	12.03
“Special Payment Date”	3.08
“Surviving Entity”	8.01
“Taxes”	10.21(a)
“U.S. Government Obligations”	4.04

SECTION 1.03. Compliance Certificates and Opinions. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers’ Certificate to the effect that all conditions precedent, if any, provided for in this Indenture (including any covenant compliance with which constitutes a condition precedent) relating to the proposed action have been complied with and an Opinion of Counsel to the effect that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that, in the case of any such application or request as to which the furnishing of any certificates and/or opinions is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished.

Every certificate or Opinion of Counsel with respect to compliance with a condition or covenant provided for in this Indenture shall include:

(a)           a statement to the effect that each individual or firm signing such certificate or opinion has read and understands such covenant or condition and the definitions herein relating thereto;

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

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

(d)           a statement as to whether, in the opinion of each such individual or such firm, such condition or covenant has been complied with.

SECTION 1.04. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one.  or several documents.

Any certificate or opinion of an Officer of the Company may be based insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any certificate or opinion of such an Officer or of counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an Officer or Officers of the Company with respect to such factual matters and which contains a statement to the effect that the information with respect to such factual matters is in the possession of the Company, unless such Officer or counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. Opinions of Counsel required to be delivered to the Trustee may have qualifications customary for opinions of the type required and counsel delivering such Opinions of Counsel may rely on certificates of the Company or government or other officials customary for opinions of the type required, including certificates certifying as to matters of fact, including that various financial covenants have been complied with.

Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

SECTION 1.05. Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders of any Notes may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any suck agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section.

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(b)           The ownership of Notes shall be proved by the Note Register.

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

(d)           The fact and date of the execution by any Person of any such instrument or  writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate of affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which, the Trustee deems sufficient.

SECTION 1.06. Notices, etc., to Trustee and the Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with:

(a)           the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed, in writing, by first-class mail postage prepaid (return receipt requested) or delivered in person or by recognized overnight courier to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust, or at any other address furnished in writing prior thereto to the Holders and the Company by the Trustee; or

(b)           the Company, RMI or NBI shall be sufficient for every purpose (except as provided in Section 5.01(c)) hereunder if in writing and mailed, first-class postage prepaid, or delivered by recognized overnight courier, to the Company, addressed to it at: 10 Toronto Street, Toronto, Canada M5C 2E7, Attn: Chief Financial Officer, or at any other address previously furnished in writing to the Trustee by the Company, as the case may be.

SECTION 1.07. Notice to Holders; Waiver. Where this Indenture or the Notes provide for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at such Holder’s address as it appears in the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Any notice when mailed to a Holder in the aforesaid manner shall be conclusively deemed to have been received by such holder whether or not actually received by such Holder. Where this Indenture or the Notes provide for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

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In case, by reason of the suspension of regular mail service or by reason of any other cause, it shall be impracticable to mail notice of any event as required by any provision of this Indenture, then any method of giving such notice as shall be reasonably satisfactory to the Trustee or the Company, as applicable, shall be deemed to be a sufficient giving of such notice.

SECTION 1.08. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with any provision of the Trust Indenture Act or another provision which is required or deemed to be included in this Indenture by any of the provisions of the Trust Indenture Act, the provision or requirement of the Trust Indenture Act shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, such provision of the Trust Indenture Act shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be.

SECTION 1.09. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

SECTION 1.10. Successors and Assigns. An covenants and agreements in this Indenture by the Company or any Note Guarantor shall bind its successors and assigns, whether so expressed or not.

SECTION 1.11. Separability Clause. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 1.12. Benefits of Indenture. Nothing in this Indenture or in the Notes, express or implied, shall give to any Person (other than the parties hereto and their successors hereunder, any Paying Agent and the Holders) any benefit or any legal or equitable right, remedy or claim under this Indenture.

SECTION 1.13. GOVERNING LAW. THIS INDENTURE, THE NOTES AND THE GUARANTEES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT OWING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF).

SECTION 1.14. Legal Holidays. In any case where any Interest Payment Date Redemption Date or Stated Maturity of any Note shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Notes) payment of interest or principal or premium, if any, need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at Maturity or the Stated Maturity, and no interest shall accrue with respect to such payment for the period from and after such Interest Payment Date, Redemption Date, Maturity or Stated Maturity, as the case may be, to the next succeeding Business Day.

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SECTION 1.15. Schedules and Exhibits. All schedules and exhibits attached hereto are by this reference made a part hereof with the same effect as if herein set forth in full.

SECTION 1.16. Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument.

SECTION 1.17. Jurisdiction and Service of Process. Any legal action or proceeding with respect to this Indenture or the Notes may be brought in the courts of the State of New York or the federal courts of the United States located in The City of New York, and each of the Company and the Note Guarantors consents to the jurisdiction of such courts. Each of the Company and the Note Guarantors irrevocably waives any objection, including any objection to the laying of venue or based on forum non conveniens, which it may have to the bringing of any action or proceeding in such jurisdiction with respect to this Indenture, the Notes, the Security Agreement or any other document related thereto. Notwithstanding the foregoing, (1) the Trustee and/or the Collateral Agent shall have the right to bring any action or proceeding against the Company, the Note Guarantors and their property in the courts of any other jurisdiction the Trustee and/or the Collateral Agent deem necessary or appropriate in order to enforce the obligations of the Company and the Note Guarantors or to realize upon the Senior Notes Collateral or other security for those obligations and (2) each of the Company and the Note Guarantors acknowledges that any appeals from the courts described in the preceding sentence. may have to be heard by a court located outside those jurisdictions.

Each party agrees that any service of process or other legal summons in connection with any proceeding maybe served on it by mailing a copy thereof by registered mail, or a form of mail substantially equivalent thereto, postage prepaid, addressed to the served party at its address as provided for in Section 1.06 hereof. Nothing in this Section shall affect the right of the parties to serve process in any other manner permitted by law. Each of the Company and the Note Guarantors has appointed Corporation Service Company as authorized agent in New York City (the “Authorized Agent,” which term, as used herein, includes any successor in such capacity), the identity of which agent may be changed by the Company from time to time by a writing delivered to the Trustee, upon whom process may be served in any such action, suit or proceeding arising out of or relating to this Indenture or any of the transactions contemplated hereby which maybe instituted in any federal or state court in the State of New York by the Trustee or by any person who controls the Trustee.

To the extent allowed by any applicable requirement of law, each of the Company and the Note Guarantors waives personal service of any and all process upon it and consents that all such service of process may be made by registered mail (return receipt requested) directed to such party at its address set forth in this Indenture and service so made shall be deemed to be completed five days after the same shall have been so posted in the United States (or Canada, as applicable), postage prepaid. Nothing contained in this Section 1.17 shall affect the right of the Trustee and/or the Collateral Agent to serve legal process by any other manner permitted by law.

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SECTION 1.18. Judgment Currency. If for the purpose of obtaining judgment in any court or for the purpose of determining, pursuant to the obligations of the Company or any Note Guarantor, the amounts owing hereunder, it is necessary to convert an amount due hereunder in U.S. dollars into a currency other than U.S. dollars (the “Judgment Currency”), the rate of exchange applied shall be that at which, in accordance with normal banking procedures, the Trustee or Collateral Agent could purchase, in the New York foreign exchange market, U.S. dollars with the Judgment Currency on the date that is two Business Days preceding that on which judgment is given or any other payment is due hereunder. Each of the Company and the Note Guarantors agrees that its respective obligation in respect of any U.S. dollars due from it to the Holders hereunder shall, notwithstanding any judgment or payment in the Judgment Currency, be discharged only to the extent that, on the Business Day following the date the Trustee or Collateral Agent receives payment of any sum so adjudged or owing to be due hereunder in the Judgment Currency, the Trustee or Collateral Agent may, in accordance with normal banking procedures, purchase, in the New York foreign exchange market U.S. dollars with the amount of the Judgment Currency so paid; and if the amount of U.S. dollars so purchased, or which could have been so purchased, is less than the amount originally due in U.S. dollars, each of the Company and the Note Guarantors agrees as a separate obligation and notwithstanding any such payment or judgment to indemnify the Trustee or Collateral Agent against such loss. The term “rate of exchange” in this Section 1.18 means the spot rate at which the Trustee or Collateral Agent, in accordance with normal banking practices is able on the relevant date to purchase U.S. dollars with the Judgment Currency and includes any premium and costs of exchange payable in connection with such purchase.

No provision of this Indenture, individually or collectively, shall have the effect of requiring the Company to pay interest (as such term is defined in section 347 of the Criminal Code of Canada) at a rate in excess of 60% per annum, taking into account all other amounts which must be taken into account for the purpose thereof and, to such extent, the Company’s obligation to pay interest hereunder shall be so limited.

ARTICLE II

Form of Note

SECTION 2.01. Form Generally. (a) The Notes will be issued in registered form without coupons, and in denominations of $1,000 and any integral multiple thereof.

(b)           The terms and provisions of the Notes, the form of which is in Exhibit A hereto, shall constitute, and are hereby expressly made, a part of this Indenture, and, to the extent applicable, the Company, the Note Guarantors and the Trustee, by their execution and delivery of this Indenture expressly agree to such terms and provisions and to be bound thereby. Except as otherwise expressly permitted in this Indenture, all Notes shall be identical in all respects.  Notwithstanding any differences among them, all Notes issued under this Indenture shall vote and consent together on all matters as one class.

(c)           The Notes may have notations, legends or endorsements as specified in Section 3.05 or as otherwise required by law, stock exchange rule or DTC rule or usage. The Company and the Trustee shall approve the form of the Notes and any notation, legend or endorsement on them. Each Note shall be dated the date of its authentication.

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(d)           Notes originally offered and sold to QIBs in reliance on Rule 144A will be issued in the form of one or more permanent Global Notes (each, a “Rule 144A Global Note”).

(e)           Notes originally offered and sold outside the United States of America will be issued in the form of one or more permanent Global Notes (each, a “Regulation S Global Note”).

SECTION 2.02. Form of Trustee’s Certificate of Authentication. The Trustee’s certificate of authentication shall be included on the form of the face of the Notes substantially in the following form:

TRUSTEE’S CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
	HSBC Bank USA, National Association, as Trustee
	By ____________________________________
	Authorized Signatory

SECTION 2.03. Form of Guarantees. (a) The form of Guarantee of RMI shall be set forth on the Notes substantially as follows:

GUARANTEE OF RAVELSTON MANAGEMENT INC.

For value received, RAVELSTON MANAGEMENT INC., a corporation incorporated under the laws of the Province of Ontario, hereby absolutely, unconditionally and irrevocably guarantees to the Holder of this Note and the Trustee, as if Ravelston Management Inc. were the principal debtor, the punctual payment, on demand, of principal of, premium, if any, and interest on this Note in the amounts and at the time when due and interest on the overdue principal and interest, if any, of this Note, if lawful, and the payment or performance of all other obligations of the Company under the Indenture or the Notes, to the Holder of this Note and the Trustee, all in accordance with and subject to the terms and limitations of this Note and Article Thirteen of the Indenture. This Guarantee will not become effective until the Trustee duly executes the certificate of authentication on this Note.

RAVELSTON MANAGEMENT INC.

Attest:	By
		Authorized Signatory

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(b)           The form of Guarantee of NBI shall be set forth on the Notes substantially as follows:

GUARANTEE OF 504468 N.B. INC.

For value received, 504468 N.B. INC., a company organized under the laws of the Province of New Brunswick, hereby absolutely, unconditionally and irrevocably guarantees to the Holder of this Note and the Trustee, as if 504468 N.B. Inc. were the principal debtor, the punctual payment, on demand, of principal of, premium, if any, and interest on this Note in the amounts and at the time when due and interest on the overdue principal and interest, if any, of this Note, if lawful, and the payment or performance of all other obligations of the Company under the Indenture or the Notes, to the Holder of this Note and the Trustee, all in accordance with and subject to the terms and limitations of this Note and Article Thirteen of the Indenture. This Guarantee will not become effective until the Trustee duly executes the certificate of authentication on this Note

	504468 N.B. INC.
Attest:	By
		Authorized Signatory

ARTICLE III

The Notes

SECTION 3.01. Execution Authentication, Delivery and Dating.  (a) The Notes shall be executed on behalf of the Company by one of its Chairman of the Board, Vice-Chairman, President or one of its Vice Presidents attested by its Secretary, one of its Assistant Secretaries or a duly appointed attorney-in-fact. The signature of any of these officers on the Notes may be manual or facsimile.

(b)           Notes bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices on the date of such Notes.

(c)           At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Notes, and the Trustee in accordance with such Company Order shall authenticate and deliver such Notes as provided in this Indenture and not otherwise.  The aggregate principal amount of Notes that may be authenticated and delivered under this Indenture on the Issue Date is limited to $15,000,000.  The aggregate principal amount of Exchange Notes that may be authenticated and delivered under this Indenture is limited to an amount equal to the aggregate principal amounts outstanding under both the Notes and the First Priority Notes as of the date the Exchange Notes are first issued.

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(d)           Each Note shall be dated the date of its authentication.

(e)           No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Note a certificate of authentication substantially in the form provided for herein duly executed by the Trustee by manual signature of an authorized signatory, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture.

(f)           In case the Company, pursuant to Article VIII, shall be consolidated or merged with or into any other Person or shall sell, convey, assign, transfer, lease or otherwise dispose of substantially all of its properties and assets to any Person, and the successor Person resulting from such consolidation, or surviving such merger, or into which the Company shall have been merged or consolidated, or the successor Person which shall have received a conveyance, transfer, lease or other disposition as aforesaid, shall have executed an indenture supplemental hereto with the Trustee pursuant to Article VIII, any of the Notes authenticated or delivered prior to such consolidation, merger, conveyance, transfer, lease or other disposition may, from time to time, at the request of the successor Person, be exchanged for other Notes executed in the name of the successor Person with such changes in phraseology and form as may be appropriate, but otherwise in substance of like tenor as the Notes surrendered for such exchange and of like principal amount; and the Trustee, upon a Company Request of the successor Person, shall authenticate and deliver Notes as specified in such order for the purpose of such exchange. If Notes shall at any time be authenticated and delivered in any new name of a successor Person pursuant to this Section in exchange or substitution for or upon registration of transfer of any Notes, such successor Person, at the option of a Holder but without expense to such Holder, shall provide for the exchange of all Notes at the time Outstanding held by such Holder for Notes authenticated and delivered in such new name.

(g)           The Trustee may appoint an authenticating agent reasonably acceptable to the Company to authenticate Notes on behalf of the Trustee. Unless limited by the terms of such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as any Note Registrar or Paying Agent to deal with the Company and its Affiliates.

SECTION 3.02. Temporary Notes. Pending the preparation of definitive Notes, the Company may execute, and upon a Company Order the Trustee shall authenticate and deliver, temporary Notes which are printed, lithographed, typewritten or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Notes in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Notes may determine, as conclusively evidenced by their execution of such Notes.

If temporary Notes are issued, the Company will cause definitive Notes to be prepared without unreasonable delay.  After the preparation of definitive Notes, the temporary Notes shall be exchangeable for definitive Notes upon surrender of the temporary Notes at the office or agency of the Company designated for such purpose pursuant to Section 10.02 (or in accordance with Section 3.01, in the case of the initial Notes), without charge to the Holders thereof. Upon surrender for cancellation of any one or more temporary Notes, the Company shall execute and upon a Company Order the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Notes of authorized denominations. Until so exchanged the temporary Notes shall in all respects be entitled to the same benefits under this Indenture as definitive Notes.

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SECTION 3.03. Registration, Registration of Transfer and Exchange. The Company shall cause to be kept at the Corporate Trust Office of the Trustee, or such other office as the Trustee may designate, a register (the register maintained in such office and in any other office or agency designated pursuant to Section 10.02 being herein sometimes referred to as the “Note Register”) in which, subject to such reasonable regulations as the Note Registrar may prescribe, the Company shall provide for the registration of Notes and of transfers and exchanges of Notes. The Trustee shall initially be the “Note Registrar” for the purpose of registering Notes and transfers and exchanges of Notes as herein provided. The Company may appoint one or more co-registrars, but there shall be only one Note Register.

Upon surrender for registration of transfer of any Note at the office or agency of the Company designated pursuant to Section 10.02, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denomination or denominations, of a like aggregate principal amount.

At the option of the Holder, Notes may be exchanged for other Notes of any authorized denomination or denominations, of a like aggregate principal amount, upon surrender of the Notes to be exchanged at such office or agency. Whenever any Notes are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Notes which the Holder making the exchange is entitled to receive.

All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Company, evidencing the same Indebtedness, and entitled to the same benefits under this Indenture, as the Notes surrendered upon such registration of transfer or exchange.

Every Note presented or surrendered for registration of transfer, or for exchange or redemption, shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company, the Trustee and the Note Registrar, duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing.

No service charge shall be made to a Holder for any registration of transfer, exchange or redemption of Notes, but the Company may require payment of a sum sufficient to pay any tax or other governmental charges that may be imposed in connection with any registration of transfer, exchange or redemption of Notes (other than any such governmental charges payable upon exchange or transfer pursuant to a Registered Exchange Offer or pursuant to Section 3.01, 302, 3.07, 9.06, 10.14, 10.15 or 11.08 not involving any transfer).

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The Company shall not be required (a) to issue, register the transfer of or exchange any Note during a period beginning at the opening of business 15 days before the mailing of a notice of redemption of the Notes selected for redemption under Section 11.04 and ending at the close of business on the day of such Mailing, or (b) to register the transfer of or exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of Notes being redeemed in part.

None of the Company, the Trustee, any agent of the Trustee, any Paying Agent or the Note Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a Global Note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

SECTION 3.04. Global Note Provisions. (a) Each Global Note initially shall: (i) be registered in the name of DTC or the nominee of DTC, (ii) be delivered to the Note Custodian, and (iii) bear the appropriate legend, as set forth in Section 3.05 and Exhibit A. Any Global Note may be represented by more than one certificate. The aggregate principal amount of each Global Note may from time to time be increased or decreased by adjustments made on the records of the Note Custodian, as provided in this Indenture.

(b)           Members of, or participants in, DTC (“Agent Members”) shall have no rights under this Indenture with respect to any Global Note held on their behalf by DTC or by the Note Custodian under such Global Note, and DTC may be treated by the Company, the Trustee, the Paying Agent and the Note Registrar and any of their agents as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee, the Paying Agent or the Note Registrar or any of their agents from giving effect to any written certification, proxy or other authorization furnished by DTC or impair, as between DTC and its Agent Members, the operation of customary practices of DTC governing the exercise of the rights of an owner of a beneficial interest in any Global Note. The registered Holder of a Global Note may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action that a Holder is entitled to take under this Indenture or the Notes.

(c)           Except as provided below, owners of beneficial interests in Global Notes will not be entitled to receive Certificated Notes. Certificated Notes shall be issued to all owners of beneficial interests in a Global Note in exchange for such interests if:

(i)           DTC notifies the Company that it is unwilling or unable to continue as

depositary for such Global Note or DTC ceases to be a clearing agency registered under the Exchange Act, at a time when DTC is required to be so registered in order to act as depositary, and in each case a successor depositary is not appointed by the Company within 90 days of such notice,

(ii)           the Company executes and delivers to the Trustee and Note Registrar an Officers, Certificate stating that such Global Note shall be so exchangeable, or

(iii)           an Event of Default has occurred and is continuing and the Note Registrar has received a request from DTC.

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In connection with the exchange of an entire Global Note for Certificated Notes pursuant to this paragraph (c), such Global Note shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, and upon Company Order the Trustee shall authenticate and deliver, to each beneficial owner identified by DTC in exchange for its beneficial interest in such Global Note, an equal aggregate principal amount of Certificated Notes of authorized denominations.

(d)           In connection with the exchange of a portion of a Certificated Note for a beneficial interest in a Global Note, the Trustee shall cancel such Certificated Note, and the Company shall execute, and the Trustee shall authenticate and deliver to the exchanging Holder, a new Certificated Note representing the principal amount not so exchanged unless such principal amount is to be exchanged for a beneficial interest in a Global Note pursuant to Section 3.06(d).

SECTION 3.05. Legends. (a) Each Global Note shall bear the legend specified therefor in Exhibit A on the face thereof.

(b)           Each Restricted Note shall bear the private placement legend specified therefor in Exhibit A on the face thereof (“Private Placement Legend”).

SECTION 3.06. Special Transfer Provisions. (a) The following provisions shall apply with respect to any proposed transfer of an interest in a Rule 144A Global Note that is a Restricted Note: If (1) the owner of a beneficial interest in a Rule 144A Global Note wishes to transfer such interest (or portion thereof) to a non-U.S. person (“Non-U.S. Person”) pursuant to Regulation S and (2) such Non-U.S. Person wishes to hold its interest in the Notes through a beneficial interest in the Regulation S Global Note,

(i)           upon receipt by the Note Custodian and Note Registrar of:

(A)           instructions from the Holder of the Rule 144A Global Note directing the Note Custodian and Note Registrar to credit or cause to be credited a beneficial interest in the Regulation S Global Note equal to the principal amount of the beneficial interest in the Rule 144A Global Note to be transferred, and

(B)           a certificate in the form of Exhibit C from the transferor, and

(ii)           subject to the rules and procedures of DTC, the Note Custodian and Note Registrar shall increase the Regulation S Global Note and decrease the Rule 144A Global Note by such amount in accordance with the foregoing.

(b)           If the owner of an interest in a Regulation S Global Note wishes to transfer such interest (or any portion thereof) to a QIB pursuant to Rule 144A prior to the expiration of the Distribution Compliance Period therefor,

(i)           upon receipt by the Note Custodian and Note Registrar of:

(A)           instructions from the Holder of the Regulation S Global Note directing the Note Custodian and Note Registrar to credit or cause to be credited a beneficial interest in the Rule 144A Global Note equal to the principal amount of the beneficial interest in the Regulation S Global Note to be transferred, and

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(B)           a certificate in the form of Exhibit B duly executed by the  transferor, and

(ii)           in accordance with the rules and procedures of DTC, the Note Custodian and Note Registrar shall increase the Rule 144A Global Note and decrease the Regulation S Global Note by such amount in accordance with the foregoing.

(c)           Other Transfers. Any transfer of Restricted Notes not described above (other than a transfer of a beneficial interest in a Global Note that does not involve an exchange of such interest for a Certificated Note or a beneficial interest in another Global Note, which must be effected in accordance with applicable law and the rules and procedures of DTC, but is not subject to any procedure required by this Indenture) shall be made only upon receipt by the Note Registrar of such opinions of counsel, certificates and/or other information reasonably required by and satisfactory to it in order to ensure compliance with the Securities Act or in accordance with Section 3.06(d).

(d)           Use and Removal of Private Placement Legends. Upon the transfer, exchange or replacement of Notes (or beneficial interests in a Global Note) not bearing (or not required to bear upon such transfer, exchange or replacement) a Private Placement Legend, the Note Custodian and Note Registrar shall exchange such Notes (or beneficial interests) for beneficial interests in a Global Note (or Certificated Notes if they have been issued pursuant to Section 3.04(c)) that does not bear a Private Placement Legend. Upon the transfer, exchange or replacement of Notes (or beneficial interests in a Global Note) bearing a Private Placement Legend, the Note Custodian and Note Registrar shall deliver only Notes (or beneficial interests in a Global Note) that bear a Private Placement Legend unless:

(i)           such Notes (or beneficial interests) are exchanged in a Registered Exchange Offer;

(ii)           such Notes (or beneficial interests) are transferred pursuant to a Shelf Registration Statement;

(iii)           such Notes (or beneficial interests) are transferred pursuant to Rule 144 under the Securities Act upon delivery to the Note Registrar of a certificate of the transferor in the form of Exhibit D and an Opinion of Counsel reasonably satisfactory to the Note Registrar;

(iv)           such Notes (or beneficial interests) are transferred, replaced or exchanged after the Resale Restriction Termination Date therefor; or

(v)           in connection with such transfer, exchange or replacement the Note Registrar shall have received an Opinion of Counsel and other evidence reasonably satisfactory to it and the Company to the effect that neither such Private Placement Legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act.

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The Private Placement Legend on any Note shall be removed at the request of the Holder on or after the Resale Restriction Termination Date therefor. The Holder of a Global Note may exchange an interest therein for an equivalent interest in a Global Note not bearing a Private Placement Legend (other than a Regulation S Global Note) upon transfer of such interest pursuant to any of clauses (i) through (v) of this paragraph (d). The Company shall deliver to the Trustee an Officers’ Certificate promptly upon effectiveness, withdrawal or suspension of any Registration Statement.

(e)           Consolidation of Global Notes and Exchange of Certificated Notes for Beneficial Interests in Global Notes. If a Global Note not bearing a Private Placement Legend (other than a Regulation S Global Note) is Outstanding at the time of a Registered Exchange Offer, any interests in a Global Note exchanged in such Registered Exchange Offer shall be exchanged for interests in such Outstanding Global Note.

(f)           Retention of Documents. The Note Registrar shall retain copies of all letters, notices and other written communications received pursuant to this Article III. The Company shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Note Registrar.

(g)           Execution, Authentication of Notes, etc. Subject to the other provisions of this Section, when Notes are presented to the Note Registrar with a request to register the transfer of such Notes or to exchange such Notes for an equal principal amount of Notes of other authorized denominations, the Note Registrar shall register the transfer or make the exchange as requested if its requirements for such transaction are met; provided that any Notes presented or surrendered for registration of transfer or exchange shall be duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Note Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing. To permit registrations of transfers and  exchanges and subject to the other terms and conditions of this Article III, the Company will execute and upon Company Order, the Trustee will authenticate Certificated Notes and Global Notes at the Note Registrar’s request. In accordance with the Registration Rights Agreement, upon the effectiveness of any Exchange Offer Registration Statement, the Company will execute and upon Company Order, the Trustee will authenticate Exchange Notes in exchange for Issue Date Notes.

(h)           No Obligation of the Trustee.

(i)           The Trustee shall have no responsibility or obligation to any beneficial owner of an interest in a Global Note, a member of, or a participant in, DTC or other Person with respect to the accuracy of the records of DTC or its nominee or of any participant or member thereof, with respect to any ownership interest in the Notes or with respect to the delivery to any participant, member, beneficial owner or other Person (other than DTC) of any notice (including any notice of redemption) or the payment of any amount or delivery of any Notes (or other security or property) under or with respect to such Notes. All notices and communications to be given to the Holders and all payments to be made to Holders in respect of the Notes shall be given or made only to or upon the order of the registered Holders (which shall be DTC or its nominee in the case of a Global Note). The rights of beneficial owners in any Global Note shall be exercised only through DTC subject to the applicable rules and procedures of DTC. The Trustee may rely and shall be fully protected in relying upon information furnished by DTC with respect to its members, participants and any beneficial owners.

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

SECTION 3.07. Mutilated, Destroyed, Lost or Stolen Notes. If (a) any mutilated Note is surrendered to the Trustee, or (b) the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note, and there is delivered to the Company or the Trustee, such security and/or indemnity, in each case as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Note has been acquired by a bona fide purchaser, the Company shall execute and upon receipt of a Company Order the Trustee shall authenticate and deliver, in exchange for any such mutilated Note or in lieu of any such destroyed, lost or stolen Note, a replacement Note of like tenor and principal amount, bearing a number not contemporaneously outstanding.

In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Company in its discretion may, instead of issuing a replacement Note, pay such Note.

Upon the issuance of any replacement Notes under this Section, the Company may require the payment of a sum sufficient to pay all documentary, stamp or similar issue or transfer taxes or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee and its agents and counsel) connected therewith.

Every replacement Note issued pursuant to this Section in lieu of any destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder.

The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.

SECTION 3.08. Payment of Interest; Interest Rights Preserved. Interest on any Note which is payable, and is punctually paid or duly provided for, on the Stated Maturity of such interest shall be paid to the Person in whose name that Note is registered at the close of business on the Regular Record Date for such interest payment.

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Any interest on any Note which is payable, but is not paid or duly provided for on the Stated Maturity of such interest (or within 15 days after the Stated Maturity of such interest) and interest on such defaulted interest at the then applicable interest rate borne by the Notes, to the extent lawful (such defaulted interest and interest thereon herein collectively called “Defaulted Interest”), shall forthwith cease to be payable to the Holder in whose name such Note is registered as of the Regular Record Date; and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Subsection (a) or (b) below:

(a)           the Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Notes are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner.

The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Note and the date of the proposed payment (the “Special Payment Date”), and at the same time the Company shall irrevocably deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the Special Payment Date, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Subsection provided.  Such notice shall be received by the Trustee no less than 30 days prior to the Special Payment Date. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which Special Record Date shall be not more than 15 days and not less than 10 days prior to the Special Payment Date and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company in writing of such Special Record Date.  In the name and at the expense of the Company, the Trustee shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date and Special Payment Date therefor to be mailed, certified or registered (return receipt requested) first-class postage prepaid, to each Holder at his address as it appears in the Note Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Notes are registered  on such Special Record Date and shall no longer be payable pursuant to the following Subsection (b).

(b)           the Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, unless, after written notice given by the Company to the Trustee of the proposed payment pursuant to this Subsection, such manner of payment shall not be deemed practicable by the Trustee (acting reasonably). The Trustee shall give prompt written notice to the Company of any such determination.

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

SECTION 3.09. Persons Deemed Owners.  Prior to due presentment of a Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name any Note is registered on the Note Register as the owner of such Note for the purpose of receiving payment of principal of, premium, if any, and (subject to Section 3.08) interest on such Note and for all other purposes whatsoever, whether or not such Note is overdue, and none of the Company, the Trustee or any agent of the Company or the Trustee shall be affected by notice to the contrary.

None of the Company, the Trustee, any Paying Agent or the Note Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a Global Note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

SECTION 3.10. Cancellation.  All Notes surrendered for payment, purchase, redemption, registration of transfer or exchange shall be delivered to the Trustee and, if not already canceled, shall be promptly canceled by it. The Company or any Restricted Subsidiary may at any time deliver to the Trustee for cancellation any Notes previously authenticated and delivered hereunder which the Company or any such Restricted Subsidiary may have acquired in any manner whatsoever, and all Notes so delivered shall upon receipt of a Company Order be promptly canceled by the Trustee. No Notes shall be authenticated in lieu of or in exchange for any Notes canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled securities held by the Trustee shall, unless by a Company Order received by the Trustee prior to such destruction the Company shall direct that the canceled Notes be returned to it, be destroyed in accordance with its customary procedures and certification of their destruction delivered to the Company. The Trustee shall provide the Company a list of all Notes that have been canceled from time to time as requested by the Company.

SECTION 3.11. Computation of Interest.  Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months. Whenever interest to be paid hereunder is to be calculated on the basis of a year of three hundred and sixty (360) days, the yearly rate of interest to which the rate determined pursuant to such calculation is equivalent is the rate so determined multiplied by the actual number of days in the calendar year in which the same is to be ascertained and divided by three hundred and sixty (360). The foregoing is disclosed herein solely for the purpose of providing the disclosure required under the Interest Act (Canada).

SECTION 3.12. Additional Interest Under Registration Rights Agreement. Under certain circumstances, the Company may be obligated to pay additional interest to Holders, all as and to the extent set forth in the Registration Rights Agreement applicable to the Notes. The terms thereof are hereby incorporated herein by reference and such additional interest is deemed to be interest for purposes of this Indenture.

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ARTICLE IV

Defeasance and Covenant Defeasance

SECTION 4.01. Company’s Option to Effect Defeasance or Covenant  Defeasance. The Company may, at its option by Board Resolution, at any time, with respect to any Notes, elect to have either Section 4.02 or Section 4.03 be applied to all of the Outstanding Notes (the “Defeased Notes”), this Indenture and the Security Agreement, upon compliance with the conditions set forth below in this Article IV.

SECTION 4.02. Defeasance and Discharge. Upon the Company’s exercise under Section 4.01 of the option applicable to this Section, the Company shall be deemed to have been discharged from its obligations with respect to the Defeased Notes on the date the conditions set forth below are satisfied (hereinafter, “defeasance”) and each Note Guarantor shall be deemed to be discharged from its obligations with respect to its Guarantee relating to the Defeased Notes. For this purpose, such defeasance means that the Company and any Note Guarantor shall be deemed to have paid and discharged the entire indebtedness represented by the Defeased Notes, which shall thereafter be deemed to be “Outstanding” only for the purposes of Section 4.05 and the other Sections of this Indenture referred to in clauses (a) and (b) below, and to have satisfied all its other obligations under such Notes and this Indenture insofar as such Notes are concerned (and the Trustee, at the expense of the Company and upon written request, shall execute proper instruments acknowledging the same), except for the following which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of Defeased Notes to receive, solely from the trust fund described in Section 4.04 and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, and interest on such Notes when such payments are due, (b) the Company’s obligations with respect to such Defeased Notes under Sections 3.02, 3.03, 3.07, 10.02 and 10.03, (c) the rights, powers, trusts, duties, indemnities and immunities of the Trustee hereunder, and (d) this Article IV. Subject to compliance with this Article IV, the Company may exercise its option under this Section notwithstanding the prior exercise of its option under Section 4.03 with respect to the Notes.

SECTION 4.03. Covenant Defeasance. Upon the Company’s exercise under Section 4.01 of the option applicable to this Section, the Company shall be released from its obligations under any covenant or provision contained in Sections 10.05 through 10.18, inclusive, with respect to the Defeased Notes on and after the date the conditions set forth below are satisfied (hereinafter, “covenant defeasance”), and the Defeased Notes shall thereafter be deemed to be not “Outstanding” for the purposes of any direction, waiver, consent or declaration or Act of Holders (and the consequences of any thereof) in connection with such covenants and provisions, but shall continue to be deemed “Outstanding” for all other purposes. hereunder. For this purpose, such covenant defeasance means that, with respect to the Defeased Notes, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such Section or Article, whether directly or indirectly, by reason of any reference elsewhere herein or in such Defeased Notes to any such Section or Article or by reason of any reference in any such Section or Article to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 5.01(c), (d) or (f) but, except as specified above, the remainder of this Indenture and such Defeased Notes shall be unaffected thereby.

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SECTION 4.04. Conditions to Defeasance or Covenant Defeasance. The following shall be the conditions to application of either Section 4.02 or Section 4.03 to the Defeased Notes:

(1)           The Company shall irrevocably have deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of Notes, (a) United States dollars, (b) U.S. Government Obligations (which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, sufficient money), or (c) a combination thereof, in such amounts as will be sufficient, as reflected in the written report of a nationally recognized firm of independent public accountants or a nationally recognized investment banking firm delivered to the Trustee, to pay and discharge (and which shall be applied by the Trustee to pay and discharge) the principal of, premium, if any, and interest on, the Defeased Notes on (x) the Stated Maturity thereof or (y) any date selected by the Company on which the Defeased Notes may be redeemed in whole at the option of the Company (such date being referred to as the “Defeasance Redemption Date”), if (in the case of clause (y)) when electing either defeasance or covenant defeasance, the Company has delivered to the Trustee an irrevocable notice to redeem all of the outstanding Notes on the Defeasance Redemption Date; provided that the Trustee (or such qualifying trustee) shall have been irrevocably instructed to apply such United States dollars or the proceeds of such U.S. Government obligations to said payments with respect to the Notes. For this purpose, “U.S.Government Obligations” means securities that are (i) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such U.S. Government Obligation or a specific payment of principal of or interest on any such U.S. Government Obligation held by such custodian for the account of the holder of such depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of principal of or interest on the U.S. Government Obligation evidenced by such depository receipt.

(2)           In the case of an election under Section 4.02, the Company shall have delivered to the Trustee an opinion of Independent Counsel in the United States to the effect that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since March 10, 2003, there has been a change in the applicable Federal income tax law, in either case to the effect that the Holders of the Outstanding Notes will not recognize income, gain or loss for Federal income tax purposes as a result of such defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred.

(3)           In the case of an election under Section 4.03, the Company shall have delivered to the Trustee an opinion of Independent Counsel in the United States to the effect that the Holders of the Outstanding Notes will not recognize income, gain or loss for Federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred.

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(4)           In the case of an election under Section 4.02 and Section 4.03, the Company shall have delivered to the Trustee an opinion of Canadian counsel stating that the Company has received from, or there has been published by, the Canada Customs and Revenue Agency a ruling, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for Canadian federal, provincial or territorial income tax or other tax purposes as a result of such deposit and defeasance and will be subject to Canadian federal, provincial or territorial income tax or other tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred (and for the purposes of such opinion, such Canadian counsel shall assume that Holders include Holders who are not resident in Canada).

(5)           No Default or Event of Default shall have occurred and be continuing on the date of such deposit or insofar as Sections 5.01(g) and 5.01(h) are concerned, at any time during the period ending on the 121st day after the date of deposit.

(6)           Any election under Section 4.02 or Section 4.03 shall not cause the Trustee to have a conflicting interest with respect to any securities of the Company.

(7)           Any election under Section 4.02 or Section 4.03 shall not result in a breach or violation of, or constitute a Default under, this Indenture or a breach or violation of any provision of any agreement relating to any Indebtedness.

(8)           The Company shall have delivered to the Trustee an Opinion of Independent Counsel in the United States to the effect that after the 121st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally.

(9)           The Company shall have delivered to the Trustee an Officers’ Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over the other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding creditors of the Company.

(10)           No event or condition shall exist that would prevent the Company from making payments of the principal of, premium, if any, and interest on the Notes on the date of such deposit or at any time ending on the 121st day after the date of such deposit.

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(11)           The Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Independent Counsel, each to the effect that all conditions precedent provided for relating to either the defeasance under Section 4.02 or the covenant defeasance under Section 4.03 (as the case may be) have been complied with as contemplated by this Section.

Opinions of Counsel required to be delivered under this Section may have qualifications customary for opinions of the type required and counsel delivering such Opinions of Counsel may rely on certificates of the Company or government or other officials customary for opinions of the type required, which certificates shall be limited to matters of fact, including that various financial covenants have been complied with.

SECTION 4.05.  Deposited Money and U.S. Government Obligations to be Held in Trust; Other Miscellaneous Provisions. Subject to the provisions of the last paragraph of Section 10.03, all United States dollars and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee pursuant to Section 4.04 in respect of the Defeased Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law.

The Company shall fully pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 4.04 or the principal and interest received in respect thereof, other than any such tax, fee or other charge which by law is for the account of the Holders of the Defeased Notes.

Anything in this Article IV to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon a Company Request any United States dollars or U.S. Government Obligations held by it as provided in Section 4.04 which, in the opinion of a nationally recognized firm of independent public accountants or nationally recognized investment banking firm expressed in a written report delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect defeasance or covenant defeasance. In the event of an error in any calculation resulting in a withdrawal hereunder, the Company shall deposit an amount equal to the amount erroneously withdrawn as promptly as practicable after becoming aware of such error.

SECTION 4.06.  Reinstatement. If the Trustee or Paying Agent is unable to apply any United States dollars or U.S. Government Obligations in accordance with Section 4.02 or 4.03, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 4.02 or 4.03, as the case may be, until such time as the Trustee or Paying Agent is permitted to apply all such United States dollars or U.S. Government Obligations in accordance with Section 4.02 or 4.03, as the case may be; provided, however, that (a) if the Company makes any payment to the Trustee or Paying Agent of principal, premium, if any, or interest on any Note following the reinstatement of its obligations, the Trustee or Paying Agent shall promptly pay any such amount to the Holders of the Notes and the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the United States dollars and U.S. Government Obligations held by the Trustee or Paying Agent and (b) the Trustee or Paying Agent shall return all such United States dollars and U.S. Government Obligations to the Company promptly after receiving a Company Request therefor at any time, if the Trustee or Paying Agent receives written notice from the Company that such reinstatement of the Company’s obligations has occurred and continues to be in effect at such time.

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ARTICLE V

Remedies

SECTION 5.01. Events of Default.  “Event of Default”, wherever used herein, means with respect to any Notes any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(a)           there shall be a default in the payment of any interest on any Note when it becomes due and payable, and such default shall continue for a period of 30 days;

(b)           there shall be a default in the payment of the principal of (or premium, if any, on) any Note when and as the same shall become due and payable at its Maturity (upon acceleration, optional or mandatory redemption, required repurchase or otherwise);

(c)           (i) there shall be a default in the performance, or breach, of any covenant or agreement of the Company under this Indenture (other than a default in the performance, or breach, of a covenant or agreement which is specifically dealt with in Section 5.01(a) or (b), in clauses (ii) or (iii) of this Section 5.01(c) or Section 5.17 (other than, solely with respect to Section 5.17, a default in making any payment required thereby)), and such default or breach shall continue for a period of 30 days after written notice has been given, by certified mail, (x) to the Company by the Trustee or (y) to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Outstanding Notes; (ii) there shall be a default in the performance or breach of the provisions of Article VIII; or (iii) the Company shall have failed to make or consummate a Change of Control Offer in accordance with the provisions of Section 10.14;

(d)           (i) one or more defaults shall have occurred under any agreements, indentures or instruments under which the Company, a Note Guarantor or any Restricted Subsidiary of the Company then has outstanding indebtedness in excess of $2,500,000 in the aggregate and, if not already matured at its final maturity in accordance with its terms, such Indebtedness shall have been accelerated or (ii) one or more defaults shall have occurred under any agreements, indentures or instruments under which Hollinger International or any of its Subsidiaries then has outstanding Indebtedness in excess of $7,500,000 in the aggregate and, if not already matured at its final maturity in accordance with its terms, such Indebtedness shall have been accelerated;

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(e)           any Guarantee relating to the Notes shall for any reason cease to be, or be asserted in writing by any Note Guarantor or the Company not to be, in full force and effect, enforceable in accordance with its terms, except to the extent contemplated by this Indenture and any such Guarantee;

(f)           one or more final judgments, orders or decrees (including execution, writ of seizure and sale, sequestration, levy, assessment, injunction or attachment or other process of court) for the payment of money shall be entered against (A) the Company, a Note Guarantor or any Restricted Subsidiary or any of their respective properties, either individually or in the aggregate, in an amount exceeding $2,500,000, or (B) Hollinger International or any of its Subsidiaries or any of their respective properties, either individually or in the aggregate, in an amount exceeding $7,500,000 and, in each case, shall not be discharged and either (i) enforcement proceedings shall have been commenced upon such judgment, order or decree or (ii) there shall have been a period of 60 consecutive days during which a stay of enforcement of such judgment or order, by reason of an appeal or otherwise, shall not be in effect;

(g)           there shall have been the entry by a court of competent jurisdiction of (i) a decree or order for relief in respect of the Company, any Note Guarantor or any Material Restricted Subsidiary in an involuntary case or proceeding under any applicable Bankruptcy Law or (ii) a decree or order adjudging the Company, any Note Guarantor or any Material Restricted Subsidiary bankrupt or insolvent, or seeking reorganization, arrangement, adjustment or composition of or in respect of the Company, any Note Guarantor or any Material Restricted Subsidiary under any applicable Federal, provincial or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator, administrator, monitor or similar official of the Company, any Note Guarantor or any Material Restricted Subsidiary or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and any such decree or order for relief shall continue to be in effect, or any such other decree or order shall be unstayed and in effect, for a period of 60 consecutive days;

(h)           (i) the Company, any Note Guarantor or any Material Restricted Subsidiary commences a voluntary case or proceeding under any applicable Bankruptcy Law or any other case or proceeding to be adjudicated bankrupt or insolvent, (ii) the Company, any Note Guarantor or any Material Restricted Subsidiary consents to the entry of a decree or order for relief in respect of the Company, any Note Guarantor or such Material Restricted Subsidiary in an involuntary case or proceeding under any applicable Bankruptcy Law or to the commencement of any bankruptcy or insolvency case or proceeding against it, (iii) the Company, any Note Guarantor or any Material Restricted Subsidiary files a petition, proposal, notice of intention to file a proposal or answer or consent seeking reorganization or relief which seeks to stay or has the effect of staying any creditor under any applicable Federal, provincial or state law, (iv) the Company, any Note Guarantor or any Material Restricted Subsidiary (x) consents to the filing of such petition, proposal, notice of intention to file a proposal or the appointment of, or taking possession by, a custodian, receiver, liquidator, assignee, trustee, sequestrator, administrator, monitor or similar official of the Company, any Note Guarantor or such Material Restricted Subsidiary or of any substantial part of its property, (y) makes an assignment for the benefit of creditors or (z) admits in writing its inability to pay its debts generally as they become due or (v) the Company, any Note Guarantor or any Material Restricted Subsidiary takes any corporate action in furtherance of any such actions in this paragraph (h);

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(i)           the Trustee, Collateral Agent and the Holders cease to have a perfected security interest which has at least second priority in any of the Senior Notes Collateral in accordance with the terms of the Security Agreement;

(j)           the Pledged Agreement shall for any reason cease to be, or be asserted in writing by any party thereto or the Company not to be, in full force and effect, or the Pledged Agreement is terminated, suspended or repudiated by any party thereto, except to the extent contemplated by this Indenture and the Pledged Agreement; or

(k)           in any quarterly period after January 1, 2006, the Company fails to receive in cash a minimum aggregate amount of at least $3.055 million from (i) payments made by RMI during such quarter pursuant to the terms of the Support Agreement, (ii) any management fees paid by Hollinger International and its Subsidiaries directly to the Company or its Wholly Owned Restricted Subsidiaries during such quarter, and (iii) the Net Dividend Amount, calculated on a quarterly basis, paid by Hollinger International on its Capital Stock held by the Company and its Wholly Owned Restricted Subsidiaries during such quarter (provided that with respect to any period that is less than a fiscal quarter, the minimum aggregate amount of $3.055 million shall be reduced pro rata by reference to the number of days in such period, calculated on the basis of a 360-day year of twelve 30-day months).

SECTION 5.02. Acceleration of Maturity; Rescission and Annulment. If an Event of Default (other than an Event of Default specified in Sections 5.01(g) and (h) with respect to the Company) occurs and is continuing with respect to the Notes, subject to the First Priority Intercreditor Agreement, the Trustee or the Holders of not less than 25% in aggregate principal amount of the Outstanding Notes may, and the Trustee upon the request of the Holders of not less than 25% in aggregate principal amount of the Outstanding Notes shall, declare the principal amount of all the Notes to be due and payable immediately in an amount equal to the principal amount of the Notes, together with accrued and unpaid interest, if any, to the date the Notes shall have become due and payable, by a notice in writing to the Company (and to the Trustee, if given by Holders) and, if a Credit Facility is in effect, to the relevant Agent under the Credit Facility in accordance with the terms of the Intercreditor Agreement, and upon any such declaration such amount shall become immediately due and payable. If an Event of Default  specified in Sections 5.01(g) or (h) occurs with respect to the Company and is continuing, then all the Notes shall ipso facto become and be immediately due and payable, in an amount equal to the principal amount of the Notes, together with accrued and unpaid interest, if any, to the date the Notes become due and payable, without any declaration or ether act on the part of the Trustee or any Holder.

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

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(a)           the Company has paid or irrevocably deposited with the Trustee a sum sufficient to pay

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

(ii)           all overdue interest on all Notes;

(iii)           the principal and the premium, if any, on any Notes which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates presented therefor by the terms of the Notes, to the extent that payment of such interest is lawful; and

(iv)           interest upon overdue interest at the rate or rates presented therefor by the terms of the Notes, to the extent that payment of such interest is lawful; and

(b)           all Events of Default with respect to the Notes, other than the non-payment of principal of the Notes which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 5.13.

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

SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if

(a)           default is made in the payment of any interest on any Note when such interest becomes due and payable and such default continues for a period of 30 days, or

(b)           default is made in the payment of the principal of (or premium, if any, on) any Note at the Maturity (upon acceleration, optional or mandatory redemption, required repurchase or otherwise) thereof,

the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Notes the whole amount then due and payable on such Notes for principal and premium, if any, and interest, with interest upon the overdue principal and premium, if any, and, to the extent that payment of such interest shall be legally enforceable, upon overdue installments of interest, at the rate or rates as may be presented therefor by the terms of any such Note.

Subject to the terms and conditions of the First Priority Intercreditor Agreement, if the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon the Notes and collect the  moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Notes, wherever situated.

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Subject to the terms and conditions of the First Priority Intercreditor Agreement, if an Event of Default with respect to any Notes occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Notes under this Indenture by such appropriate private or judicial proceedings as the Trustee shall deem most effectual to protect and enforce such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein or therein, or to enforce any other proper remedy.

The rights and remedies under this Section are in addition to the other rights and remedies under this Article V or Article XIII.

SECTION 5.04. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other similar judicial proceeding relative to the Company or the property of the Company, the Trustee (irrespective of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise:

(a)           to file and prove a claim for the whole amount of principal, and premium, if any, and interest owing and unpaid in respect of the Notes and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding; and

(b)           to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 6.07.

Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment, composition or other similar arrangement affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

SECTION 5.05. Trustee May Enforce Claims Without Possession of Notes. All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name and as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Notes in respect of which such judgment has been recovered.

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SECTION 5.06. Application of Money Collected. Any money collected by the Trustee with respect to the Notes pursuant to this Article or otherwise on behalf of the Holders or the Trustee pursuant to this Article or through any proceeding or any arrangement or restructuring in anticipation or in lieu of any proceeding contemplated by this Article shall be applied, subject to applicable law, in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal, premium, if any, or interest, upon presentation of the Notes and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

FIRST: To the payment of all amounts due the Trustee under Section 6.07;

SECOND: To the payment in full of the amounts then due and unpaid upon the Notes for principal, premium, if any, and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Notes for principal, premium, if any, and interest; and

THIRD: The balance, if any, to the Person or Persons entitled thereto as a court of competent jurisdiction shall direct, or to the Company; provided that all sums due and owing to the Holders and the Trustee have been paid in full as required by this Indenture.

SECTION 5.07. Limitation on Suits. No Holder of any Notes shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture or the Notes, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless

(a)           such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to Notes;

(b)           the Holders of not less than 25% in principal amount of the Outstanding Notes shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;

(c)           such Holder or Holders have offered, and if requested have provided, to the Trustee an indemnity satisfactory to the Trustee in its sole discretion against the costs, expenses and liabilities that may be incurred in compliance with such request;

(d)           the Trustee for 60 days after its receipt of such notice, request and offer (and if requested, provision) of indemnity has failed to institute any such proceeding; and

(e)           no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Notes;

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it being understood and intended that no one or more Holders of Notes shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of such Notes, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner provided in this Indenture and for the equal and ratable benefit of all the Holders of all Notes.

SECTION 5.08. Unconditional Right of Holders to Receive Principal, Premium and Interest. Notwithstanding any other provision in this Indenture, the Holder of any Note shall have the right on the terms stated herein, which is absolute and unconditional, to receive payment of the principal of, premium, if any, and (subject to Section 3.08) interest on such Note on the respective Stated Maturities expressed in such Note (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.

SECTION 5.09. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, (a) the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder, and (b) thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.

SECTION 5.10. Rights and Remedies Cumulative. Except as provided in Section 3.07, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

SECTION 5.11. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders. as the case may be..

SECTION 5.12. Control by Holders. The Holders of not less than a majority in aggregate principal amount of the Outstanding Notes shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee; provided that:

(a)           such direction shall not be in conflict with any rule of law or with this Indenture (including, without limitation, Section 5.07), expose the Trustee to personal liability or be unduly prejudicial to Holders not joining therein; and

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(b)           subject to the provisions of Section 315 of the Trust Indenture Act, the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.

SECTION 5.13. Waiver of Past Defaults. The Holders of not less than a majority in aggregate principal amount of the Outstanding Notes may on behalf of the Holders of all the Notes waive any past Default hereunder and its consequences, except a Default

(a)           in the payment of the principal of, premium, if any, or interest on any Notes, or

(b)           in respect of a covenant or provision hereof which under Article IX cannot be modified or amended without the consent of the Holder of each Outstanding Note affected by such modification or amendment.

Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

SECTION 5.14. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Note by its acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Notes to which the suit relates, or to any suit instituted by any Holder for the enforcement of the payment of the principal of, premium, if any, or interest on any Note on or after the respective Stated Maturities expressed in such Note (or, in the case of redemption, on or after the Redemption Date).

SECTION 5.15. Waiver of Stay, Extension or Usury Laws. The Company (to the extent that it may lawfully do so) covenants that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury or other similar law wherever enacted, now or at any time hereafter in force, which would prohibit or forgive the Company from paying all or any portion of the principal of, premium, if any, or interest on the Notes contemplated herein or in the Notes or which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

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SECTION 5.16. Remedies Subject to Applicable Law. All rights, remedies and powers provided by this Article may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law in the premises, and all the provisions of this Indenture are intended to be subject to all applicable mandatory provisions of law which may be controlling in the premises and to be limited to the extent necessary so that they will not render this Indenture invalid, unenforceable or not entitled to be recorded, registered or filed under the provisions of any applicable law.

Section 5.17. Failure to File Reports. If there shall be a default in the performance of the Company’s obligations pursuant to Section 10.17(b), then the Company shall pay to the Holders an amount equal to 0.50% of the principal amount of the Notes Outstanding as of December 31, 2005. Any such payment shall be made by the Company no later than January 9, 2006.

ARTICLE VI

The Trustee

SECTION 6.01. Duties of Trustee. (a) If a Default or an Event of Default with respect to any Notes actually known to the Trustee has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise thereof as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. The Trustee shall not be charged with knowledge of any Default or Event of Default with respect to any Notes, Asset Sale or Change of Control unless written notice thereof shall have been delivered to a Responsible Officer by the Company or any other Person.

(b)           Except during the continuance of an Event of Default with respect to any Notes actually known to the Trustee:

(1)           the Trustee need perform only those duties as are specifically set forth in this Indenture and no covenants or obligations shall be implied in this Indenture that are adverse to the Trustee; and

(2)           in the absence of bad faith or willful misconduct on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.

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

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

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

(3)           the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction of the Holders of a majority in principal amount of Outstanding Notes relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power confirmed upon the Trustee under this Indenture.

(d)           No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any loss, expense, fees or financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or loss, expense, fees or financial liability is not reasonably assured to it.

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

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

SECTION 6.02. Notice of Defaults. Within 30 days after a Responsible Officer of the Trustee receives notice of the occurrence of any Default with respect to any Notes, the Trustee shall, at the Company’s expense, transmit by mail to all Holders of such Notes or any other Persons entitled to receive reports pursuant to Trust Indenture Act Section 313(c), as their names and addresses appear in the Note Register, notice of such Default, unless such Default shall have been cured or waived; provided, however, that, except in the case of a Default in the payment of the principal of, premium, if any, or interest on any Note, the Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of the Trustee in good faith determines that the withholding of such notice is in the interest of the Holders of such Notes.

SECTION 6.03. Certain Rights of Trustee. Subject to the provisions of Trust Indenture Act Sections 315(a) through 315(d):

(a)           the Trustee may rely conclusively and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

(b)           any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;

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(c)           wherever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to the taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) in the absence of bad faith on its part, may rely conclusively, upon an Officers’ Certificate and/or an Opinion of Counsel;

(d)           the Trustee may consult with counsel and any advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon in accordance with such advice or Opinion of Counsel;

(e)           notwithstanding any other provisions contained in this Indenture, the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to the Trustee in its sole discretion against the costs, expenses and liabilities which might be incurred therein or thereby in compliance with such request or direction;

(f)           the Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture other than any liabilities arising out of the negligence or wilful misconduct of the Trustee;

(g)           the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, approval, appraisal, bond, debenture, note, coupon, security or other paper or document; but the Trustee in its discretion may make such further inquiry or investigation in accordance with any of the provisions of this Indenture into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine such relevant books, records and premises of the Company as may be reasonable, personally or by agent or attorney;

(h)           the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; and

(i)           no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights and powers.

SECTION 6.04. Trustee Not Responsible for Recitals, Dispositions of Notes or Application of Proceeds Thereof. The recitals contained herein and in the Notes, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or the Notes, except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Notes and perform its obligations hereunder and that the statements made by it in a Statement of Eligibility and Qualification on Form T-1 supplied to the Company are true and accurate subject to the qualifications set forth therein. The Trustee shall not be accountable for the use or application by the Company of Notes or the proceeds thereof.

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SECTION 6.05. Trustee and Agents May Hold Notes; Collections; etc. The Trustee, any Paying Agent, Note Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Notes, with the same rights it would have if it were not the Trustee, Paying Agent, Note Registrar or such other agent and, subject to Trust Indenture Act Sections 310 and 311, may otherwise deal with the Company and receive, collect, hold and retain collections from the Company with the same rights it would have if it were not the Trustee, Paying Agent, Note Registrar or such other agent.

SECTION 6.06. Money Held in Trust.  All moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by mandatory provisions of law. Except for funds or securities deposited with the Trustee pursuant to Article IV, the Trustee shall only be required to invest moneys received by the Trustee, until used or applied as herein provided, in Temporary Cash Investments in accordance with the directions of the Company.

SECTION 6.07. Compensation and Indemnification of Trustee and Its Prior Claim. The Company covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation for all services rendered by it hereunder (which, to the extent lawful, shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) and the Company covenants and agrees to pay or reimburse the Trustee and each predecessor Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all agents and other Persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence, bad faith or willful misconduct. When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 5.01(g) or Section 5.01(h), the expenses (including the reasonable compensation and the expenses and disbursements of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable Federal or state bankruptcy, insolvency or other similar law. The Company also covenants to indemnify the Trustee and each predecessor Trustee, and their respective officers, agents and employees for, and to hold them harmless against, any claim, loss, liability, tax, assessment or other governmental charge (other than taxes applicable to the Trustee’s compensation hereunder) or expense incurred without negligence, bad faith or wilful misconduct on its part, arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder and its duties hereunder, including enforcement of this Section and also including any liability which the Trustee may incur as a result of failure to withhold, pay or report any tax, assessment or other governmental charge, and the costs and expenses of defending itself against or investigating any claim of liability in the premises. The obligations of the Company under this Section to compensate and indemnify the Trustee and each predecessor Trustee and to pay or reimburse the Trustee and each predecessor Trustee for expenses, disbursements and advances shall constitute an additional obligation hereunder and shall survive the satisfaction and discharge of this Indenture and the resignation or removal of the Trustee and each predecessor Trustee. As security for the performance of the obligations of the Company under this Section, the Trustee shall have a lien prior to the Notes upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of Holders of particular Notes.

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SECTION 6.08. Conflicting Interests. The Trustee shall comply with the provisions of Section 310(b) of the Trust Indenture Act. Nothing herein shall prevent the Trustee from filing with the Commission the application referred to in the second to last paragraph of Section 310(b) of the Trust Indenture Act.

SECTION 6.09. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be eligible to act as Trustee under the Trust Indenture Act Section 310(a)(1) and which shall have a combined capital and surplus of at least $100,000,000, and have a Corporate Trust Office in The City of New York to the extent there is such an institution eligible and willing to serve. If the Trustee does not have an office in The City of New York, the Trustee shall appoint an agent in The City of New York reasonably acceptable to the Company to conduct any activities which the Trustee is required under this Indenture to conduct in The City of New York. The Trustee may not rescind any such agency without the consent of the Company, which consent may not be unreasonably withheld, unless the Trustee appoints a satisfactory replacement or has a Corporate Trust Office in The City of New York. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of Federal, state, territorial or District of Columbia supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, the Trustee shall resign immediately in the manner and with the effect hereinafter specified in this Article.

SECTION 6.10. Resignation and Removal; Appointment of Successor Trustee.

(a)           No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 6.11.

(b)           The Trustee, or any trustee or trustees hereafter appointed, may at any time resign with respect to any Notes by giving written notice thereof to the Company. Upon receiving such notice of resignation, the Company shall use its best efforts to promptly appoint a successor Trustee by Board Resolution or written instrument executed by authority of the Board of Directors, a copy of which shall be delivered to the resigning Trustee and a copy to the successor Trustee. If an interment of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may, or any Holder who has been a bona fide Holder of a Note for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. Such court may thereupon, after such notice, if any, as it may deem proper, appoint a successor Trustee.

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(c)           The Trustee may be removed with respect to any Notes at any time by an Act of the Holders of not less than a majority in aggregate principal amount of the Outstanding Notes, delivered to the Trustee and to the Company.

(d)           If at any time:

(1)           the Trustee shall fail to comply with the provisions of Trust Indenture Act Section 310(b) with respect to any Notes after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Note for at least six months, or

(2)           the Trustee shall cease to be eligible under Section 6.09 with respect to any Notes and shall fail to resign after written request therefor by the Company or by any such Holder, or

(3)           the Trustee shall become incapable of acting with respect to any Notes or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,

then, in any case, (i) the Company by a Board Resolution may remove the Trustee, with respect to any Notes or in the case of bankruptcy or insolvency or receivership pursuant to clause (3) above, with respect to all Notes, or (ii) subject to Section 5.14, any Holder of any Note who has been a bona fide Holder of a Note for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee with respect to the Notes, or in the case of bankruptcy or insolvency or receivership pursuant to clause (3) above, with respect to all Notes. Such court may thereupon, after such notice, if any, as it may deem proper, remove the Trustee and appoint a successor Trustee.

(e)           If the Trustee shall resign, be removed or become incapable of acting with respect to any Notes, or if a vacancy shall occur in the office of Trustee with respect to any Notes for any cause, the Company, by a Board Resolution or written instrument executed by authority of the Board of Directors, shall use its best efforts to promptly appoint a successor Trustee for such Notes and shall comply with the applicable requirements of Section 6.11. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, the Company or a court of competent jurisdiction has not appointed a successor Trustee, a successor Trustee with respect to such Notes shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Notes delivered to the Company and the retiring Trustee, and the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee with respect to such Notes and supersede the successor Trustee appointed by the Company with respect to such Notes. If no successor Trustee shall have been so appointed by the Company or the Holders of such Notes and accepted appointment in the manner hereinafter provided, any Holder of a Note who has been a bona fide Holder of a Note for at least six months may, subject to Section 5.14, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to such Notes.

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(f)           The Company shall give notice of each resignation and each removal of the Trustee with respect to any Notes and each appointment of a successor Trustee with respect to any Notes by mailing written notice of such event by first-class mail, postage prepaid, to the Holders of Notes as their names and addresses appear in the Note Register. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office or agent hereunder.

SECTION 6.11. Acceptance of Appointment by Successor. In case of the appointment hereunder of a successor Trustee with respect to the Notes, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee under this Indenture with respect to any such Notes; but, nevertheless, on the written request of the Company or the successor Trustee, upon payment of its charges then unpaid, such retiring Trustee shall pay over to the successor Trustee all moneys at the time held by it hereunder with respect to any such Notes and shall execute and deliver an instrument transferring to such successor Trustee all such rights, powers, duties and obligations.

Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights and powers. Any Trustee ceasing to act shall, nevertheless, retain a prior claim upon all property or funds held or collected by such Trustee or such successor Trustee to secure any amounts then due such Trustee pursuant to the provisions of Section 6.07.

No successor Trustee with respect to the Notes shall accept appointment as provided in this Section unless at the time of such acceptance such successor Trustee shall be eligible to act as Trustee under the provisions of Trust Indenture Act Section 310(a) and this Article VI and shall have a combined capital and surplus of at least $100,000,000 and have a Corporate Trust Office or an agent selected in accordance with Section 6.09 in The City of New York.

Upon acceptance of appointment by any successor Trustee as provided in this Section, the Company shall give notice thereof to the Holders of the Notes, by mailing such notice to such Holders at their addresses as they shall appear on the Note Register. If the acceptance of appointment is substantially contemporaneous with the resignation, then the notice called for by the preceding sentence may be combined with the notice called for by Section 6.10. If the Company fails to give such notice within 10 days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be given at the expense of the Company.

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SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business. Any Person into which the Trustee may be merged or converted or with which it May be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided such Person shall be eligible under Trust Indenture Act Section 310(a) and this Article VI and shall have a combined capital and surplus of at least $100,000,000.

In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor Trustee and deliver such Notes so authenticated; and, in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor Trustee. In all such cases such certificates shall have the full force and effect which this Indenture provides for the certificate of authentication of the Trustee; provided that the right to adopt the certificate of authentication of any predecessor Trustee or to authenticate Notes in the name of any predecessor Trustee shall apply only to its successor or successors by merger, amalgamation, conversion or consolidation.

SECTION 6.13. Preferential Collection of Claims Against the Company. If and when the Trustee shall be or become a creditor of the Company, the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company.

ARTICLE VII

Holders’ Lists and Reports by Trustee and the Company

SECTION 7.01. Company to Furnish Trustee Names and Addresses of Holders. The Company will furnish or cause to be furnished to the Trustee:

(a)           semiannually, not more than 10 days after each Regular Record Date, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Notes as of such Regular Record Date; and

(b)           at such other times as the Trustee may reasonably request in writing, within 30 days after receipt by the Company of any such request, a list of similar form and content to that in subsection (a) hereof as of a date not more than 15 days prior to the time such list is furnished;

provided, however, that if and so long as the Trustee shall be the Note Registrar for Notes, no such list need be furnished with respect to such Notes.

SECTION 7.02. Disclosure of Names and Addresses of Holders. Every Holder of Notes, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee or any agent of either of them shall be held accountable by reason of the disclosure of any information as to the names and addresses of the Holders in accordance with Trust Indenture Act Section 312, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable or liable by reason of mailing any material pursuant to a request made under Trust Indenture Act Section 312.

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SECTION 7.03. Reports by Trustee. (a) Within 60 days after May 15 of each year commencing with the first May 15 after the issuance of Notes, the Trustee shall transmit by mail, at the Company’s expense, to all Holders, as their names and addresses appear in the Note Register, as provided in Trust Indenture Act Section 313(c), a brief report dated as of such May 15 in accordance with and with respect to the matters required by Trust Indenture Act Section 313(a).

(b) The Trustee shall promptly transmit to the Company a copy of any report it transmits to Holders of such Notes pursuant to this Section.

SECTION 7.04. Reports by the Company. (a) The Company shall do the following:

(i)           from and after January 1, 2006, file with the Trustee, in accordance with Section 10.17 hereof, and in any event within 30 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company is required to file with the Commission separately or together with the Note Guarantors pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports pursuant to either of said Sections, then it shall (A) deliver to the Trustee annual audited financial statements of the Company and its Restricted Subsidiaries, prepared on a Consolidated basis in conformity with GAAP, within 120 days after the end of each fiscal year of the Company, and (B) file with the Trustee and the Commission, in accordance with, and so long as not prohibited by, the rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Exchange Act in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations;

(ii)           file with the Trustee and the Commission, in accordance with the rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this indenture as is required from time to time by such rules and regulations (including such rules and regulations, if any, referred to in Trust Indenture Act Section 314(a)); and

(iii) transmit by mail to all Holders or any other persons entitled to receive a report pursuant to Trust indenture Act Section 313(c), within 30 days after the filing thereof with the Trustee, in the manner and to the extent provided in Trust Indenture Act Section 313(c), such summaries of any information, documents and reports required to be filed by the Company pursuant to Section 10.17 hereunder and subsections (i) and (ii) of this Section as are required and not prohibited by rules and regulations prescribed from time to time by the Commission.

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(b)           For so long as the Company qualifies as a foreign private issuer (as defined in Rule 3b-4 under the Exchange Act) (a “Foreign Private Issuer”), the Company may comply with the filing requirements of Section 7.04(a)(i) at the times, and in the manner, required of Foreign Private Issuers under the Exchange Act.

ARTICLE VIII

Consolidation, Merger, Sale of Assets

SECTION 8.01. Company May Merge, Consolidate, etc., Only on Certain Terms. (a) The Company shall not, in a single transaction or a series of related transactions, consolidate with, amalgamate or merge with or into any other Person or sell, assign, convey, transfer, lease or otherwise dispose of all or substantially all of its properties and assets to any Person or group of Affiliated Persons, or permit any of its Restricted Subsidiaries to enter into any such transaction or transactions (other than, in the case of a Restricted Subsidiary, such a consolidation, amalgamation, merger or transfer with or to one or more Restricted Subsidiaries) if such transaction or transactions, in the aggregate, would result in a sale, assignment, conveyance, transfer, lease or disposition of all or substantially all of the properties and assets of the Company and its Restricted Subsidiaries on a Consolidated basis to any other Person or group of Affiliated Persons, unless at the time and after giving effect thereto:

(i)           either (a) the Company shall be the continuing corporation or (b) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or amalgamated or the Person which acquires by sale, assignment, conveyance, transfer, lease or disposition all or substantially all of the properties and assets of the Company and its Restricted Subsidiaries on a Consolidated basis (the “Surviving Entity”) shall be a corporation duly organized and validly existing under the laws of Canada or any province thereof or of the United States of America, any state thereof or the District of Columbia and shall expressly assume, by a supplemental Indenture hereto (and to the extent necessary, a supplemental Security Agreement), executed and delivered to the Trustee; in form and substance reasonably satisfactory to the Trustee, all the obligations of the Company under the Notes and this Indenture and the Security Agreement, and this Indenture and the Security Agreement (and the Trustee’s security interest in the Senior Notes Collateral) will remain in full force and effect;

(ii)           immediately before and immediately after giving effect to such transaction on a pro forma basis, no Default or Event of Default shall have occurred and be continuing;

(iii)           immediately after giving effect to the transaction on a pro forma basis, the Consolidated Net Worth of the Surviving Entity is not less than the Consolidated Net Worth of the Company and the Restricted Subsidiaries immediately prior to the transaction;

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(iv)           if any of the property or assets of the Company or any of its Restricted Subsidiaries would thereupon become subject to any Lien, the provisions of Section 10.11 are complied with; and

(v)           the Company or the Surviving Entity shall have delivered, or caused to be delivered, to the Trustee, in form and substance reasonably satisfactory to the Trustee, an Officers’ Certificate and an Opinion of Counsel, each to the effect that such consolidation, merger, amalgamation, transfer, sale, assignment, lease or other transaction and the supplemental Indenture in respect thereof comply with the provisions described in this Section 8.01(a) and that all conditions precedent herein provided for in this Section 8.01(a) relating to such transaction have been complied with.

(b)           None of the Note Guarantors will, in a single transaction or series of related transactions, consolidate with or merge or amalgamate with or into any other Person (other than the Company, in which case the requirements of the foregoing paragraph would apply), or sell, assign, convey, transfer, lease or otherwise dispose of all or substantially all of its properties and assets on a Consolidated basis to any Person (other than the Company) if such transaction or transactions, in the aggregate, would result in a sale, assignment, conveyance, transfer, lease or disposition of all or substantially all of the properties and assets of any such Note Guarantor to any other Person or group of Affiliated Persons, unless at the time and after giving effect thereto:

(i)           either (a) such Note Guarantor shall be the continuing corporation or (b) the Person (if other than such Note Guarantor) formed by such consolidation or into which any such Note Guarantor is merged or amalgamated or the Person which acquires by sale, assignment, conveyance, transfer, lease or disposition all or substantially all of the properties and assets of such Note Guarantor shall be a corporation duly organized and validly existing under the laws of Canada or any province thereof or the United States of America, any state thereof or the District of Columbia and shall (except where the Note Guarantor is the continuing corporation) expressly assume, by a supplemental Indenture hereto (and, to the extent necessary, a supplemental Security Agreement and supplemental Support Agreement), executed and delivered to the Trustee, in form and substance reasonably satisfactory to the Trustee, all the obligations of such Note Guarantor under the Notes, this Indenture, the Security Agreement and the Support Agreement (as applicable), and this Indenture, the Security Agreement (and the Trustee’s security interest in the Senior Notes Collateral) and Support Agreement (as applicable) shall remain in full force and effect;

(ii)           immediately before and immediately after giving effect to such transaction on a pro forma basis; no Default or Event of Default shall have occurred and be continuing; and

(iii)           such Note Guarantor shall have delivered, or caused to be delivered, to the Trustee, in form and substance reasonably satisfactory to the Trustee, an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, amalgamation, sale, assignment, conveyance, transfer, lease or other transaction and the supplemental Indenture in respect thereof (and, to the extent necessary, such supplemental Security Agreement and supplemental Support Agreement) comply with the provisions described in this Section 8.01(b), and that all conditions precedent herein provided for in this Section 8.01(b) relating to such transactions have been complied with.

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(c)           Notwithstanding anything in this Article Eight to the contrary, any Guarantee by a Restricted Subsidiary of the Notes may be released in accordance with the provisions of Section 10.12(b).

SECTION 8.02. Successor Substituted. Upon any consolidation, amalgamation or merger, or any sale, assignment, conveyance, transfer, lease or disposition of all or substantially all of the properties and assets on a Consolidated basis of the Company or any Note Guarantor in accordance with Section 8.01 with respect to which the Company or any Note Guarantor is not the continuing corporation; the successor Person formed by such consolidation or into which the Company or such Note Guarantor is merged or the successor Person to which such sale, assignment, conveyance, transfer, lease or disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company or such Note Guarantor, as the case may be, under this Indenture, with the same effect as if such successor had been named as the Company or a Note Guarantor, as the case may be, herein. When a successor assumes all the obligations and covenants of its predecessor under this Indenture or the Notes, the predecessor shall be released from those obligations and covenants; provided that, in the case of a transfer by lease, the predecessor shall not be released from the payment of principal and interest on the Notes or, in the case of a Note Guarantor, its Guarantee.

Any successor to the Company described in the foregoing paragraph may cause to be signed, and may issue either in its own name or in the name of the Company, any or all of the Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor, instead of the Company, and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Notes which previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication, and any Notes which such successor thereafter shall cause to be signed and delivered to the Trustee for that purpose. All the Notes so issued shall in all respects have the same legal rank and benefit under this Indenture as the Notes theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Notes had been issued at the date of the execution of this Indenture.

ARTICLE IX

Supplemental Indentures

SECTION 9.01. Supplemental Indentures and Agreements Without Consent of Holders. Without the consent of any Holders of the Notes, the Company, each Note Guarantor and the Trustee, at any time and from time to time, may enter into one or more Indentures supplemental hereto, in form and substance reasonably satisfactory to the Trustee, for any of the following purposes:

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(a)           to cure any ambiguity or to correct or supplement any provision in this Indenture or the Notes which may be defective or inconsistent with any other provision in this Indenture or the Notes;

(b)           to evidence the succession of another Person to the Company or any Note Guarantor, and the assumption by any such successor of the covenants of the Company or such Note Guarantor, as the case may be, herein and in the Notes;

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

(d)           to add Guarantees with respect to the Notes or release Guarantees as provided by the terms of this Indenture;

(e)           to mortgage, pledge, hypothecate or grant a security interest in favor of the Trustee for the benefit of the Holders as additional security, pursuant to the requirements of Section 10.11, Article XIV, the Security Agreement or otherwise, for the payment and performance of the Indenture Obligations, in any property or assets, including any which are required to be mortgaged, pledged or hypothecated, or in which a security interest is required to be granted, to the Trustee pursuant to this Indenture, the Security Agreement or otherwise;

(f)           to add to the covenants of the Company or its Restricted Subsidiaries, as applicable, for the benefit of the Holders of the Notes (and if such covenants or the surrender of such right or power are to be for the benefit of less than all Notes, stating that such covenants are expressly being included or such surrenders are expressly being made solely for the benefit of one or more specified Notes), or to surrender any right or power conferred upon the Company or its Restricted Subsidiaries by this Indenture or the Notes;

(g)           to comply with the requirements of the Commission in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act, as contemplated by Section 9.05 or otherwise;

(h)           if necessary, to effect any addition or release of Senior Notes Collateral permitted under this Indenture or the Security Agreement;

(i)           to evidence and provide the acceptance of the appointment of a successor Trustee hereunder;

(j)           to clarify or make any other provisions with respect to matters or questions arising under this Indenture or the Notes; provided that, in each case, such clarification or provision thus made shall not adversely affect the interests of the Holders; and

(k)           to establish any form of Note, as provided in Article Two, and to provide for the issuance of any Notes as provided in Article Three and to set forth the terms thereof, and/or to add to the rights of the Holders of the Notes.

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SECTION 9.02. Supplemental Indentures and Agreements with Consent of Holders. Except as permitted by Section 9.01, with the consent of (x) the Holders of not less than a majority in aggregate principal amount of the Outstanding Notes affected by such supplemental indenture or indentures, or (y) in the case of substantively identical supplemental indentures that are sought to be effected with respect to both the First Priority Notes Indenture and this Indenture, holders of not less than a majority in aggregate principal amount of the Outstanding Notes and the First Priority Notes, taken together, affected by such supplemental indentures, by Act of said Holders delivered to the Company and the Trustee, the Company and each Note Guarantor (if a party thereto) and the Trustee may (i) enter into an indenture or indentures supplemental hereto, in form and substance reasonably satisfactory to the Trustee, for the purpose of adding any provisions to or amending, modifying or changing in any member or eliminating any of the provisions of this Indenture or the Notes (including, bit not limited to, for the purpose of modifying in any manner the rights of the Holders of the Notes under this Indenture), (ii) modify or amend the Intercreditor Agreement, First Priority Intercreditor Agreement, the Support Agreement, and the Security Agreement (except as otherwise provided therein) or (iii) waive compliance with any provision in this Indenture, the Notes (other than waivers of past Defaults covered by Section 5.13 and waivers of covenants which are covered by Section 10.19), the Intercreditor Agreement, the Support Agreement and the Security Agreement; provided, however, that no such supplemental indenture, agreement or instrument shall, without the consent of the Holder of each outstanding Note affected thereby:

(a)           change the Stated Maturity of the principal of, or any installment of interest on, any Notes or waive a default in the payment of the principal or interest on any Note or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or change the coin or currency in which the principal of any Note or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment after the Stated Maturity thereof;

(b)           amend, change or modify the obligation of the Company to make and consummate a Change of Control Offer in the event of a Change of Control in accordance with Section 10.14, including amending, changing or modifying any of the provisions or definitions with respect thereto;

(c)           reduce the percentage in principal amount of the Outstanding Notes, the consent of whose Holders is required for any such supplemental indenture or the consent of whose Holders is required for any waiver of compliance with certain provisions of this Indenture or certain Defaults hereunder and their consequences provided for in this Indenture or for any modifications or amendments to the Intercreditor Agreement, the Support Agreement or the Security Agreement;

(d)           modify any of the provisions of this Section or Section 5.13 or 10.19, except to increase the percentage of Outstanding Notes required for such actions or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Note affected thereby;

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(e)           except as otherwise permitted under Article VIII, consent to the assignment or transfer by the Company or RMI of any of its respective rights and obligations under this Indenture; or

(f)           amend or modify any of the provisions of (i) this Indenture relating to the ranking of the Notes or any guarantee in any manner adverse to the Holders or (ii) the RMI Subordination Agreement relating to the Indebtedness of the Company under the Support Agreement, in each case in any manner adverse to the Holders.

Upon the written request of the Company, accompanied by a copy of a Board Resolution authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Holders as aforesaid, the Trustee shall join with the Company in the execution of such supplemental indenture.

It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture or agreement, but it shall be sufficient if such Act shall approve the substance thereof.

With respect to determining what constitutes a majority in aggregate principal amount of the Outstanding Notes and the First Priority Notes, taken together, as contemplated by this Section, the Trustee shall be entitled to rely on information provided to it by Wachovia Trust Company, National Association, or any successor trustee under the First Priority Indenture, or by the Company in an Officers’ Certificate.

SECTION 9.03. Execution of Supplemental Indentures and Agreements. In executing, or accepting the additional trusts created by, any supplemental indenture; agreement or instrument permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Trust Indenture Act Section 315(a) through 315(d) and Section 6.03 hereof) shall be fully protected in relying upon, an Opinion of Counsel and an Officers’ Certificate to the effect that the execution of such supplemental indenture, agreement or instrument is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture, agreement or instrument which affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.

SECTION 9.04. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Notes theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

SECTION 9.05. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect.

SECTION 9.06. Reference in Notes to Supplemental Indentures. Notes authenticated and delivered after the execution of any supplemental indefinite pursuant to this Article IX may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Notes modified so as to conform to any such supplemental indenture, in the opinion of the Trustee and the Board of Directors, may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for outstanding Notes.

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SECTION 9.07. Record Date. If the Company shall solicit from the Holders of any Notes any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders of the Notes entitled to consent to any supplemental indenture, agreement or instrument or any waiver, and shall promptly notify the Trustee of any such record date. If a record date is fixed, those Persons who were Holders of the Notes at such record date (or their duly designated proxies), and only those Persons, shall be entitled to consent to such supplemental indenture, agreement or instrument or waiver or to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date. The record date shall be a date no more than 30 days prior to the first solicitation of Holders generally in connection therewith and no later than the date such solicitation is completed. No such consent shall be valid or effective for more than six months after such record date. Subject to applicable law, until any supplemental indenture, agreement, instrument or waiver becomes effective, or a consent to it by a Holder of a Note shall cease to be valid and effective as set forth in the preceding sentence, such consent is a continuing consent by the Holder and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder’s Note.

ARTICLE X

Covenants

SECTION 10.01. Payment of Principal, Premium and Interest. With respect to each Note, the Company will duly and punctually pay the principal of, premium, if any, and interest on such Note in accordance with the terms of such Note and this Indenture.

SECTION 10.02. Maintenance of Office or Agency. The Company will maintain in The City of New York an office or agency where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Corporate Trust Office shall be such office or agency of the Company, unless the Company shall designate and maintain some other office or agency for one or more of such purposes. The Company will give prompt written notice to the Trustee of any change in the location of any such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands.

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

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SECTION 10.03. Money for Note Payments to be Held in Trust. The Company will, on or before Noon, New York time, on each due date of the principal of, premium, if any, or interest on, the Notes, deposit with a Paying Agent (which shall not be the Company) a sum in same day funds sufficient to pay the principal, premium, if any, or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of such action or any failure so to act.

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

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

(b)           give the Trustee notice of any Default by the Company (or any other obligor upon the Notes) in the making of any payment of principal, premium, if any, or interest on the Notes;

(c)           at any time during the continuance of any such Default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent; and

(d)           acknowledge, accept and agree to comply in all aspects with the provisions of this Indenture relating to the duties, rights and liabilities of such Paying Agent.

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

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

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SECTION 10.04. Corporate Existence. Subject to Article VIII, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and related rights and franchises (charter and statutory) of the Company and each Restricted Subsidiary; provided, however, that the Company shall not be required to preserve any such right or franchise or the corporate existence of any such Restricted Subsidiary if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Restricted Subsidiaries as a whole and that the loss thereof would not reasonably be expected to have a material adverse effect on the ability of the Company to perform its obligations hereunder; and provided further, however, that the foregoing shall not prohibit a sale, transfer or conveyance of a Restricted Subsidiary or any of its assets in compliance with the terms of this Indenture.

SECTION 10.05. Payment of Taxes and Other Claims. The Company will pay or discharge or cause to be paid or discharged, on or before the date the same shall become due  and payable, (a) all material taxes, assessments and governmental charges levied or imposed upon the Company or any Restricted Subsidiary shown to be due on any tax return of the Company or any Restricted Subsidiary or otherwise assessed or upon the income, profits or property of the Company or any Restricted Subsidiary and (b) all material lawful claims for labor, materials and supplies, which, if unpaid, would by law become a Lien upon the property of the Company or any Restricted Subsidiary, except for any Lien permitted to be Incurred under Section 10.11; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings properly instituted and diligently conducted and in respect of which appropriate reserves (in the good faith judgment of management of the Company) are being maintained in accordance with GAAP consistently applied.

SECTION 10.06. Maintenance of Properties. The Company will cause all material properties owned by the Company or any Restricted Subsidiary or used or held for use in the conduct of its business or the business of any Restricted Subsidiary to be maintained and kept in good condition, repair and working order (ordinary wear and tear excepted) and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be consistent with sound business practice and reasonably necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the Company from discontinuing the maintenance of any of such properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of the business of the Company and its Restricted Subsidiaries and not reasonably expected to have a material adverse effect on the ability of the Company to perform its obligations hereunder.

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SECTION 10.07. Insurance. The Company will at all times keep all of its and its Restricted Subsidiaries’ properties which are of an insurable nature reasonably self-insured or insured with insurers, believed by the Company to be responsible, against loss or damage to the extent that property of similar character is usually so insured by corporations similarly situated and owning like properties in the same general geographic areas in which the Company and its Restricted Subsidiaries operate; except where the failure to do so would not reasonably be expected to have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or prospects of the Company and its Restricted Subsidiaries, taken as a whole.

SECTION 10.08. Limitation on Indebtedness. The Company will not, and will not permit any of its Restricted Subsidiaries to, Incur any Indebtedness, including any Acquired Indebtedness, but excluding any Permitted Indebtedness.

SECTION 10.09. Limitation on Restricted Payments. (a) The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly:

(i)           declare or pay any dividend or make any other distribution or payment on or in respect of the Company’s Capital Stock (including dividends or distributions of the Capital Stock of any Subsidiary), or make any other payment to the direct or indirect holders (in their capacities as such) of the Company’s Capital Stock (other than dividends or distributions payable in shares of the Company’s Qualified Capital Stock or in options, warrants or other rights to acquire such Qualified Capital Stock);

(ii)           purchase, redeem or otherwise acquire or retire for value, directly or indirectly, any Capital Stock of the Company or any Capital Stock of any Affiliate of the Company (other than Capital Stock of any Restricted Subsidiary or Capital Stock of a Person that is, or immediately following such repurchase will become, a Restricted Subsidiary), or options, warrants or other rights to acquire such Capital Stock;

(iii)           make any principal payment on, or repurchase, redeem, defense, retire or otherwise acquire for value, prior to any scheduled principal payment, sinking fund payment or maturity, any Subordinated Indebtedness (other than Subordinated Indebtedness owing by the Company to any Restricted Subsidiary, by any Restricted Subsidiary to the Company or by any Restricted Subsidiary to any other Restricted Subsidiary) or make any cash interest payment on the International Intercompany Note;

(iv)           declare or pay any dividend or distribution on any Capital Stock of any Restricted Subsidiary to any Person (other than (x) dividends and distributions on Preferred Stock of Restricted Subsidiaries or (y) dividends and distributions made to any Person on a pro rata basis consistent with the ownership interests in such Capital Stock to the owners of such Capital Stock, except that, in the case of the Capital Stock of a Restricted Subsidiary that has provided a Guarantee, (i) no Default or Event of Default shall have occurred and be continuing; and (ii) no holders of any other Indebtedness of the Company or any Restricted Subsidiary shall have an Acceleration Right);

(v)           Incur, create or assume any guarantee of Indebtedness of any Affiliate of the Company (other than a Restricted Subsidiary of the Company);

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(vi)           make any Restricted Investment in any Person; or

(vii)           designate any Restricted Subsidiary as an Unrestricted Subsidiary;

(any of the payments described in paragraphs (i) through (vii) above, other than any such action that is a Permitted Payment (as defined below), collectively, “Restricted Payments”) unless at the time of and after giving effect to the proposed Restricted Payment (the amount of any such Restricted Payment, if other than cash, as determined by the Board of Directors, whose determination shall be conclusive and evidenced by a Board Resolution), (1) no Default or Event of Default shall have occurred and be continuing; (2) no holders of any other Indebtedness of the Company or any Restricted Subsidiary shall have an Acceleration Right; and (3) the aggregate amount expended by the Company and its Restricted Subsidiary (provided that, in the case of a Restricted Payment by a Restricted Subsidiary, such Restricted Payment is calculated .for the purposes of this paragraph (3) by multiplying the amount of the Restricted Payment by the percentage of the Company’s common equity interest in such Restricted Subsidiary at the time of such Restricted Payment) in connection with all Restricted Payments made subsequent to March 10, 2003, taken together with any payments made pursuant to paragraph (b)(viii) below, shall not exceed the sum of (without duplication):

(A)           50% of the aggregate cumulative Adjusted Net Cash Flow of the Company and its Restricted Subsidiaries accrued during the period (treated as a single accounting period) beginning on the first day of the Company’s fiscal quarter commencing prior to March 10, 2003 and ending on the last day of the Company’s last fiscal quarter ending prior to the date of the Restricted Payment; plus

(B)           the aggregate Net Cash Proceeds received after March 10, 2003 by the Company from the issuance or sale (other than to any of its Restricted Subsidiaries) of its Qualified Capital Stock or any options, warrants or rights to purchase such Qualified Capital Stock (except, in each case, to the extent such proceeds are used to purchase, redeem or otherwise retire Capital Stock or Subordinated Indebtedness of the Company as set forth in (b)(iv) and (b)(v) below); plus

(C)           the aggregate Net Cash: Proceeds received after March 10, 2003 by the Company (other than from any of its Restricted Subsidiaries) upon the exercise of any options or warrants to purchase Qualified Capital Stock of the Company subsequent to March 10, 2003 (except to the extent such proceeds are used to purchase, redeem or otherwise retire Capital Stock or Subordinated Indebtedness of the Company as set forth in (b)(iv) and (b)(v) below); plus

(D)           the aggregate amount by which any Permitted Indebtedness of the Company or any Restricted Subsidiary is reduced after March 10, 2003 as a result of the conversion or exchange of debt securities or Redeemable Capital Stock of the Company that has been converted into or exchanged for Qualified Capital Stock of the Company to the extent such debt securities or Redeemable Capital Stock plus the aggregate Net Cash Proceeds received by the Company at the time of any such conversion or exchange were originally sold for cash; plus

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(E)           the aggregate Net Cash Proceeds received after March 10, 2003 by the Company from cash capital contributions made to the Company (other than from a Restricted Subsidiary, and other than cash capital contributions made pursuant to the Support Agreement); plus

(F)           the aggregate Net Cash Proceeds of any (x) sale or other disposition of Restricted Investments (which Investment was made after March 10, 2003) made by the Company or a Restricted Subsidiary, (y) dividends or other distributions, whether liquidating or otherwise, from, or the sale of capital stock of, an Unrestricted Subsidiary, or (z) dividends or other distributions, whether liquidating or otherwise, from Restricted Investments (which Investment was made after March 10, 2003); plus

(G)           with respect to any Unrestricted Subsidiary that is redesignated by the Board of Directors as a Restricted Subsidiary, an amount equal to the lower of (x) the fair market value (as determined by a majority of the Independent Directors of the Board of Directors and evidenced by a Board Resolution) of the Company’s or a Restricted Subsidiary’s interest in such Unrestricted Subsidiary or (y) the amount of the original Investment by the Company or such Restricted Subsidiary in such Unrestricted Subsidiary plus any additional Investment made in such Unrestricted Subsidiary after the date such Subsidiary was so designated; provided that in determining the amount of the Investment by the Company or such Restricted Subsidiary in (1) any Subsidiary designated as an Unrestricted Subsidiary as of March 10, 2003, such amount shall be the fair market value of such Unrestricted Subsidiary as at March 10, 2003, (2) any Restricted Subsidiary that is designated as an Unrestricted Subsidiary after March 10, 2003; such amount shall be the fair market value of such Unrestricted Subsidiary as at the date of such designation, and (3) any Investment made in an Unrestricted Subsidiary after the date such Subsidiary was so designated, such amount shall be equal to the cash amount so invested or the fair market value of any property contributed; plus

(H)           Cdn. $30,000,000.

The sum of the amounts provided for in clauses (3)(A) through (3)(H) above, less the aggregate amount of Restricted Payments made by the Company and its Restricted Subsidiaries, is referred to in this Indenture as the “RP Available Amount.”

(b)           Notwithstanding the foregoing (and, in the case of clauses (ii) through (viii) below, so long as (I) no Default or Event of Default shall have occurred and be continuing or shall occur as a consequence of the actions or payments set forth therein and (2) no holders of any other Indebtedness of the Company or any Restricted Subsidiary have an Acceleration Right), the foregoing provisions will not prohibit the following actions (clauses (i) through (viii) of this subsection (b) being referred to as “Permitted Payments”):

(i)           the payment of any dividend or distribution within 60 days after the date of declaration thereof, if at such date of declaration such payment would be permitted by the provisions of paragraph (a) of this Section and such payment will be deemed to have been paid on such date of declaration for purposes of the calculation required by paragraph (a) of this Section;

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(ii)           the payment of any dividend or distribution on the Series II Preferred Shares (and any Capital Stock issued in connection with the purchase, redemption, retirement or other refinancing of the Series II Preferred Shares permitted under this Indenture), in an amount not to exceed the aggregate dividends paid by Hollinger International to the Company on Class A Common Stock that corresponds to the number of shares of Class A Common Stock into which the Series II Preferred Shares are exchangeable;

(iii)           the payment of any dividend or distribution on the retractable common shares of the Company in an amount not to exceed the aggregate cash amount received by the Company from ACL or RMI after March 10, 2003 in the form) of a Subordinated Intercompany Loan;

(iv)           any repurchase, redemption or other acquisition or retirement of any shares of Capital Stock of the Company in exchange for (including any such exchange pursuant to the exercise of a conversion right or privilege in connection with which cash is paid in lieu of the issuance of fractional shares or scrip), or out of the Net Cash Proceeds of a substantially concurrent issue and sale for cash (other than to a Restricted Subsidiary) of, (A) other Qualified Capital Stock of the Company or (B) in the case of a retraction of the Company’s retractable Capital Stock, shares of Class A common stock of Hollinger International; provided that the Net Cash Proceeds from the issuance of such shares of Qualified Capital Stock are excluded from clauses (B) and (C) of paragraph (a) of this Section;

(v)           any repurchase, redemption, defeasance, retirement or acquisition for value or payment of principal of any Subordinated Indebtedness in exchange for, or out of the net proceeds of, a substantially concurrent issuance and sale for cash (other than to any Restricted Subsidiary of the Company) of, any Qualified Capital Stock of the Company; provided that the Net Cash Proceeds from the issuance of such Qualified Capital Stock are excluded from clauses (B) and (C) of paragraph (a) of this Section; and

(vi)           the repurchase; redemption, defeasance, retirement, refinancing, acquisition for value or payment of principal of any Subordinated Indebtedness (other than Redeemable Capital Stock) (a “refinancing”) through the issuance of new Subordinated Indebtedness of the Company; provided that any such new Subordinated Indebtedness (1) shall be in a principal amount that does not exceed the principal amount so refinanced (or, if the Subordinated Indebtedness so refinanced provides for an amount less than the principal amount thereof to be due and payable upon a declaration or acceleration thereof, then such lesser amount as of the date of determination), plus the amount of any premium required to be paid in connection with such refinancing pursuant to the terms of such refinanced Indebtedness and any reasonable out-of-pocket expenses of the Company Incurred in connection with such refinancing; (2) has an Average Life to Stated Maturity greater than the remaining, Average Life to Stated Maturity of the Notes; (3) has a Stated Maturity for its final scheduled principal payment later than the Stated Maturity for the final scheduled principal payment of the Notes; and (4) is expressly subordinated in right of payment to the Notes at least to the same extent as the Indebtedness to be refinanced.

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(c)           For purposes of this Section, if the Board of Directors designates a Restricted Subsidiary as an Unrestricted Subsidiary, a “Restricted Payment” shall be deemed to have been made in an amount equal to the fair value of the Investment of the Company and its other Restricted Subsidiaries in such Unrestricted Subsidiary as determined by the Board of Directors with the concurrence of a majority of the Independent Directors (there being at least one Independent Director), whose good faith determination shall be conclusive. If a particular Restricted Payment involves a non-cash payment, including a distribution of assets, then such Restricted Payment shall be deemed to be in an amount equal to the fair market value of the non-cash portion of such Restricted Payment as determined by the Board of Directors, whose good faith determination shall be conclusive.

SECTION 10.10. Limitation on Transactions with Affiliates. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or suffer to exist any transaction or series of related transactions (including, without limitation, the sale, purchase, exchange or lease of assets, property or services) with any Affiliate of the Company (other than the Company or a Restricted Subsidiary) unless (a) such transaction or series of related transactions is on terms that are no less favourable to the Company or such Restricted Subsidiary, as the case may be, than would be available in a comparable transaction in arm’s length dealings with an unrelated third party and (b) with respect to any transaction or series of related transactions involving aggregate payments in excess of $1,000,000, the Company delivers an Officers’ Certificate to the Trustee certifying that such transaction or series of related transactions complies with clause (a) above and such transaction or series of related transactions has been approved by a majority of the Independent Directors of the Board of Directors (or, if the Company ceases to be a public company, by a majority of the members of the Board of Directors); provided that any transaction or series of related transactions otherwise permitted under this paragraph (other than any transaction or series of related transactions with respect to the making of any Restricted Payment permitted pursuant to Section 10.09) pursuant to which the Company or any Restricted Subsidiary shall receive or render value exceeding $5,000,000 shall not be permitted unless, prior to the consummation of any such transaction or series of related transactions, the Company shall have received an opinion, from an independent nationally recognized investment banking firm or firm experienced in the appraisal or similar review of similar types of transactions, that such transaction is fair to the Company from a financial point of view; provided further that this covenant shall not apply to:

(i)           transactions or agreements as in effect or securities outstanding as of March 10, 2003;

(ii)           directors' fees approved by the Board of Directors;

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(iii)           any employee benefit plan or arrangement entered into or made available to officers or other employees of the Company or the Restricted Subsidiaries in the ordinary course of business;

(iv)           the performance by RMI, ACL, the Company and any Restricted Subsidiary of their respective obligations under the Support Agreement (and the related Contribution Agreement), the Security Documents and this Indenture or the contribution by RMI or ACL of any voluntary support amounts to the Company;

(v)           for so long as the Company is a public company, any sale to Hollinger International of shares of Capital Stock of Hollinger International held by the Company or its Restricted Subsidiaries for fair value (as determined by a majority of the Independent Directors of the Board of Directors); and

(vi)           purchase by RMI or its Affiliates from the Company or any of its Restricted Subsidiaries and substantially concurrent sale in an arm’s-length transaction by RMI or its Affiliates to a third party (other than an Affiliate of the Company or RMI) or to Hollinger International of shares of Capital Stock of Hollinger International where the purchase and sale were undertaken at the same price and RMI delivers an Officers’ Certificate to the Trustee certifying that such purchase and sale of such shares were undertaken at the same price.

SECTION 10.11. Limitation on Liens. (a) The Company will not, and will not permit any Restricted Subsidiary to, create, incur, assume or suffer to exist any Lien on any of its assets or properties of any character, or any shares of Capital Stock or Indebtedness of any Restricted Subsidiary, without making effective provision for all of the Notes and all other amounts due under this Indenture to be directly secured equally and ratably with (or, if the obligation or liability to be secured by such Lien is subordinated in right of payment to the Notes, prior to) the obligation or liability secured by such Lien.

(b) The foregoing limitation does not apply to:

(i)             Liens (other than on the Capital Stock of NBI (until and unless the NBI Guarantee shall have been released in accordance with this Indenture) or any of the Senior Notes Collateral) securing Indebtedness incurred under the Credit Facility that is permitted to be incurred under the definition of "Permitted Indebtedness”;

(ii)            Liens existing on March 10, 2003;

(iii)           Liens granted after March 10, 2003 on any assets or Capital Stock of the Company or its Restricted Subsidiaries created in favor of the Holders;

(iv)           Liens with respect to the assets of a Restricted Subsidiary granted by such Restricted Subsidiary to the Company or a Restricted Subsidiary to secure Indebtedness owing to the Company or such Other Restricted Subsidiary;

(v)            Liens securing Indebtedness which is Incurred to refinance secured Indebtedness which is permitted to be Incurred under clause (viii) of the definition of “Permitted Indebtedness” provided that such Liens do not extend to or cover any property or assets of the Company or any Restricted Subsidiary other than the property or assets securing the Indebtedness being refinanced;

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(vi)           Liens on any property or assets or capital stock of a Restricted Subsidiary securing Indebtedness of such Restricted Subsidiary permitted under the definition of “Permitted Indebtedness”; or

(vii)          Permitted Liens.

SECTION 10.12. Limitation on Issuances of Guarantees of Indebtedness. (a) The Company will not permit any Restricted Subsidiary (other than NBI), directly or indirectly, to guarantee, assume or in any other manner become liable with respect to any Indebtedness of the Company (other than pursuant to the First Priority Notes Indenture, the First Priority Notes or the First Priority Notes Security Agreement, or a Credit Facility) unless such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to this Indenture providing for a senior Guarantee of the Notes and if such Indebtedness of the Company is by its terms pari passu with or expressly subordinated to the Notes, any such assumption, guarantee or other liability of such Restricted Subsidiary with respect to such Indebtedness shall be pari passu with or subordinated to such Restricted Subsidiary’s Guarantee to the same extent as such Indebtedness is pari passu with or subordinated to the Notes.

(b) Notwithstanding the foregoing, any Guarantee by a Restricted Subsidiary of the Notes that is provided pursuant to the foregoing paragraph may provide by its terms that it shall be automatically and unconditionally released and discharged (1) upon any sale, exchange or transfer, to any Person not an Affiliate of the Company, of all of the Company’s Capital Stock in, or all or substantially all the assets of, such Restricted Subsidiary, which sale, exchange or transfer is in compliance with this Indenture, (ii) if the Restricted Subsidiary issuing such Guarantee ceases to be a Restricted Subsidiary or (iii) upon the release by the holders of the Indebtedness of the Company described in paragraph (a) above of their guarantee by such Restricted Subsidiary (including any deemed release upon payment in full of all obligations under such Indebtedness), at a time when (A) no other Indebtedness of the Company or any Restricted Subsidiary has been guaranteed by such Restricted Subsidiary or (B) the holders of all such other Indebtedness which is guaranteed by such Restricted Subsidiary also release their guarantee by such Restricted Subsidiary (including any deemed release upon payment in full of all obligations under such Indebtedness).

SECTION 10.13. Limitation on Sale of Assets. (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, consummate an Asset Sale unless:

(i)           at least 75% of the proceeds from such Asset Sale are received in cash (provided that the amount of (A) any Pari Passu Indebtedness of the Company or Indebtedness of any such Restricted Subsidiary that is pari passu with any guarantee of the Notes (as shown on the Company’s or such Restricted Subsidiary’s most recent balance sheet or in the notes thereto) of the Company or any such Restricted Subsidiary that is assumed by the transferee of any asset in connection with any Asset Sale and (B) any deferred payment obligations received by the Company or any such Restricted Subsidiary as proceeds of an Asset Sale that are concurrently with the Asset Sale converted into cash without recourse to, the Company or any of its Restricted Subsidiaries shall be deemed to be cash for purposes of this provision; provided further that for purposes of this clause (i); “cash” shall include any cash proceeds received from the sale of securities received in an Asset Sale as long as, at the time of such Asset Sale, the Company or its Restricted Subsidiary, as applicable, has entered into a legally binding agreement for the sale of such securities and such securities are sold within 90 days of such Asset Sale; and provided further that this clause (i) shall not apply to

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(x)           any contribution, sale or other disposition of shares of Capital Stock of Hollinger International held by the Company or its Restricted Subsidiaries (other than the Pledged Share Collateral) to Hollinger International or its Subsidiaries in satisfaction of such portion of any Indebtedness owed by the Company or any of its Restricted Subsidiaries to Hollinger International or its Subsidiaries under the international Intercompany Note as is no less than 90% of the aggregate Current Market Price of the shares of Capital Stock of Hollinger International so contributed, sold or disposed of, so long as and to the extent that the repayment of such Indebtedness would be permitted under the provisions of Section 10.09 and Section 10.10, or

(y)           any sale of an interest in the Company’s newspaper businesses in the Cayman Islands held through Holcay Holdings Ltd., or in Costa Rica held through 172847 Canada Limited, to Hollinger International or its Subsidiaries in satisfaction of such portion of any Indebtedness owed by the Company or any of its Restricted Subsidiaries to Hollinger International or its Subsidiaries under the International Intercompany Note as is equal to the fair market value of the shares or assets so sold, so long as and to the extent that the repayment of such Indebtedness would be permitted under the provisions of Section 10.09 and Section 10.10; and

(ii)           The Company or such Restricted Subsidiary receives consideration at the time of such Asset Sale at least equal to the fair market value of the shares or assets sold (as determined by the Board of Directors of the Company and evidenced by a Board Resolution). The value of any properties or assets (other than cash) received pursuant to an Asset Sale shall be determined by the Board of Directors of the Company and evidenced by a Board Resolution; provided, that if the value of the asset which is the subject of the Asset Sale is in excess of $5,000,000, the value, of the properties or assets received shall be determined by an independent nationally recognized investment banking firm or firm experienced in the appraisal or similar review of similar types of assets.

(b)           The Company will, and will cause its Restricted Subsidiaries to, apply 100% of the Net Cash Proceeds of any Asset Sale:

(i)           first, (A) to the extent the Company elects, to the reinvestment by the Company or such Restricted Subsidiary in properties and assets that (as determined by the Board of Directors) replace the properties and assets that were the Subject of the Asset Sale or in properties and assets that will be used in the businesses of the Company or its Restricted Subsidiaries existing as of March 10, 2003 or in businesses reasonably related thereto or (B) to the extent the Company elects to the making of an offer to purchase (an “Offer”), out of such amount of the Net Cash Proceeds as the Company shall determine to allocate for such purpose (the “Allocated Proceeds”), a principal amount of Notes equal to the Notes Amount (as defined in clause (c) below) and (to the extent so required by the terms of the debt instrument governing such Indebtedness) a principal amount of Pari Passu Indebtedness equal to the Pari Passu Amount (as defined in clause (c) below), any such Offer pursuant to this clause (b)(i)(B) to be conducted in accordance with the procedures set forth in clause (c) below (substituting the term “Allocated Proceeds” in place of any reference therein with “Excess Proceeds”) and in this Indenture (with any Deficiency (as defined in clause (c) below) occurring after such Offer to be excluded from the calculation of Excess Proceeds and treated the same as a Deficiency occurring after an Offer made using Excess Proceeds), any such application pursuant to clauses (A) and (B) to be made within 12 months of receipt of such Net Cash Proceeds;

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(ii)           second, to the extent of the balance of such Net Cash Proceeds after application, if any, in accordance with clause (i) above, to make an Offer to purchase Notes pursuant to and subject to the conditions set forth below (including, without limitation, the condition in Section 10.13(c) that the aggregate amount of Excess Proceeds equals or exceeds $5,000,000); provided however, that if the Company elects (or is required by the terms of any Pari Passu Indebtedness), such Offer may be made ratably to purchase the Notes and any Pari Passu Indebtedness of the Company (any Net Cash Proceeds from Asset Sales (excluding any Deficiency resulting from an Offer made using Allocated Proceeds pursuant to clause (b)(i)(B)) that are not applied as provided in clause (i) above shall constitute “Excess Proceeds”); and

(iii)           third, to the extent of the balance of any Excess Proceeds after application in accordance with clauses (i) and (ii) above, for any general corporate purpose permitted pursuant to the terms of this Indenture;

provided, however, that in connection with any prepayment, repayment or purchase of Indebtedness pursuant to clauses (i)(B) and (ii) above, the Company or such Restricted Subsidiary will retire such Indebtedness and (in the case of the Credit Facility, to the extent of any borrowings thereunder that have been converted to a term loan as permitted under this Indenture) will cause the related loan commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased.

(c)           When the aggregate amount of Excess Proceeds equals or exceeds $5,000,000, the Company shall apply the Excess Proceeds to the repayment of the Notes and any Pari Passu Indebtedness required to be repurchased under the instrument governing such Pari Passu Indebtedness as follows: (i) the Company shall make an offer to purchase (an “Offer”) from all Holders, in accordance with the procedures set forth in this Indenture, in the maximum principal amount (expressed as a multiple of $1,000) of Notes that may be purchased out of an amount (the “Note Amount”) equal to the product of such Excess Proceeds multiplied by a fraction, the numerator of which is the outstanding principal amount of the Notes, and the denominator of which is the sum of the outstanding principal amount of the Notes and such Pari Passu Indebtedness (subject to proration in the event such amount is less than the aggregate Offered Price (as defined herein) of all Notes tendered) and (ii) to the extent required by such Pari Passu Indebtedness to permanently reduce the principal amount of such Pari Passu Indebtedness, the Company shall make an offer to purchase or otherwise repurchase or redeem Pari Passu Indebtedness (a “Pari Passu Offer”) in an amount (the “Pari Passu Debt Amount”) equal to the excess of the Excess Proceeds over the Note Amount; provided that in no event shall the Pari Passu Debt Amount exceed the principal amount of such Pari Passu Indebtedness plus the amount of any premium required to be paid to repurchase such Pari Passu Indebtedness. The offer price shall be payable in cash in an amount equal to 100% of the principal amount of the Notes plus accrued and unpaid interest, if any, to the date (the “Purchase Date”) such Offer is consummated (the “Offered Price”), in accordance with the procedures set forth below. To the extent that the aggregate Offered Price of the Notes tendered pursuant to the Offer is less than the Note Amount relating thereto or the aggregate amount of Pari Passu Indebtedness that is purchased is less than the Pari Passu Debt Amount (the amount of such shortfall, if any, constituting a “Deficiency”), the Company may use such Deficiency for any purpose not otherwise prohibited by this Indenture. Upon completion of the purchase of all Notes tendered pursuant to an Offer and repurchase of the Pari Passu Indebtedness pursuant to a Pari Passu Offer, the amount of Excess Proceeds, if any, shall be reset at zero.

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(d)           Whenever the aggregate amount of Excess Proceeds received by the Company exceeds $5,000,000, such Excess Proceeds shall, prior to the purchase of Notes or any Pari Passu Indebtedness described in paragraph (c) above, be set aside by the Company in a separate account pending (i) deposit with the depository or a Paying Agent of the amount required to purchase the Notes or Pari Passu Indebtedness tendered in an Offer or a Pari Passu Offer and (ii) delivery by the Company of the Offered Price to the Holders or holders of Pari Passu Indebtedness tendered in an Offer or a Pari Passu Offer. Such Excess Proceeds may be invested in Temporary Cash Investments; provided that the maturity date of any such investment made after the amount of Excess Proceeds equals or exceeds $5,000,000 shall not be later than the Purchase Date. The Company shall be entitled to any interest or dividends accrued, earned or paid on such Temporary Cash Investments; provided that the Company shall not be entitled to such interest and shall not withdraw such interest from the separate account, if an Event of Default has occurred and is continuing.

(e)           If the Company becomes obligated to make an Offer pursuant to paragraph (c) above, the Notes shall be purchased by the Company, at the option of the Holders thereof, in whole or in part in integral multiples of $1,000, on a date that is not earlier than 30 days and not later than 60 days from the date the notice is given to Holders, or such later date as may be necessary for the Company to comply with the requirements under the Exchange Act, subject to proration in the event the Note Amount is less than the aggregate Offered Price of all Notes tendered.

(f)           Notwithstanding any other provision hereof, with respect to the proceeds of an Asset Sale arising from the issuance of Capital Stock of a Restricted Subsidiary (“Issuance Proceeds”):

(i)           Prior to the day following the fifth anniversary of March 10, 2003, the Company shall not be required to use Issuance Proceeds to make an Offer to purchase Notes in an amount in excess of 25% of the original aggregate principal amount of the Notes. For greater certainty, the maximum amount of the Issuance Proceeds that may be applied to make an Offer to purchase Notes that has a date of purchase prior to the day following the fifth anniversary of March 10, 2003 is 25% of the original aggregate principal amount of the Notes less the aggregate principal amount of Notes previously purchased pursuant to a purchase offer using Issuance Proceeds. To the extent the aggregate amount of Notes tendered exceeds the permitted amount of the Offer, the tendered Notes shall be selected for repurchase on a pro rata basis.

(ii)           Promptly after the fifth anniversary of March 10, 2003, the Company shall be required to make an Offer to purchase Notes in accordance with the requirements set out in paragraph (c) above, in an aggregate amount equal to the aggregate amount of Issuance Proceeds in excess of 25% of the principal amount of the Notes that was not applied to purchase Offers pursuant to the provisions of this paragraph

(g)           The Company shall comply with the applicable tender offer rules, including Rule 14e-1 under the Exchange Act, and any other applicable securities laws or regulations in connection with an Offer.

(h)           The Company shall not, and shall not permit any Restricted Subsidiary to, create or permit to exist or become effective any restriction that would expressly impair the ability of the Company to make an Offer to purchase the Notes or, if such Offer is made, to pay for the Notes tendered for purchase.

(i)           Notwithstanding anything to the contrary herein, until and unless the NBI Guarantee shall have been released in accordance with this Indenture, the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, consummate an Asset Sale in respect of any of the Capital Stock or assets and properties of either Sugra or NBI to the extent that any such Asset Sale would impair the Lien in favor of the Collateral Agent in the Pledged Share Collateral.

(j)           Within 30 days after the date on which the amount of Excess Proceeds equals or exceeds $5,000,000, the Company shall send by first-class mail; postage prepaid, to the Trustee and to each Holder of the Notes, at such Holder’s address appearing in the Note Register, a notice stating or including:

(i)           that the Holder of such Notes has the right to require the Company to repurchase, subject to proration, part or all of such Holder’s Notes at the Offered Price;

(ii)           the Purchase Date;

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(iii)           the instructions a Holder of such Notes must follow in order to have its Notes purchased in accordance with paragraph (c) of this Section;

(iv)           (A) the most recently filed annual report on Form 20-F or Form 40-F, as applicable (including audited consolidated financial statements), of the Company, and any report on Form 6-K of the Company furnished subsequent to such annual report, other than reports describing Asset Sales otherwise described in the offering Materials (or corresponding successor reports) (or in the event the Company is not required to prepare any of the foregoing Forms, the comparable information required pursuant to Section 10.17), (B) a description of material developments in the Company’s business subsequent to the date of the latest of such reports, (C) if material, appropriate pro forma financial information, and (D) such other information, if any, concerning the business of the Company and its Restricted Subsidiaries which the Company in good faith believes will enable such Holders to make an informed investment decision regarding the Offer;

(v)           the Offered Price;

(vi)           the names and addresses of the Paying Agent and the offices or agencies referred to in Section 10.02;

(vii)           that Notes must be surrendered at least three Business Days prior to the Purchase Date to the Paying Agent or to an office or agency referred to in Section 10.02 to collect payment;

(viii)                      that any Notes not tendered will continue to accrue interest and that unless the Company defaults in the payment of the purchase price, any Note accepted for payment pursuant to the offer shall cease to accrue interest on and after the Purchase Date; and

(ix)           the procedures for withdrawing a tender.

(k)           Holders electing to have the Notes purchased hereunder will be required to surrender such Notes at the address specified in the notice at least three Business Days prior to the Purchase Date. Holders will be entitled to withdraw their election to have their Notes purchased pursuant to this Section if the Company receives, not later than three Business Days prior to the Purchase Date, a telegram, telex, facsimile transmission or letter setting forth (1) the name of the Holder, (2) the certificate number of the Note in respect of which such notice of withdrawal is being submitted, (3) the principal amount of the Note (which shall be $1,000 or an integral multiple thereof) delivered for purchase by the Holder as to which his election is to be withdrawn, (4) a statement that such Holder is withdrawing such Holder’s election to have such principal amount of such Note purchased, and (5) the principal amount, if any, of such Note (which shall be $1,000 or an integral multiple thereof) that remains subject to the original notice of the Offer and that has been or will be delivered for purchase by the Company.

(l)           the Company shall (i) not later than the Purchase Date, accept for payment Notes or portions thereof tendered pursuant to the Offer, (ii) not later than 11:00 a.m. (New York time) on the Purchase Date, deposit with the Trustee or with a Paying Agent an amount of money in same day Rinds (or New York Clearing House funds if such deposit is made prior to the Purchase Date) sufficient to pay the aggregate Offered Price of all the Notes or portions thereof which are to be purchased on that date and (iii) not later than 11:00 a.m. (New York time) on the Purchase Date, deliver to the Paying Agent an Officers’ Certificate stating the Notes or portions thereof have been accepted for payment by the Company.

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The Trustee and the Paying Agent shall return to the Company any cash, that remains unclaimed, together with interest, if any, thereon, held by them for the payment of the Offend Price; provided, however, that (x) to the extent that the aggregate amount of cash deposited by the Company with the Trustee or a Paying Agent in respect of an Offer exceeds the aggregate Offered Price of the Notes or portions thereof to be purchased, then the Trustee or a Paying Agent shall hold such excess for the Company and (y) unless otherwise directed by the Company in writing, promptly after the Business Day following the Purchase Date the Trustee or a Paying Agent shall return any such excess to the Company together with interest or dividends, if any, thereon.

(m)           Notes to be purchased shall, on the Purchase Date, become due and payable at the Offered Price and from and after such date (unless the Company shall default in the payment of the Offered Price) such Notes shall cease to bear interest. The Offered Price shall be paid to such Holder promptly following the later of the Purchase Date and the time of delivery of such Note to the relevant Paying Agent at the office of such Paying Agent by the Holder thereof in the manner required. Upon surrender of any such Note for purchase in accordance with the foregoing provisions, such Note shall be paid by the Company at the Offered Price; provided, however, that installments of interest whose Stated Maturity is on or prior to the Purchase Date shall be payable to the Holders of such Notes, or one or more Predecessor Notes, registered as such on the relevant Regular Record Dates according to the terms and the provisions of Section 3.08; provided further that Notes to be purchased are subject to proration in the event the Excess Proceeds are less than the aggregate Offered Price of all Notes tendered for purchase, with such adjustments as may be deemed appropriate by the Trustee so that only Notes in denominations of $1,000 or integral multiples thereof shall be purchased if any Note tendered for purchase in accordance with the terms of this Section shall not be so paid upon surrender thereof by deposit of funds with the Trustee or a Paying Agent in accordance with paragraph (j) above, the principal thereof (and premium, if any, thereon) shall, until paid, bear interest from the Purchase Date at the rate borne by such Note. Any Note that is to be purchased only in part shall be surrendered to a Paying Agent in accordance with the terms of this Section at the office of such Paying Agent (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing), and the Company shall execute and pursuant to a Company Order the Trustee shall authenticate and deliver to the Holder of such Note, without service charge, one or more new Notes of any authorized denomination as requested by such Holder in an aggregate principal amount equal to, and in exchange for, the portion of the principal amount of the Note so surrendered that is not purchased.

SECTION 10.14. Purchase of Notes upon a Change of Control. (a) if a Change of Control shall occur at any time, each Holder with respect to Notes shall have the right to require that the Company purchase such Holder’s Notes, pursuant to an offer described in subsection (b) of this Section ( “Change of Control Offer”), in whole or in part in integral multiples of $1,000, at a purchase price (the “Change of Control Purchase Price”) in cash in an amount equal to 101% of the principal amount of such Notes, plus accrued and unpaid interest, if any, to the date of purchase (the “Change of Control Purchase Date”), in accordance with the procedures set forth in paragraphs (b), (c), (d) and (e) of this Section.

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(b) Within 30-days following any Change of Control, the Company shall notify the Trustee thereof and give written notice (a “Change of Control Purchase Notice”) of such Change of Control to each Holder by first-class mail, postage prepaid, to the Trustee and to each Holder at his address appearing in the Note Register, stating or including:

A.           that a Change of Control has occurred, the date of such event, and that such Holder has the right to require the Company to repurchase such Holder’s Notes at the Change of Control Purchase Price;

B.           the circumstances and relevant facts regarding such Change of Control (including but not limited to information with respect to pro forma historical income, cash flow and capitalization after giving effect to such Change of Control, if any);

C.           that the Change of Control Offer is being made pursuant to Section 10.14(a) and that all Notes properly tendered pursuant to the Change of Control Offer will be accepted for payment at the Change of Control Offer Purchase Price;

D.           the Change of Control Purchase Date, which shall be a Business Day no earlier than 30 days nor later than 60 days from the date such notice is mailed or such later date as may be necessary for the Company to comply with the requirements under the Exchange Act;

E.           (i) the most recently filed annual report on Form 20-F or Form 40-F, as applicable (including audited consolidated financial statements), of the Company, and any report on Form 6-K of the Company furnished subsequent to such annual report (or in the event the Company is not required to prepare any of the foregoing Forms, the comparable information required to be prepared by the Company pursuant to Section 10.17), (ii) a description of material developments in the Company’s business subsequent to the date of the latest of such reports and (iii) such other information, if any, concerning the business of the Company and its Restricted Subsidiaries which the Company in good faith believes will enable such Holders to make an informed investment decision regarding the Change of Control Offer;

F.           the Change of Control Purchase Price;

G.           the names and addresses of the Paying Agent and the offices or agencies referred to in Section 10.02;

H.           that Notes must be surrendered at least three Business Days prior to the Change of Control Purchase Date to the Paying Agent at the Office of the Paying Agent or to an office or agency referred to in Section 10.02 to collect payment;

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I.           that the Change of Control Purchase Price for any Note which has been properly tendered and not withdrawn will be paid promptly following the Change of Control Purchase Date;

J.           the procedures for withdrawing a tender of Notes and Change of Control Purchase Notice;

K.           that any Note not tendered will continue to accrue interest; and

L.           that, unless the Company defaults in the payment of the Change of Control Purchase Price, any Note accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Purchase Date.

(c)           Upon receipt by the Company of the proper tender of Notes, each Holder of a Note in respect of which such proper tender was made shall (unless the tender of such Note is properly withdrawn) thereafter be entitled to receive solely the Change of Control Purchase Price with respect to such Note. Upon surrender of any such Note for purchase in accordance with the foregoing provisions, such Note shall be paid by the Company at the Change of Control Purchase Price; provided, however, that installments of interest whose Stated Maturity is on or prior to the Change of Control Purchase Date shall be payable to the Holders of such Notes, or one or more Predecessor Notes, registered as such on the relevant Regular Record Dates according to the terms and the provisions of Section 3.08. If any Note tendered for purchase in accordance with the provisions of this Section shall not be so paid upon surrender thereof by deposit of funds with the Paying Agent in accordance with paragraph (d) below, the principal thereof (and premium, if any, thereon) shall, until paid, bear interest front the Change of Control Purchase Date at the rate borne by such Note. Holders electing to have such Notes purchased will be required to surrender such Notes to the Paying Agent at the address specified in the notice at least three Business Days prior to the Change of Control Purchase Date. Any such Notes that are to be purchased only in part shall be surrendered to a Paying Agent in accordance with the provisions of this Section at the office of such Paying Agent (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing), and the Company shall execute and pursuant to a Company Order the Trustee shall authenticate and deliver to the Holder of such Note, without service charge, one or more new Notes of any authorized denomination as requested by such Holder in an aggregate principal amount equal to, and in exchange for, the portion of the principal amount of the Note so surrendered that is not purchased.

(d)           The Company shall (i) not later than the Change of Control Purchase Date, accept for payment of Notes or portion thereof tendered pursuant to the Change of Control Offer, (ii) not later than 11:00 a.m. (New York time) on the Change of Control Purchase Date, deposit with the Paying Agent an amount of cash sufficient to pay the aggregate Change of Control Purchase Price of all the Notes or portions thereof which are to be purchased as of the Change of Control Purchase Date and (iii) not later than 11:00 am. (New York time) on the Change of Control Purchase Date, deliver to the Paying Agent an Officers’ Certificate stating the Notes or portions thereof accepted for payment by the Company. The Paying Agent shall promptly mail or deliver to Holders of Notes so accepted payment in an amount equal to the Change of Control Purchase Price of the Notes purchased from each such Holder. Any Notes not so accepted shall be promptly mailed or delivered by the Paying Agent at the Company’s expense to the Holder thereof. The Company will publicly announce the results of the Change of Control Offer on the Change of Control Purchase Date. For purposes of this Section, the Company shall choose a Paying Agent which shall not be the Company.

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(e)           A tender made in response to a Change of Control Purchase Notice may be withdrawn before or after delivery by the Holder to the Paying Agent at the office of the Paying Agent of the Notes to which such Change of Control Purchase Notice relates, by means of a written notice of withdrawal delivered by the Holder to the Paying Agent at the office of the Paying Agent or to the office or agency referred to in Section 10.02 to which the related Change of Control Purchase Notice was delivered not later than three Business Days prior to the Change of Control Purchase Date specifying as applicable:

(1)           the name of the Holder;

(2) the certificate number of the Note in respect of which such notice of withdrawal is being submitted;

(3)           the principal amount of the Note (which shall be $1,000 or an integral multiple thereof) delivered for purchase by the Holder as to which such notice of withdrawal is being submitted;

(4)           a statement that such Holder is withdrawing such Holder’s election to have such principal amount of such Note purchased; and

(5)           the principal amount; if any, of such Note (which shall be $1,000 or an integral multiple thereof) that remains subject to the original Change of Control Purchase Notice and that has been or will be delivered for purchase by the Company.

(f)           As provided in the Notes, the Trustee and the Paying Agent shall return to the Company any cash that remains unclaimed; together with interest or dividends, if any, thereon, held by either of them for the payment of the Change of Control Purchase Price; provided, however, that (x) to the extent that the aggregate amount of cash deposited by the Company pursuant to clause (ii) of paragraph (d) above exceeds the aggregate Change of Control Purchase Price of the Notes or portions thereof to be purchased, then the Trustee or the Paying Agent shall hold such excess for the Company and (y) unless otherwise directed by the Company in writing, promptly after the Business Day following the Change of Control Purchase Date, the Trustee or the Paying Agent shall return any such excess to the Company together with interest, if any, thereon.

(g)           The Company shall comply with the applicable tender offer rules, including Rule 14e-1 under the Exchange Act, and any other applicable securities laws or regulations in connection with a Change of Control Offer.

(h)           Notwithstanding the occurrence of a Change of Control, the Company shall not be obligated to repurchase the Notes pursuant to a Change of Control Offer, or otherwise comply with this Section, if the Company has elected to redeem all of the Notes in accordance with Article XI.

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The Company shall not, and shall not permit any Subsidiary to, create or permit to exist or become effective any restriction that would expressly impair the ability of the Company to make a Change of Control Offer, to purchase the Notes or, if such Change of Control Offer is made, to pay for the Notes tendered for purchase.

SECTION 10.15. Limitation on Issuance and Sale of Capital Stock of Restricted Subsidiaries. The Company will not permit:

(a)           any Restricted Subsidiary to issue any Capital Stock (other than to the Company or any Restricted Subsidiary); or

(b)           any Person (other than the Company or a Restricted Subsidiary) to acquire any Capital Stock of any Restricted Subsidiary from the Company or any Restricted Subsidiary,

except if, immediately after giving effect to such issuance or sale, such Restricted Subsidiary would continue to be a Restricted Subsidiary or if, immediately after giving effect to such issuance or sale, such Restricted Subsidiary would no longer be a Restricted Subsidiary and the Company’s Investment in such Person after giving effect to such issuance or sale would have been permitted to be made under the provisions of Section 10.09 as if made on the date of such issuance or sale (and such Investment shall be deemed to be an Investment made for the purposes of Section 10.09). The proceeds of any issuance or sale of such Capital Stock permitted hereby will be treated as Net Cash Proceeds from an Asset Sale and must be applied in accordance with the terms of Section 10.13 (including the limitation noted in paragraph (f) thereof). Notwithstanding the foregoing, no issuance or sale of any Capital Stock of NBI (other than to the Company or any other Restricted Subsidiary) shall be permitted.

SECTION 10.16. Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to (a) pay dividends or make any other distribution on its Capital Stock to the Company or any other Restricted Subsidiary, (b) pay any Indebtedness owed to the Company or any other Restricted Subsidiary, (c) make any Investment in the Company or (d) transfer any of its properties or assets to the Company or any Restricted Subsidiary, except (i) any encumbrance or restriction pursuant to or in connection with any agreement as in effect as of March 10, 2003, (ii) any encumbrance or restriction, with respect to a Restricted Subsidiary that is not a Restricted Subsidiary of the Company as of March 10, 2003, in existence at the time such Person becomes a Restricted Subsidiary of the Company and not Incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary, (iii) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of the Company or any Restricted Subsidiary and (iv) any encumbrance or restriction existing under any amendments, modifications, restatements, renewals, supplements, replacements or refinancings of the agreements containing the encumbrances or restrictions in the foregoing clauses (i) and (ii); provided that the terms and conditions of any such encumbrances or restrictions, taken as a whole, are not materially less favourable to the Holders than those under or pursuant to the agreement evidencing the Indebtedness so extended, renewed, refinanced or replaced.

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SECTION 10.17. Provision of Financial Statements. (a) Whether or not the Company is subject to Section 13(a) or 15(d) of the Exchange Act; front and after January 1, 2006, the Company and RMI will, to the extent permitted under the Exchange Act, file with, or furnish to, the Commission the annual reports and other documents that they are or would have been required to file with, or furnish to, the Commission pursuant to such Section 13(a) or 15(d), including any information relating to the Company and RMI as may be required by Regulation S-X under the Exchange Act or by the Commission, if they were so subject, such documents to be filed with, or furnished to, the Commission on or prior to the respective dates by which they would have been required so to file, or to furnish, such documents if they are or were so subject (in each case, at the times, and in the manner, required of Foreign Private Issuers under the Exchange Act if the Company or RMI, as the case may be, qualifies as a Foreign Private Issuer) (the “Requited Filing Dates”); provided that, RMI may satisfy its obligations under this paragraph through the inclusion in the Company’s annual reports and other documents filed with or furnished to the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act (or the provisions of this Indenture) of such financial information of RMI as may be required to be contained therein by Regulation S-X under the Exchange Act. The Company will in any event, from and after January 1, 2006, (x) within 15 days of such Required Filing Date (i) transmit by mail to all Holders, as their names and addresses appear in the Note Register, without cost to such Holders and (ii) file with the Trustee copies of the annual reports and other documents which the Company would have been required to file with, or to furnish to, the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act if it was subject to such Sections and (y) if filing or furnishing such documents by the Company with the Commission is not permitted under the Exchange Act, promptly upon written request and payment of the reasonable cost of duplication and delivery, supply copies of such documents to any Holders at the Company’s cost.

(b) On or prior to December 31, 2005, the Company will file with, or furnish to, the Commission and transmit by mail to the Trustee and all Holders an annual report on Form 20-F (or any other form available for the purpose) pursuant to the Exchange Act, including audited Consolidated financial statements for the fiscal years ended December 31, 2003 and December 31, 2004.

SECTION 10.18. Statement by Officers as to Default. (a) The Company and RMI will deliver to the Trustee, on or before a date not more than 45 days after the end of each fiscal quarter and not more than 90 days after the end of each fiscal year of the Company and RMI ending after the date hereof, a written statement signed by two executive officers of each of the Company and RMI, one of whom shall be the principal executive officer, principal financial officer or principal accounting officer of the Company and RMI, as applicable, stating whether or not, after a review of the activities of the Company and RMI during such year or such quarter and of the Company’s and RMI’s performance under this Indenture, to the best knowledge, based on such review, of the signers thereof, each of the Company and RMI has fulfilled all its respective obligations and is in compliance with all conditions and covenants under this Indenture throughout such year or quarter, as the case may be, and, if there has been a Default, specifying each Default and the nature and status thereof.

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(b) When any Default of Event of Default has occurred and is continuing, or if the Trustee or any Holder or the trustee for or the holder of any other evidence of Indebtedness of the Company or any Restricted Subsidiary gives any notice or takes any other action with respect to a claimed default, the Company shall deliver to the Trustee by registered or certified mail or by telegram, telex or facsimile transmission followed by hard copy an Officers’ Certificate specifying such Default, Event of Default, notice or other action, the status thereof and what action the Company is taking or proposes to take with respect thereto, within five Business Days of its occurrence.

SECTION 10.19. Waiver Certain Covenants. The Company may omit in any particular instance to comply with any covenant or condition set forth in Sections 10.05 through 10.13 and Sections 10.15 through 10.18 if, before or after the time for such compliance, the Holders of not less than a majority in aggregate principal amount of the Notes at the time Outstanding waive such compliance in such instance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such covenant or condition shall remain in full force and effect.

SECTION 10.20. Limitation on the Designation of Unrestricted Subsidiaries. (a) The Board of Directors may designate any Restricted Subsidiary as an Unrestricted Subsidiary if (i) such action is in compliance with Section 10.09 of this Indenture and (ii) such action complies with the definition of “Unrestricted Subsidiaries.”

(b) The Board of Directors may not designate any Unrestricted Subsidiary as a Restricted Subsidiary unless any additional Indebtedness incurred as a result of giving effect to such action (and treating any Acquired Indebtedness as having been incurred at the time of such action) would constitute Permitted Indebtedness.

SECTION 10.21. Additional Amounts. (a) All payments made by the Company or any of the Note Guarantors under or with respect to the Notes shall be made free and clear of and without withholding or deduction for or on account of any present or future tax, duty, levy, impost, assessment or other governmental charge (including penalties, interest and other liabilities related thereto) (hereinafter “Taxes”) imposed or levied by or on behalf of the government of Canada or any political subdivision or any authority or agency therein or thereof having power to tax, or within any other jurisdiction in which the Company or any such Note Guarantor is organized or is otherwise resident for tax purposes or any jurisdiction from or through which payment is made (each a “Relevant Taxing Jurisdiction”), unless it is required to withhold or deduct Taxes by law or by the interpretation or administration thereof.

(b) If the Company or any Note Guarantor is so required to withhold or deduct any amount for or on account of Taxes imposed by a Relevant Taxing Jurisdiction from any payment made under or with respect to the Notes, it will be required to pay such additional amounts (“Additional Amounts”) as may be necessary so that the net amount received by Holders (including Additional Amounts) after such withholding or deduction will not be less than the amount that such Holders would have received if such Taxes had not been withheld or deducted; provided, however, that the foregoing obligation to pay Additional Amounts does not apply (1) with respect to a payment made to a Holder (an “Excluded Holder”) (A) with which the Company or such Note Guarantor does not deal at arm’s length (within the meaning of the Income tax Act (Canada)) at the time of making such payment, or (B) which is subject to any Taxes by reason of the existence of any present or former connection between the relevant Holder (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of power over the relevant Holder, if the relevant Holder is an estate; nominee, trust or corporation) and the Relevant Taxing Jurisdiction (other than the mere receipt of such payment or the ownership or holding outside of Canada of such Note); or (2) to any estate, inheritance, gift, sales, excise, transfer, personal property tax or similar tax, assessment or governmental charge (“Excluded Taxes”); nor will the Company or any Note Guarantor pay Additional Amounts if the payment could have been made without such deduction or withholding if the beneficiary of the payment had presented the Note for payment within 30 days after the date on which such payment or such Note became due and payable or the date on hich payment thereof is duly provided for, whichever is later (except to the extent that the Holder would have been entitled to Additional Amounts had the Note been presented on the last day of such 30-day period).

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(c)           The Company and each Note Guarantor will also (i) make such withholding or deduction and (ii) remit the full amount deducted or withheld to the relevant authority in accordance with applicable law. The Company and each Note Guarantor will furnish to the Holders, within 30 days after the date the payment of any Taxes is due pursuant to applicable law, certified copies of tax receipts evidencing such payment by the Company or such Note Guarantor. The Company and each Note Guarantor will indemnify and hold harmless each Holder (other than an Excluded Holder or with respect to Excluded Taxes) and upon written request will reimburse each such Holder for the amount of (1) any Taxes so levied or imposed and paid by such Holder as a result of payments made under or with respect to the Notes and (2) any Taxes levied or imposed and paid by such Holder with respect to any reimbursement under clause (1), but excluding any such Taxes on such Holder’s income or net income.

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

(e)           Whenever in this Indenture there is mentioned, in any context: (1) the payment of principal; (2) purchase prices in connection with a purchase of Notes; (3) interest; or (4) any other amount payable on or with respect to any of the Notes, such reference shall be deemed to include payment of Additional Amounts as described under this heading to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

(f)           The Company and the Note Guarantors will pay any present or future stamp, court or documentary taxes or any other excise or property taxes, charges or similar levies that arise in any jurisdiction from the execution, delivery, enforcement or registration of the Notes, this Indenture or any other document or instrument in relation thereof, or the receipt of any payments with respect to the Notes, excluding such taxes, charges or similar levies imposed by any jurisdiction outside of Canada, the jurisdiction of incorporation of any successor of the Company or any of the Note Guarantors Or any jurisdiction in which a paying agent is located, and the Company and the Note Guarantors will agree to indemnify the Holders for any such taxes paid by such Holders.

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(g)           The obligations of the Company and the Note Guarantors under this Section 10.21 will survive any termination, defeasance or discharge of this Indenture and will apply mutatis mutandis to any jurisdiction in which any successor Person to the Company or any Note Guarantor, as applicable, is organized or any political subdivision or taxing authority or agency thereof or therein.

SECTION 10.22. Covenants of RCL and Sugra.

(a) RCL hereby covenants to vote its Capital Stock in RMI, and cause any subsequent holder of Capital Stock of RMI to vote such stock, so as to cause RMI to comply with its obligations under this indenture, its Guarantee, the Support Agreement, the Security Documents and other transaction agreements. This covenant of RCL will not be deemed to be a guarantee by RCL of the Notes.

(b)           Sugra hereby covenants that, until and unless the NBI Guarantee shall have been released in accordance with this Indenture, it will not create, Incur, assume or suffer to exist any Lien on any of its shares of Capital Stock of NBI. This covenant of Sugra will not be deemed to be a guarantee by Sugra of the Notes.

SECTION 10.23. Limitation on RMIs Business Activities. RMI shall not:

(a)           Incur any Indebtedness other than its Guarantee of the Notes or Indebtedness incurred in connection with the First Priority Notes Indenture or under the First Priority Notes (and any refinancings or replacements thereof permitted under the definition of “Permitted Indebtedness”);

(b)           Create, Incur, assume or suffer to exist any Lien on any of its assets or properties of any character other than Liens arising in connection with the First Priority Notes indenture, the First Priority Notes or the First Priority Notes Security Agreement; or

(c)           engage in any business activities other than (i) the issuance of the RMI Guarantee, (ii) the performance of its obligations and pursuit of its rights under the Support Agreement and the Contribution Agreement or its rights and obligations existing as of March 10, 2003, (iii) the transactions contemplated in paragraph (vi) of Section 10.10, and (iv) activities incidental to those described in this clause (c).

ARTICLE XI

Redemption of Notes

SECTION 11.01: Right of Redemption. The Notes may be redeemed, at the election of the Company:

(a)           as a whole or in part; at any time on or after March 1, 2007, subject to the conditions and at the Redemption Prices specified in the form of Note or in this Indenture and any Indenture supplemental hereto with respect to the Notes as provided in Exhibit A, together with accrued and unpaid interest, if any, to the Redemption Date (subject to the right of Holders of record of the Notes on relevant Regular Record Dates and Special Record Dates to receive interest dice on relevant Interest Payment Dates) to the extent that this Article does not conflict with the terms of the form of Note;

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(b)           as a whole and not in part, upon not less than 30 nor more than 60 days’ notice, at any time, at a Redemption Price equal to the principal amount thereof plus accrued interest to the date fixed for redemption only if, as a result of (1) any change in or amendment to the laws of Canada (or of any political subdivision or taxing authority therein or thereof) or any regulations or rulings promulgated thereunder or any change in the official interpretation or official application of such laws; regulations or rulings (including a judgment; holding or order by a court of competent jurisdiction), or (2) any change in the official application or interpretation (including a judgment, holding or order by a court of competent jurisdiction) of, or any execution of or amendment to, any treaty or treaties affecting taxation to which Canada (or such political subdivision Or taxing authority) is a party, which change, amendment or treaty becomes effective on or after March 10, 2003:

(i)           the Company is or would be required on the next succeeding due date for a payment with respect to the Notes to pay any Additional Amounts with respect to the Notes pursuant to Section 10.21, or

(ii)           with respect to any payment due or to become due under the Guarantees or this Indenture, MI or NBI is, or on the next succeeding due date with respect to the Notes would be required to pay any Additional Amounts pursuant to Section 10.21.

SECTION 11.02. Applicability of Article. Redemption of Notes at the election of the Company or otherwise, as permitted or required by any provision of this Indenture, shall be made in accordance with such provision and this Article.

SECTION 11.03. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Notes pursuant to Section 11.01 shall be evidenced by a Company Order and an Officers’ Certificate stating that the Company is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of redemption have occurred. In case of any redemption at the election of the Company, the Company shall, not less than 30 nor more than 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice period shall be satisfactory to the Trustee), notify the Trustee in writing of such Redemption Date and of the principal amount of the Notes to be redeemed.

SECTION 11.04. Selection by Trustee of Notes to be Redeemed. (a) If less than all the Notes are to be redeemed, the portions of the Notes to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee (or such shorter period as the Trustee may agree upon), from the Outstanding Notes not previously called for redemption, by lot or such other method as the trustee shall deem fair and reasonable; and The amounts to be redeemed may be equal to $1,000 or any integral multiple thereof, unless otherwise provided in the terms of the Notes.

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(b)           The Trustee shall promptly notify the Company and the Note Registrar in writing of the Notes selected for redemption and, in the case of Notes selected for partial redemption, the principal amount thereof to be redeemed.

(c)           For all purposes of this Indenture; unless the context otherwise requires, all provisions relating to redemption of Notes shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principal amount of such Note which has been or is to be redeemed.

SECTION 11.05. Notice of Redemption. (a) Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Notes to be redeemed, at this address appearing in the Note Register. All notices of redemption shall state:

(i)            the Redemption Date;

(ii)           the Redemption Price;

(iii)           if less than all the Outstanding Notes are to be redeemed, the identification of the particular Notes to be redeemed;

(iv)           in the case of a Note to be redeemed in part, the principal amount of such Note to be redeemed and that after the Redemption Date upon surrender of such Note, a new Note or Notes in the aggregate principal amount equal to the unredeemed portion thereof will be issued;

(v)           that Notes called for redemption must be surrendered to the Paying Agent to collect the Redemption Price;

(vi)           that on the Redemption Date the Redemption Price will become due and payable upon each such Note or portion thereof to be redeemed, and that (unless the Company shall default in payment of the Redemption Price) interest thereon shall cease to accrue on and after said date;

(vii)           the place or places where such Notes are to be surrendered for payment of the Redemption Price; and

(viii)          the CUSIP number, if any, relating to such Notes.

(b)           notice of redemption of Notes to be redeemed at the election of the Company shall be given by the Company or at the Company’s written request, by the Trustee in the name and at the expense of the Company. If the Company elects to give notice of redemption, it shall provide the Trustee with a certificate stating that such notice has been given in compliance with the requirements of this Section.

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(c)           such notice if mailed in the manner herein provided shall be conclusively presumed to have been given, whether or not the Holder receives such notice. In any case, failure to give such notice by mail or any defect in the notice to the Holder of any Note designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Note.

SECTION 11.06. Deposit of Redemption Price. Prior to 11:00 am., New York. City time, on any Redemption Date, the Company shall irrevocably deposit with the Trustee or with a Paying Agent an amount of money in same day funds sufficient to pay the Redemption Price of, and, except if the Redemption Date shall be an Interest Payment Date, accrued interest on, all the Notes or portions thereof which are to be redeemed on that date. The Trustee or the Paying Agent shall hold in trust for, and return to, the Company promptly after the Business Day following the Redemption Date any interest or dividends, if any, earned on amounts deposited with the Trustee or the Paying Agent remaining after the payment of the aggregate Redemption Price for all Notes to be redeemed; provided that neither the Trustee nor the Paying Agent Shall be under any obligation to place or invest such funds in an interest bearing account.

SECTION 11.07. Notes Payable on Redemption Date. (a) Notice of redemption having, been given as aforesaid, the Notes so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and from and after such date (unless the Company shall not have deposited funds in accordance with Section 11.06 in respect of the payment of the Redemption Price and accrued interest) such Notes shall cease to bear interest. Upon surrender of any such Note for redemption in accordance with said notice, such Note shall be paid by the Company at the Redemption Price together with accrued interest to the Redemption Date; provided, however, that installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Notes, or one or more Predecessor Notes, registered as such on the relevant Regular Record Dates according to the terms and the provisions of Section 3.08.

(b)           If any Note called for redemption shall not be so paid upon surrender thereof for redemption, by deposit or segregation of funds in accordance with Section 11.06, the principal and premium, if any, shall, until paid, bear interest from the Redemption Date at the rate then borne by such Note.

SECTION 11.08. Notes Redeemed or Purchased in Part. Any Note which is to be redeemed or purchased only in part shall be surrendered to the Paying Agent at the office or agency maintained for such purpose pursuant to Section 10.02 (with, if the Company, the Note Registrar or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company, the Note Registrar or the Trustee as the case may be, duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing), and the Company shall execute, and pursuant to a Company Order the Trustee shall authenticate and deliver to the Holder of such Note without service charge, a new Note or Notes, of any authorized denomination as requested by such Holder in aggregate principal amount equal to, and in exchange for, the unredeemed portion of the principal of the Note so surrendered that is not redeemed or purchased.

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ARTICLE XII

Satisfaction and Discharge

SECTION 12.01. Satisfaction and Discharge of Indenture. This Indenture shall cease to be of further effect (except as to surviving rights of registration of transfer or exchange of the Notes herein expressly provided for) and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when

(a)           either:

(i)           all the Notes theretofore authenticated and delivered (other than (x) lost, stolen or destroyed Notes which have been replaced or paid as provided in Section 3.07 and (y) Notes for whose payment United States dollars have theretofore been irrevocably deposited in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 10.03) have been delivered to the Trustee for cancellation; or

(ii)           all Notes not theretofore delivered to the Trustee for cancellation

(x)           have become due and payable, or

(y)           will become due and payable at their Stated Maturity within one year, or

(z)           are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,

and the Company has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust an amount sufficient to pay and discharge the entire indebtedness on the Notes not theretofore delivered to the Trustee for cancellation; including principal of, premium, if any, and accrued interest on the Notes at such Maturity, Stated Maturity or Redemption Date;

(b)           the Company has paid all other sums payable hereunder by the Company; and

(c)           the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel each to the effect that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with and that such satisfaction and discharge will not result in a breach or violation of, or constitute a default under, this Indenture.

Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 6.07 and, if United States dollars shall have been deposited with the Trustee pursuant to subclause (ii) of Subsection (a) of this Section, the obligations of the Trustee under Section 12.02 and the fast paragraph of Section 10:03 shall survive.

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SECTION 12.02. Application of Trust Money. Subject to the provisions of the last paragraph of Section 10.03, all United States dollars deposited with the Trustee pursuant to Section 12.01 shall be held in trust and applied by it in accordance with the previsions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent as the Trustee may determine, to the Persons entitled thereto, of the principal of, premium, if any, and interest on the Notes for whose payment such United States dollars have been deposited with the Trustee.

ARTICLE XIII

Guarantees

SECTION 13.01. Guarantees. (a) For value received, RMI, in accordance with this Article XIII, hereby absolutely, unconditionally and irrevocably guarantees to the Trustee and the Holders, as if RMI were the principal debtor, the punctual payment and performance, on demand, when due of all Indenture Obligations (which for purposes of this Guarantee shall also be deemed to include all commissions, fees, charges, costs and other expenses (including reasonable legal fees and disbursements of one counsel) arising out of or incurred by the Trustee or the Holders in connection with the enforcement of this Guarantee).

(b)           For value received, NBI, in accordance with this Article XIII, hereby absolutely, unconditionally and irrevocably guarantees to the Trustee and the Holders, as if NBI were the principal debtor, the punctual payment and performance, on demand, when due of all Indenture Obligations (which for purposes of this Guarantee shall also be deemed to include all commissions, fees, charges, costs and other expenses (including reasonable legal fees and disbursements of one counsel) arising out of or incurred by the Trustee or the Holders in connection with the enforcement of this Guarantee).

SECTION 13.02. Continuing Guarantee; No Right of Set-Off: Independent Obligation. (a) Each of the Guarantees shall be a continuing guarantee of the payment and performance of all Indenture Obligations and shall remain in full force and effect until the payment in full of all of the Indenture Obligations and shall apply to and secure any ultimate balance due or remaining unpaid to the Trustee (including the fees and expenses of its agents and counsel) or the Holders; and neither of the Guarantees shall be considered as wholly or partially satisfied by the payment or liquidation at any time or from time to time of any sum of money for the time being due or remaining unpaid to the Trustee or the Holders. Each of the Note Guarantors covenants and agrees to comply with all obligations, covenants, agreements and provisions applicable to it in this Indenture including those set forth in Article VIII and Section 10.17. Without limiting the generality of the foregoing, each of the Note Guarantors’ liability shall extend to all amounts which constitute part of the Indenture Obligations and would be owed by the Company under this Indenture and the Notes but for the fact that they are unenforceable, reduced, limited, impaired, suspended or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving the Company.

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(b)           Each of the Note Guarantors hereby guarantees that the Indenture Obligations will be paid to the Trustee without set off or counterclaim or other reduction whatsoever (whether for taxes, withholding or otherwise) in lawful currency of the United States of America.

(c)           Each of the Note Guarantors guarantees that the Indenture Obligations shall be paid strictly in accordance with their terms regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Holders.

(d)           Each of the Note Guarantors’ liability to pay or perform or cause the performance of the Indenture Obligations under the Guarantees shall arise forthwith after demand for payment or performance by the Trustee has been given to such Note Guarantor in accordance with the terms hereof and in the manner prescribed in Section 1.06 hereof.

(e)           Except as provided herein, the provisions of this Article XIII cover all agreements between the parties hereto relative to the Guarantees and none of the parties shall be bound by any representation, warranty or promise made by any Person relative thereto which is not embodied herein; and it is “specifically acknowledged and agreed that the Guarantees have been delivered by each of the Note Guarantors free of any conditions whatsoever and that no representations, warranties or promises have been made to any of the Note Guarantors affecting their liabilities hereunder, and that the Trustee shall not be bound by any representations, warranties or promises now or at any time hereafter made by the Company to either of the Note Guarantors.

SECTION 13.03. Guarantees Absolute. Obligations of each of the Note Guarantors hereunder are independent of the obligations of the Company under the Notes and this Indenture and a separate action or actions may be brought and prosecuted against any of the Note Guarantors whether or not an action or proceeding is brought against the Company and whether or not the Company is joined in any such action or proceeding. The liability of each of the Note Guarantors hereunder is irrevocable, absolute and unconditional and (to the extent permitted by law) the liability and obligations of the Note Guarantors hereunder shall not be released, discharged, mitigated, waived, impaired or affected in whole or in part by:

(a)           any defect or lack of validity or enforceability in respect of any Indebtedness or other obligation of the Company or any other Person under this Indenture or the Notes, or any agreement or instrument relating to any of the foregoing;

(b)           any grants of time, renewals, extensions, indulgences, releases, discharges or modifications which the Trustee or the Holders may extend to, or make with, the Company, the Note Guarantors or any other Person, or any change in the time, manner or place of payment of, or in any other term of, all or any of the Indenture Obligations, or any other amendment or waiver of, or any consent to or departure from, this Indenture or the Notes, including any increase or decrease in the Indenture Obligations;

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(c)           the taking of security from the Company, the Note Guarantors or any other Person, and the release, discharge or alteration of, or other dealing with, such security;

(d)           the occurrence of any change in the laws, rules, regulations or ordinances of any jurisdiction by any present or future action of any governmental authority or court amending, varying, reducing or otherwise affecting, or purporting to amend; vary, reduce or otherwise affect, any of the Indenture Obligations and the obligations of the Note Guarantors hereunder;

(e)           the abstention from taking security from the Company, the Note Guarantors or any other Person or from perfecting, continuing to keep perfected or taking advantage of any security;

(f)           any loss; diminution of value or lack of enforceability of any security received from the Company, the Note Guarantors or any other Person, and including any other guarantees received by the Trustee;

(g)           any other dealings with the Company, the Note Guarantors or any other Person, or with any security;

(h)           the Trustee’s or the Holders’ acceptance of or entering into any composition with the Company or the Note Guarantors;

(i)           the application by the Holders or the Trustee of all monies at any time and from time to time received from the Company, the Note Guarantors or any other Person on account of any indebtedness and liabilities owing by the Company or the Note Guarantors to the Trustee or the Holders, in such manner as the Trustee or the Holders deem best and the changing of such application in whole or in part and at any time or from time to time, or any manner of application of collateral, or proceeds thereof, to all or any of the Indenture Obligations, or the manner of sale of any Collateral;

(j)           the release or discharge of the Company or the Note Guarantors or of any other Guarantor of the Notes or of any Person liable directly as surety or otherwise by Operation of law or otherwise for the Notes, other than an express release in writing given by the Trustee, on behalf of the Holders, of the liability and obligations of the Note Guarantors hereunder;

(k)           any change in the name, business, capital structure or governing instrument of the Company or the Note Guarantors or any refinancing or restructuring of any of the Indenture Obligations;

(l)           the sale of the Company’s or the Note Guarantors’ business or any part thereof;

(m)           subject to Section 13.14, any merger, amalgamation or consolidation, arrangement or reorganization of the Company, the Note Guarantors, any Person resulting from the merger, amalgamation or consolidation of the Company or the Note Guarantors with any other Person or any other successor to such Person or merged, amalgamated or consolidated Person or any other change in the corporate existence, structure or ownership of the Company or the Note Guarantors;

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(n)           the insolvency, bankruptcy, liquidation, winding-up, dissolution, receivership or distribution of the assets of the Company or its assets or any resulting discharge of any obligations of the Company (whether voluntary or involuntary) or of a Note Guarantor or the loss of corporate existence;

(o)           subject to Section 13.14, any arrangement or plan of reorganization affecting the Company or the Note Guarantors;

(p)           any other circumstance (including any statute of limitations) that might otherwise constitute a defense available to, or discharge of, the Company or the Note Guarantors; or

(q)           any modification, compromise, settlement or release by the Trustee, or by operation of law or otherwise, of the Indenture Obligations or the liability of the Company or any other obligor under the Notes, or of any Collateral, in whole or in part, and any refusal of payment by the Trustee, in whole or in part, from any other obligor or other guarantor in connection with any of the Indenture Obligations, whether or not with notice to, or further assent by, or any reservation of rights against, the Note Guarantors.

SECTION 13.04. Right to Demand Full Performance. Subject to the First Priority Notes Intercreditor Agreement, in the event of any demand for payment or performance by the Trustee from any of the Note Guarantors hereunder, the Trustee or the Holders shall have the right to demand their full claim and to receive all dividends or other payments in respect thereof until the Indenture Obligations shall have been paid in full, and the Note Guarantors shall continue to be liable hereunder for any balance which may be owing to the Trustee (including the fees and expenses of its agent and counsel) or the Holders by the Company under this Indenture and the Notes. The retention by the Trustee or the Holders of any security, prior to the realization by the Trustee or the Holders of their rights to such security upon foreclosure thereon, shall not, as between the Trustee and the Note Guarantors, be considered as a purchase of such security, or as payment, satisfaction or reduction of the Indenture Obligations due to the Trustee or the Holders by the Company or any part thereof.

SECTION 13.05. Waivers. (a) Each of the Note Guarantors hereby expressly waives (to the extent permitted by law) notice of the acceptance of this Guarantee and notice of the existence, renewal, extension or the nonperformance, nonpayment, or nonobservance on the part of the Company of any of the terms, covenants, conditions and provisions of this Indenture or the Notes or any other notice whatsoever to or upon the Company or, the Note Guarantors with respect to the Indenture Obligations. Each of the Note Guarantors hereby acknowledges communication to it of the terms of this Indenture and the Notes and all of the provisions therein contained and consents to and approves the same. Each of the Note Guarantors hereby expressly waives (to the extent permitted by law) diligence, presentment, protest, and any right to require a proceeding first against the Company.

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(b)           Without prejudice to any of the rights or recourses which the Trustee or the Holders may have against the Company, each of the Note Guarantors hereby expressly. waives (to the extent permitted by law) any right to require the Trustee or the Holders to:

(i)           initiate or exhaust any rights, remedies or recourse against the Company, the Note Guarantors or any other Person;

(ii)           value, realize upon, or dispose of any security of the Company or any other Person held by the Trustee or the Holders; or

(iii)           initiate or exhaust any other remedy which the Trustee or the Holders may have in law or equity;

before requiring or becoming entitled to demand payment from any Note Guarantor under this Guarantee.

SECTION 13.06. Note Guarantors Remain Obligated in Event the Company Is No Longer Obligated to Discharge Indenture Obligations. It is the express intention of the Trustee and the Note Guarantors that if for any reason the Company has no legal existence, is or becomes under no legal obligation to discharge the Indenture Obligations owing to the Trustee or the Holders by the Company or if any of the Indenture Obligations owing by the Company to the Trustee or the Holders becomes irrecoverable from the Company by operation of law or for any reason whatsoever, the Guarantees and the covenants, agreements and obligations of the Note Guarantors contained in this Article XIII shall nevertheless be binding upon the Note Guarantors, as principal debtors, until such time as all such Indenture Obligations have been paid in full to the Trustee and all Indenture Obligations owing to the Trustee or the Holders by the Company have been discharged, or such earlier time as Section 4.02 shall apply to the Notes and the Note Guarantors shall be responsible for the payment thereof to the Trustee or the Holders upon demand.

SECTION 13.07. Waiver of Rights. Each of the Note Guarantors agrees (to the extent permitted by law) that it hereby waives and will not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, exoneration, contribution, indemnity or subrogation (whether contractual, under Section 509 of Title Eleven of the United States Code, under common law or otherwise) or any similar rights or “claims” (as such term is defined under Title Eleven of the United States Code), against the Company or any Restricted Subsidiary arising from the existence of, or performance by, the Note Guarantors under this Guarantee, until such time as the Indenture Obligations have been paid in full.

SECTION 13.08. Guarantees Are in Addition to Other Security. The Guarantees shall be in addition to and not in substitution for any other guarantees or other security which the Trustee may now or hereafter hold in respect of the Indenture Obligations owing to the Trustee or the Holders by the Company and (except as may be required by law) the Trustee shall be under no obligation to marshal in favor of the Note Guarantors any other guarantees or other security or any moneys or other assets which the Trustee may be entitled to receive or upon which the Trustee or the Holders may have a claim.

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SECTION 13.09. Release of Security Interests. Without limiting the generality of the foregoing and except as otherwise provided in this Indenture, each of the Note Guarantors hereby consents and agrees, to the fullest extent permitted by applicable law, that the rights of the Trustee hereunder, and the liability of each of the Note Guarantors hereunder, shall not be affected by any and all releases for any purpose of any Collateral, if any, from the Liens and security interests created by any document relating thereto and that this Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Indenture Obligations is rescinded or must otherwise be returned by the Trustee upon the insolvency, bankruptcy or reorganization of the Company or otherwise, all as though such payment had not been made. Notwithstanding any of the foregoing, NBI shall be released from its obligations as Note Guarantor upon the Company’s request if all of the Class B Shares owned by NBI and pledged as part of the Pledged Share Collateral have been released from the security interest in favor of the Collateral Agent as permitted by and in accordance with the provisions of this Indenture and/or the Security Agreement.

SECTION 13.10. No Bar to Further Actions. Except as provided by law, no action or proceeding brought or instituted under this Article XIII and this Guarantee and no recovery or judgment in pursuance thereof shall be a bar or defense to any further action or proceeding which may be brought under this Article XIII and this Guarantee by reason of any further default or defaults under this Article XIII and this Guarantee or in the payment of any of the Indenture Obligations owing by the Company.

SECTION 13.11. Failure to Exercise Rights Shall Not Operate as a Waiver; No  Suspension of Remedies. (a) No failure to exercise and no delay in exercising, on the part of the Trustee or the Holders, any right, power, privilege or remedy under this Article XIII and this Guarantee shall operate as a waiver thereof, nor shall any single or partial exercise of any rights, power, privilege or remedy preclude any other or further exercise thereof, or the exercise of any other rights, powers, privileges or remedies. The rights and remedies herein provided for are cumulative and not exclusive of any rights or remedies provided in law or equity.

(b)           Nothing contained in this Article XIII shall limit the right of the Trustee or the Holders to take any action to accelerate the maturity of the Notes pursuant to Article V or to pursue any rights or remedies hereunder or under applicable law.

SECTION 13.12. Trustee’s Duties; Notice to Trustee. (a) Any provision in this Article XIII or elsewhere in this Indenture allowing the Trustee to request any information or to take any action authorized by, or on behalf of a Note Guarantor, shall be permissive and shall not be obligatory on the Trustee except as the Holders may direct in accordance with the provisions of this Indenture.

(b)           The Trustee shall not be required to inquire into the existence, powers or capacities of the Company, the Note Guarantors or the officers, directors or agents acting or purporting to act on their respective behalf.

(c)           Notwithstanding the provisions of this Article XIII or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment to or by the Trustee in respect of the Notes, unless and until the Trustee shall have received written notice thereof from a Note Guarantor; and, prior to the receipt of any such written notice, the Trustee, subject to the provisions of Section 6.01, shall be entitled in all respects to assume that no such facts exist; provided, however, that if the Responsible Officer of the Trustee shall not have received any such notice from a Note Guarantor at least three Business Days prior to the date upon which by the terms hereof any money may become payable for any purpose (including, without limitation, the payment of the principal of, premium, if any, or interest on any Note), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and to apply the same to the purpose for which such money was received and shall not be affected by any notice to the contrary which may be received by it within three Business Days prior to such date; nor shall the Trustee be charged with knowledge of the curing of any such default or the elimination of the act or condition preventing any such payment unless and until the Responsible Officer of the Trustee shall have received an Officers’ Certificate to such effect.

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(d)           In the case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term “Trustee” as used in this Article XIII shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article XIII in addition to or in place of the Trustee; provided, however, that this Section shall not apply to the Company or any Affiliate of the Company if the Company or such Affiliate acts as Paying Agent.

SECTION 13.13. Successors and Assigns. All terms, agreements and conditions of this Article XIII shall extend to and be binding upon each Note Guarantor and its successors and permitted assigns and shall enure to the benefit of and may be enforced by the Trustee and its successors and assigns; provided, however, that neither Note Guarantor may assign any of its rights or obligations hereunder other than in accordance with Article VIII.

SECTION 13.14. Release of Guarantee. Concurrently with the payment in full of all of the Indenture Obligations, the Note Guarantors shall be released from and relieved of its obligations under this Article XIII:. Upon the delivery by the Company to the Trustee of an Officers’ Certificate and, if requested by the Trustee, an Opinion of Counsel to the effect that the transaction giving rise to the release of the Guarantees was made by the Company in accordance with the provisions of this Indenture and the Notes, the Trustee shall execute any documents reasonably required in order to evidence the release of each Note Guarantor from its obligations under the Guarantees. If any of the Indenture Obligations are revived and reinstated after the termination of the Guarantees, then all of the obligations of the Note Guarantors under this Guarantee shall be revived and reinstated as if this Guarantee had not been terminated until such time as the Indenture Obligations are paid in full, and the Note Guarantors shall enter into an amendment to this Guarantee, reasonably satisfactory to the Trustee, evidencing such revival and reinstatement.

SECTION 13.15. Execution of Guarantees. To evidence the Guarantees, each of the Note Guarantors hereby agrees to execute a guarantee substantially in the form set forth in Exhibit A, to be endorsed on each Note authenticated and delivered by the Trustee and that this Indenture shall be executed on behalf of such Note Guarantor by its Chairman of the Board, its President or one of its Vice Presidents, under its corporate seal reproduced thereon attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Notes may be manual or facsimile.

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SECTION 13.16. Payment Permitted by Note Guarantors if No Default. Nothing contained in this Article XIII, elsewhere in this Indenture or in any of the Notes shall prevent a Note Guarantor from making payments at any time of principal of, premium, if any; or interest on the Notes.

ARTICLE XIV

Security

SECTION 14.01. Security. In order to secure the due and punctual payment of the Indenture Obligations and the Guarantee Obligations, when and as the same shall be due and payable, whether on an interest payment date, at maturity, by acceleration, call for redemption or otherwise, and performance of all other obligations of the Company and Note Guarantors, to the Holders or the Trustee under this Indenture and in respect of the Notes, according to the terms hereof or thereof:

(a)           the Company will grant a security interest over its right, title and interest in and to the Pledged Agreement and RMI will grant a security interest over its right, title and interest in and to the Services Agreement, and

(b)           each of the Company and NBI will grant a security interest over its right, title and interest in and to the Pledged Share Collateral,

to the Collateral Agent on behalf of the Trustee and the Holders pursuant to the Security Documents and to the extent therein provided, no later than the Issue Date.

Subject to the First Priority Notes Indenture, the First Priority Notes and the First Priority Notes Security Agreement, at the time the Security Documents are executed:

(i)           the Company will have full right, power and lawful authority to grant, bargain, sell, release, convey, hypothecate, assign, mortgage, transfer and confirm, absolutely, its rights and interests under the Support Agreement, and

(ii)           the Company and NBI will have full right, power and lawful authority to grant, bargain, sell, release, convey, hypothecate, assign, mortgage; transfer and confirm, absolutely, the property constituting the Pledged Share Collateral,

each in the manner and form done, or intended to be done, in the Security Documents, free and clear of all Liens, whatsoever (other than Permitted Liens), and, subject to the First Priority Notes Indenture, the First Priority Notes and the First Priority Notes Security Agreement, each of the Company, RMI and NBI will (a) for so long as the Notes and the Guarantees are outstanding, warrant and defend the title to the same against the claims of all Persons whatsoever (unless the Senior Notes Collateral is released as provided herein, in the Security Documents, in the Fast Priority Intercreditor Agreement or in the Intercreditor Agreement), (b) execute, acknowledge and deliver to the Collateral Agent and the Trustee such further assignments, transfers, assurances or other instruments as the Collateral Agent or the Trustee may require or request and (c) door cause to be done all such acts and things as may be necessary or proper, or as may be required by the Collateral Agent or the Trustee, to assure and confirm to the Collateral Agent and the Trustee the security interest in the Senior Notes Collateral contemplated hereby and by the Security Documents, or any part thereof, as from time to time constituted, so as to render the same available for the security and benefit of this Indenture and of the Guarantees secured hereby, according to the intent and purposes herein expressed. The Security Documents will create a direct and valid Lien on the property constituting the Senior Notes Collateral as set forth in the Security Documents.

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The Senior Notes Collateral shall secure (i) the Indenture Obligations and the obligations under the Guarantees, and performance of all other obligations of the Company and Note Guarantors, up to the amount outstanding from time to time under. the Notes and (ii) subject to the terms, conditions and limitations of the First Priority Notes Security Agreement and the First Priority Intercreditor Agreement, the obligations of the Company and the Note Guarantors under the First Priority Notes. The claims of Holders against the Senior Notes Collateral will be subject to the First Priority Intercreditor Agreement and the Intercreditor Agreement. The Holders hereby authorize and direct the Trustee, or a Co-Trustee appointed by the Trustee, to enter into the First Priority Intercreditor Agreement and the Intercreditor Agreement on their behalf.

SECTION 14.02. Additional Security. To the extent provided in the Indenture or Security Agreement, the assets, properties and contract rights constituting the Senior Notes Collateral may in the future be expanded in accordance with the terries of the Security Agreement.

SECTION 14.03. Recording and Opinions. The Company and each of the Note Guarantors will cause, at their own expense, the Security Documents, this Indenture and all amendments or supplements thereto to be registered, recorded and filed or re-recorded, re-filed and renewed in such manner and in such place or places, if any, as may be required by law in order fully to preserve and protect the Liens created by the Security Documents on all parts of the Senior Notes Collateral and to effectuate and preserve the security of the Holders and all rights of the Trustee and the Collateral Agent.

The Company and each of the Note Guarantors shall furnish to the Trustee:

(a)           promptly after the execution and delivery of the Security Documents, an Opinion of Counsel either (i) stating that, in the opinion of such counsel, this Indenture and the assignment of the Senior Notes Collateral intended to be made by the Security Documents and all other instruments of further assurance or amendment have been properly recorded, registered and filed to the extent necessary to make effective the Lien intended to be created by the Security Documents, and reciting the details of such action or referring to prior opinions of counsel in which such details are given, and stating that as to the Security Documents such recording, registering and filing are the only recordings, registrations and filings necessary to give notice thereof and that no re-recordings, re-registrations or re-filings are necessary to maintain such notice, and further stating that all financing statements, continuation statements (or the equivalent thereof under the laws of Canada and any other relevant jurisdictions) and other instruments of further assurance have been executed and filed that are necessary fully to preserve and protect the rights of the Collateral Agent on behalf of the Holders and the Trustee hereunder and under the Security Documents, or (ii) stating that, in the opinion of such counsel, no such action is necessary to make such Lien and assignment effective; and

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(b)           within 30 days after July 1 in each year beginning with July 1, 2005, an Opinion of Counsel, dated as of such date, either (a) stating that, in the opinion of such counsel, such action has been taken with respect to the recording, registering, filing, re-recording, re-registering and re-filing of all supplemental indentures, financing statements, continuation statements (or the equivalent thereof under the laws of Canada and any other relevant jurisdictions) or other instruments of further assurance as is necessary to maintain the Lien of the Security Documents and reciting the details of such action or referring to prior opinions of counsel in which such details are given, and stating that all financing statements and continuation statements or the equivalent thereof under the laws of Canada and any other relevant jurisdiction have been executed and filed that are necessary fully to preserve and protect the rights of the Collateral Agent on behalf of the Holders and the Trustee hereunder and under the Security Documents, or (b) stating that, in the opinion of such counsel, no such action is necessary to maintain such Lien and assignment.

SECTION 14.04. Release and Disposition of Collateral. (a) From and after a Collateral Transfer (as defined in the Security Agreement), the Senior Notes Collateral shall be subject to release solely as permitted below or in the Security Documents:

(i)           upon the payment of all principal, premium, if any, and interest under this Indenture and the Notes, the Security Documents shall terminate and the Senior Notes Collateral shall be released from the Lien created by this indenture and the Security Documents;

(ii)           with respect to any of the Pledged Share Collateral, in the event of a redemption or repurchase in part of the Notes that is permitted or required by this Indenture, such number of Class B Shares shall be released from the security interest in favor of the Collateral Agent upon the Company’s request in writing to the Collateral Agent and the Trustee, together with any Officers’ Certificate and Opinion of Counsel required under this Indenture, as bears the same proportion to the total number of Class B Shares comprising the Pledged Share Collateral as of the Issue Date as the proportion of the principal amount of Notes redeemed or repurchased to the original principal amount of Notes issued on the Issue Date, provided that the total number of Class B Shares comprising the Pledged Share Collateral after any portion thereof is released from the Lien under this Indenture and the Security Documents shall have an aggregate Current Market Price on the date of such release that is not less than 200 percent of the principal amount of Notes and First Priority Notes remaining Outstanding after giving effect to such redemption or repurchase;

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(iii)           with respect to any of the Pledged Share Collateral, in the event of a redemption or repurchase in part of the Notes that is permitted or required by this Indenture, such number of Class B Shares shall be released from the security interest in favor of the Collateral Agent upon the Company’s request in writing to the Collateral Agent and the Trustee, together with any Officers’ Certificate and Opinion of Counsel required under this Indenture, as bears the same proportion to the total number of Class B Shares compromising the Pledged Share Collateral as of the Issue Date as the proportion of the principal amount of Notes redeemed or repurchased to the original principal amount of Notes issued on the Issue Date, provided that the total number of Class B Shares comprising the Pledged Share Collateral after any portion thereof is released from the Lien under this Indenture and the Security Documents shall have an aggregate Current Market Price on the date of such release that is not less than 200 percent of the principal amount of Notes and First Priority Notes remaining Outstanding after giving effect to such redemption or repurchase;

(iv)           upon a redemption of all of the Notes effected by the Company in accordance with Article XI, or legal defeasance effected by the Company in Accordance with Article IV or upon a satisfaction and discharge effected by the Company in accordance with Article XII, all of the Senior Notes Collateral shall be released;

(v)           upon the deposit by the Company in the Collateral Account with the Collateral Agent, as security for the Company’s payment obligations with respect to that portion of the outstanding principal amount of the Notes (the “Cash Collateralized Notes”) specified in a notice to the Trustee, cash in United States dollars, U.S. Government Obligations, or a combination thereof, in such amounts (the “Cash Collateralized Note Amount”) as will be sufficient, in the opinion of a recognized firm of independent public accountants nationally recognized in the United States or in Canada, to pay and discharge the principal of, premium, if any, and interest on the Cash Collateralized Notes on the Stated Maturity, such number of Class B Shares as the Company may request in writing to the Trustee and the Collateral Agent, together with any Officers’ Certificate and Opinion of Counsel required under this Indenture, shall be released from the Lien under this Indenture and the Security Documents in favor of the Collateral Agent as bears the same proportion to the total number of Class B Shares comprising the Pledged Share Collateral as of the Issue Date as the proportion of the aggregate principal amount of the Cash Collateralized Notes to the original principal amount of Notes issued on the Issue Date, provided that the total number of Class B. Shares comprising the Pledged Share Collateral after any portion thereof is released pursuant to this provision shall have an aggregate Current Market Price on the date of such release that is not less than 200 percent of the aggregate principal amount of Notes and First Priority Notes Outstanding (excluding the Cash Collateralized Notes); or

(vi)           by consent of Holders of 90% or more of the outstanding principal amount of the Notes, the Holders may elect to consent to the release of their Lien in the Senior Notes Collateral.

(b)           The release of any portion of the Senior Notes Collateral from the Lien under this Indenture and the Security Documents pursuant to the terms hereof and of the Security Documents will not be deemed to impair the security interest under this Indenture in contravention of the provisions hereof. To the extent applicable, the Company and the Note Guarantors shall cause Trust Indenture Act § 314(d) relating to the release of property from the Lien under the Security Documents to be complied with. Any certificate or opinion required by Trust Indenture Act § 3I4(d) may be made by an Officer of the Company, except in cases in which Trust Indenture Act § 3I4(d) requires that such certificate or opinion be made by an independent Person.

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SECTION 14.05. Enforcement of Claims Against Collateral. From and after a Collateral Transfer (as defined in the Security Agreement), if the Notes become due and payable prior to their final Stated Maturity for any reason or are not paid in full at the final Stated Maturity and no payment has been made following a demand on either of the Guarantees, the Collateral Agent and the Trustee have the right to foreclose or otherwise realize upon the relevant Collateral in accordance with instructions from Holders of a majority in aggregate principal amount of the Notes. The proceeds received by the Collateral Agent and the Trustee upon a foreclosure or realization will be applied by the Collateral Agent and the Trustee first to pay the expenses of such foreclosure or realization and fees and other amounts then payable to the Collateral Agent and the Trustee under this Indenture, the Intercreditor Agreement and the Security Documents, and thereafter, to pay art amounts owing to Holders under this Indenture, the Notes and the Security Documents. Any remaining proceeds will be payable to the Company or as may otherwise be required.

SECTION 14.06. Authorization of Actions To Be Taken by the Trustee. Subject to the provisions of the Security Documents, the First Priority Intercreditor Agreement, the Intercreditor Agreement, the First Priority Notes Indenture, the First Priority Notes and the First Priority Notes Security Agreement, the Trustee shall have power to institute and to maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Senior Notes Collateral by any acts which may be unlawful or in violation of the Security Documents and the Intercreditor Agreement, or this Indenture, and such suits and proceedings as the Trustee may deem expedient to preserve or protect its interests and the interests of the Holders in the Senior Notes Collateral (including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or governmental enactment, rule, or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the security hereunder or be prejudicial to the interest of the Holders or the Trustee). Notwithstanding anything herein or in any of the Security Documents to the contrary, subject to Article VI hereof, the Trustee assumes no responsibility for the validity, perfection, priority or enforceability of the security interest in any of the Senior Notes Collateral and shall have no obligation to take any action to procure or maintain such validity, perfection, priority or  enforceability.

* * * *

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IN WITNESS WHEREOF; the parties hereto have caused this Indenture to be duly executed, all as of the day and year first above written.

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SCHEDULE 1

PERMITTED INDEBTEDNESS

Debtor	Creditor	Amount
Hollinger Inc.	Domgroup Ltd.	Cdn. $9,927,102
Sugra Limited	The Ravelston Corporation Limited	Cdn.. $7,632,661
Sugra Limited	3016296 Nova Scotia Company	Cdn. $1,090,000
Sugra Limited	Sugra (Bermuda) Limited	Cdn. $776,012
Sugra Limited	Hollinger Canadian Publishing Holdings Co.	Cdn. $17,371
Hollinger Inc.	Hollinger Canadian Publishing Holdings Co.	Cdn. $5,717
Holcay Holdings Ltd.	Domgroup Ltd.	Cdn. $2,288,052
JP Publishing International Inc.	Domgroup Ltd.	Cdn. $20,521

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EXHIBIT A

FORM OF NOTE

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EXHIBIT B

FORM OF TRANSFER CERTIFICATE FOR TRANSFER TO QIB

	[Date]
HSBC Bank USA, National Association
Corporate Trust
452 Fifth Avenue
New York, New York 10018

Re: 11.875% Senior Secured Notes due 2001(the “Notes”) of

Hollinger Inc. (the “Company”)

Ladies and Gentlemen:

Reference is hereby made to the Indenture, dated as of September 30, 2004 (as amended and supplemented from time to time, the “Indenture”), among the Company, Ravelston Management Inc., 504468 N.B. Inc., The Ravelston Corporation Limited, Sugra Limited and HSBC Bank USA, National Association, as Trustee. Capitalized terms used but not defined herein shall have the meanings given them in the Indenture.

This letter relates to the transfer of $n aggregate principal amount of Notes [in the case of a transfer of an interest in a Regulation S Global Note: which represents an interest in a Regulation S Global Note beneficially owned] by the undersigned (the “Transferor”, to effect the transfer of such Notes in exchange for an equivalent beneficial interest in the Rule 144A Global Note.

In connection with such request, and with respect to such Notes, the Transferor does hereby certify that such Notes are being transferred in accordance with Rule 144A under the Securities Act of 1933, as amended (“Rule 144A”), to a transferee that the Transferor reasonably believes is purchasing the Notes for its own account or an account with respect to which the transferee exercises sole investment discretion, and the transferee, as well as any such account, is a “qualified institutional buyer” within the meaning of Rule 144A, in a transaction meeting the requirements of Rule 144A and in accordance with applicable securities laws of any state of the United States or any other jurisdiction.

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You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby.

Very truly yours,
[Name of Transferor]
By:
	Authorized Signature

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EXHIBIT C

FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH

TRANSFERS PURSUANT TO REGULATION S

	[Date]
HSBC Bank USA, National Association
Corporate Trust
452 Fifth Avenue
New York, New York 10018

Re:  11.875% Senior Secured Notes due 2011 (the “Notes”) of

Hollinger Inc. (the “Company”)

Ladies and Gentlemen:

Reference is hereby made to the Indenture, dated as of September 30, 2004 (as amended and supplemented from time to time, the “Indenture”), among the Company, Ravelston Management Inc., 504468 N.B. Inc., The Ravelston Corporation Limited, Sugra Limited and HSBC Bank USA, National Association, as Trustee. Capitalized terms used but not defined herein shall have the meanings given them in the Indenture.

In connection with the proposed sale of $n aggregate principal amount of the Notes [in the case of a transfer of an interest in a Rule 144A Global Note: which represents an interest in a Rule 144A Global Note beneficially owned] by the undersigned (the “Transferor”), we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the Securities Act of 1933, as amended (“Regulation S”), and, accordingly, we represent that:

(a)                 the offer of the Notes was not made to a person in the United States;

(b)                 either (i) at the time the buy order was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States or (ii) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States;

(c)                 no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable;

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(d)                 the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; and

(e)                 we are the beneficial owner of the principal amount of Notes being transferred.

In addition, if the sale is made during a Distribution Compliance Period and the provisions of Rule 904(b)(1) or Rule 904(b)(2) of Regulation S are applicable thereto, we confirm that such sale has been made in accordance with the applicable provisions of Rule 904(b)(1) or Rule 904(b)(2), as the case may be.

You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this letter have the meanings set forth in Regulation S.

Very truly yours,
[Name of Transferor]
By:
	Authorized Signature

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EXHIBIT D

FORM OF RULE 144 CERTIFICATION

	[Date]
HSBC Bank USA, National Association
Corporate Trust
452 Fifth Avenue
New York, New York 10018

Re: 11.875% Senior Secured Notes due 2011 (the “Notes”) of

Hollinger Inc. (the “Company”)

Ladies and Gentlemen:

Reference is hereby made to the Indenture, dated as of September 30, 2004 (as amended and supplemented from time to time, the “Indenture”), among the Company, Ravelston Management Inc., 504468 N.B. Inc., The Ravelston Corporation Limited, Sugra Limited and HSBC Bank USA, National Association, as Trustee. Capitalized terms used but not defined herein shall have the meanings given them in the Indenture.

In connection with the proposed sale of $   __________________ aggregate principal amount of the Notes [in the case of a transfer of an interest in a Rule 144A Global Note: which represents an interest in a Rule 144A Global Note beneficially owned] by the undersigned (the “Transferor”), we confirm that such sale has been effected pursuant to and in accordance with Rule 144 under the Securities Act.

You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby.

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Very truly yours,
[Name of Transferor]
By:
	Authorized Signature

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INTERCREDITOR AGREEMENT

INTERCREDITOR AGREEMENT (this “Agreement”) dated as of n, 200_, among HSBC BANK USA, NATIONAL ASSOCIATION (“HSBC”), as Trustee and Collateral Agent under the Senior Note Documents (as defined below) (in its capacities as Trustee and Collateral Agent for the benefit of the holders (the “Senior Noteholders”) of the notes issued from time to time under the Senior Note Documents (the “Senior Notes”) and together with any of its permitted successors and assigns, the “Senior Note Agent”) [and] [NAME EACH BANK SECURED PARTY) (collectively, and/or as represented by an agent under the Bank Documents (as defined below), together with any other secured parties specified from time to time in the Bank Documents (as defined below), and each of their respective successors and assigns, the “Bank Secured Parties”).

PRELIMINARY STATEMENTS:

(1) HSBC has entered into an Indenture, dated as of September 30, 2004 (as amended, amended and restated, or otherwise modified or supplemented from time to time, the “Indenture”) among itself as Trustee and Collateral Agent for the benefit of the Senior Noteholders, Hollinger Inc., as issuer of the Senior Notes (the “Company”), each of Ravelston Management Inc. (“RMI") and 504468 N.B. Inc. (“504468”) as guarantors thereunder (RMI and 504468 being collectively, the “Guarantors” and, collectively with the Company, the “Obligor Parties”), Sugra Limited and The Ravelston Corporation Limited;

(2)           The Senior Notes and. the guarantees of the obligations thereunder (the “Guarantees”) by the Guarantors are secured by security interests held by the Senior Note Secured Parties (as defined below) in the Senior Notes Collateral (as defined in the Indenture).

(3)           The Company and 504468 intend to incur or guarantee indebtedness in the form of secured loans from the Bank Secured Parties, pursuant to a credit agreement and certain other security documents and other agreements or documents related thereto (such credit agreement and all such security agreements or other agreements or documents, whether effective presently or in the future, and as amended, amended. and restated, or otherwise modified or supplemented from time to time, being collectively, the “Bank Documents”);

(4)           The Bank Indebtedness (as defined below) will be seemed by security interests held by the Bank Secured Parties in any of the assets, properties and rights of the Company or 504468 that are not pledged as collateral for the First Priority Notes or the Senior Notes pursuant to the Security Agreement or the First Priority Notes Security Agreement (the “Bank Collateral”); and

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(5)           The ability under the Indenture of the Obligor Parties to enter into the Bank Documents is conditioned upon the parties hereto entering into this Agreement to, inter aria, confirm their relative rights with respect to the Senior Note Documents, the Bank Documents, and the assets, properties and rights of the Obligor Parties constituting the Senior Notes Collateral and the Bank Collateral.

NOW THEREFORE, in consideration of the premises and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Senior Note Agent, on behalf of itself and the other Senior Note Secured Parties, and each of the Bank Secured Parties hereby agree as follows:

SECTION 1.  Definitions.  As used in this Agreement, the following teams shall have the meanings respectively set forth after each:

“Bank Indebtedness” shall mean all obligations of the Obligor Parties (including, without limitation, interest accruing after the commencement of a bankruptcy proceeding by or against any of the Obligor Parties) to the Bank Secured Parties evidenced by or arising under any one or mote of the Bank Documents, all whether fixed or contingent, matured or unmatured, liquidated or unliquidated, and whether arising under contract, in tort or otherwise.

“Collateral Transfer” shall have the meaning set forth in the Security Agreement.

“First Priority Senior Note Secured Parties” shall mean the Trustee and the Collateral Agent, the Holders, any other secured parties specified from time to time in the Senior Note Documents, and each of their respective successors and assigns (in each case, as such terms are defined in the First Priority Notes Indenture).

“PPSA” shall mean the Personal Property Security Act (Ontario) (or any successor statute) or similar legislation of any other jurisdiction the laws of which are required by such legislation to be applied in connection with the issue, perfection, enforcement, validity or effect of security interests.

“Senior Note Documents” shall mean, collectively, the Indenture, the Senior Notes the Guarantees, the Security Agreement and all agreements, instruments and documents relating thereto, whether effective presently or in the future, and as amended, amended and restated, or otherwise modified or supplemented from time to time.

“Senior Note Indebtedness” shall mean all obligations of the Obligor Parties (including, without limitation, interest accruing after the commencement of the bankruptcy proceeding by or against any of the Obligor Parties) to the Senior Note Secured Parties evidenced by or arising under any one or more of the Senior Note Documents, all whether fixed or contingent, matured unmatured, liquidated or unliquidated, and whether arising under contract, in tort or otherwise.

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“Senior Note Secured Parties” shall mean, collectively, the Senior Note Agent, the Senior Noteholders, any other secured parties specified from time to time in the Senior Note Documents, and each of their respective successors and assigns.

“UCC” shall mean the Uniform Commercial Code as in effect in the applicable jurisdiction from time to time.

All other capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Indenture.

SECTION 2.  No Third Party Beneficiaries.  All undertakings, agreements, representations and warranties contained in this Agreement are solely for the benefit of the Senior Note Secured Parties and the Bank Secured Parties and there are no other parties (including, without limitation, the Obligor Parties or any of their Affiliates) who are intended to be benefited in anyway by this Agreement. The existence of this Agreement shall not commit or obligate the Senior Note Secured Parties or the Bank Secured Parties to make loans or extend credit to any of the Obligor Parties.

SECTION 3.  Reservation of Security Interests as Against Other Parties.  Nothing contained in this Agreement is intended to affect or limit in any way the security interests and/or liens the Senior Note Secured Parties, on the one hand, and the Bank Secured Parties, on the other hand, have in or on any-or all of the property and assets of the Obligor Parties, whether tangible or intangible, insofar as the Obligor Parties and other parties are concerned. The parties hereto specifically reserve all respective security interests and/or liens and rights to assert such security interests and/or liens as against the Obligor Parties and other parties.

SECTION 4.  Priority of Security Interests.  Irrespective of (a) the time, order, manner or method of creation, attachment or perfection of the respective security interests and/or liens granted to the Senior Note Secured Parties or the Bank Secured Parties in or on any or all of the properties or assets of the Obligor Parties, (b) the time or manner of the filing of their respective financing statements, (c) whether the Senior Note Secured Parties or the Bank Secured Parties or any bailee or agent thereof holds possession of any or all of the property or assets of the Obligor Parties, (d) the dating, execution or delivery of any agreement, document or Instrument granting Senior Note Secured Parties or the Bank Secured Parties security interests and/or liens in or on any or-all of the properties or assets of the Obligor Parties, (e) the giving or failure to give notice of the acquisition or expected acquisition of any purchase money or other security interests and (f) any provision of the PPSA, UCC or any other applicable law to the contrary:

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(i) any and all security interests, liens, rights and interests of the Bank Secured Parties, whether now or hereafter arising or existing, in or on any or all of the assets of the Obligor Parties shall be limited to the Bank Collateral and shall not otherwise in any manner or for any purpose apply to any or all security interests, liens, rights and interests of the Senior Note Secured Parties in and to the Senior Notes Collateral; and

(ii) any and all security interests, liens, rights and interests of the Senior Note Secured Parties, whether now or hereafter arising or existing, in or on any or all of the assets of the Obligor Parties shall be limited to the Senior Notes Collateral and shall not otherwise in any manner or for any purpose apply to any or all security interests, liens, rights and interests of the Bank Secured Parties in and to the Bank Collateral.

For purposes of the foregoing allocation of priorities, any claim. of a right of set-off shall be treated in all respects as a security interest and no claimed right of set-off shall be asserted to defeat or diminish the rights or priorities provided for herein.

SECTION 5.  Standstill.  (a)  Upon an event of default under any one or more of the Bank Documents, each Bank Secured Party agrees that before it accelerates or demands payment of any of the Bank Indebtedness or commences proceedings to enforce its rights in any of the Bank Collateral (any such action being a “Bank Enforcement Action”) it will provide written notice (a “Bank Enforcement Notice”) of such default to the Senior Note Secured Parties and will thereafter refrain from taking any such Bank Enforcement Action for the shorter of (i) the period commencing on the date of the giving of the Bank Enforcement Notice and expiring 30 days thereafter and (ii) the period commencing on the date of the giving of the Bank Enforcement Notice and expiring on the date on which (A) any Senior Note Secured Party accelerates or demands payment of any of the Senior Note Indebtedness or commences proceedings to enforce its rights in any of the Senior Notes Collateral or (B) any proceedings by or against the Company or 504468 are commenced under Bankruptcy Law (such period being the “Bank Standstill Period”).

(b)           The Bank Secured Parties shall have no right to take any action with respect to the Senior Notes Collateral, whether by judicial or non judicial foreclosure, notification to any account debtor of an Obligor Party, the seeking of the appointment of a receiver or any similar trustee or agent for any portion of the property or assets of any Obligor Party or otherwise (other than the Bank Collateral), or to take possession of any of the Senior Notes Collateral.

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(c)           The Senior Note Secured Parties shall have no right to take any action with respect to the Bank Collateral, whether by judicial or non judicial foreclosure, notification to any account debtor of an Obligor Party, the seeking of the appointment of a receiver or any similar trustee or agent for-any portion of the property or assets of any Obligor Party or otherwise (other than the Senior Notes Collateral), or to take possession of any of the Bank Collateral.

SECTION 6.  Option to Purchase Bank Indebtedness.  After receiving a Bank Enforcement Notice and during the Bank Standstill Period, the Senior Note Secured Parties shall have the option (but not the obligation) to purchase the Bank Indebtedness (and all liens and security interests securing the payment thereof) by paying the Bank Secured Parties an amount equal to the then outstanding Bank Indebtedness proposed to be purchased or such amount as the Senior Note Secured Parties and the Bank Secured Parties may otherwise agree. Upon the exercise of such option by the Senior Note Secured Parties, the Bank Secured Parties shall assign all of their right, title and interest in and to the amount of Bank Indebtedness so purchased, the Bank Documents and any related documents to the Senior Note Secured Parties without recourse or warranty, whereupon the Bank Secured Parties shall be relieved of any further obligation with respect to the Bank Documents and whereupon the terms and provisions of this Agreement shall cease to be of force and effect as to that amount of Bank Indebtedness so purchased.

SECTION 7.  Rights of Senior Note Secured Parties.  Upon the occurrence of any event of default under the Senior Note Documents, the Senior Note Secured Parties shall have the right at any time, upon the giving of notice to the Bank Secured Parties to accelerate any or all of the Senior Note Indebtedness, to undertake foreclosure proceedings with respect to the Senior Notes Collateral, whether by judicial or non judicial foreclosure, notification to any account debtor of a Obligor Party, the seeking. of the appointment of a receiver for any portion of the property or assets of any Obligor Party or otherwise, to take possession of any of the Senior Notes Collateral, to commence insolvency proceedings against any Obligor Party, and to pursue any other remedies available to such Senior Note Secured Parties pursuant to the Senior Note Documents or applicable law.

SECTION 8.  Release of Collateral.  (a)  Each Bank Secured Party agrees that it shall not have any Lien whatsoever in any or all of the Senior Notes Collateral.

(b)           Each Senior Note Secured Party agrees that it shall not have any Lien whatsoever in any or all of the Bank Collateral.

(c)           Each of the Bank Secured Parties agrees that any collection, sale or other disposition of any or all of Me Senior Notes Collateral by any Senior Note Secured Party (whether pursuant to the UCC, PPSA or otherwise) shall be free and clear of any and all Liens whatsoever of the Bank Secured Parties in such Senior Notes Collateral. At the request of any Senior Note Secured Party, the Bank Secured Parties shall promptly provide the Senior Note Secured Parties with any necessary or appropriate releases to permit the collection, sale or other disposition of any or all of the Senior Notes Collateral by the Senior Note Secured Parties free and clear of any Liens whatsoever of the Bank Secured Parties.

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(d)           Each of the Senior Note Secured Parties agrees that any collection, sale or other disposition of any or all of the Bank Collateral by any Bank Secured Party (whether pursuant to the UCC, PPSA or otherwise) shall be free and clear of any and all Liens whatsoever of the Senior Note Secured Parties in such Bank Collateral. At the request of any Bank Secured Party, the Senior Note Secured Parties shall promptly provide the Bank Secured Parties with any necessary or appropriate releases to permit the collection, sale or other disposition of any or all of the Bank Collateral by the Bank Secured Parties free and clear of any Liens whatsoever of the Senior Note Secured Parties.

SECTION 9.  Turnover of Collateral.  In connection with the exercise of the remedies by any of the undersigned:

(a)           In the event any payment or distribution to the Bank Secured Parties is made from any of the Senior Notes Collateral upon or with respect to any of the Bank Indebtedness prior to the time all of the Senior Note Indebtedness shall have been fully and finally paid, defeased or discharged ‘in cash and all other obligations of the Obligor Parties pursuant to the Senior Note Documents shall have been fully discharged, the Bank Secured Parties shall receive and hold the same in trust, as trustee, for the benefit of (i) prior to a Collateral Transfer, the First Priority Senior Notes Secured Parties and (ii) from and after a Collateral Transfer, the Senior Note Secured Parties, and shall forthwith deliver the same to the First Priority Senior Note Secured Parties or the Senior Note Secured Parties, as applicable, in precisely the form received (except for the endorsement or assignment of the Bank Secured Parties where necessary) for application against the indebtedness under the First Priority Notes or the Senior Note Indebtedness, as applicable, whether due or not due, and, until so delivered, the same shall be held in trust by the Bank Secured Parties as the property of the First Priority Senior Note Secured Parties or the Senior Note Secured Parties;

(b)           If any payment or distribution otherwise payable or distributable to the Senior Note Secured Parties has been applied, pursuant to Section 9(a) above to the payment of the Bank indebtedness, then and in such case, the Senior Note Secured Parties shall be subrogated to the rights of the Bank Secured Parties to receive payments and distributions made on the Bank Indebtedness to the extent of the amount of the distribution or payment so made. No payments or distributions to the Senior Note Secured Parties, by reason of subrogation of any payment or distribution which otherwise would be payable or distributable to the Bank Secured Parties, shall, as between the Obligor Parties and its creditors (other than the Bank Secured Parties), on the one hand, and the Senior Note Secured Parties, on the other hand, be deemed to be a payment by the Obligor Parties on account of the Bank Indebtedness;

(c)           In the event any payment or distribution to any Senior Note Secured Party is made from any of the Bank Collateral upon or with respect to any of the Senior Note Indebtedness prior to the time all of the Bank Indebtedness shall have been fully and finally paid, defeased or discharged in cash and all financing arrangements and commitments between the Obligor Parties and the Bank Secured Parties pursuant to the Bank Documents shall have been terminated, such Senior Note Secured Party shall receive and hold the same in trust, as trustee, for the benefit of the Bank Secured Parties and shall forthwith deliver the same to the Bank Secured Parties in precisely the form received (except for the endorsement or assignment of such Senior Note Secured Party where necessary) for application against the Bank Indebtedness, whether due or not due, and, until so delivered, the same shall be held in trust by such Senior Note Secured Party as the property of the Bank Secured Parties; and

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(d)           If any payment or distribution otherwise payable or distributable to the Bank Secured Parties has been applied, pursuant to Section 9(c) above to the payment of the Senior Note Indebtedness, then and in such case, the Bank Secured Parties shall be subrogated to the rights of the Senior Note Secured Parties to receive payments and distributions made on the Senior Note Indebtedness to the extent of the amount of the distribution or payment so made. No payments or distributions to the Bank Secured Parties, by reason of subrogation, of any payment or distribution which otherwise would be payable or distributable to the Senior Note Secured Parties, shall, as between the Obligor Parties and its creditors (other than the Senior Note Secured Parties), on the one hand, and the Bank Secured Parties, on the other hand, be deemed to be a payment by the Obligor Parties on account of the Senior Note Indebtedness.

SECTION 10.  Agreement not to Contest.  (a)  Each Bank Secured Party agrees that it shall not directly or indirectly take any action to contest or challenge the privity, validity, legality, enforceability, perfection, priority or avoidability of any of the Senior Note Indebtedness, any of the Senior Note Documents or any of the security interests and/or liens of the Senior Note Secured Parties in or on any of the Senior Notes Collateral or the reasonableness of any action or failure to act in respect of the Senior Notes Collateral, including, without limitation, the timing, method or manner of (i) any consent to disposition by the Obligor Parties of any Senior Notes Collateral or (ii) disposing of or liquidating any Senior Notes Collateral, the terms, including the price and percentage of consideration received in cash, of any such disposition or liquidation, or any failure to dispose of or liquidate any Senior Notes Collateral, including acceptance of Senior Notes Collateral by the Senior Note Secured Parties in full or partial satisfaction of any Senior Note Indebtedness.

(b)           The Senior Note Secured Parties agree that they shall not directly or indirectly take any action to contest or challenge the privity, validity, legality, enforceability, perfection, priority or avoidability of any of the Bank Indebtedness, any of the Bank Documents or any of the security interests and/or liens of the Bank Secured Parties in or on any of the Bank Collateral or the reasonableness of any action or failure to act in respect of the Bank Collateral, including, without limitation, the timing, method or manner of (i) any consent to disposition by the Obligor Parties of any Bank Collateral or (ii) disposing of or liquidating any Bank Collateral, the terms, including the price and percentage of consideration received in cash, of any such disposition or liquidation, or any failure to dispose of or liquidate any Bank Collateral, including acceptance of Bank Collateral by the Bank Secured Parties in full or partial satisfaction of any Bank Indebtedness.

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SECTION 11.  Agreements.  (a) Each Bank Secured Party covenants and agrees with the Senior Note Secured Parties that such Bank Secured Party will not assert or claim the benefit of any marshalling, valuation, appraisal or similar rights that may be available to such party in connection with any enforcement action taken by any Senior Note Secured Party, or oppose, interfere with or otherwise attempt to prevent the Senior Note Secured Parties from enforcing their Liens on any of the Senior Notes Collateral or otherwise realizing upon any of the Senior Notes Collateral.

(b)           Each of the Senior Note Secured Parties covenants and agrees with each Bank Secured Party that the Senior Note Secured Parties will not assert or claim the benefit of any marshalling, valuation, appraisal or similar rights that may be available to such party in connection with any enforcement action taken by any Bank Secured Party (provided that such enforcement action is permitted under this Agreement), or oppose, interfere with or otherwise attempt to prevent such Bank Secured Party from enforcing its Liens on any of the Bank Collateral or otherwise realizing upon any of the Bank Collateral.

(c)           The parties hereto agree that neither this Agreement, the Senior Note Documents nor the Bank Documents create an agency relationship between the Senior Note Secured Parties and the Bank Secured Parties.

SECTION 12.  Insurance Proceeds.  (a) In the event of the occurrence of any casualty with respect to any of the Bank Collateral, the Senior Note Secured Parties agree that the Bank Secured Parties shall have the sole and exclusive right to adjust, compromise or settle any such loss with the insurer thereof, and to collect and receive the proceeds from such insurer.

(b)           In the event of the occurrence of any casualty with respect to any of the Senior Notes Collateral, the Bank Secured Parties agree that the Senior Note Secured Parties shall have the sole and exclusive right to adjust, compromise or settle any such loss with the insurer thereof, and to collect and receive the proceeds from such insurer.

(c)           Any insurer shall be fully protected if it acts in reliance on the provisions of this Section 12.

SECTION 13. Waiver of Certain Rights. (a) Each Bank Secured Party hereby waives any and all rights to (i) require the Senior Note Secured Parties to marshall any property or assets of any Obligor Party comprising the Senior Notes Collateral or to resort to any of the property or assets of any Obligor Party comprising the Senior Notes Collateral in any particular order or manner; or (ii) require any Senior Note Secured Party to enforce any guaranty or any security interest or lien given by any person or entity other than any of the Obligor Parties to secure the payment of any or all of the Senior Note Indebtedness as a condition precedent or concurrent to taking any action against or with respect to the Senior Notes Collateral; and

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(b)           The Senior Note Secured Parties hereby waive any and all rights to (i) require the Bank Secured Parties to marshall any property or assets of any Obligor Party comprising the Bank Collateral or to resort to any of the property or assets of any Obligor Party comprising the Bank Collateral in any particular order or manner, or (ii) require the Bank Secured Parties to enforce any guaranty or any security interest or lien given by any person or entity other than any of the Obligor Parties to secure the payment of any or all of the Bank Indebtedness as a condition precedent or concurrent to taking any action against or with respect to the Bank Collateral.

SECTION 14.  Bankruptcy Financing Issues.  (a) This Agreement shall continue in full force and effect after the filing of any petition or like actions or proceedings for relief by or against any Obligor Party under any Bankruptcy Law and all converted or succeeding cases in respect thereof (all references herein to any Obligor Party being deemed to apply to such Person as a debtor-in-possession and to a trustee for such Person) with respect to all Senior Notes Collateral and Bank Collateral acquired by any Obligor Party, and to all Senior Note Indebtedness and Bank Indebtedness incurred by any Obligor Party, subsequent to such filing.

(b)           If any Obligor Party shall become subject to a proceeding under Bankruptcy Law, and if the Senior Note Secured Parties shall desire to permit the use of cash collateral by any Obligor Party or to provide post-petition financing from the Senior Note Secured Parties to any Obligor Party, the Bank Secured Parties agree as follows: (a) adequate notice to the Bank Secured Parties shall be deemed to have been provided for such use of cash collateral or such post-petition financing if the Bank Secured Parties receive notice thereof to the extent required by the applicable Bankruptcy Law; and (b) no objection will be raised by the Bank Secured Parties to any such use of cash collateral or such post-petition financing from the Senior Note Secured Parties so long as the Lien of the Bank Secured Parties in the Bank Collateral is not adversely affected thereby.

(c)           If any Obligor Party shall become subject to a proceeding under Bankruptcy Law, and if the Bank Secured Parties shall desire to permit the use of cash collateral by any Obligor Party or to provide post-petition financing from the Bank Secured Parties to any Obligor Party, the Senior Note Secured Parties agree as follows: (a) adequate notice to the Senior Note, Secured Parties shall be deemed to have been provided for such use of cash collateral or such post-petition financing if the Senior Note Secured Parties receive notice thereof to the extent required by the applicable Bankruptcy Law; and (b) no objection will be raised by the Senior Note Secured Parties to any such use of cash collateral or such post-petition financing from the Bank Secured Parties so long as the Lien of the Senior Note Secured Parties in the Senior Notes Collateral is not adversely affected thereby.

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(d)           No objection will be raised by (i) the Bank Secured Parties to any Senior Note Secured Party’s motion for relief from automatic stay in any such proceeding to foreclose on, sell or otherwise realize upon the Senior Notes Collateral and (ii) any Senior Note Secured Party to the Bank Secured Parties, motion for relief from automatic stay in any such proceeding to foreclose on, sell or otherwise realize upon the Bank Collateral.

SECTION 15.  Assignment of Indebtedness.  Each of the Bank Secured Parties and each of the Senior Note Secured Parties represents and warrants that, as of the date hereof, (a) it has not previously assigned any interest in any of the Bank Indebtedness or the Senior Note Indebtedness, as the case may be, (b) no other party owns an interest in any of the Bank Indebtedness or the Senior Note Indebtedness, as the case may be, other than the Bank Secured Parties or the Senior Note Secured Parties (whether as joint holders of any such Indebtedness, as participants or otherwise) and (c) the entire Bank Indebtedness or the Senior Note Indebtedness, as the case may be, is owed only to the Bank Secured Parties and the Senior Note Secured Parties, respectively. Each of the Bank Secured Parties and each of the Senior Note Secured Parties covenants and agrees that the assignment of any such Indebtedness shall be expressly subject to the terms, provisions and conditions of this Agreement and that any purported assignment of any such Indebtedness shall be deemed to be null and void unless the assignee thereof shall agree to be bound by the terms, provisions and conditions of this Agreement.

SECTION 16.  Term.  This Agreement shall remain in full force and effect until all of the Senior Note Indebtedness or all of the Bank Indebtedness, as the case may be, shall have been fully and finally paid, defeased or discharged in cash and all other obligations of the Obligor Parties under the Senior Note Documents shall have been fully discharged and all financing arrangements and commitments between the Obligor Parties and the Bank Secured Parties, pursuant to the Bank Documents, shall have been terminated. This Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Senior Note Indebtedness or Bank Indebtedness is rescinded or must otherwise be returned by Senior Note Secured Parties or the Bank Secured Parties upon the insolvency, bankruptcy or reorganization of any Obligor Party or otherwise, all as though such payment had not been made. This is a mutual and continuing agreement and the Senior Note Secured Parties and the Bank Secured Parties may continue to extend credit or other financial accommodations and loan monies to or for the benefit of any Obligor Party, on the faith hereof, under the Senior Note Documents or the Bank Documents or otherwise without notice to the other party hereto.

SECTION 17.  Amendment and Release.  (a)  Any Senior Note Secured Party may at any time and from time to time (i) enter into such agreements with the Obligor Parties as such Senior Note Secured Party may deem proper to the extent not inconsistent or in conflict with, in violation of or in default under this Agreement and (ii) exchange, sell, release, surrender or otherwise deal with any or all of the Senior Notes Collateral as provided in the Senior Note Documents, all without in any way compromising or affecting this Agreement.

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(b)  Any Bank Secured Party may at any time and from time to time (a) enter into such agreements with any Obligor Party as each Bank Secured Party may deem proper to the extent not inconsistent or in conflict with, in violation of or in default under this Agreement and (b) exchange, sell, release, surrender or otherwise deal with any or all of the Bank Collateral as, provided in the Bank Documents, all without in any way compromising or affecting this Agreement.

SECTION 18.  Reliance Waiver of Notices; No Representations and Management of Credit Facilities.  All of the Senior Note Indebtedness and Bank Indebtedness shall be deemed to have been made or incurred in reliance upon this Agreement. Each of the Bank Secured Parties and the Senior Note Secured Parties expressly waive all notices not specifically required pursuant to the terms of this Agreement. Each of the Bank Secured Parties and the Senior Note Secured Parties agree that the other party has made no representation or warranty with respect to the due execution, legality, validity, completeness or enforceability of any of the respective documents to which they are a party, the perfection or priority of any Lien securing any or all of the Senior Note Indebtedness or the Bank Indebtedness or the collectibility of any of such Senior Note Indebtedness or Bank Indebtedness.  No party shall have any liability to the other for any loss, claim or damage allegedly suffered by such other party in any proceeding to foreclose or otherwise enforce any of its Liens on any of the assets or properties of the Obligor Parties comprising the Senior Notes Collateral or the Bank Collateral, as the case may be.

SECTION 19.Financial Condition of the Obligor Parties. Each of the Bank Secured Parties and the Senior Note Secured Parties hereby assumes responsibility for keeping itself informed of the financial condition of the Obligor Parties and of all other circumstances bearing upon the risk of nonpayment of the Bank Indebtedness or the Senior Note Indebtedness, as applicable, that diligent inquiry would reveal and each such party also hereby agrees that no other party shall have any duty to advise any other of any information regarding such condition or any such circumstances.

SECTION 20.  Notices.  Any notice, request, demand, consent or other communication hereunder: shall be in writing and delivered in person or sent by telecopy or email (in each case confirmed by overnight courier service or by registered or certified mail, return receipt requested and postage prepaid, to the applicable party at its address or telecopy number set forth, as to the Senior Note Secured Parties, to HSBC Bank USA, National Association, 452 Fifth Avenue, New York, New York 10018, Attention: Corporate Trust Division and as to [list contact information for each Bank Secured Party], or at such other address, telecopy number or email address as any party hereto may designate as its address for communications hereunder by notice so given. Such notices shall be deemed effective on the day on which delivered or sent if delivered in person or sent by telecopy or by email, or on the third Business Day after the day on which mailed, if sent by registered or certified mail.

SECTION 21.  UCC, PPSA or Bankruptcy Law Notices.  If the Senior Note Secured Parties or the Bank Secured Parties shall be required by the UCC, PPSA or Bankruptcy Law or any other applicable law to give notice of any action taken or to be taken with respect to any or all of the Senior Notes Collateral or the Bank Collateral, as the case may be, such notice shall be given in accordance with Section 20 above and five (5) days’ notice shall be conclusively deemed to be commercially reasonable.

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SECTION 22.  Further Assurances.  Each Bank Secured Party and each Senior Note Secured Party hereby covenants and agrees to take any and all additional actions and execute, deliver, file and/or record any and all additional agreements, documents and instruments as may be necessary or as such party may from time to time reasonably request to effect the other provisions of this Agreement.

SECTION 23.  Modifications in Writing.  No amendment, modification, supplement, termination, consent or waiver of or to any provision of this Agreement nor any consent to any departure therefrom shall in any event be effective unless the same shall be in writing and signed by or on behalf of each of the Bank Secured Parties and, in the case of the Senior Note Secured Parties, the Collateral Agent. Any waiver of any provision of this Agreement, and any consent to any departure from the terms of any provision of this Agreement, shall be effective only in the specific instance and for the specific purpose for which given.

SECTION 24.  Waivers; Failure or Delay.  No failure or delay on the part of any Bank Secured Party or any Senior Note Secured Party in the exercise of any power, right, remedy or privilege under this Agreement shall impair such power, right, remedy or privilege or shall operate as a waiver thereof; nor shall any single or partial exercise of any such power, right, remedy or privilege preclude any other or further exercise of any other power, right, remedy or privilege. The waiver of any such right, power, remedy or privilege with respect to particular facts and circumstances shall not be deemed to be a waiver with respect to other facts and circumstances.

SECTION 25.  Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be effective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Agreement.

SECTION 26.  Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the Bank Secured Parties and the Senior Note Secured Parties and their respective successors and assigns.

SECTION 27.Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.  (a)This Agreement shall be governed by and construed in accordance with the laws of the State of New York. EACH OF THE BANK SECURED PARTIES AND THE SENIOR NOTE SECURED PARTIES HEREBY IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION IN WHICH THE BANK SECURED PARTIES AND THE SENIOR NOTE SECURED PARTIES ARE PARTIES RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.

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(b)           Any legal action or proceeding with respect to this Agreement may be brought in the courts of the State of New York or the federal courts of the United States located in The City of New York, and each of the Bank Secured Parties and the Senior Note Secured Parties consents to the jurisdiction of such courts. Each of the Bank Secured Parties and the Senior Note Secured Parties irrevocably waives any objection, including any objection to the laying of venue or based on forum non conveniens, which it may have to the bringing of any action or proceeding in such jurisdiction with respect to this Agreement. Notwithstanding the foregoing, (i)(A) the Senior Note Secured Parties shall have the right to bring any action or proceeding against the Bank Secured Parties and their property in the courts of any other jurisdiction the Senior Note Secured Parties deem necessary or appropriate in order to enforce the obligations of the Bank Secured Parties under this Agreement and (B) each of the Bank Secured Parties acknowledges that any appeals from the courts described in Section 28(b)(i)(A) may have to be heard by a court located outside those jurisdictions, and (ii)(A) the Bank Secured Parties shall have the right to bring any action or proceeding against the Senior Note Secured Parties and their property in the courts of any other jurisdiction the Bank Secured Parties deem necessary or appropriate in order to enforce the obligations of the Senior Note Secured Parties under this Agreement and (B) each of the Senior Note Secured Parties acknowledges that any appeals from the courts described in Section 28(b)(ii)(A) may have to be heard by a court located outside those jurisdictions.

(c)           To the extent allowed by any applicable requirement of law, each of the Bank Secured Parties and the Senior Note Secured Parties waives personal service of any and all process upon it and agrees that all such service of process may be made by registered mail (return receipt requested) directed to such party at its address set forth in this Agreement and service so made shall be deemed to be completed five days after the same shall have been so posted in the United States or Canada, as applicable, postage prepaid.  Nothing contained in this Section 28(c) shall affect the right of the Bank Secured Parties or the Senior Note Secured Parties to serve legal process by any other manner permitted by law.

SECTION 28.  Judgment Currency.  (a) If for the purpose of obtaining or enforcing any judgment in any court or for the purpose of determining any amounts owing hereunder, it is necessary to convert an amount due hereunder in U.S. dollars into a currency other than U.S. dollars (the “Judgment Currency”) the rate of exchange applied shall be that at which, in accordance with normal banking procedures, the Senior Note Secured Parties could purchase, in the New York foreign exchange market, U.S. dollars with the Judgment Currency on the date that is two business days preceding that on which judgment is given or any other payment is due hereunder.  Each of the Bank Secured Parties agrees that its respective obligation in respect of any U.S. dollars due from it to the Senior Note Secured Parties hereunder shall, notwithstanding any judgment or payment in the Judgment Currency, be discharged only to the extent that, on the business day followings the date the Senior Note Secured Parties receives payment of any sum so adjudged or owing to be due hereunder in the Judgment Currency, the Senior Note Secured Parties may, in accordance with normal banking procedures, purchase, in the New York foreign exchange market U.S. dollars with the amount of the Judgment Currency so paid; and if the amount of U.S. dollars so purchased or that could have been so purchased is less than the amount originally due in U.S. dollars, each of the Bank Secured Parties agrees as a separate obligation and notwithstanding any such payment or judgment to indemnify the Senior Note Secured Parties against such loss. The term “rate of exchange” in this Section 28(a) means the spot rate at which the Senior Note Secured Parties, in accordance with normal practices, are able on the relevant date to purchase U.S. dollars with the Judgment Currency and includes any premium and costs of exchange payable in connection with such purchase.

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(b)           If for the purpose of obtaining or enforcing any judgment in any court or for the purpose of determining any amounts owing hereunder, it is necessary to convert an amount due hereunder in U.S. dollars into Judgment Currency, the rate of exchange applied shall be that at which, in accordance with normal banking procedures, the Bank Secured Parties could purchase, in the New York foreign exchange market, U.S. dollars with the Judgment Currency on the date that is two business days preceding that on which judgment is given or any other payment is due hereunder. Each of the Senior Note Secured Parties agrees that its respective obligation in respect of any U.S. dollars due from it to the Bank Secured Parties hereunder shall, notwithstanding any judgment or payment in the Judgment Currency, be discharged only to the extent that, on the business day following the date the Bank Secured Parties receives payment of any sum so adjudged or owing to be due hereunder in the Judgment Currency, the Bank Secured Parties may, in accordance with normal banking procedures, purchase, in the New York foreign exchange market U.S. dollars with the amount of the Judgment Currency so paid; and if the amount of U.S. dollars so purchased or that could have been so purchased is less than the amount originally due in U.S. dollars, each of the Senior Note Secured Parties agrees as a separate obligation and notwithstanding any such payment or judgment to indemnify the Bank Secured Parties against such loss to the extent of any Senior Notes Collateral available for payment thereof. The term “rate of exchange” in this Section 28(b) means the spot rate at which the Bank Secured Parties, in accordance with normal practices, are able on the relevant date to purchase U.S. dollars with the Judgment Currency and includes any premium and costs of exchange payable in connection with such purchase.

SECTION 29.  Equitable Remedies. Each party to this Agreement acknowledges that the breach by it of any of the provisions of this Agreement is likely to cause irreparable damage to the other party. Therefore, the relief to which any party shall be entitled in the event of any such breach or threatened breach shall include, but not be limited to, a mandatory injunction for specific performance, injunctive or other judicial relief to prevent a violation of any of the provisions of this Agreement, damages and any other relief to which it may be entitled at law or in equity.

SECTION 30.  Attorneys, Fees and Expenses.  In the event of any dispute concerning the meaning or interpretation of this Agreement which results in litigation, or in the event of any litigation by a party hereto to enforce the provisions hereof, the prevailing party shall be entitled to recover from the non-prevailing party, in addition to its other damages, its reasonable attorneys’ fees and expenses and any actual court costs incurred.

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SECTION 31.  Headings.  Section headings used in this Agreement are for convenience of reference only and shall not constitute a part of this Agreement for any purpose or affect the construction of this Agreement.

SECTION 32.  Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement. This Agreement shall become effective upon the execution and delivery of a counterpart hereof by each of the parties hereto. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of an original executed counterpart of this Agreement.

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EXHIBIT F

RMI SUBORDINATION AGREEMENT

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EXHIBIT G

SECURITY AGREEMENT

137

EXHIBIT H

FIRST PRIORITY INTERCREDITOR AGREEMENT

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EX-99.3

Exhibit 99.3

RMI/HI SUPPORT AGREEMENT

THIS AGREEMENT is dated as of March 10, 2003.

BETWEEN:

RAVELSTON MANAGEMENT INC., a corporation incorporated under the

laws of Ontario

("RMI")

- and -

HOLLINGER INC., a corporation incorporated under the laws of Canada

("HI")

RECITALS:

A.                        HI and RMI have entered into an indenture dated as of March 10, 2003 (the "Indenture") with Wachovia Trust Company, National Association, as trustee (the "Trustee"), which provides for the issue by HI of senior secured notes (the "Notes").

B.                         The Ravelston Corporation Limited ("Ravelston") is the holder, directly or indirectly, of 78.2% of the issued and outstanding retractable common shares of HI.  RMI is a wholly-owned direct subsidiary of Ravelston.  RMI has entered into a guarantee of the Notes (the "Guarantee").

C.                         RMI wishes to provide support to HI in connection with the Notes.RMI wishes to provide support to HI in connection with the Notes.

NOW THEREFORE, in consideration of the mutual promises herein contained and other good and valuable consideration, the parties hereto agree as follows:

1.             Definitions.  For the purposes of this Agreement:

"Agreement" means this agreement as it may be amended, supplemented, restated or replaced from time to time; the expressions "hereof", "herein", "hereto", "hereunder", "hereby" and similar expressions refer to this Agreement as a whole and not to any particular article, section, schedule or other portion hereof.

"Capital Stock" has the meaning assigned to such term in the Indenture.

"Dividend Offset Amount" means the excess of any Net Dividend Amount received by HI and NBI in the relevant fiscal year over U.S.$4,650,000.

"Floor Amount" means U.S.$14,000,000 in each fiscal year, less (i) the aggregate amount of management fees paid in cash by HII and its subsidiaries directly to HI or to its Wholly-Owned Restricted Subsidiaries in such fiscal year, and (ii) any Dividend Offset Amount in such fiscal year.  With respect to any period that is less than a fiscal

year, the Floor Amount shall be calculated pro rata by reference to the number of days in such period, computed on the basis of a 360-day year of twelve 30-day months.

"GAAP" means generally accepted accounting principles in Canada, consistently applied, which are in effect on the date of the Indenture.

"HII" means Hollinger International Inc.

"NBI" means 504468 N.B. Inc.

"Negative Net Cash Flow" means, for any period, the amount by which:

(a)   Net Income (Loss) plus, without duplication, (i) the amount of all non-cash items reducing Net Income (Loss), (ii) all amounts deducted in the calculation of Net Income (Loss) on account of depreciation and amortization, and (iii) all taxes provided for in the calculation of Net Income (Loss), less, without duplication, (iv) any non-cash items increasing Net Income (Loss), (v) all taxes paid in cash during such period, (vi) all capital expenditures made in cash during such period, and (vii) all dividends (excluding dividends on HI's retractable common shares) made during such period; all calculated in accordance with GAAP as of the last day of any period, is less than

(b)   zero.

"Net Dividend Amount" means the net cash dividend amount received by HI and NBI in the relevant fiscal year on the Class A common shares and Class B common shares of HII held by them (including, without limitation, any such shares pledged as security for the Notes), after deducting (i) any withholding taxes or income taxes paid or payable in cash by HI or NBI in respect of such dividends, and (ii) any dividends received by HI or NBI on such number of shares of HII hold by HI or NBI that corresponds to the number of Class A common shares of HII into which the Series II preferred shares of HI are exchangeable.

"Net Income (Loss)" of the Company means, for any period, the unconsolidated net income (or loss (and treating a loss as a negative number)) of the Company for such period, adjusted by excluding, without duplication, to the extent included in calculating such net income (or loss), (i) all extraordinary gains and losses, (ii) the net income (or loss) of any Person acquired during the specified period attributable to any period prior to the date of such acquisition, (iii) any gain or loss realized upon the termination of any employee pension benefit plan, (iv) aggregate gains and losses (less all fees and expenses relating thereto) in respect of dispositions of assets other than in the ordinary course of business (provided that any sale of Capital Stock of HII for cash would be considered a disposition in the ordinary course of business), (v) any gain from the collection of proceeds of life insurance policies, and (vi) any gain or loss arising from the acquisition of any securities of the Company, or the extinguishment, under GAAP, of any Indebtedness of the Company.

"Qualified Capital Stock" has the meaning assigned to such term in the Indenture.

"RCL Repayment Amount" means, for any period, any permanent repayment in cash of the principal amount of debt owing by Ravelston under the promissory note made by Ravelston as borrower in favour of HI as lender dated March 10, 2003 received by HI during such period.

"Subordinated Debt" means unsecured debt expressly subordinated in right of payment to the Notes.

"Wholly-Owned Restricted Subsidiaries" has the meaning attributed to such term in the Indenture.

2.             Annual Support Amount.  Each fiscal year, RMI will contribute to HI an amount (the "Annual Support Amount") equal to (i) the greater of (A) Negative Net Cash Flow for that fiscal year and (B) the Floor Amount, less (ii) any RCL Repayment Amount made during that fiscal year.  The Annual Support Amount shall be contributed by RMI to HI as either (i) subscription for Qualified Capital Stock, (ii) contributions to capital in respect of Capital Stock of HI already issued and without the issuance of additional Capital Stock of HI to RMI, or (iii) Subordinated Debt, as determined by RMI and HI.

3.             Payment of Annual Support Amount.  The Annual Support Amount shall be paid by RMI to HI as follows:

(a)   for the first three quarters of each fiscal year, an amount equal to (i) the Negative Net Cash Flow for the preceding quarter, less (ii) any RCL Repayment Amount for that preceding quarter, shall be paid by RMI to HI within 45 days of the end of each such quarter; and

(b)   for the last quarter of each fiscal year, an amount equal to

(i)   the greater of (A) the Negative Net Cash Flow for the fiscal year and (B) the Floor Amount,

(ii)   less any RCL Repayment Amount made during the fiscal year,

(iii)   less the aggregate amount paid during the fiscal year pursuant to section 3(a) hereof,

shall be paid by RMI to HI (or, if negative, paid by HI to RMI, if permitted by the Indenture) no later than 90 days after the end of such fiscal year.

For greater certainty, partial payments of the Annual Support Amount may be made by RMI from time to time before the dates specified in this section.  Such partial payments shall be credited towards the amounts due in this section.  With respect to any period that is less than a fiscal quarter or a fiscal year, the Annual Support Amount to be paid by RMI to HI for such period shall be calculated pro rata by reference to the number of days in such period, computed on the basis of a 360-day year of twelve 30-day months.

4.             Reports

(a)   HI shall:

(i)   for each of the first three quarters of each fiscal year, calculate the Net Income (Loss), the Negative Net Cash Flow and the amount to be paid by RMI pursuant to section 3(a) hereof for the preceding fiscal quarter and, within 45 days after the end of such quarter, deliver to RMI and the Trustee (A) a report for such quarter setting out these amounts, and (B) a review on such report by HI's independent auditors; and

(ii)   for the last quarter of each fiscal year, calculate the Net Income (Loss), the Negative Net Cash Flow and the amount to be paid by RMI pursuant to section 3(b) hereof for the preceding fiscal year and, within 90 days after the end of such quarter, deliver to RMI and the Trustee (A) a report for such fiscal year setting out these amounts, and (B) an audit of such reports by HI's independent auditors,

(each such report, a "Delivered Report").  The amounts set out in each Delivered Report will be deemed to be the settled amounts for purposes of the payments required hereby until such time as determined otherwise pursuant to section 4(c) or (d).  Any payments or adjustments to payments previously made required by a resolution under section 4(c) or an award or determination of an Auditor under section 4(d) will be made forthwith after the resolution, award or determination (as applicable).

(b)   For each Delivered Report, if RMI notifies HI that it agrees with the Delivered Report within 10 days after receiving it or fails to deliver notice to HI of its disagreement with the Delivered Report within that 10-day period, the Delivered Report will be conclusive and binding on HI and RMI will be deemed to have agreed to it, in the first case, on the date HI receives the notice and, in the second case, on that 10^th day.

(c)   If RMI notifies HI of RMI's disagreement with a Delivered Report within the 10-day period provided for in section 4(b), then HI and RMI will attempt, in good faith, to resolve their differences with respect to it within 20 days after delivery of the Delivered Report to RMI.  Any disagreement over a Delivered Report not resolved by HI and RMI within that 20-day period will be resolved as set out in section 4(d).  HI shall provide the Trustee with a copy of any notice of disagreement received from RMI.

(d)   Any dispute relating to a Delivered Report not resolved within 20 days after delivery of the Delivered Report to RMI will be determined by arbitration under the Arbitration Act, 1991 (Ontario) (the "Arbitration Act") by a partner of a major accounting firm in Ontario (the "Auditor") who is independent of HI and RMI and agreed to by HI and RMI or appointed by a judge of the Superior Court of Justice of Ontario, on application of HI or RMI, on notice to the other.  The application of section 7(2) of the Arbitration Act is expressly excluded.  Subject to section 44 of the Arbitration Act, any award or determination of the Auditor will be final and binding on the parties and there will be no appeal on any ground.  Any hearing in the course of the determination will be held in Toronto, Ontario in the English language.  All matters relating to the arbitration will be kept confidential to the full extent permitted by law.  Despite section 28(1) of the Arbitration Act, the Auditor will not, without the written consent of HI and RMI, retain any expert.  The Auditor shall have power to award costs of the arbitration (including fees of the Auditor) to the losing party on a substantial indemnity basis.

5.             Termination.  This Agreement shall terminate upon repayment in full of the Notes and termination or release of the Guarantee.

6.             Waiver.  RMI hereby waives any failure or delay on the part of another party in asserting or enforcing any rights or in making any claims or demands hereunder.

7.             Modification, Amendment and Termination.  This Agreement may be modified, amended or terminated only by the written agreement of all parties hereto.

8.             Third Party Beneficiary.  The parties hereto agree and acknowledge that the Trustee is a third party beneficiary of this Agreement (except for the second sentence of section 2 hereof) and is entering into the Indenture in reliance, among other things, upon this Agreement.  The Trustee shall be entitled to enforce against any party hereto any term or provision of this Agreement (except the second sentence of section 2 hereof).

9.             Successor.  The Agreement herein set forth shall be binding upon, and enure to the benefit of RMI and HI and their respective successors and permitted assigns.

10.           Assignment.  The benefits of this Agreement may not be assigned without the express written consent of RMI and HI, other than a pledge of this Agreement by HI in favour of the Trustee as security for HI's obligations under the Indenture.  In the event that (i) an Event of Default (as defined in the Indenture) has occurred and is continuing, and (ii) the Trustee has given prior written notice to RMI and HI, RMI shall pay all amounts payable by RMI to HI hereunder directly to the Trustee for the benefit of the holders of the Notes for such time as such Event of Default shall continue.

11.           GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

DATED as of the date first set out above.

RAVELSTON MANAGEMENT INC.
By:	/s/Peter Y. Atkinson
	Name:Peter Y. Atkinson
	Title:

HOLLINGER INC.
By:	/s/ Peter Y. Atkinson
	Name :Peter Y. Atkinson
	Title

EX-99.4

Exhibit 99.4

CONTRIBUTION AGREEMENT

THIS AGREEMENT is dated as of March 10, 2003.

BETWEEN:

THE RAVELSTON CORPORATION LIMITED,  a corporation incorporated

under the laws of Ontario

("Ravelston")

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RAVELSTON MANAGEMENT INC., a corporation incorporated under the

laws of Ontario

("RMI")

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HOLLINGER INC., a corporation incorporated under the laws of Canada

("HI")

RECITALS

A.                    HI and RMI have entered into an indenture dated as of March 10, 2003 (the "Indenture") with Wachovia Trust Company , National Association, as trustee (the "Trustee"), which provides for the use by HI of senior secured notes (the "Notes").

B.                     Ravelston is the holder, directly or indirectly, of 78.2% of the issued and outstanding retractable common shares of HI.  RMI is a wholly-owned direct subsidiary of Ravelston.  RMI has entered into a guarantee of the Notes.

C.                     Pursuant to the Support Agreement (as defined below), RMI has agreed to provide support to HI in connection with the Notes.

D.                      Ravelston has borrowed U.S. $11,500,000 from HI under a promissory note dated March 10, 2003 made by Ravelston as borrower in favour of HI as lender (the "RCL Loan") used by Ravelston to repay currently outstanding senior bank debt of Ravelston.  The amounts to be contributed by RMI to HI under the Support Agreement are reduced by any RCL Repayment Amounts (as defined in the Support Agreement) paid by Ravelston to HI in respect of the RCL Loan.

E.                     Section 2 of the Support Agreement provides that the Annual Support Amount (as defined below) shall be contributed by RMI to HI as either (i) subscription for Qualified Capital Stock, (ii) contributions to capital in respect of Capital Stock of HI already issued and without the issuance of additional Capital Stock of HI to RMI, or (iii) Subordinated Debt (all as defined in the Support Agreement), as determined by RMI and HI.  RMI and HI may make the determination as to the manner in which the Annual Support Amount is contributed, and change that determination, from to time in their sole discretion without approval of the Trustee.

F.   In connection with the issuance of the Notes, the board of directors of HI formed a Special Committee (as defined below) who reviewed the Notes offering and related transactions.

G.   This Agreement sets forth, among other things, RMI and HI's current agreement as to the manner in which the Annual Support Amount shall be contributed by RMI to HI for purposes of the Support Agreement.

NOW THEREFORE, in consideration of the mutual promises herein contained and other good and valuable consideration, the parties hereto agree as follows:

1.             Definitions.  For the purposes of this Agreement:

"Agreement" means this agreement as it may be amended, supplemented, restated or replaced from time to time; the expressions "hereof", "herein", "hereto", "hereunder", "hereby" and similar expressions refer to this Agreement as a whole and not to any particular article, section, schedule or other portion hereof;

"Annual Support Amount"  has the meaning assigned to such term in the Support Agreement.

"Capital Stock" has the meaning assigned to such term in the Indenture.

"Floor Amount" has the meaning assigned to such term in the Support Agreement.

"Liens" has the meaning assigned to such term in the Indenture.

"Negative Net Cash Flow" has the meaning assigned to such term in the Support Agreement.

"Obligations" means all of the obligations, liabilities and indebtedness of RMI to HI from time to time, whether present or future, absolute or contingent, liquidated or unliquidated, of whatsoever nature or kind, in any currency, under or in respect of this Agreement and the Support Agreement.

"Permitted Liens" has the meaning assigned to such term in the Indenture.

"Public Company" means a company whose voting, participating equity securities are (1) held by persons who are not affiliates of the company or acting jointly or in concert with an affiliate of the company and (2) listed on a stock exchange.

"RCL Ownership Percentage" means, at any time, the percentage of retractable common shares of HI owned by Ravelston and its Affiliates (as defined in the Indenture).

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"RMI Loan" means the grid promissory note in favour of RMI as lender from HI as borrower dated the date hereof.

"Special Committee" means a committee of the board of directors of HI comprised of not less than three directors, each of whom is neither an officer nor an employee of HI or any of its Affiliates.

"Support Agreement" means the RMI/HI support agreement between RMI and HI dated the date hereof;

2.             Support Amounts.  The Annual Support Amount which RMI is required to contribute under the Support Agreement for any fiscal year shall be paid to HI by RMI as follows:

(a)   if Negative Net Cash Flow in that fiscal year is greater than the Floor Amount, then all amounts to be contributed by RMI to HI in respect of that fiscal year pursuant to the Support Agreement shall be contributions by RMI to the capital of Hi in respect of Capital Stock already issued and without the issuance of additional Capital Stock of HI to RMI;

(b)   if Negative Net Cash Flow in that fiscal year is zero, then all amounts to be contributed by RMI in respect of that fiscal year pursuant to the Support Agreement shall be contributions by way of advances from RMI to HI under the RMI Loan; and

(c)   if Negative Net Cash Flow in that fiscal year is less than the Floor Amount, then (1) all amounts to be contributed by RMI to HI in respect of that fiscal year pursuant to the Support Agreement up to the amount of the Negative Net Cash Flow for that fiscal year shall be contributions by RMI to the capital of HI in respect of Capital Stock already issued and without the issuance of additional Capital Stock of HI to RMI, and (2) all amounts to be contributed by RMI  to HI in respect of that fiscal year pursuant to the Support Agreement in excess of the Negative Net Cash Flow for such fiscal year shall be contributions by way of advances from RMI to HI under the RMI Loan.

3.             Payment of Support Amounts.  The Annual Support Amount shall be paid by RMI to HI as follows:

(a)   for the first three quarters of each fiscal year, the amount to tbe paid by RMI pursuant to section 3(a) of the Support Agreement shall be paid by way of contributions by RMI to the capital of HI in respect of Capital Stock already used and without the issuance of additional Capital Stock of HI to RMI; and

(b)   for the last quarter of each fiscal year, the amount to be paid pursuant to section 3(b) of the Support Agreement shall be paid by way of either (i) advances from RMI to Hi or, if permitted by the Indenture, repayments from HI to RMI under the RMI Loan, (ii) contributions by RMI to the capital of HI in respect of Capital Stock already issued and without the issuance of additional Capital Stock of HI to RMI and/or (iii) if permitted by the Indenture, returns of capital of HI to RMI, all in such amounts as shall be required to meet the requirements of section 2 hereof.

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For greater certainty, with respect to any period that is less than a fiscal quarter or a fiscal year, the Annual Support Amount to be paid by RMI to HI for such period shall be calculated pro rata by reference to the number of days in such period, computed on the basis of a 360-day year of twelve 30-day months.

4.             Ravelston Covenants.  At all times while the Obligations are outstanding, Ravelston covenants in favour of HI to:

(a)   take all actions, including without limitation voting the capital stock of RMI, so as to cause RMI to comply with its obligations under (i) the covenants of RMI set out in sections 10.22(a) and 10.23 of the Indenture, (ii) the Support Agreement, and (iii) this Agreement; and

(b)   comply with the covenants of Ravelston set out in section 10.22(b) of the Indenture.

5.             RMI Covenants.  At all times while the Obligations aer outstanding, RMI covenants in favour of HI:

(a)   not to create, incur, assume or suffer to exist any Lien on any of its assets or properties, other than Permitted Liens; and

(b)   to comply with the covenants of RMI set out in sections 10.22(a) and 10.23 of the Indenture.

6.             Additional Contribution to Pay Dividends.  In the event that, in any fiscal year (i) the board of directors of HI resolves to declare a cash dividend on the retractable common shares of HI which is permitted under the Indenture, and (ii) after giving effect to the Annual Support Payment paid by RMI to HI under the Support Agreement, HI does not have sufficient cash to pay such dividend (the "Dividend Cash Shortfall"), then RMI will contribute to HI an amount equal to the Dividend Cash Shortfall, as follows:

(a)   an amount equal to the product obtained by multiplying (i) the RCL Ownership Percentage immediately prior to the date for payment of such dividend, by (ii) the Dividend Cash Shortfall, shall be paid by way of contributions by RMI to the capital of HI in respect of Captial Stock of already issued and without the issuance of additional Capital Stock of HI to RMI; and

(b)   the balance of the Dividend Cash Shortfall, shall be paid by way of advances from RMI to HI under the RMI Loan.

7.             Merger, Consolidation, Amalgamation.  RMI shall not, in a single transaction or a series of related transactions, consolidate with, amalgamate or merge with or into any other person, or sell, assign, convey, transfer, lease or otherwise dispose of all or substantially all of its properties and assets to any person, if such transaction or transactions, in the aggregate, would result in a sale, assignment, conveyance, transfer, lease or disposition of all or substantially all of the properties and assets of RMI to any other person, unless at the time and after giving effect thereto either (i) RMI shall be the continuing corporation or (b) the person (if other than RMI) formed by such consolidation or into which RMI is merged or amalgamated or the person which acquires by sale, assignment, conveyance, transfer, lease, or disposition all or substantially all of the properties and assets of RMI expressly assumes all the obligations of RMI hereunder and this Agreement remains in full force and effect.

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8.             Termination.  This Agreement shall terminate upon (i) repayment in full of the Notes and termination of the Support Agreement, or (ii) HI ceasing to be a Public Company.

9.             Modification, Amendment and Termination.  This Agreement may be modified, amended or terminated only by the written agreement of all parties hereto, and, so long as HI is a Public Company, with the approval of a Special Committee.

10.           Assignment.  The benefits of this Agreement may not be assigned without the express written consent of the parties hereto.

11.           Successor and No Third Party Beneficiaries.  This Agreement will enure to the benefit of, and be binding upon, the parties to this agreement and their respective successors and permitted assigns.  No provision of this agreement, express or implied, is intended to confer upon any person other than the parties to this agreement and their successors or permitted assigns, any rights or remedies under or by reason of this agreement or any beneficial interest in this agreement or any such rights or remedies.

12.           Governing Law.  This agreement shall be governed by the laws of the Province of Ontario and the laws of Canada applicable therein.  The parties hereto irrevocably submit and attorn  to the non-exclusive jurisdiction of the courts of the Province of Ontario for all matters arising out of or in connection with this Agreement.

DATED as of the date first set out above.

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THE RAVELSTON CORPORATION LIMITED
By:	/s/Peter Y. Atkinson
	Name:Peter Y. Atkinson
	Title: Executive Vice-President

RAVELSTON MANAGEMENT INC.
By:	/s/Peter Y. Atkinson
	Name:Peter Y. Atkinson
	Title: Executive Vice-President

HOLLINGER INC.
By:	/s/Peter Y. Atkinson
	Name:Peter Y. Atkinson
	Title: Executive Vice-President

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EX-99.5

Exhibit 99.5

Hollinger

November 11, 2005

Mr. Randall C. Benson

c/o 1379074 Ontario Ltd.	TELEPHONE: (416) 363-8721
3098 First Street	FAX: (416) 363-4187

3098 First Street FAX: (416) 363-4187

Burlington, ON  L7N 1C6

Dear Randy:

Hollinger Inc. (the "Corporation") is pleased to retain 1379074 Ontario Ltd. as advisor to the Corporation and to appoint you as Chief Restructuring Officer and a Director of the Corporation on the terms and conditions of the Term Sheet attached as Schedule A, both effective as of July 15, 2005.

Yours very truly, HOLLINGER INC.
By:	/s/ Joseph H. Wright
	Joseph H. Wright
	Chair, Board of Directors
	Hollinger Inc.

__________________________

I accept the position of Chief Restructuring Office and Director of Hollinger Inc. on the terms and conditions of the Term Sheet attached as Schedule A.

/s/ R.C. Benson                                                      

Randall C. Benson

1379074 Ontario Inc. accepts the retainer as advisor to Hollinger Inc. on the terms and conditions of the Term Sheet attached as Schedule A.

1379074 ONTARIO INC.

/s/ R.C. Benson                                                      

Randall C. Benson

President

HOLLINGER INC., 10 TORONTO STREET, TORONTO, CANADA M5C 2B7

SCHEDULE A

TERM SHEET

Following is an outline of the terms on which Hollinger Inc. (the "Company") agrees to retain 1379074 Ontario Ltd. ("BensonCo") as its advisor and to Randy Benson ("Benson") being appointed as Chief Restructuring Officer and a director of the Company.  (For convenience, Benson and BensonCo are sometimes collectively referred to herein as the "Consultant".)

1.Services and Retainer

1.1 The "Services" will be to assist the Company in the development and evaluation of litigation and regulatory proceedings management, restructuring, refinancing, merger, divestiture and other strategies and in the implementation of those strategies (the "Restructuring") which are approved by the board of directors of the Company (the "Board") and, through Benson, to perform the role of Chief Restructuring Officer of the Company (the "CRO") as described in Section 2.

1.2 BensonCo will be retained to and will provide the Services to the Company.  BensonCo's Services will be provided by Benson.  BensonCo and the Company will arrange that Benson will be appointed and serve as CRO and, so long as BensonCo's engagement continues hereunder.  Benson will also be appointed a member of the Board.  Benson will be employed by BensonCo.  He will not be employed by, or have the status of an employee of, the Company and he will not be entitled to receive any remuneration from the Company for serving as a member of the Board or as CRO.

2.Role of CRO

2.1 The Company will appoint Benson as CRO and confer upon him the chief executive responsibility for the Company and concomitant authority.  Benson will accept such position and will, in the capacity of CRO, report directly to the Board.  As CRO, Benson will provide executive direction and leadership for the Company, primarily in relation to developing and evaluating strategic alternatives for the Company and implementing a Board-approved Restructuring plan as described in Section 1.  This will include leading negotiations with the various parties having dealings with the Company and its affairs, coordinating and instructing the Company's legal and financial advisors, and acting as the principal spokesperson for the Company on Restructuring matters.  Benson will make himself available for such number of hours during the week as the Company may from time to time reasonably require to serve as CRO.

3.Compensation for Services

3.1           Certain Defined Terms:

"Acknowledgements" means the acknowledgements set out in Section 3.2.

"Change of Control" means the occurrence at any date hereafter of any of the following events other than an Excluded Event:

(i)   any change in the holding, direct or indirect, of shares in the capital of the Company as a result of which a person or group of persons acting jointly or in concert, or person associated or affiliated with any such person or group within the meaning of the Securities Act (Ontario) (any such person or group of persons acting jointly or in concert being hereinafter referred to as a "Control Person"), becomes the beneficial owner, directly or indirectly, of shares and/or other securities which, directly or following conversion thereof, would entitle the holders thereof to cast more than twenty percent (20%) of the votes attaching to all shares of the Company which may be cast to elect directors of the Company;

(ii)   Incumbent Directors no longer constituting a majority of the Board or having their powers restricted, in whole or in part, to manage the business and affairs of the Company pursuant to a legally enforceable unanimous shareholder agreement;

(iii)   a sale or other disposition of all or substantially all of the property or assets of the Company; or

(iv)   any determination by the majority of Incumbent Directors that a change in control has occurred or is about to occur and any such determination shall be binding and conclusive for all purposes of this Agreement.

"Commencement Date" means July 15, 2005.

"Engagement Term" means the period commencing on the Commencement Date and ending when BensonCo's engagement to provide the Services is terminated.

"Excluded Event" means any change in the holding, direct or indirect, of shares in the capital of the Company, or a change in the percentage of shares held, by reason of:

(i)   the cancellation of previously outstanding shares directly or indirectly held by one or more Ravelston Entities;

(ii)   a sheriff, receiver, receiver/manager, custodian, liquidator, trustee in bankruptcy or other officer of a court directly or indirectly acquiring shares in the capital of the Company;

(iii)   Hollinger Inc. or any of its affiliates (other than Hollinger International Inc. and its subsidiaries) acquiring shares directly or indirectly held by one or more Ravelston Entities;

(iv)   a transfer of shares within a related group of entities acting in combination or jointly or in concert where there is no change in the person directly or indirectly entitled to control how such shares will be voted.

"Good Reason" means the occurrence of any one or more of the following conditions without the prior written consent of Benson, which conditions remain in effect ten days after written notification by Benson to the Chair or Lead Director of the Company (any such notification to have been given within 60 days of Benson first learning of the condition referred to therein) that he objects to the occurrence of such condition:

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(i)   the assignment to or removal from Benson of a set of responsibilities that represents a material change in Benson's then-current responsibilities as CRO;

(ii)   a change in the reporting relationship of Benson to the Board or in the reporting relationships of other executives of the Company to Benson as CRO or to the Board;

(iii)   the requirement that Benson relocate his office to a location that is outside a 50 kilometre radius of the current location of the CRO's office; and

(iv)   a Change of Control.

"Incumbent Directors" means those persons who are directors of the Company as of the Commencement Date, and up to three additional persons who may be appointed as directors at any time within three months thereafter.

"Matters" means, having regard to the Acknowledgements, one or more material projects, actions, transactions, and/or agreements in respect of the Company or any asset, liability, ownership interest, claim, proceeding or circumstance relating to the Company which are not in the ordinary course or of a routine nature and in respect of which BensonCo will provide significant Services, including without limitation the Ravelston Receivable and the Ravelston Litigation.

"Milestones" means any Value Realization in respect of any Matters during the Engagement Term or the Sunset Term.

"Milestone Fees" has the meaning given in Section 3.3.2.

"Minimum Term" has the meaning given in Section 4.1.

"Ravelston Entities" means The Ravelston Corporation Limited and parties associated or affiliated with Ravelston excluding the Company and its subsidiaries.

"Ravelston Litigation" means the Company's claims against certain of the Shareholder/Manager Group in excess of $600,000,000 in damages, in respect of which the Company has commenced a legal proceeding.

"Ravelston Litigation Milestone" means any Value Realization in respect of the Ravelston Litigation during the Engagement Term or the Sunset Term.

"Ravelston Receivable" means certain amounts shown on the books of the Company as being payable to the Company by any Ravelston Entities, the amount of which is not in dispute.

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"Ravelston Receivable Milestone" means any Value Realization in respect of the Ravelston Receivable during the Engagement Term of the Sunset Term.

"Realized" and "Realization" means the actual realization by the Company or its Shareholders of Value in respect of any Matter or Matters in one or more actions (where final judgement or settlement has been obtained), transactions and/or agreements, having regard to the Acknowledgements.

"Shareholder/Manager Group" means certain of the Company's past and current direct and indirect shareholders, directors, officers, employees and related parties including certain of the Ravelston Entities.

"Sufficient Cause" means the occurrence of a material breach by BensonCo of its obligations under this engagement which is not cured within 10 days of written notification to BensonCo from the Company or an act of theft, dishonesty or wilful misconduct by the Consultant in the performance of the Services or if Benson resigns as CRO otherwise than pursuant to Section 4.4.

"Sunset Term" means, in respect of any Matter, a period ending 12 months following the expiry of the Engagement Term, provided that, for any litigation or arbitration proceeding in respect of which the trial hearing commenced prior to the expiry of the Engagement Term, the Sunset Term will not expire until 12 months following the date on which a final judgement is obtained or the date of a final and binding settlement disposing of such Matter, as the case may be.

"Value" means the actual net fair value or net benefit of any cash receipt, set off, assignment, settlement, release, discharge, forbearance, disposition, compromise, trade off or other agreement, resolution or dealing in respect of the Company or its shareholders or any asset, liability, ownership interest, claim, proceeding or circumstance relating to the Company or its shareholders, having regard to the Acknowledgements.

"Work Fee" has the meaning given in Section 3.3.1.

3.2               Acknowledgements:  The Company and BensonCo acknowledge as follows:

3.2.1 The Company's circumstances are unique and complex.  They include the Company's interrelationships and past dealings with members of the Shareholder/Manager Group and with its principal subsidiary Hollinger International Inc. and other subsidiaries and the various legal and regulatory proceedings and causes of action that do or may exist as between or involving various of those and other persons.

3.2.2 It is in the best interests of the Company to identify, develop and implement strategies intended so far as possible to resolve uncertainties and complexities affecting the Company.

3.2.3 The ultimate form of a Restructuring (a) may not involve achievement of Milestones regarding the Ravelston Receivable or the Ravelston Litigation notwithstanding the BensonCo's Services in that regard, and (b) in addition to or in lieu of any Ravelston Receivable and Ravelston Litigation, may involve other Matters.

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3.2.4 In determining the Value Realized in respect of any Matter, the nominal amount of any claim against or by the Company is not necessarily equal to its Value and, in particular, such nominal amount may have been substantially inflated for tactical or other reasons.

3.2.5 Value can be Realized in different measures and at different stages in respect of a particular Matter or Matters, by different means, and either in respect of a single Matter or in respect of a number of Matters as part of a broader combination of agreements, actions and transactions.  For instance, without limiting the generality of the foregoing:

(a)   Value can be Realized in respect of a Matter by the obtainment of a final judgement or settlement in favour of the Company notwithstanding that the judgement may not be fully collectible or that the proceeding does not involve a damages award in favour of or against the Company;

(b)   Value can be Realized in respect of a Matter if claims by the Company, whether before or after being reduced to judgement, are abandoned, settled or otherwise disposed of without payment to the Company if and to the extent that such action contributes to other actions, transactions or agreements that result in Value being Realized by the Company; and

(c)   Value can be Realized by the reduction of uncertainties and/or complexities existing in respect of the Company.

3.2.6 For purposes of the Milestone Fee provisions hereof, where Value has been Realized in respect of any Matter, the Milestone Fees payable in respect thereof will be deemed to be unaffected by any subsequent dealing by the Company in respect of that Matter or Value Realization unless BensonCo otherwise agrees.

3.2.7 The Milestone Fees are intended to vary substantially in relation to the Value Realized in respect of any Matter so as to incentivize BensonCo to help maximize Value Realized by the Company in respect of the Matters.  The determined amount of Milestone Fees should be reflective of this intent and of BensonCo's willingness to share with the Company the risk as to whether Value will be Realized in respect of any Matter.

3.2.8 During the Engagement Term, BensonCo will have an oversight role and will provide significant Services with regard to all, aspects of the Restructuring and the Company.  All contributions of Benson as CRO and as a director of the Company will be deemed to be Services provided by BensonCo for purposes hereof.  The nature and extent of involvement of BensonCo relative to any other advisors in the achievement of any Milestones will not be a consideration in determining the amount of any Milestone Fees.

3.2.9 No approval or other action by Benson as CRO or as a director of the Company in respect of any action, transaction or agreement of the Company or other matter, which is not in breach of BensonCo's obligations under this engagement, will adversely affect BensonCo's rights under this engagement, including, without limitation, rights with respect to Milestone Fees and to terminate this engagement.

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3.2.10 If during the Engagement Term BensonCo has contributed substantially towards a Milestone in any Matter and a Milestone is achieved in respect of that Matter during the Sunset Period then BensonCo will be entitled to a Milestone Fee in respect of and reflecting the progress towards the Milestone during the Engagement Period.

3.3           BensonCo's compensation for the Services will be as follows:

3.3.1 Work Fee:  BensonCo will be entitled to a work fee of $75,000 per month during the Engagement Term ($37,500 for Services provided in July 2005), due and payable in advance monthly (the "Work Fee").

3.3.2 Milestone Fees:  Subject as hereinafter provided, BensonCo will be entitled to fees in relation to achieving a Milestone as follows ("Milestone Fees"):

(a)   Ravelston Receivable Milestones and Milestone Fees:  The Milestone Fees upon achievement of any Ravelston Receivable Milestone will be calculated as follows:

(i)   for amounts in aggregate up to $35,000,000, an amount equal to 1% thereof;

(ii)   for any further amounts exceeding $35,000,000 but not in aggregate exceeding $50,000,000, an amount equal to 1.5% thereof; and

(iii)   for any further amounts exceeding $50,000,000, an amount equal to 2% thereof.

(For illustration purposes, Realizations totalling $70,000,000 in respect of the Ravelston Receivable would result in a Milestone Fee of $975,000 (i.e. $350,000 pursuant to clause (i) above, $225,000 pursuant to clause (ii) above and $400,000 pursuant to clause (iii) above.)

(b)   Ravelston Litigation Milestones and Milestone Fees:  The Milestone Fees upon achievement of any Ravelston Litigation Milestone will be calculated as follows:

(i)   for amounts in aggregate up to $100,000,000, an amount equal to 0.5% thereof; and

(ii)   for any further amounts exceeding $100,000,000, an amount equal to 0.25% thereof.

(c)   Matters and Milestones Fees:  The Milestone Fees upon achievement of any other Milestones will be determined as follows.  The Company and BensonCo, acting in good faith, will negotiate mutually satisfactory Milestone Fees for achievement of Milestones as appropriate from time to time, having regard to the Acknowledgements.  In this regard, the Company and BensonCo will:

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(i)   where appropriate, endeavour to determine appropriate metrics or methodologies (x) to measure or evaluate Value Realized in respect of any relevant Matter and (y) for determining Milestone Fees therefor,

(ii)   have regard to the mutual intention of the parties that the Company will pay Milestone Fees to BensonCo having regard to the results achieved and to recognize that, within the range of what is a fair and reasonable Milestone Fee in all the circumstances, the parties intend that BensonCo's fee be at or above the middle of such range,

(iii)   have regard to the Milestone Fees specified in Subsections 3.3.2(a) and (b) as indicative of the magnitude of Milestone Fee BensonCo might reasonably receive for other Milestones of comparable Value Realization,

(iv)   have regard to short-term success-based incentive compensation provided to persons performing a similar role in relation to public company restructurings of similar complexity and/or amounts at issue,

(v)   not have regard to whether the achievement of any related Milestone has made the options referred to herein more valuable; and

(vi)   for purposes of any Milestone referred to in Section 3.2.10, have regard to the progress towards the Milestone during the Engagement Term.

(d)   Time for Payment:  Milestone Fees in respect of any Matter will be due and payable within ten business days of achievement of the relevant Milestone.

(e)   Arbitration:  In the event the parties are unable to agree upon the entitlement to or amount or time for payment of, any Milestone Fee, at the instance of either party the dispute will be submitted and decided through final binding arbitration conducted by a single arbitrator who will be a suitably experienced active or retired investment banker who (and whose firm) is independent of the parties (except as may be disclosed and consented to by the parties).  An arbitrator meeting those criteria will be chosen by agreement of the parties within seven days, failing which, by the ADR Institute of Ontario or another mutually acceptable body, failing which, on application of either of the parties, by a court acting pursuant to the Arbitration Act, 1991 (Ontario).  The arbitration will be completed within 90 days of the arbitrator's appointment.  Each of the Company and BensonCo will submit to the arbitrator (with a copy to the other party) a written submission (not exceeding 30 pages) in support of its position on the issues.  The arbitrator will, in making its decision, have regard to the Acknowledgements.  All expenses in respect of the arbitration process will be borne by the Company, provided that the arbitrator may, in its discretion, make an award of costs in the cause against BensonCo if it finds that BensonCo acted in bad faith in commencing the arbitration.

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3.3.3                  Stock Options Agreement:

(a)   The Company will concurrently grant to BensonCo options under its executive stock option plan to purchase an aggregate of 1,000,000 common shares of the Company at an exercise price not more than $5.50 per share.

(b)   During the term of BensonCo's engagement hereunder, one-quarter of such options will vest immediately, an additional one-quarter of such options will vest three months following the Commencement Date (as defined in Section 4.1), an additional one-quarter of such options will vest six months following the Commencement Date and an additional one-quarter will vest nine months following the Commencement Date; provided that, in the event that (x) the Company terminates BensonCo's engagement other than pursuant to Section 4.1, 4.2 or 4.3, or (y) BensonCo terminates its engagement pursuant to Section 4.4, all unvested options will vest immediately upon the occurrence of such event.

(c)   Vested options will be exercisable immediately in whole or in part from time to time for freely tradeable common shares and will expire on the date immediately following the date that is three years after the end of the Engagement Term; provided that, if any of Hollinger's common shares are subject to any cease trade order or similar restraint on trading imposed by any court, stock exchange or securities regulatory authority during the last 18 months of such three year period, the exercise period of the options will be extended by a period equal to the number of days any such trading restraint is in effect..

(d)   The options will be adjusted in the events and in the manner specified in Schedule A hereto.

(e)   If due to applicable law including orders of securities regulatory authorities, the Company is unable to grant BensonCo such options or if BensonCo is unable to exercise such options or to sell common shares of the Company issuable upon exercise of such options, then the Company will promptly provide alternate consideration to BensonCo having an equivalent total after-tax value to BensonCo (provided that, following receipt of such alternate compensation, BensonCo will surrender the relevant number of options or shares or rights thereto in lieu of which such alternate compensation was provided or take other mutually acceptable actions so as to avoid double compensation).

3.3.4 Reimbursement of Expenses:  The Company will reimburse the Consultant for reasonable out-of-pocket expenses in entering into and performing this agreement, including legal fees (including those relating to the preparation and negotiation of this term sheet and any resulting definitive agreements), travelling and communications expenses and courier charges.

3.3.5 Applicable Taxes:  All fees and expense reimbursements may be subject to applicable federal Goods and Services Tax and applicable provincial sales tax.  Where tax is applicable, an additional amount equal to the amount of tax owing thereon will be charged to and payable by the Company.

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4.Term and Termination

4.1 Minimum Term and Renewals:  BensonCo's engagement and provision of Services commenced on the Commencement Date and will continue at least until July 31, 2006 (the "Minimum Term").  As at the expiry of the Minimum Term or as the end of any month following the Minimum Term, BensonCo or the Consultant may terminate such engagement by providing the other party with at least 30 days' prior written notice.

4.2 Termination on Death or Disability:  BensonCo's engagement will automatically terminate upon the death of Benson.  The Company may terminate BensonCo's engagement if Benson suffers a physical or mental disability that prevents BensonCo from providing the Services for a period of 60 days, whether or not consecutive and that is, in the opinion of a duly qualified medical practitioner selected by the Company, likely to continue to the same degree for a further period of more than 30 days.  Benson agrees to submit to any reasonably required medical examination by such practitioner for purposes of this Section 4.2 and that such medical practitioner may reveal the results of such medical examination to the Company.

4.3 Termination by Company for Sufficient Cause: The Company may terminate BensonCo's engagement at any time for Sufficient Cause.

4.4 Termination by Consultant for Good Reason:  BensonCo may terminate its engagement at any time for Good Reason.

4.5 Fee Consequences if Termination on Death or Disability or for Sufficient Cause, Etc.:  If the Company terminates the engagement of BensonCo pursuant to Section 4.2 or 4.3, or if BensonCo terminates its engagement other than for Good Reason, then BensonCo will not be entitled to any further Work Fees or Milestone Fees except as expressly provided herein.

4.6 Fee Consequences if Other Termination by Company or Termination by Consultant for Good Reason: The Company may at any time terminate the engagement of BensonCo for reasons other than as contemplated by Sections 4.1, 4.2 and 4.3 above.  However, if the Company terminates the engagement of BensonCo other than pursuant to Section 4.1, 4.2 or 4.3, or if the Consultant terminates the engagement for Good Reason, then:

(a)   if such termination occurs before the end of the Minimum Term, the Company will promptly pay to BensonCo all unpaid Work Fees to the end of the Minimum Term;

(b)   if such termination occurs following a Change of Control, the Company will promptly pay to BensonCo a fee equal to the greater of (i) nil and (ii) two times the total Work Fees earned to the date of termination, subject to a maximum of $1,500,000, provided that if such termination occurs during the Minimum Term, the foregoing amount will be reduced by an amount equal to any amount paid pursuant to clause (a) above; and

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(c)   BensonCo will be entitled to Milestone Fees for Matters on which BensonCo has made a substantial contribution towards a Milestone during the Engagement Term, so long as the Milestone is achieved prior to the end of the Sunset Period, having regard to the Acknowledgements including, without limitation, Section 3.2.10.

4.7 Survival of Indemnification Fee Reimbursement and Option Obligations:  The Company's obligations to indemnify the Consultant and other Indemnified Parties, to reimburse the Consultant for expenses and in relation to the options referred to above will survive Benson ceasing to be the CRO and/or a director of the Company, the completion of the engagement of BensonCo and any other termination of the agreement.

4.8 Resignation by Benson:  Upon any termination of BensonCo's engagement hereunder, Benson will be deemed to have automatically, and without further notice or formality, ceased to be a director of the Company and ceased to be the CRO.  Nothing herein affects Benson's right to resign as a director and/or as CRO of the Company at any time.

5.Indemnification and Acknowledgements by Company

5.1 Indemnification:  The Company will indemnify BensonCo and Benson in accordance with Schedule B hereto.

5.2 Acknowledgements:  In addition, the Company will acknowledge and agree that Benson's responsibilities as a director and as CRO and BensonCo's responsibilities under its consulting agreement with the Company are to the Company as a whole and not to any particular shareholder or class of shareholders, and will agree not to threaten or engage in any legal proceeding against Benson or BensonCo (or any spouse, heirs, executors or administrators of Benson or any directors, officers, employees, independent contractors, agents, representatives, shareholders, successors or assigns of BensonCo), provided that the foregoing will not restrict the Company from pursuing legal recourse against Benson for breach of any fiduciary or other duties owed as a director of the Company and against BensonCo for gross negligence or wilful misconduct in respect of the engagement.

6.Matters

6.1 Other Interests:  The Consultant may perform services for third parties during the term of this engagement provided, however, that such activities do not interfere with the efficient and timely performance of the Services, the Consultant does not provide services to a similar or competing business to that of the Company and the Consultant has procured the prior written consent of the Company, such consent not to be unreasonably withheld during the last three months of the Minimum Term or at any time thereafter.  The Company consents to the Consultant providing services to Ivaco Inc. pursuant to the Consultant's residual obligations in respect of that company, and to Benson serving as a director of Terra Nova Corporation, a publicly traded company.

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6.2 Vacation:  Benson may take vacation time of up to one week for every three months during which the Consultant continues to be engaged, such vacation time to be scheduled in consultation with the Chairman or Lead Director of the Board.

6.3 Miscellaneous:  The consulting agreement will contain usual and customary provisions regarding (A) confidentiality obligations of the Consultant, (B) CRO's rights to coverage under such directors and officers liability and other insurance, any trust fund and other liability protection arrangements, in each case as are maintained for the other incumbent directors, (C) no compromise of Consultant's entitlements, (D) enurement, (E) restrictions on assignability (excluding BensonCo's right to assign its rights and delegate its obligations to any corporation controlled by Benson), (E) severability, (F) notices, (G) governing law of Ontario, and (D) any other terms to which the parties may agree.

*   *  *  *  *  *

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SCHEDULE A

ANTI-DILUTION TERMS

ARTICLE 1

INTERPRETATION

Section 1.1            Definitions

In this Schedule A, unless there is something in the subject matter or context inconsistent therewith, the terms defined in this Section or elsewhere herein shall have the respective meanings specified in this Section or elsewhere herein:

(a)      "Agreement" means the agreement dated as of July 15, 2005 between the Corporation as issuer and BensonCo and Benson and providing for, among other things, the grant of the Options by the Corporation to BensonCo to which this Schedule A is attached and forms a part.

(b)      "Benson" means Randall C. Benson;

(c)      "BensonCo" means 1379074 Ontario Ltd., a corporation incorporated under the laws of Ontario;

(d)      "Business Day" means a day which is not Saturday or Sunday or a statutory holiday in the City of Toronto;

(e)      "Capital Reorganization" has the meaning attributed thereto in subsection 2.2(4);

(f)      "Common Shares" means the common shares in the capital of the Corporation as such shares exist at the close of business on July 15, 2005 and, in the event that there shall occur a change in respect of or affecting the Common Shares referred to in Article 2 (whether or not such change shall result in an adjustment in the Exercise Price), the term "Common Shares" shall mean the shares, other securities or other property which BensonCo is entitled to purchase resulting from such change;

(g)      "Common Share Reorganization" has the meaning attributed thereto in subsection 2.2(1);

(h)      "Corporation" means Hollinger Inc., a corporation existing under the laws of Canada, and its lawful successors from time to time;

(i)      "Current Market Price" of a Common Share at any date means the price per share equal to the weighted average price at which the Common Shares have traded (i) on the TSX, or (ii) if the Common Shares are not traded on the TSX, on a recognized exchange or market, or (iii) if the Common Shares are not traded on such recognized exchange or market, on the over-the-counter market, during the 20 consecutive trading days (on each of which at least 500 Common Shares are traded in board lots) ending on the fifth trading day immediately prior to such date as reported by such market or exchange in which the Common Shares are then trading or quoted.  The weighted average price per Common Share shall be determined by dividing the aggregate sale price of all such shares sold on the aforementioned over-the-counter market, recognized exchange or market, as the case may be, during the aforementioned 20 consecutive trading days by the total number of such shares so sold.  If the Common Shares are not then traded in the over-the-counter market or on a recognized exchange or market, the Current Market Price of the Common Shares shall be the fair market value of the Common Shares as determined in good faith by the board of Directors of the Corporation after consultation with a nationally or internationally recognized investment dealer or investment banker;

(j)      "Director" means a director of the Corporation for the time being, and, unless otherwise specified herein, reference to "action by the Directors" means action by the Directors of the Corporation as a board, or whenever duly empowered, action by any committee of such board;

(k)      "Exercise Date" with respect to any Option means the date on which such Option is exercised in accordance with the Agreement;

(l)      "Exercise Period" means the period within which the Options may be exercised in accordance with the Agreement;

(m)      "Exercise Price" means the price per Common Share provided in the Agreement unless such price shall have been adjusted in accordance with the provisions of Article 2, in which case it shall mean the adjusted price in effect at such time;

(n)      "Options" means the options granted by the Corporation to BensonCo to purchase an aggregate of 1,000,000 Common Shares on the terms and conditions provided in the Agreement;

(o)      "Rights Offering" has the meaning attributed thereto in subsection 2.2(2);

(p)      "Rights Period" has the meaning attributed thereto in subsection 2.2(2);

(q)      "Shareholder" means a holder of record of one or more Common Shares;

(r)      "Special Distribution" has the meaning attributed thereto in subsection 2.2(3);

(s)      "this Schedule A", "herein", "hereby", and similar expressions mean and refer to this Schedule A and any indenture, deed or instrument supplemental or ancillary hereto; and the expressions "Article", "Section", and "subsection" followed by a number mean and refer to the specified Article, Section or subsection of this Indenture;

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(t)      "TSX" means The Toronto Stock Exchange;

Section 1.2            Number and Gender

Unless elsewhere context otherwise requires, words importing the singular include the plural and vice versa and words importing gender include all genders.

Section 1.3            Interpretation Not Affected by Headings, Etc.

The division of this Schedule A into Articles, Sections and subsections, and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Schedule A or the Options.

Section 1.4            Day Not a Business Day

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

ARTICLE 2

ADJUSTMENT OF OPTIONS AND EXERCISE PRICE

Section 2.1            General

The number of Common Shares which may be purchased pursuant to the Options and the Exercise Price shall be adjusted in the events and in the manner specified in this Article 2.

Section 2.2 Adjustment of Exercise Price and Number of Common Shares Purchasable Upon Exercise

The Exercise Price (and the number of Common Shares purchasable upon exercise in the case of subsections (4) and (5) below of this Section 2.2) shall be subject to adjustment from time to time in the events and in the manner provided as follows:

(1)                      Common Share Reorganization.  If during the Exercise Period the Corporation shall:

(a)      issue Common Shares or securities exchangeable for or convertible into Common Shares to all or substantially all of the holders of the Common Shares by way of stock dividend or other distribution, or

(b)      subdivide, redivide or change its outstanding Common Shares into a greater number of Common Shares, or

(c)      consolidate, reduce or combine its outstanding Common Shares into a lesser number of Common Shares,

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(any of such events in these clauses (a), (b) and (c) being called a "Common Share Reorganization"), then the Exercise Price shall be adjusted as of the effective date or record date, as the case may be, at which the holders of Common Shares are determined for the purpose of the Common Share Reorganization by multiplying the Exercise Price in effect immediately prior to such effective date or record date by a fraction, the numerator of which shall be the number of Common Shares outstanding on such effective date or record date before giving effect to such Common Share Reorganization and the denominator of which shall be the number of Common Shares outstanding as of the effective date or record date after giving effect to such Common Share Reorganization (including, in the case where securities exchangeable for or convertible into Common Shares are distributed, the number of Common Shares that would have been outstanding had such securities been exchanged for or converted into Common Shares on such record date or effective date).  If during the Exercise Period a Common Share Reorganization shall occur which results in an adjustment in the Exercise Price pursuant to the provisions of this Section 2.2, the number of Common Shares purchasable pursuant to each Option shall be adjusted contemporaneously with the adjustment of the Exercise Price by multiplying the number of Common Shares theretofore purchasable on the exercise thereof by a fraction the numerator of which shall be the Exercise Price in effect immediately prior to such adjustment and the denominator of which shall be the Exercise Price resulting from such adjustment.

(2)                      Rights Offering.  If during the Exercise Period the Corporation shall fix a record date for the issue of rights, options or warrants to all or substantially all of the holders of Common Shares under which such holders are entitled, during a period expiring not more than 45 days after the record date for such issue ("Rights Period"), to subscribe for or purchase Common Shares or securities exchangeable for or convertible into Common Shares at a price per share to the holder of less than the Current Market Price for the Common Shares on such record date (any of such events being called a "Rights Offering"), then the Exercise Price shall be adjusted effective immediately after the end of the Rights Period to a price determined by multiplying the Exercise Price in effect immediately prior to the end of the Rights Period by a fraction:

(a)   the numerator of which shall be the aggregate of:

(i)   number of Common Shares outstanding as of the record date for the Rights Offering, and

(ii)   a number determined by dividing (i) either (a) the product of the number of Common Shares issued or subscribed during the Rights Period upon the exercise of the rights, warrants or options under the Rights Offering and the price at which such Common Shares are offered, or, as the case may be, or (b) the product of the exchange or conversion price per share of such securities offered and the number of Common Shares for or into which the securities so offered pursuant to the Rights Offering have been exchanged or converted during the Rights Period, by (ii) the Current Market Price of the Common Shares as of the record date for the Rights Offering; and

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(b)   the denominator of which shall be the number of Common Shares outstanding after giving effect to the Rights Offering and including the number of Common Shares actually issued or subscribed for during the Rights Period upon exercise of the rights, warrants or options under the Rights Offering or upon the exercise of the exchange or conversion rights contained in such exchangeable or convertible securities under the Rights Offering.

If BensonCo shall have exercised its right to purchase Common Shares during the period beginning immediately after the record date for a Rights Offering and ending on the last day of the Rights Period therefor, it shall, in addition to the Common Shares to which it is otherwise entitled upon such exercise, be entitled to that number of additional Common Shares equal to the result obtained when the difference, if any, resulting from the subtraction of the Exercise Price as adjusted for such Rights Offering pursuant to this subsection (2) from the Exercise Price in effect immediately prior to the end of such Rights Offering is multiplied by the number of Common Shares purchased upon exercise of Options held by it during such period, and the resulting product is divided by the Exercise Price as adjusted for such Rights Offering pursuant to this subsection (2).  Such additional Common Shares shall be deemed to have been issued to BensonCo immediately following the end of the Rights Period and a certificate for such additional Common Shares shall be delivered to BensonCo within ten Business Days following the end of the Rights Period.

(3)                      Special Distribution.  If during the Exercise Period the Corporation shall issue or distribute to all or to substantially all the holders of the Common Shares:

(a)   securities of the Corporation including rights, options or warrants to acquire shares of any class or securities exchangeable for or convertible into or exchangeable into any such shares or property or assets and including evidences of its indebtedness, or

(b)   any property or other assets,

and if such issuance or distribution does not constitute a Common Share Reorganization or a Rights Offering (any of such non-excluded events being herein called a "Special Distribution"), the Exercise Price shall, subject to the prior written approval of any stock exchange or over-the-counter market on which the Common Shares are then listed or quoted for trading, be adjusted effective immediately after the record date at which the holders of affected Common Shares are determined for purposes of the Special Distribution to a price determined by multiplying the Exercise Price in effect on such record date by a fraction:

(c)   the numerator of which shall be:

(i)   the product of the number of Common Shares outstanding on such record date and the Current Market Price of the Common Shares on such record date; less

(ii)   the excess, if any, of (A) the fair market value on such record date, as determined by good faith action by the Directors, which action shall, if required, be subject to the prior written approval of any stock exchange or over-the-counter market on which the Common Shares are then listed or quoted for trading, to the holders of the Common Shares of such securities or property or other assets so issued or distributed in the Special Distribution over (B) the fair market value of any consideration received therefor by the Corporation from the holders of the Common Shares, as determined by good faith action by the Directors; and

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(d)   the denominator of which shall be the product of the number of Common Shares outstanding on such record date and the Current Market Price of the Common Shares on such record date.

(4)                           Capital Reorganization.  If during the Exercise Period there shall be a reclassification of Common Shares at any time outstanding or a change of the Common Shares into other shares or into other securities (other than a Common Share Reorganization), or a consolidation, amalgamation, arrangement or merger of the Corporation with or into any other corporation or other entity or any other transaction which results in a change of control of the Corporation (other than a consolidation, amalgamation, arrangement or merger which does not result in any reclassification of the outstanding Common Shares or a change of the Common Shares into other shares), or a transfer of the undertaking or assets of the Corporation as an entirety or substantially as an entirety to another corporation or other entity, (any of such events being herein called a "Capital Reorganization"), if BensonCo exercises its right to purchase Common Shares pursuant to Options then held after the effective date of such Capital Reorganization, it shall be entitled to receive, and shall accept for the same aggregate consideration in lieu of the number of Common Shares to which it was theretofore entitled upon such exercise the aggregate number of shares, other securities or other property which BensonCo would have been entitled to receive as a result of such Capital Reorganization if, on the effective date thereof, BensonCo had been the registered holder of the number of Common Shares to which BensonCo was theretofore entitled upon exercise of the Options subject to adjustment thereafter in accordance with provisions the same, as nearly as may be possible, as those contained in Sections 2.2 and 2.3 hereof, provided however, that no such Capital Reorganization shall be carried into effect unless all necessary steps shall have been taken to so entitle BensonCo.  If determined appropriate by the Corporation, acting reasonably, and, if required, subject to the prior written approval of any stock exchange or over-the-counter market on which the Common Shares are then listed or quoted for trading, appropriate adjustments shall be made as a result of any such Capital Reorganization in the application of the provisions set forth in this Article 2 with respect to the rights and interests thereafter Of BensonCo to the end that the provisions set forth in this Article 2 shall thereafter correspondingly be made applicable as nearly as may reasonably be in relation to any shares, other securities or other property thereafter deliverable upon the exercise of any Options.  Any such adjustments shall be made by and set forth in terms and conditions supplemental hereto approved by good faith action by the Directors and by the Corporation.

Section 2.3 Rules Regarding Calculation of Adjustment of Exercise Price and Number of Common Shares Purchasable Upon Exercise

For the purposes of Section 2.2:

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(1)                      The adjustments provided for in Section 2.2 are cumulative, and shall, in the case of adjustments to the Exercise Price be computed to the nearest one-tenth of one cent and shall be made successively whenever an event referred to therein shall occur, subject to the following subsections of this Section 2.3.

(2)                      No adjustment in the Exercise Price shall be required unless such adjustment would result in a change of at least 1% in the prevailing Exercise Price and no adjustment shall be made in the number of Common Shares purchasable upon exercise of an Option unless it would result in a change of at least one one-hundredth of a Common Share; provided, however, that any adjustments which, except for the provisions of this subsection 2.3(2) would otherwise have been required to be made, shall be carried forward and taken into account in any subsequent adjustment.

(3)                      No adjustment in the Exercise Price or in the number of Common Shares purchasable upon exercise of Options shall be made in respect of any event described in Section 2.2, other than the events referred to in clauses (b) and (c) of subsection (1) thereof, if BensonCo is entitled to participate in such event on the same terms, mutatis mutandis, as if BensonCo had exercised its Options prior to or on the effective date or record date of such event.

(4)                      No adjustment in the Exercise Price shall be made pursuant to Section 5.2 in respect of the issue from time to time of Common Shares purchasable on exercise of the Options, and any such issue shall be deemed not to be a Common Share Reorganization or Capital Reorganization.

(5)                      If a dispute shall at any time arise with respect to adjustments provided for in Section 2.2, such dispute shall be conclusively determined by the Corporation's auditors, or if they are unable or unwilling to act, by such other firm of independent chartered accountants as may be selected by action by the Directors and any such determination shall be binding upon the Corporation and BensonCo.  Notwithstanding the foregoing, such determination shall, if required, be subject to the prior written approval of any stock exchange or over-the-counter market on which the Common Shares are then listed or quoted for trading.  Such auditors or accountants shall be provided access to all necessary records of the Corporation.  In the event that any such determination is made, the Corporation shall deliver a certificate to BensonCo describing such determination.

(6)                      In case the Corporation after July 15, 2005 shall take any action affecting the Common Shares, other than action described in Section 2.2, which in the opinion of the Directors of the Corporation would materially affect the rights of BensonCo, the Exercise Price and the number of Common Shares purchasable upon exercise shall be adjusted in such manner, if any, and at such time, by action by the Directors, in their reasonable discretion as they may determine to be equitable in the circumstances, but subject in all cases to any necessary regulatory approval.  Failure of the taking of action by the Directors so as to provide for an adjustment on or prior to the effective date of any action by the Corporation affecting the Common Shares shall be conclusive evidence that the board of Directors of the Corporation has determined that it is equitable to make no adjustment in the circumstances.

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(7)                      If the Corporation shall set a record date to determine the holders of the Common Shares for the purpose of entitling them to receive any dividend or distribution or any subscription or purchase rights and shall, thereafter and before the distribution to such shareholders of any such dividend, distribution or subscription or purchase rights, legally abandon its plan to pay or deliver such dividend, distribution or subscription or purchase rights, then no adjustment in the Exercise Price or the number of Common Shares purchasable upon exercise of any Option shall be required by reason of the setting of such record date.

(8)                      In the absence of a resolution of the Directors fixing a record date for a Special Distribution or Rights Offering, the Corporation shall be deemed to have fixed as the record date therefor the date on which the Special Distribution or Rights Offering is effected.

(9)                      As a condition precedent to the taking of any action which would require any adjustment in any of the subscription rights pursuant to any of the Options, including the Exercise Price and the number or class of shares or other securities which are to be received upon the exercise thereof, the Corporation shall take any corporate action which may, in the opinion of counsel to the Corporation, be necessary in order that the Corporation have unissued and reserved in its authorized capital and may validly and legally issue as fully paid and non-assessable all the shares or other securities which all the holders of such Options are entitled to receive on the full exercise thereof in accordance with the provisions thereof and hereof.

Section 2.4 Rules Regarding Calculation of Adjustment of Exercise Price and Number of Common Shares Purchasable Upon Exercise

 In any case in which this Article 2 shall require that an adjustment shall be effective immediately after a record date for an event referred to herein, the Corporation may defer, until the occurrence of such an event:

(a)   issuing to BensonCo in respect of any Option exercised after such record date and before the occurrence of such event, the additional Common Shares issuable upon such exercise by reason of the adjustment required by such event, and

(b)   delivering to BensonCo any distributions declared with respect to such additional Common Shares after such Exercise Date and before such event;

provided, however, that the Corporation shall deliver or cause to be delivered to BensonCo, an appropriate instrument evidencing such holder's right, upon the occurrence of the event requiring the adjustment, to an adjustment in the Exercise Price or the number of Common Shares purchasable on the exercise of any Options and to such distributions declared with respect to any additional Common Shares issuable on the exercise of any Options.

Section 2.5 Rules Regarding Calculation of Adjustment of Exercise Price and Number of Common Shares Purchasable Upon Exercise

Purchasable Upon Exercise 

(1)                      At least 10 Business Days prior to the effective date or record date, as the case may be, of any event which requires or might require adjustment in any of the subscription rights pursuant to any of the Options, including the Exercise Price and the number of Common Shares which are purchasable upon the exercise thereof, or such longer period of notice as the Corporation shall be required to provide BensonCo in respect of any such event, the Corporation shall give notice, in the form of a certificate of adjustment, to BensonCo of the particulars of such event and, if determinable, the required adjustment and the computation of such adjustment.

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BensonCo may for all purposes act and rely upon the certificate of the Corporation submitted to it pursuant to this subsection 2.5(1) and on the accuracy of such certificate, calculations and formulas contained therein.

(2)                      In case any adjustment for which a notice in subsection (1) of this Section 2.5 has been given is not then determinable, the Corporation shall promptly after such adjustment is determinable give notice to BensonCo of the adjustment and the computation of such adjustment.

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SCHEDULE B

INDEMNITY

In connection with the engagement (the "Engagement") of 1379074 Ontario Ltd. ("BensonCo") and the appointment of Randy Benson ("Benson") as a director and Chief Restructuring Officer of Hollinger Inc. (the "Company") pursuant to an engagement letter (the "Engagement Letter") among Benson, BensonCo and the Company dated as of July 15, 2005, the Company agrees to indemnify and hold harmless Benson and BensonCo and BensonCo's directors, officers, employees and agents, and any other person providing services to the Company pursuant to the Engagement Letter (collectively, the "Indemnified Parties" and individually, an "Indemnified Party"), from and against any and all losses, expenses, claims, actions, damages and liabilities, joint or several, including the aggregate amount paid in reasonable settlement of any actions, suits, proceedings, investigations or claims and the reasonable fees and expenses of its counsel on a solicitor and his own client basis that may be incurred in advising with respect to and/or defending any action, suit, proceeding, investigation or claim that may be made or threatened against any Indemnified Party or in enforcing this indemnity (collectively, the "Claims") to which any Indemnified Party may become subject or otherwise involved in any capacity insofar as the Claims relate to, are caused by, result from, arise in respect of or are based upon, directly or indirectly, the Engagement.

The Company also agrees that no Indemnified Party shall have any liability (whether directly or indirectly in contract or tort or otherwise) to the Company or any person asserting claims on behalf of or in right of the Company for or in connection with the Engagement except to the extent any losses, expenses, claims, actions, damages or liabilities incurred by the Company are determined by a court of competent jurisdiction in a final judgment that has become non-appealable to have resulted primarily from the gross negligence or willful misconduct of such Indemnified Party.  The Company will not, without Benson's written consent, settle, compromise, consent to the entry of any judgment in or otherwise seek to terminate any action, suit, proceeding, investigation or claim in respect of which indemnification may be sought hereunder (whether or not any Indemnified Party is a party thereto) unless such settlement, compromise, consent or termination includes a release of each Indemnified Party from any liabilities arising out of such action, suit, proceeding, investigation or claim.

Promptly after receiving notice of an action, suit, proceeding or claim against Benson, BensonCo or any other Indemnified Party or receipt of notice of the commencement of any investigation which is based, directly or indirectly, upon any matter in respect of which indemnification may be sought from the Company, Benson or any such other Indemnified Party will notify the Company in writing of the particulars thereof.  The omission so to notify the Company shall not relieve the Company of any liability which the Company may have to any Indemnified Party.

The Company also agrees to reimburse BensonCo for the time spent by Benson in connection with any Claim at any time following the end of the Engagement at their normal per diem rates.  Benson and BensonCo may retain counsel to separately represent them in the defence of a Claim, which shall be at the Company's expense on a solicitor and his own client basis if (i) the Company does not promptly assume the defence of the Claim, (ii) the Company agrees to separate representation or (iii) Benson or BensonCo is advised by counsel that there is an actual

or potential conflict in the Company's and Benson's or BensonCo's respective interests or additional defences are available to Benson or BensonCo, which makes representation by the same counsel inappropriate.

The obligations of the Company hereunder are in addition to any liabilities, which the Company may otherwise have to Benson or BensonCo or any other Indemnified Party.

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EX-99.6

Exhibit 99.6

BETWEEN:

R.C, BENSON CONSULTING INC. (formerly 1379074 ONTARIO LTD.)

("BensonCo")

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RANDY BENSON

("Benson")

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HOLLINGER INC.

("Hollinger")

MEMORANDUM OF AGREEMENT

WHEREAS the parties entered into a consulting agreement dated as of July 15, 2005 (the "Agreement"), a copy of which is attached as Appendix "A" to this Memorandum of Agreement;

AND WHEREAS BensonCo and Benson will be collectively referred to hereinafter in this Memorandum of Agreement as the "Consultant" and capitalized terms not defined herein have the meanings given to them in the Agreement;

AND WHEREAS the parties have agreed that the Consultant will be paid $1,000,000 plus GST for Milestones achieved pursuant to the Agreement and not for severance;

AND WHEREAS the parties have mutually agreed that the Agreement, with the exceptions noted herein, will terminate upon Benson's resignation as Chief Restructuring Officer of Hollinger ("CRO") but, in any event, not later than March 7, 2007;

AND WHEREAS the parties wish to enter into a full and final settlement of all outstanding issues arising from the Agreement or otherwise;

FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH IS ACKNOWLEDGED, THE PARTIES AGREE AS FOLLOWS:

1.The Agreement shall terminate pursuant to section 4.1 thereof (subject to paragraph 6 below) upon Benson ceasing to be CRO but, in any event, not later than March 7, 2007, and the parties agree that the Agreement will have been duly terminated on proper notice in accordance with its terms.

2.In consideration of the services rendered and Milestones achieved by BensonCo pursuant to the Agreement, Hollinger agrees to pay BensonCo the sum of $1,000,000 plus GST in the following manner:

(a)   the sum of $750,000 plus GST at the earlier of the time of signing of this Memorandum of Agreement and the time at which the pending resignation of Benson as CRO and/or the pending appointment of Wes Voorheis as Chief Executive Officer of Hollinger is announced; and

(b)   the sum of $250,000 plus GST upon Benson ceasing to be CRO, but, in any event, not later than March 7, 2007.

3.The Consultant acknowledges that the payment of the sum in paragraph 2 above is inclusive of and exhaustive of any and all possible entitlements, under the Agreement or otherwise, to any Work Fees for services provided after Benson's resignation as CRO, and Milestone Fees, any Ravelston Receivable Milestones and Milestone Fees, any Ravelston Litigation Milestones and Milestone Fees, any Matters and Milestone Fees, any Fees pursuant to section 4.6 of the Agreement surrounding Term and Termination or any vacation pay owing.  The payment of the sum in paragraph 2 shall be made in full and final settlement of any obligations arising under the Agreement, save and except as provided in paragraph 6 hereof.

4.The parties agree that Benson shall not resign as CRO until the earlier of the date of filing with the Ontario Securities Commission in proper form of the audited annual and unaudited interim financial statements of Hollinger for historical periods and March 7, 2007, and Benson agrees to take all proper steps as CRO to assist Hollinger in completing such filing.

5.Benson shall resign as a director and officer of Hollinger and all of its subsidiaries not later than the date of his resignation as CRO.

6.The Agreement shall terminate upon Benson's resignation as CRO, but, in any event, not later than March 7, 2007, subject to the survival and continuation of the following provisions:

(a)   The Consultant's entitlement to stock options to purchase 1,000,000 common shares of Hollinger per section 3.3.3 of the Agreement;

(b)   the Consultant's entitlement to indemnification per section 5.1 of the Agreement; and

(c)   the Consultant's entitlement per section 6.3 of the Agreement to the existing directors and officers' liability insurance coverage, which shall be continued for a period of not less than three (3) years from the earlier of the date of his resignation as CRO and March 7, 2007;

and provided that, for the month in which Benson resigns, the $75,000 monthly Work Fee for that month will be prorated based on the number of days to and including the date of Benson's resignation as CRO in that month relative to the total number of days in that month.

7.The Consultant agrees to indemnify and save Hollinger harmless with respect to any claims, charges or demands which might be made upon it in respect of the Consultant's obligations in connection with the Milestone Fee referred to in section 2 of this Memorandum of Agreement pursuant to the Income Tax Act (Canada) or the Employment Insurance Act.

8.Each of Hollinger and the Consultant acknowledges by signing this Memorandum of Agreement that it understands the terms hereof and has had a reasonable opportunity for independent advice with respect to it.  Each of Hollinger and the Consultant further confirms that this Memorandum of Agreement, the surviving provisions of the Agreement and the indemnity agreement dated August 9, 2005 between Hollinger and Benson (collectively, the "Three Agreements") constitute the entire agreement between the parties.

9.In consideration of the terms and conditions set out in this Memorandum of Agreement, and effective the date of Benson's ceasing to be CRO, the Consultant hereby releases and forever discharges Hollinger and its successors and assigns and each of their respective officers, directors, employees and agents [the Releasees] from any and all actions, causes of action, claims, demands, and proceedings of whatever kind for damages, indemnity, costs, compensation or any other remedy which the Consultant had, may now have, or may have in the future (collectively, "Claims") in respect of the Agreement, the termination of that Agreement or the provision of services by BensonCo or Benson to Hollinger, or otherwise; save and except for and excluding from the scope of this release any Claims in respect of any of the Three Agreements, including any matter in respect of which Benson or BensonCo has a right to indemnification thereunder.

10.In consideration of the terms and condition set out in this Memorandum of Agreement, and effective the date of Benson's ceasing to be CRO, Hollinger, on its own behalf and on behalf of its wholly owned subsidiaries, hereby releases and forever discharges the Consultant and their respective successors and assigns from any and all actions, causes of action, claims, demands and proceedings of whatever kind for damages, indemnity, costs, compensation or any other remedy which Hollinger had, many now have, or may have in the future in respect of the Agreement, the termination of that Agreement, the provision of services by the Consultant to Hollinger, or any of Benson's appointment, conduct and resignation as a director and/or officer of Hollinger and any of its subsidiaries.  This Release shall not cover any breach of fiduciary duties by the Consultant.  Hollinger admits that there are no facts actually known to Mr. S. Beck, Chairman of the Board; and Mr. W. Voorheis, Chairman of the Litigation Committee, at this time that would constitute the basis for a claim of breach of fiduciary duties.  This Release shall not cover any breach of this Memorandum of Agreement.

Dated at Toronto, Ontario, this 15^th day of January, 2007.

R.C. BENSON CONSULTING, INC.
	/s/ R.C. Benson
	Per:
	/s/ R.C. Benson	/s/ Anna Garbin
	Randy Benson	Witness

Dated at Toronto, Ontario, this 15^th day of January, 2007.

HOLLINGER INC.
	/s/ Wes Voorheis
	Per:	Per:

EX-99.7

Exhibit 99.7

THIS AGREEMENT OF PURCHASE AND SALE made as of the 28th day of June, 2006.

BETWEEN:

DOMGROUP LTD.

(hereinafter referred to as the "Vendor")

OF THE FIRST PART,

– and –

LANTERRA REALTY INC.

(hereinafter referred to as the "Purchaser")

OF THE SECOND PART.

WHEREAS the Vendor has agreed to sell, transfer and assign the Subject Assets to the Purchaser and the Purchaser has agreed to purchase and acquire the Subject Assets from the Vendor on the terms and conditions set forth in this Agreement.

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement and the sum of Ten ($10.00) Dollars paid by each of the Vendor and the Purchaser to the other and for good and other valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties hereto covenant and agree as follows:

ARTICLE 1

INTERPRETATION

1.1 Definitions

The terms defined in this Section 1.1 shall have, for all purposes of this Agreement, the following meanings, unless the context expressly or by necessary implication otherwise requires:

"Additional Deposit" has the meaning ascribed thereto in Subsection 3.1(b);

"Adjustments" means the adjustments to the Purchase Price provided for and determined pursuant to Section 3.3;

"affiliate" has the meaning ascribed thereto in the Canada Business Corporations Act;

"Agreement" means this Agreement of Purchase and Sale and the Schedules attached hereto, as amended from time to time;

"Applicable Laws" means all statutes, laws, by-laws, regulations, ordinances and orders of Governmental Authorities;

"Approved Contracts" means Contracts created after the date hereof without contravening Section 7.3;

"Approved Leases" means Leases created after the date hereof without contravening Section 7.3;

"Article", "Section" and "Subsection" mean and refer to the specified article, section and subsection of this Agreement;

"Assignment and Assumption of Contracts" means an assignment and assumption of the Vendor's interest in all Contracts in force at the Closing, such document to be in the form attached hereto as Schedule C;

"Assignment and Assumption of Leases" means an assignment and assumption of the Vendor's interest in all Leases in force at the Closing, such document to be in the form attached hereto as Schedule D;

"Assignment and Assumption of Permitted Encumbrances" means an assumption in favour of the Vendor by the Purchaser of (and full indemnification by the Purchaser of the Vendor from all Claims which arise or accrue during, or relate to, the period after the Closing Date in respect of) all Permitted Encumbrances, such document to be in the form attached hereto as Schedule E;

"Balance" has the meaning ascribed thereto in Subsection 3.2(c);

"Bill of Sale" means a bill of sale for the Chattels in the form attached hereto as Schedule F;

"Buildings" means, collectively, all buildings, structures and fixed improvements located on, in or under the Lands, and improvements and fixtures contained in or on such buildings and structures used in the operation of the Buildings, but excluding (i) improvements and fixtures not owned by the Vendor and (ii) those used by any Tenant in carrying on its business and those improvements and fixtures, which, in each case, are removable by any Tenant pursuant to its Lease, and "Building" means any one of the Buildings;

"Business Day" means any day other than a Saturday, Sunday or a statutory holiday in Toronto;

"Certificate re: Lease" has the meaning ascribed thereto in Section 2.3;

"Chattels" means the equipment, inventory, supplies and other chattels located in the Buildings or elsewhere which are owned by the Vendor or leased by the Vendor as lessee and used exclusively in the maintenance, repair, management and operation of the Property;

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"Claiming Party" has the meaning ascribed thereto in Subsection 6.3(b)(ii) of this Agreement;

"Claims" means all past, present and future claims, suits, proceedings, liabilities, obligations, losses, damages, penalties, judgments, costs, expenses, fines, disbursements, legal fees on a solicitor and client basis, interest, demands and actions of any nature or any kind whatsoever;

"Closing" means the closing of this Agreement, including without limitation the payment of the Purchase Price and the delivery of the Closing Documents;

"Closing Date" means, subject to Section 4.1, the day which is [forty-five (45)] days after the Due Diligence Date, or if such day is not a Business Day then the first Business Day thereafter;

"Closing Documents" means the agreements, instruments and other deliveries to be delivered to the Purchaser or the Purchaser's Solicitors pursuant to Section 5.2 and the agreements, instruments and other deliveries to be delivered to the Vendor or the Vendor's Solicitors pursuant to Section 5.3;

"Confidentiality Agreement" means the agreement between the Vendor and the Purchaser, made as of May 12, 2006, relating to confidentiality and other related matters, as amended or supplemented;

"Confidential Information" means all information with respect to the Subject Assets, the Property or the Vendor furnished to the Purchaser or its Representatives by the Vendor or the Vendor's Representatives plus all information with respect to the Purchaser, or the Purchaser's principals or affiliates furnished to the Vendor or its Representatives by the Purchaser or its Representatives in connection with the Transaction, in each case whether furnished before or after the Execution Date, whether oral or written, and regardless of the manner in which it is furnished, and includes, without limiting the generality of the foregoing, all notes, analyses, compilations, studies, interpretations or other documents which contain, reflect or are based upon, in whole or in part, such information;

"Contracts" means any and all contracts and agreements (other than policies of insurance) relating to the Property to which the Vendor is a party or by which the Vendor or the Property is bound, in its capacity as owner of the Subject Assets, in respect of the ownership, development, maintenance, operation, cleaning, security, fire protection or servicing of the Property and all contracts and agreements relating to any equipment or other assets leased by the Vendor and located on or in the Property;

"Deposit" has the meaning ascribed thereto in Section 3.1;

"Disclosed to the Purchaser" means written information which:

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(a)  is Previously Disclosed Information; or

(b) is made available for the Purchaser's review pursuant to Sections 2.2 and/or 2.8 hereof; or

(c) is otherwise communicated in writing by the Vendor or its advisors or Representatives to the Purchaser;

"Due Diligence" has the meaning ascribed thereto in Subsection 2.5(a);

"Due Diligence Date" means the date which is sixty (60) days after the Board Approval Date;

"Encumbrances" means, in the case of any given Subject Assets, all mortgages, pledges, charges, liens, debentures, trust deeds, assignments by way of security, security interests, conditional sales contracts or other title retention agreements or similar interests or instruments charging, or creating a security interest in, or against title to, such Subject Assets or any part thereof or interest therein, and any agreements, leases, options, easements, servitudes, rights of way, restrictions, executions or other charges or encumbrances (including notices or other registrations in respect of any of the foregoing) against title to the Subject Assets or any part thereof or interest therein;

"Encumbrances to be Discharged" means any Encumbrances, other than Permitted Encumbrances, registered against any Subject Assets or entered into or consented to by the Vendor after the date hereof;

"Execution Date" means the date upon which this Agreement is executed and delivered by each of the parties hereto;

"Existing Contracts" means all Contracts in existence as of the date hereof;

"Existing Leases" means all Leases in existence as of the date hereof;

"Final Adjustment Date" has the meaning ascribed thereto in Subsection 3.3(b);

"Governmental Authority" means any government, regulatory authority, government department, agency, commission, board, tribunal or court having jurisdiction on behalf of any nation, province or state or other subdivision thereof or any municipality, district or other subdivision thereof;

"GST Undertaking and Indemnity" means the GST undertaking and indemnity attached as Schedule G hereto;

"Initial Deposit" has the meaning ascribed thereto in Subsection 3.1(a);

"ITA" means the Income Tax Act (Canada), as amended;

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"Lands" means the lands and premises described in Schedule A attached hereto;

"Leases" means all agreements to lease, leases, renewals of leases and other rights (including licences) granted by or on behalf of the Vendor or its predecessors in title as owner or ground lessee of the Property which entitle any Person to possess or occupy any space within the Property, together with all security, guarantees and indemnities relating thereto, in each case as amended, renewed or otherwise varied to the date hereof; and "Lease" means any one of the Leases;

"Lender Representatives" has the meaning ascribed thereto in Subsection 2.6(a);

"Non-Assignable Rights" has the meaning ascribed thereto in Section 7.4;

"Permitted Encumbrances" means, with respect to the Property or the Subject Assets:

(a) those Encumbrances which, or notice of which, are registered against the title to the Property, the Subject Assets or the Vendor at 5:00 p.m. on the date of this Agreement, other than registrations under the Personal Property Security Act (Ontario) that do not relate to any of the leased Included Chattels pursuant to any of the Contracts;

(b) all those Encumbrances described on Schedule B; and

(c) all other Encumbrances which, or notice of which, are registered against the title to the relevant Subject Assets after 5:00 p.m. on the date of this Agreement and all unregistered Encumbrances in respect of the Subject Assets entered into by the Vendor after such time, in each case as approved by the Purchaser, acting reasonably;

"Person" means an individual, partnership, corporation, trust, unincorporated organization, government, or any department or agency thereof, and the successors and assigns thereof or the heirs, executors, administrators or other legal representatives of an individual;

"Post Closing Adjustments" has the meaning ascribed thereto in Subsection 3.3(b);

"Previously Disclosed Information" means: (i) issues, matters and/or information set out in or revealed by or in written documentation previously disclosed or made available to the Purchaser and/or its Representatives prior to the date of this Agreement in contemplation of the transactions contemplated hereby; (ii) issues, matters and/or information set out in this Agreement; and/or (iii) issues, matters and/or information which a sophisticated purchaser could reasonably be expected to have ascertained or derived from the issues, matters and/or information disclosed or made available pursuant to (i) and/or (ii) above;

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“Prime Rate” means the annual rate of interest announced in Canada from time to time by the Bank of Montreal as its prime rate then in effect in Toronto with respect to Canadian dollar commercial loans made in Canada to its Canadian commercial borrowers;

"Property" means, collectively, the Lands and the Buildings;

"Property Conditions" has the meaning ascribed thereto in Subsection 6.4(b);

"Purchase Price" means CDN $19,600,000.00;

"Purchaser's Solicitors" means Minden Gross Grafstein & Greenstein LLP or such other firm or firms of solicitors as are appointed by the Purchaser from time to time and notice of which is provided to the Vendor;

"Rechargeable Sum Estimates" and "Rechargeable Sums" have the meanings ascribed thereto in Subsection 3.3(c);

"Responding Party" has the meaning ascribed thereto in Subsection 6.3(b) hereof;

"Representatives" has the meaning ascribed thereto in Subsection 2.6(a);

"Satisfaction Notice" has the meaning ascribed thereto in Subsection 2.5(b);

"Subject Assets" means all of the Vendor's right, title and interest in and to:

(a)           the Property;

(b)           the Existing Leases and any Approved Leases;

(c)           the Existing Contracts and any Approved Contracts; and

(d)           the Chattels.

"Substantial Damage" has the meaning ascribed thereto in Subsection 7.2(a);

"Survival Period" has the meaning ascribed thereto in Subsection 6.3(a);

"Tenant Estoppels" has the meaning ascribed thereto in Section 2.3;

"Tenants" means Persons having a right to possess or occupy space in the Property now or hereafter pursuant to an Existing Lease or an Approved Lease;

"Third Party Claim" has the meaning ascribed thereto in Subsection 6.6(a) hereof;

"Transaction" means the purchase and sale of the Subject Assets provided for in this Agreement;

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"Unsatisfied Condition" has the meaning ascribed thereto in Section 4.3;

"Vendor's Solicitors" means Davies Ward Phillips & Vineberg LLP, or such other firm or firms of solicitors as are appointed by the Vendor from time to time and notice of which is provided to the Purchaser; and

"VTB Mortgage" has the meaning ascribed thereto in Subsection 3.2(b).

ARTICLE 2

AGREEMENT OF PURCHASE AND SALE

2.1 Agreement of Purchase and Sale/Allocation of Purchase Price

The Vendor hereby agrees to sell, transfer and assign the Subject Assets to the Purchaser, free and clear of all Encumbrances, other than Permitted Encumbrances, and the Purchaser hereby agrees to purchase and acquire the Subject Assets from the Vendor for the Purchase Price, on and subject to the terms and conditions of this Agreement.

2.2 Initial Deliveries by Vendor

To the extent available and in the possession or control of the Vendor, the Vendor will make available to the Purchaser for the Purchaser's review copies of the following within five (5) days after execution hereof and after such date at the Purchaser’s written request:

(a) existing surveys or certificates of location for the Property, if any;

(b) the current rent rolls for the Property and copies of all Existing Leases;

(c) all Existing Contracts;

(d) written soil tests, engineering reports, structural reports and environmental reports, if any, pertaining to the Property prepared by independent third parties for the Vendor;

(e) all outstanding written directives or work orders, if any, issued by any Governmental Authority pertaining to the Property;

(f) realty tax bills with respect to the Property for the two most recent tax years, and the most current tax assessment together with all assessment appeals, if any, and material filed in support thereof; and

(g) such other documents, plans, reports, bills, statements and other information relating to Subject Assets as the Purchaser may reasonably require.

The Vendor will execute and deliver to the Purchaser within three (3) Business Days after receipt of a written request from the Purchaser, authorizations to Governmental

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Authorities necessary to permit the Purchaser to obtain information from their files, provided each such authorization expressly states that there shall not be any inspections by a Governmental Authority with respect to the Property and none is authorized or requested and such authorization must otherwise be satisfactory to the Vendor, acting reasonably.  The Purchaser shall not request any Governmental Authority to inspect any of the Property.

2.3 Tenant Estoppels

If requested by the Purchaser, the Vendor shall use reasonable commercial efforts to obtain and deliver to the Purchaser at least five (5) days prior to the Due Diligence Date, estoppel certificates ("Tenant Estoppels") from all Tenants (other than from Heritage Fine Clothing Manufacturers Ltd.), which Tenant Estoppels shall be dated no earlier than May 15, 2006.  The failure to obtain such Tenant Estoppels shall not constitute a default on the part of the Vendor nor shall such failure entitle the Purchaser to terminate this Agreement or to any other right or remedy whatsoever.  The Vendor shall not be required to spend any monies to obtain such Tenant Estoppels, other than its own costs of preparing and distributing the forms.  The Vendor shall provide the Purchaser with a copy of the Tenant Estoppels, if any, forthwith after they are received.  To the extent Tenant Estoppels shall not be forthcoming from any particular Tenant (other than from Heritage Fine Clothing Manufacturers Ltd.), the Vendor shall deliver a certificate (a "Certificate re: Lease") from a senior officer of the Vendor, without personal liability, certifying that matters which otherwise would have been the subject of the Tenant Estoppel for such Tenant. In the event that, at any time before or after Closing, the Vendor provides the Purchaser with a Tenant Estoppel for any Lease in respect of which the Vendor has given a Certificate re: Lease and such Tenant Estoppel contains information consistent in all material respects with that set out in the Certificate re: Lease in respect of such Lease then the Certificate re: Lease shall cease to be of any force and effect in respect of such Lease; and this provision for substitution survives Closing.

2.4 Access to Property

(a)           Subject to the Purchaser complying with each of its obligations herein and the rights of the Tenants under the Leases, from and after the Execution Date to and including the Due Diligence Date, the Purchaser and its agents, consultants and employees have had and shall continue to have access to the Property during the Vendor's normal business hours upon reasonable notice to the Vendor, at the Purchaser's sole risk and expense, for the purpose of inspecting the Property, including without limitation performing physical and structural inspections, soil tests and environmental audits.  Such inspections, tests and audits shall be conducted in a manner that minimizes interference with the use of the Property and does not contravene any Leases or unreasonably interfere with any Tenants.  The Purchaser and its agents, consultants and employees shall not have any communications with Tenants or their employees.  The Vendor shall have the right to accompany the Purchaser and its agents, consultants and employees on any inspections and shall have the right, acting reasonably, to approve, or to refuse approval for, invasive or intrusive inspections, tests and audits, if any are proposed by the Purchaser, prior to such inspections, tests and audits being undertaken.  No such inspections,

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tests or audits shall occur unless the Purchaser has given the Vendor at least one complete Business Day’s prior written notice and complies with the foregoing requirements;

(b)           The Purchaser shall repair any damage caused by inspections, tests and audits performed by the Purchaser or its agents, consultants or employees and fully indemnify the Vendor from all costs of repairing any damage caused by such inspections, tests or audits and all Claims relating to any such inspections, tests and audits and from all Claims incurred by the Vendor as a result thereof.  This indemnity shall survive termination of this Agreement regardless of the cause of such termination.

2.5 Purchaser's Investigations

(a)           On or before 5:00 p.m. on the Due Diligence Date, the Purchaser shall conduct (subject to compliance with other relevant provisions of this Agreement) all investigations, inspections, reviews, tests and audits relating to the Subject Assets and the Property (including, without limitation, title to the Subject Assets and the Property and compliance with Applicable Laws) and the transactions provided for herein (collectively referred to herein as the "Due Diligence") which the Purchaser deems necessary or desirable.

(b)           The Purchaser shall be entitled, on or before 5:00 p.m. on the Due Diligence Date, in its sole and absolute discretion, to determine whether it is satisfied with the results of its Due Diligence.  The Purchaser shall be deemed to not be satisfied with the result of its Due Diligence unless it delivers to the Vendor on or before 5:00 p.m. on the Due Diligence Date a written notice in the form attached hereto (with the relevant details inserted therein) as Schedule H (the "Satisfaction Notice") stating that it is satisfied with the results of its Due Diligence including, without limiting the generality of the foregoing, the contents of the Tenant Estoppels.  If the Purchaser fails to give the Vendor a Satisfaction Notice by such time, then this Agreement shall terminate automatically at such time and, upon such termination, the Purchaser and Vendor shall be released from all obligations under this Agreement (except for those obligations which are expressly stated to survive the termination of this Agreement) and the Deposit and all interest earned on it shall be returned to the Purchaser.

(c)           If the Purchaser does deliver the Satisfaction Notice to the Vendor by such time, notwithstanding any other provisions of this Agreement (including, without limitation, Section 2.1), the Purchaser shall be deemed to have irrevocably waived its right to raise any objection to, or to have or make any Claim regarding, any circumstance, defect, matter or issue in respect of the Subject Assets or the Property, or any other aspect thereof of any nature whatsoever (including, without limitation, any objection or Claim relating to the Vendor's title to the Subject Assets or any matter relating to title to the Property or the existence of any Encumbrances (other than Encumbrances to be Discharged), as such title and Encumbrances exist on the Due Diligence Date, any non-compliance with Applicable Laws, or any Contract, Encumbrance or other instrument) unless the foregoing first arose or was created after the Due Diligence Date and then only to the extent otherwise permitted pursuant to this Agreement.  Without limiting the generality of the foregoing, the Purchaser also agrees that it shall not have the right to seek an abatement to the Purchase Price or any other remedy by virtue of any matters Disclosed to the

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Purchaser prior to the Due Diligence Date or as a result of any circumstance, defect, matter or issue in respect of the Subject Assets or the Property in respect of the Subject Assets or the Property, or any other aspect thereof of any nature whatsoever, in existence at the Due Diligence Date.  Notwithstanding the foregoing, however, if the Closing does take place the foregoing does not derogate from the Purchaser's rights in the event of any breach of a representation or warranty made in this Agreement by the Vendor, except as is otherwise provided in the last sentence of Section 2.8.

2.6 Confidentiality

(a)           The Vendor and Purchaser agree that each party:

                    (i) shall keep all provisions of this Agreement confidential and shall not disclose any of its provisions to any Person; and

                    (ii) shall keep confidential all Confidential Information and shall not disclose any Confidential Information to any Person,

except as required by Applicable Laws or as permitted pursuant to Subsection 2.6(b) hereof and except (A) to those trustees, directors, officers, employees and advisors of each of the parties who are participating in the Transaction or are otherwise specifically in writing approved by the other party (all such Persons being referred to as "Representatives"), and (B) to the officers, employees and solicitors of any lender to the Purchaser (all such Persons being referred to as "Lender Representatives") in connection with any financing to be undertaken by the Purchaser in connection with the Subject Assets.  The Vendor and the Purchaser shall cause all Representatives, and the Purchaser shall cause all Lender Representatives, who, in each case, receive any information of the nature referred to above to comply with the requirements of this Section 2.6.

(b)           Neither the Vendor nor the Purchaser shall issue any press release or other public announcement or release information with respect to this Agreement to the press or the public unless the same has been mutually approved by the Vendor Parties and the Purchaser or such disclosure is in the good faith opinion of the Purchaser or the Vendor, as the case may be, required in order to comply with any Applicable Laws, with any agreement between any affiliate of the Vendor and any inspector in respect of Hollinger Inc. appointed under the Canada Business Corporations Act, or the rules, orders or regulations of any stock exchange or to satisfy the obligations of the Vendor under Permitted Encumbrances, and then only after prior consultation with the other party hereto, if possible.

(c)           It is agreed that if this Agreement is terminated for any reason, each party shall promptly return, or cause to be returned, to the other party all written Confidential Information in the possession or control of the other party or any other Person to whom Confidential Information has been provided and shall destroy, or cause to be destroyed, any Confidential Information stored in or on any computer memory, disk, tape or other contrivance whatsoever in the possession or control of the other party or any other Person to whom the other party has

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provided Confidential Information.  On request of a party, the other party shall certify that it has complied with its obligation under this Section.

(d)           The provisions of this Section are supplementary to the provisions of the Confidentiality Agreement and do not in any way derogate from the obligations of the Purchaser pursuant to the Confidentiality Agreement.  In the case of any conflict between the provisions of this Section and the provisions of the Confidentiality Agreement, the latter shall prevail.

(e)           The provisions of this Section 2.6 shall survive the Closing or any termination of this Agreement, regardless of the cause of such termination.

2.7 Settlement of Documents

The parties shall proceed diligently and in good faith to attempt to agree, on or before the Due Diligence Date, upon the contents of all Closing Documents to be executed and delivered by the Vendor and the Purchaser; provided that in the case of any Closing Documents to be executed and delivered in the form set out in a schedule to this Agreement, such form shall not be subject to further negotiations and the Vendor shall provide all details and/or information necessary to complete such documents, subject to the Purchaser's approval of the accuracy of such details and information, such approval not to be unreasonably withheld.

2.8 Subsequent Deliveries

Any documentation or other information provided by the Vendor to the Purchaser pursuant to Section 2.2 may be amended or supplemented by the Vendor as necessary from time to time until the Due Diligence Date.  In addition, if the Vendor becomes aware of a failure to provide any document or other information that it is required to provide in accordance with Section 2.2 at any time prior to the Due Diligence Date, it may advise the Purchaser in writing of such failure and deliver such information to the Purchaser at any time prior to the Due Diligence Date.  If the Purchaser delivers a Satisfaction Notice pursuant to Section 2.5 prior to 5:00 p.m. on the Due Diligence Date, the Purchaser shall be deemed to have accepted for all purposes all matters which have been Disclosed to the Purchaser on or before the Due Diligence Date and if any representation or warranty of the Vendor is incorrect or inaccurate but the Purchaser has received written notice from the Vendor or its Representatives on or before the Due Diligence Date of the instrument, circumstance, action, omission, matter or issue which causes such representation or warranty to be incorrect or inaccurate, then such representation and warranty shall be deemed to have been qualified by reference to such instrument, circumstance, matter or issue.

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Article 3

PURCHASE PRICE

3.1 Deposit

(a)           Prior to 11:00 a.m. on the first Business Day following the Board Approval Date is executed by both parties hereto the Purchaser shall pay $350,000 (the "Initial Deposit") by certified cheque or negotiable bank draft to the Vendor's Solicitors to be invested by the Vendor's Solicitors in trust, as the Purchaser directs, in a term deposit or other similar certificate of deposit with a Canadian Schedule I chartered bank.  Contemporaneously with the payment of the Initial Deposit by the Purchaser to the Vendor's Solicitors, the Purchaser shall deliver to the Vendor's Solicitors a deposit authorization in the form attached hereto as Schedule I.

(b)           Unless this Agreement has terminated pursuant to Section 2.5, prior to 11:00 a.m. (Toronto time) on the first Business Day following the Due Diligence Date, the Purchaser shall pay $650,000  (the "Additional Deposit") as a further deposit to the Vendor's Solicitors to be invested, as the Purchaser directs, by the Vendor's Solicitors on the same terms as referred to in Subsection 3.1(a).  In this Agreement, "Deposit" means the Initial Deposit and, if applicable, the Additional Deposit.  Contemporaneously with the payment of the Additional Deposit by the Purchaser to the Vendor's Solicitors, the Purchaser shall deliver to the Vendor's Solicitors a deposit authorization in the form attached hereto as Schedule I.

(c)           If the Transaction is not completed for any reason other than the default of the Purchaser (and for greater certainty the failure to submit a Satisfaction Notice is not a default of the Purchaser), the Deposit (together with all interest thereon) shall be returned to the Purchaser forthwith thereafter.  If the Transaction is not completed as a result of the default of the Purchaser, the Deposit, together with interest thereon, shall be forfeited to the Vendor and thereupon be paid to the Vendor, without prejudice to the rights and remedies of the Vendor at law or in equity as a result of such default.

(d)           If the Transaction is completed, the Deposit and accrued interest shall be credited against the Purchase Price due on Closing.

(e)           In holding and dealing with the Deposit pursuant to this Agreement, the Vendor's Solicitors are not bound in any way by any agreement other than this Agreement, and Vendor's Solicitors shall not be considered to assume any duty, liability or responsibility other than to hold the Deposit in accordance with the provisions of this Agreement and to pay the Deposit to the Person becoming entitled thereto in accordance with the terms of this Agreement except in the event of a dispute between the parties as to entitlement to the Deposit; in the case of such dispute, the Vendor's Solicitors may, in their discretion, pay the monies in dispute into court, whereupon the Vendor's Solicitors shall have no further obligations relating to the Deposit and interest earned thereon.  The Vendor's Solicitors will not, under any circumstances, be required to verify or determine the validity of any notice or other document whatsoever delivered to the Vendor's Solicitors and the Vendor's Solicitors are hereby relieved of any liability or responsibility for any loss or damage which may arise as the result of the acceptance by the

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Vendor's Solicitors of any such notice or other document in good faith (provided that the Vendor's Solicitors shall not be relieved of any liability or responsibility for any loss or damage which may arise if the Vendor's Solicitors release the Deposit to a party hereto after having received prior written notice from the other party hereto claiming entitlement to such Deposit or a dispute to such entitlement).

3.2 Method of Payment of Purchase Price

On Closing the Purchase Price shall be satisfied as follows:

(a) by application of the Deposit and interest earned thereon held by the Vendor's Solicitors;

(b) an amount equal to one half of the Purchase Price, payable to the Vendor pursuant to the vendor take back mortgage (the "VTB Mortgage") in accordance with Section 3.4; and

(c) by payment to the Vendor, or as the Vendor directs in writing, of an amount (the "Balance") equal to the Purchase Price, as adjusted pursuant to Section 3.3, less the aggregate of the amounts referred to in paragraphs 3.2(a) and (b).  The Balance shall be paid on Closing by the Purchaser by certified cheque or negotiable bank draft of one of the five largest (by asset size) Schedule I Canadian chartered banks.

If at any time the Vendor delivers to the Purchaser a direction in writing in respect of the payment of the Balance the Purchaser shall forthwith provide, at the Vendor's request, in favour of any lender to the Vendor and/or affiliates of the Vendor an irrevocable acknowledgement of such direction and an agreement to act in accordance therewith unless otherwise agreed to by such lender.

3.3 Adjustments

(a) Except as otherwise provided herein, the Vendor shall be responsible for all expenses and liabilities, including, without limitation, the expense of paying and radiating all Encumbrances to be Discharged, and be entitled to receive all revenues, accrued in respect of the Subject Assets up to and including the Closing Date.  After the Closing Date, the Purchaser shall be responsible for all expenses and liabilities accruing in respect of the Subject Assets after the Closing Date and shall be entitled to all revenues accruing in respect of the Subject Assets after the Closing Date.  Except as otherwise provided herein, all adjustments for basic rent, additional rents, percentage rents, ground lease rents, parking income, damage/security deposits and interest thereon, if any, prepaid rents and interest thereon, if any, and other income and operating expenses, utilities, taxes (including local improvement charges and assessments and business taxes) and other adjustments established by the usual practice in the City of Toronto, shall be made as of the Closing Date and shall be paid on the Closing Date pursuant to a

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statement of adjustments to be prepared by the Vendor and approved by the Purchaser, each acting reasonably.

(b) If the final cost or amount of any item which is to be adjusted cannot be determined at Closing, then an initial adjustment for such item shall be made at Closing, such amount to be estimated by the Vendor, acting reasonably, as of the Closing Date on the basis of the best evidence available at the Closing as to what the final cost or amount of such item will be.  All amounts which have been estimated as at the Closing Date because they have not been finally determined at that date (the "Post Closing Adjustments") shall be finally adjusted on a post-closing basis once they have been determined and finalized.  In each case when a Post Closing Adjustment is determined, the Vendor or the Purchaser, as the case may be, shall within 30 days of determination, provide a complete statement thereof, together with particulars relating thereto in reasonable detail, to the other and within 30 days thereafter the parties hereto shall make a final adjustment as of the Closing Date for the Post Closing Adjustment in question.  In the case of any dispute between the parties hereto with respect to any Post Closing Adjustments, the final amount of such Post Closing Adjustments shall be determined by the audit firm of Deloitte & Touche LLP and the cost of such determination shall be shared equally between the parties hereto.  Either party may refer any such dispute to Deloitte & Touche LLP for such determination and such determination shall be final and binding on the parties hereto.  The Vendor and Purchaser agree to execute and deliver on the Closing Date an undertaking to re-adjust and pay the amount of any Post Closing Adjustments as may be owing pursuant to the provisions of this Agreement.  Such undertaking shall include an undertaking by the Vendor to make available its records regarding the calculation of its capital tax and large corporation tax required pursuant to the Leases and all such information as may be necessary to allow the Purchaser and Vendor to proceed to Post-Closing Adjustments.  Notwithstanding the foregoing, all adjustments and Post Closing Adjustments to be made pursuant to this Subsection 3.3(b) shall, in any event, be completed on or before the date which is the first anniversary of the Closing Date (the "Final Adjustment Date") and no claim for any re-adjustment may be made by either party thereafter, unless such claim is a claim contemplated by the provisions of Section 6.3, in which case such provisions shall apply.  It is agreed that no adjustments shall be made with respect to insurance premiums and that the Purchaser shall not assume or take an assignment of the Vendor's insurance policies.

(c) The parties acknowledge that under the terms of Leases and Approved Leases, portions of certain payments, such as realty taxes and operating costs, (including, where recoverable, taxes on capital and large corporation taxes) although paid by the landlord, are charged to and payable by the Tenants under such Leases and Approved Leases (the "Rechargeable Sums") and are collected from such Tenants in monthly instalments on the basis of the landlord's estimates (the "Rechargeable Sum Estimates").  The Rechargeable Sum Estimates are subject

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to adjustment with the Tenants when the total amounts of the Rechargeable Sums are finally determined.  For greater certainty, Rechargeable Sums shall not include any expenditures or any portion thereof which are not recoverable from the Tenants by the terms of the Leases and Approved Leases.  It is agreed that, with respect to the Rechargeable Sums and the Rechargeable Sum Estimates, adjustments shall be made not at Closing but forthwith after the actual amount of the Rechargeable Sums has been ascertained for the relevant fiscal year, calendar year or tax year, as appropriate, for the Property.  Such adjustments shall be made as follows:

      (i) the Purchaser shall provide to the Vendor a statement which sets out the amounts collected from each Tenant on account of Rechargeable Sums, as well as the Rechargeable Sums for the relevant fiscal year, calendar year or tax year, as appropriate, for the Property;

      (ii) if such statement indicates that the Vendor has collected pursuant to the Rechargeable Sum Estimates more than the Vendor's share (as hereinafter defined) of the Rechargeable Sums for the relevant fiscal year, calendar year or tax year, as appropriate, the amount of such difference shall be paid by the Vendor to the Purchaser within ten Business Days after the amount of such difference has been finally determined pursuant to this Agreement in accordance with Subsection 3.3(b) and the Purchaser shall be responsible for, and make, the required adjustments with the Tenants in respect of such over-collection in accordance with the terms of the Leases; the "Vendor's share" of the Rechargeable Sums means the amount obtained by multiplying the Rechargeable Sums by a fraction, the numerator of which is the number of days in the relevant fiscal year, calendar year or tax year, prior to and including the Closing Date and the denominator of which is the total number of days in such fiscal, calendar or tax year; and

      (iii) if such statement indicates that the Vendor has collected pursuant to the Rechargeable Sum Estimates less than the Vendor's share of the Rechargeable Sums, the amount of such difference shall be paid by the Purchaser to the Vendor within ten Business Days after the amount of such difference has been finally determined pursuant to this Agreement in accordance with Subsection 3.3(b) and such amount has been collected from the Tenants and the Purchaser shall be entitled to the amount collected in respect of such difference.

It is agreed that the Purchaser shall be responsible to conclude all final reconciliations and to make all payments and satisfy all obligations with all Tenants relating to the Rechargeable Sums and Rechargeable Sum Estimates.

(d) The Vendor and the Purchaser hereby acknowledge and agree that:

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         (i) the Vendor shall be responsible for and shall pay (and same shall be shown as an adjustment in favour of the Purchaser on the statement of adjustments if unpaid to the party entitled thereto by Closing):

(A) any real estate or leasing commissions in respect of the Existing Leases and/or the Approved Leases, and the Vendor shall not have any responsibility therefor nor shall there be any adjustment in favour of the Purchaser in respect thereof; and

(B) any tenant inducements, tenant allowances and/or early termination fees payable under the Existing Leases and/or the Approved Leases, and the Vendor shall not have any responsibility therefor nor shall there be any adjustment in favour of the Purchaser in respect thereof;

(ii) the Purchaser shall not be entitled to be paid or receive the benefit of any amount payable or owing under the Leases for rent or any other amounts for any period prior to Closing, including without limitation accounts receivable under and pursuant to the Leases as at Closing, and the Purchaser shall use reasonable commercial efforts to collect such amounts following Closing (which amounts shall remain the property of the Vendor after Closing) provided that the Purchaser shall not be obliged to seize for rent, terminate any Lease or bring any action for payment of indebtedness and to the extent the Purchaser does receive any of the aforementioned amounts after Closing, they shall be applied as follows:

(A) first, against any rent (including arrears of rent) and other amounts owing to the Purchaser by a Tenant or assumed by the Purchaser hereunder or arising after the Closing Date;

(B) second, against any reasonable third party costs (including accounting costs) incurred by the Purchaser in respect of the collection of such arrears in rent; and

(C) thereafter, the excess, if any, against the arrears in rent for periods prior to Closing, which the Purchaser shall pay to the Vendor within ten (10) Business Days after collection thereof, together with a statement as to the amount of such arrears and the application of the proceeds thereof;

(iii) in the event that there are any realty or business tax appeals for the period prior to Closing, the Vendor may, at its option, continue such appeals and shall be entitled to receive any payment resulting therefrom except to the extent that such payment is properly payable to any Tenants; provided that the Vendor shall consult with the Purchaser with respect to, and the Purchaser acting reasonably shall have the right to approve, any final

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settlement or disposition of any such appeal.  Any refund or reassessment for the 2006 calendar year (after deduction of out-of-pocket expenses in conducting any such appeal or reassessment, including any commissions payable to agents or consultants) shall be readjusted as of the Closing Date after the conclusion of any assessment appeal and notwithstanding such readjustment occurs after the Final Adjustment Date.  The Purchaser agrees to co-operate with the Vendor with respect to all such appeals or reassessments and to provide the Vendor with access to any necessary documents or materials required to continue any such appeals or reassessments.  To the extent the Purchaser receives payment of any refund or reassessment for the period prior to the Closing Date, the Purchaser shall hold such refund or reassessment payment in trust for the Vendor and shall endorse (without recourse) in favour of the Vendor and deliver to the Vendor all such payment cheques forthwith upon receipt; provided that in all cases, readjustments with the Tenants as the result of any refunds or reassessments may be effected by the Purchaser prior to the payment of any refund or reassessment to the Vendor or to the Purchaser and the amount otherwise owing to the Vendor in accordance with the foregoing shall be reduced by any amount payable to any Tenants as a result of any such adjustments.

(e) The Purchaser shall provide the Vendor and its auditors, during normal business hours at any time and from time to time after Closing upon reasonable prior notice to the Purchaser, access to the books, files and records of the Purchaser relating exclusively to the Subject Assets, for the purpose of calculating or verifying the amount of any Adjustments, Rechargeable Sums and Rechargeable Sum Estimates and dealing with any tax appeals.

(f) On the Closing Date, the Purchaser shall issue replacement letters of credit and/or security deposits for the letters of credit and/or security deposits with respect to the Property, if any, (all of which shall be Disclosed to the Purchaser at least twenty (20) days prior to the Due Diligence Date) and shall use its reasonable commercial efforts to cause the Vendor's letters of credit and/or security deposits with respect to the Property to be released and returned to the Vendor.  Provided that to the extent that the Purchaser is unable to cause such letters of credit and/or security deposits to be released and returned to the Vendor, in lieu of issuing the replacement letters of credit and/or security deposits referred to above, the Purchaser shall cause matching letters of credit and/or security deposits to be provided to the Vendor, which matching letters of credit and/or security deposits may be drawn upon by the Vendor if and to the extent that the Vendor's letters of credit and/or security deposits are drawn upon.

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3.4 VTB Mortgage

The VTB Mortgage shall be prepared by the Vendor’s Solicitors and shall be registered against the Property as a first ranking charge, with the Vendor as mortgagee and the Purchaser as mortgagor subject to the following terms and provisions:  (i) having a two year term; (ii) bearing interest at five (5%) percent, compounded semi-annually with the first six (6) months being interest free; (iii) interest to be calculated and payable quarterly; and (iv) incorporating the standard charge terms filed as No. 200033; (v) further subject to the terms and provisions listed in Schedule J attached hereto.

ARTICLE 4

CONDITIONS

4.1 Conditions for Vendor

The obligation of the Vendor to complete the Transaction shall be subject to fulfilment of each of the following conditions on or before the Closing Date or such earlier date or time as may be herein specified:

(a) payment by the Purchaser of the Purchase Price and all of the other terms, covenants and conditions of this Agreement to be complied with or performed by the Purchaser shall have been complied with or performed in all material respects;

(b) on Closing, the representations or warranties of the Purchaser set out in Section 6.2 shall be true and accurate as if made as of the Closing;

(c) by the Closing Date: (i) no action or proceeding, at law or in equity, shall have been commenced by any Person to enjoin, restrict or prohibit the Closing which has not, by the Closing Date, been dismissed, quashed or permanently stayed without any further right of appeal or right to seek leave to appeal; and (ii) the Vendor shall have obtained an amendment, variation, modification or discharge of any order of a Governmental Authority required to permit the removal of documents or other personal property from the Property; and

(d) by no later than 5:00p.m on July 10, 2006, the Board of Directors of the Vendor shall have duly authorized and approved the Transaction (the "Board Approval Date").

The conditions set forth in this Section 4.1 are for the benefit of the Vendor and may be waived in whole or in part by the Vendor by notice to the Purchaser. In the event that the conditions set forth in Section 4.1(c) have not been satisfied by the Closing Date, the Vendor or the Purchaser shall have the one time right, exercisable in its sole and absolute discretion, by written notice to the other delivered on or before the Closing Date, to extend the date of the Closing by up to 365 days following the original Closing Date.  The Vendor shall use its best commercial efforts to satisfy the conditions set out in 4.1(c) in order to facilitate closing.

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4.2 Conditions for Purchaser

The obligations of the Purchaser to complete the Transaction shall be subject to fulfilment of each of the following conditions on or before the Closing Date or such earlier date or time as may be herein specified:

(a) all of the material terms, covenants and conditions of this Agreement to be complied with or performed by the Vendor shall have been complied with or performed in all material respects;

(b) on Closing, the Vendors shall (subject to the Vendors' right to deliver, pursuant to Subsection 5.2(d), discharge statements and undertakings in respect of Encumbrances to be Discharged, rather than discharge such Encumbrances to be Discharged on Closing) transfer all of the Vendors' right, title and interest in and to the Subject Assets to the Purchaser free and clear of all Encumbrances, other than Permitted Encumbrances; and

(c) on Closing, the representations and warranties of the Vendor set out in Section 6.1, as supplemented or amended by information Disclosed to the Purchaser on the fifth Business Day prior to the Due Diligence Date, shall be true and correct in all material respects (except as such representations and warranties may be affected by the occurrence of events or transactions expressly contemplated and permitted hereby and provided that, for greater certainty, if a representation and warranty is expressly made as of a specific date other than the Closing Date, it shall not be required to be correct and true as at Closing or at any time other than such specific date).

The conditions set forth in Section 4.2 are for the benefit of the Purchaser, and may be waived in whole or in part by the Purchaser by notice to the Vendor.  For greater certainty, it is agreed that for the purposes of Subsection 4.2(c), representations and warranties of the Vendor shall be deemed to be true and accurate in all material respects unless the effect of the falsity or inaccuracy of such representations and warranties is that there is a material adverse effect upon the value of the Subject Assets, taken as a whole.

4.3 Non-Satisfaction of Conditions

In the event any condition set forth in Section 4.1 or Section 4.2 is not satisfied or waived as therein provided on or before the applicable date or time referred to in Section 4.1 or Section 4.2, as the case may be (such condition being referred to as the "Unsatisfied Condition"), this Agreement shall, upon notice by the party having the benefit of the Unsatisfied Condition to the other party, be terminated and both parties hereto shall be released from all of their liabilities and obligations under this Agreement (other than the obligations referred to in Subsection 2.4(b) and Section 2.6) unless the reason for the Unsatisfied Condition not being satisfied is the breach by a party hereto of an obligation under this Agreement or a representation and warranty made by such party being incorrect or inaccurate, in which case a claim may be made against such party. Notwithstanding any other provisions of this Agreement, if by the

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applicable time or date referred to in Section 4.1 or Section 4.2, as the case may be, the party having the benefit of any given condition has not given notice to the other party that such condition has been waived or satisfied, such condition shall be deemed not to have been waived or satisfied.

4.4 Efforts to Satisfy Conditions

Without derogating from any party's other obligations under this Agreement, it is agreed that the Purchaser shall act in good faith and use reasonable efforts to satisfy, or cause to be satisfied, the conditions set forth in Section 4.1, and the Vendor shall act in good faith and use reasonable efforts to satisfy, or cause to be satisfied, the conditions set out in Section 4.2. Provided that, unless the Vendor has otherwise in this Agreement specifically agreed to do so, nothing in this Agreement shall be interpreted as requiring the Vendor to spend money (other than fees to its own professionals) to satisfy any conditions, or to address any defects, deficiencies or concerns identified by the Purchaser with respect to the Property, the Subject Assets or any other matter or aspect of the Transaction whatsoever.  Each of the Purchaser and the Vendor shall act in good faith in determining whether or not a condition in its favour has been satisfied.

ARTICLE 5

CLOSING DOCUMENTS

5.1 Closing Arrangements

The Closing shall commence at 10:00 a.m. on the Closing Date at the office of the Vendor's Solicitors or at such other time or place as the parties shall mutually agree upon in writing and shall continue until the Closing is completed or this Agreement is validly terminated in accordance with the terms hereof.

5.2 Vendor’s Closing Deliveries

On or before Closing, subject to the provisions of this Agreement, the Vendor shall deliver, or cause to be delivered, to the Purchaser's Solicitors the following:

(a) a registrable transfer (other than a land transfer tax affidavit) of the undivided 100% ownership interest of the Vendor in the Property in favour of the Purchaser, which shall exclude any representation or warranty, express or implied, of any nature whatsoever;

(b) the Assignment and Assumption of Leases;

(c) the Assignment and Assumption of Contracts;

(d) the Bill of Sale;

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(e) the Tenant Estoppels, if any, received by the Vendor pursuant to Section 2.3 or in the alternative, the Certificate(s) re: Lease contemplated in Section 2.3;

(f) notices to Tenants advising of the sale of the Subject Assets in a form approved by the Purchaser, acting reasonably;

(g) registrable discharges of the Encumbrances to be Discharged, if any, in respect of the Subject Assets which have not been discharged as at the Closing Date or, in each case as an alternative to delivering such registrable discharges, discharge statements from the holder of the Encumbrances to be Discharged together with an irrevocable direction to pay in respect of the amounts secured by such Encumbrance and a solicitor's undertaking to obtain and register a discharge of such Encumbrance as soon as reasonably practicable following Closing;

(h) the Assignment and Assumption of Permitted Encumbrances;

(i) a direction as to the payee or payees of the Purchase Price;

(j) an undertaking by the Vendor to re-adjust the Adjustments in accordance with Section 3.3;

(k) all third party consents, if any, with respect to any of the Contracts or Permitted Encumbrances that the Vendor is required to obtain pursuant to this Agreement; and

(l) a statutory declaration or other evidence satisfactory to the Purchaser, acting reasonably, that the Purchase Price is not subject to withholding tax pursuant to the non-residency provisions of the ITA.

All documentation shall be in form and substance acceptable to the Purchaser's Solicitors and the Vendor's Solicitors, each acting reasonably and in good faith.

5.3 Purchaser's Closing Deliveries

On or before Closing, subject to the terms and conditions of this Agreement, the Purchaser shall execute (where it is a party thereto) and shall deliver or cause to be delivered to the Vendor's Solicitors the following:

(a) a registrable first ranking VTB Mortgage duly executed in favour of the Vendor;

(b) the Balance of the Purchase Price in accordance with Section 3.2;

(c) the Assignment and Assumption of Leases;

(d) the Assignment and Assumption of Contracts;

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(e) the Assignment and Assumption of Permitted Encumbrances; and such assumption or other agreements, undertakings and other instruments in favour of other parties as may be required pursuant to the terms of any such Permitted Encumbrances or as the Vendor may require;

(f) an undertaking by the Purchaser to re-adjust the Adjustments in accordance with Section 3.3;

(g) the GST Undertaking and Indemnity; and

(h) assumption agreements or other agreements, notices, undertakings or other instruments required to be delivered by the Purchaser in favour of any other Persons with an interest in the Property.

All documentation shall be in form and substance acceptable to the Purchaser's Solicitors and the Vendor's Solicitors, each acting reasonably and in good faith.

5.4 Registration and Other Costs

(a)           The Vendor and the Purchaser shall be responsible for the costs of the Vendor's Solicitors and the Purchaser's Solicitors, respectively, in respect of the Transaction.  The Purchaser shall be responsible for and pay, in addition to the Purchase Price, any land transfer taxes and all mutation taxes payable on the transfer of the Subject Assets, all registration fees payable in respect of registration by it of any documents on Closing and all federal and provincial sales and other taxes, if any, payable by a purchaser upon or in connection with the conveyance or transfer of the Subject Assets, including provincial retail sales tax and goods and services tax.

(b)           The Purchaser shall indemnify and save harmless the Vendor and its shareholders, directors, officers, employees and agents from all Claims incurred, suffered or sustained as a result of a failure by the Purchaser:

(i) to pay any federal, provincial or other taxes payable by the Purchaser in connection with the conveyance or transfer of the Subject Assets whether arising from a reassessment or otherwise, including provincial retail sales tax and goods and services tax, if applicable; or

(ii) to file any returns, certificates, filings, elections, notices or other documents required to be filed by the Purchaser with any federal, provincial or other taxing authorities in connection with the conveyance or transfer of the Subject Assets.

This indemnity shall survive and shall not merge on Closing.

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ARTICLE 6

PRESENTATIONS, WARRANTIES AND COVENANTS

6.1 Vendor's Representations

The Vendor hereby represents and warrants to and in favour of the Purchaser that as of the date of this Agreement:

(a) the Vendor has the necessary authority, power and capacity to enter into this Agreement and the documents and transactions contemplated herein and to complete the transaction on the terms and conditions herein contained;

(b) this Agreement has been duly and validly authorized by all requisite proceedings of the Vendor and constitutes a legal, valid and binding obligation of such Vendor enforceable against such Vendor in accordance with its terms;

(c) the execution and delivery of this Agreement by the Vendor and the consummation of the Transaction will not, subject to Section 6.5, result in the breach or violation of any of the provisions of, or constitute a default under, or conflict with or cause the acceleration of any obligation of the Vendor under:

(i) any provision of the constating documents, by-laws or resolutions of the board of directors of the Vendor; or

(ii) any Applicable Laws;

(d) there are no employees engaged in the operation of the Property that are to be assumed by the Purchaser; and

(e) the Vendor is a resident of Canada for the purposes of the ITA.

6.2 Purchaser's Representations

The Purchaser hereby represents and warrants to and in favour of the Vendor that as of the date of this Agreement:

(a) the Purchaser is (and will be at Closing) a corporation existing and governed by the laws of the Province of Ontario and has the necessary corporate authority, power and capacity to own the Subject Assets and to enter into this Agreement and the documents and transactions contemplated herein and to complete the Transaction and perform its obligations under the documents and transactions contemplated herein on the terms and conditions herein contained;

(b) the agreement of purchase and sale constituted on the execution and delivery of this Agreement and the obligations of the Purchaser hereunder and the documents and transactions contemplated herein have been duly and validly authorized by all

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requisite corporate proceedings and constitute (and will constitute at Closing), legal, valid and binding obligations of the Purchaser enforceable against the Purchaser in accordance with its and their terms; and neither the entering into nor delivery of this Agreement nor the completion by the Purchaser of the Transaction will conflict with or constitute a default under any Applicable Laws; and no approval or consent of any Governmental Authority is required in connection with the execution and delivery of this Agreement by the Purchaser and the consummation of the Transaction;

(c) the Purchaser is duly registered in virtue of Subsection (d) of Section V of Part IX of the Excise Tax Act (Canada), and in consequence, in virtue of paragraph 221(2)(b) of such law, the Vendor is not obliged to collect the tax known as the goods and services tax from the Purchaser;

(d) the Purchaser is purchasing the Subject Assets as principal for its own account and same are not being purchased by the Purchaser as an agent, trustee or otherwise on behalf of or for another Person and, the Purchaser is not Purchasing the Subject Assets, in whole or in part, on behalf of, nor is it in a partnership, co-ownership, or joint venture with, in connection with the purchase of the Subject Assets, any Person that is an affiliate of the Vendor, and/or any officer, director, shareholder or employee of any such Person;

(e) except for this Agreement and the Closing Documents to be delivered in connection therewith, the Purchaser has not, with respect to the Subject Assets,  entered into any contractual arrangements with any former or current director, officer, and/or employee of the Vendor, any affiliate of the Vendors, or any Person controlled by any of the foregoing;

(f) the Purchaser is purchasing the Subject Assets as principal for its own account and same are not being purchased by the Purchaser as an agent, trustee or otherwise on behalf of or for another Person;

(g) the Purchaser is not a non-Canadian within the meaning of the Investment Canada Act (Canada); and

(h) the Purchaser has not retained the services of any real estate broker or agent in connection with the transactions contemplated by this Agreement.

6.3 Survival of Representations

(a)           The representations, warranties and certifications contained in this Agreement or in any Closing Documents shall not merge on Closing but shall survive for a period of three hundred and sixty-five (365) days after the Closing Date (the "Survival Period").  The party which has received a representation, warranty or certification, whether in this Agreement or in any Closing Document, shall give written notice to the other party of each breach of the representation, warranty or certification, together with details thereof, promptly after becoming

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aware of the breach and no later than three hundred and sixty-five (365) days after the Closing Date.  Notwithstanding any other provision of this Agreement or of any Closing Document, no claim may be asserted or pursued against any party hereto, or any action, suit or other proceedings commenced or pursued, for or in respect of any breach of any representation, warranty or certification made by such party in this Agreement or in any Closing Document unless written notice of such claim is received by such party describing in detail the facts and circumstances with respect to the subject matter of such Claim on or prior to the last day of the Survival Period, irrespective of whether the subject matter of such Claim shall have occurred before or after such date; and upon the expiry of the Survival Period all such representations, warranties and certifications shall cease to have any effect except to the extent a written notice of Claim has been previously given in respect thereof in accordance with this Subsection 6.3(a).

(b)           Notwithstanding the foregoing provisions of this Section or any other provisions of this Agreement or any Closing Documents, the liability of any party to this Agreement (herein referred to as the "Responding Party") after Closing in respect of any representation, warranty or certification made by such Responding Party in or pursuant to this Agreement or in any Closing Document shall be subject to and limited by the following:

(i) the limitations contained in Subsections 6.3(a) and (b);

(ii) no Claim shall be brought against the Responding Party by the other party to this Agreement (the "Claiming Party") until the aggregate of all the amounts claimed pursuant to such Claim or Claims that have then been made by the Claiming Party against the Responding Party exceed $75,000; provided that if the aggregate of all such Claims exceeds $75,000, the Purchaser shall be entitled to recover the full amount of the Claim or Claims, including the initial $75,000 if such Claims are successful;

(iii) if any breach of a representation, warranty or certification can be remedied within a reasonable period of time (not to exceed ninety (90) days after written notice thereof is given) the Responding Party shall be given a reasonable opportunity to remedy any such breach, provided it is capable of being remedied;

(iv) the Responding Party shall not be responsible for any Claim to the extent, if any, that the Claiming Party is otherwise indemnified for such Claim under insurance policies in the absence of any such Claim;

(v) to the extent that a Responding Party becomes liable to pay any amount for the breach of a representation, warranty or certification, and such amount is deductible by the Claiming Party for income tax purposes, the Responding Party shall, notwithstanding any other provision hereof, be obligated to pay the Claiming Party only the loss that the Claiming Party actually suffers after having regard to the effect of such deductions; and

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(vi) the provisions of Section 6.6, if applicable.

6.4 "As-Is" Purchase

(a)           The Purchaser acknowledges and agrees that the Subject Assets and all other aspects of the Transaction are being sold and purchased "as-is, where-is", without any representation, warranty or covenant except as expressly set forth in this Agreement.  The Purchaser agrees to exercise its rights to perform Due Diligence on or before the Due Diligence Date and shall rely solely upon its own findings resulting therefrom and not upon any information, documentation, statement or opinion, written or oral, provided by the Vendor or any agent of the Vendor other than the representations and warranties set out in Section 6.1.

(b)           Except as expressly provided in Section 6.1, the Vendor makes no representations or warranties of any nature whatsoever with respect to any information or documentation Disclosed to the Purchaser, nor with respect to the Subject Assets (including, without limitation, the Vendor's title thereto and any Encumbrances), the Property or any other assets or the Transaction including, without limitation, (i) the structural integrity or any other aspect of the physical condition of the Buildings, (ii) the conformity of the Buildings to any plans or specifications for the Property (including, but not limited to, any plans and specifications that may have been or which may be provided to the Purchaser), (iii) the conformity of the Property to past, current or future applicable zoning or building code requirements or other Applicable Laws, (iv) the existence of soil instability, past soil repairs, soil additions or conditions of soil fill or any other matter affecting the stability or integrity of the Lands, or any Building situated on or as part of the Property, (v) the sufficiency of any drainage, (vi) whether the Property is located wholly or partially in a flood plain or a flood hazard boundary or similar area, (vii) the existence or non-existence of underground storage tanks, (viii) the availability of public utilities and services for the Property, (ix) the fitness or suitability of the Property for occupancy or any intended use (including matters relating to health and safety and the environment), (x) the potential for further development of the Property, (xi) the existence of land use, zoning or building entitlements affecting the Property, (xii) the existence of any unused density that would permit a redevelopment of the Property, (xiii) the status of any of the Leases, Contracts or Permitted Encumbrances, and or that any of the Leases, Contracts or Permitted Encumbrances is assignable or in good standing, (xiv) the presence of toxic wastes, hazardous materials or contaminants in, on or about the Property or any other environmental issue or condition, or (xv) the conformity of the Property to the Heritage Act (Ontario) or to any municipal by-laws relating to the preservation of heritage, cultural or historical properties (collectively, the "Property Conditions").

(c)           As part of the Purchaser's agreement to purchase the Subject Assets and accept the Subject Assets and the Property "as-is, where-is", and not as a limitation on such agreement, the Purchaser hereby unconditionally and irrevocably waives any and all actual or potential rights or claims the Purchaser might have against the Vendor pursuant to any warranty, express or implied, of any kind or type, other than those representations and warranties expressly set forth in this Agreement, relating to the Property or any other assets, the Subject Assets, the Property Conditions or any other aspect of the Transaction.  Such waiver is absolute, unlimited

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and includes, but is not limited to, waiver of express warranties, implied warranties, warranties of fitness for a particular use, warranties of merchantability, warranties of occupancy, strict liability and claims of every kind and type, including, but not limited to, claims regarding defects, whether or not discoverable, product liability claims, or similar claims, and to all other extent or later created or conceived of strict liability or strict liability type claims and rights.

(d)           Except as otherwise expressly provided in Section 6.1, the Vendor shall not be responsible or liable for any misrepresentation, lack of disclosure or incorrect or incomplete disclosure of any nature whatsoever or failure to investigate the Property on the part of any real estate broker or sales agent, or any other purported or acknowledged agent, representative, contractor, consultant or employee of the Vendor or any third party.

6.5 Bulk Sales Legislation

The Purchaser agrees that it shall not require that the Vendor comply with the provisions of any statutes governing bulk sales or similar legislation applicable to the Transaction.  The Vendor agrees to indemnify and save harmless the Purchaser from and against all Claims which the Purchaser may suffer or incur as a result of or arising out of such non-compliance by the Vendor except those that are attributable to the Purchaser's breach after Closing of its obligations under any Contracts, or other obligations that have been assigned to it, or assumed by it, on Closing pursuant to this Agreement.  This Section 6.5 shall survive Closing.

6.6 Third Party Claims

(a)           In the case of Claims made by a third party after the Closing (a "Third Party Claim") with respect to which the Claiming Party seeks to make a Claim against the Responding Party as a result of the breach by the Responding Party of any representation, warranty, certification or covenant made by such Responding Party in or pursuant to this Agreement or any Closing Document, the Claiming Party shall give written notice to the Responding Party of any such Third Party Claim forthwith after receiving notice thereof.  If the Claiming Party fails to give such written notice to the Responding Party, such failure shall not preclude the Claiming Party from making such claim against the Responding Party, but its right to indemnification may be reduced to the extent that such delay prejudiced the defence of the Third Party Claim or increased the amount of liability or the cost of the defence.

(b)           The Responding Party shall have the right, by written notice to the Claiming Party given not later than thirty (30) days after receipt of the notice referred to in Subsection 6.6(a), to assume the control of the defence, compromise or settlement of the Third Party Claim.

(c)           Upon the assumption of control of any Third Party Claim by the Indemnifying Party as contemplated by Subsection 6.6(b), the Responding Party shall diligently proceed with the defence, compromise or settlement of the Third Party Claim at its sole expense, including, if necessary, employment of counsel reasonably satisfactory to the Claiming Party and, in connection therewith, the Claiming Party shall co-operate fully (but at the expense of the Responding Party with respect to any reasonable out-of-pocket expenses incurred by the Claiming Party) to make available to the Responding Party all pertinent information and

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 witnesses under the Claiming Party's control, make such assignments and take such other steps as in the opinion of counsel for the Responding Party, acting reasonably, are reasonably necessary to enable the Claiming Party to conduct such defence.  The Claiming Party shall have the right to participate in the negotiation, settlement or defence of any Third Party Claim at its own expense and no Third Party Claim shall be settled, compromised or otherwise disposed of without the prior written consent of the Claiming Party, such consent not to be unreasonably withheld or delayed.  If the Responding Party elects to assume control of the Third Party Claim as contemplated by Subsection 6.6(b), the Claiming Party shall not pay, or permit to be paid, any part of the Third Party Claim unless the Responding Party consents in writing to such payment or unless the Responding Party, subject to the last sentence of Subsection 6.6(d), withdraws from the defence of such Third Party Claim or unless a final judgment from which no appeal may be taken by or on behalf of the Responding Party is entered against the Claiming Party in respect of such Third Party Claim.

(d)           If the Responding Party fails to give written notice to the Claiming Party as contemplated by Subsection 6.6(b), the Claiming Party shall be entitled to make such settlement of the Third Party Claim, or otherwise deal therewith, as it deems appropriate, acting reasonably, and such settlement or any other final determination of the claim or demand shall be binding upon the Responding Party.  If the Responding Party fails to defend or, if after commencing or undertaking such defence, fails to prosecute or withdraws from such defence, the Claiming Party shall have the right to undertake the defence or settlement thereof.  If the Claiming Party assumes the defence of any Third Party Claim and proposes to settle it prior to a final judgment thereon or to forego any appeal with respect thereto, then the Claiming Party shall give the Responding Party prompt written notice thereof, and the Responding Party shall have the right to participate in the settlement or assume or reassume the defence of such Third Party Claim.

ARTICLE 7

OPERATION UNTIL CLOSING

7.1 Operation Before Closing

From the date hereof until Closing, the Vendor shall operate the Property in accordance with its current management practices applicable to the Property.

7.2 Damage Before Closing

The interest of the Vendor in and to the Property shall be at the risk of the Vendor until Closing, subject to the terms and conditions of this Agreement.  If loss or damage to the Property occurs, then:

(a) if the cost of repair or restoration, in the opinion of the Vendor's architect or engineer, will exceed an amount equal to 50% of the Purchase Price (such damage being referred to herein as "Substantial Damage"), then the Vendor or the Purchaser may by notice to the other party within ten (10) Business Days after the occurrence of such Substantial Damage, elect to terminate this Agreement in

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which event this Agreement shall automatically terminate, be null and void and of no further force and effect whatsoever, the Purchaser and Vendor shall be released from all obligations under this Agreement (except those which are expressly stated to survive any termination of this Agreement) and the Deposit and all interest earned thereon shall be returned to the Purchaser; and

(b) if such loss or damage is not Substantial Damage, or is Substantial Damage but neither party has elected to exercise the termination right with respect to the Agreement, pursuant to Subsection 7.2(a), then neither party shall have any right to terminate this Agreement by virtue thereof, the Vendor shall pay any insurance deductibles in respect of such loss or damage, the Purchaser shall be entitled to all proceeds of property insurance in respect of such loss or damage (except that portion, if any, required to reimburse the Vendor for repair or restoration work it has done prior to Closing and insurance for loss of income prior to Closing, all of which shall be paid to the Vendor), the parties shall complete the Transaction and the Purchaser shall promptly and diligently repair such damage at its own expense following Closing.

If the damage or destruction occurs at such time that there is insufficient time for the Vendor or the Purchaser to make its election hereunder, the Closing Date shall be postponed to a date which is five (5) Business Days after the earlier of the date such election is made or the period for making such election has expired, or if such date is not a Business Day, then the next Business Day thereafter.

7.3 Leasing and Contracts

(a)           The Vendor shall not enter into any new Lease (other than a Lease for storage space, kiosks or parking space or for a term of more than six months) after the date hereof without the prior approval of the Purchaser (which approval will not be unreasonably withheld or delayed) provided that the requirement for the approval of the Purchaser shall not apply in the event that the Vendor is bound to enter into the relevant new Lease on specified terms and conditions pursuant to a lease, agreement or offer in existence prior to the date hereof.  The Vendor shall not enter into any new material Contract (unless such Contract is terminable without penalty upon notice of not more than 180 days) after the date hereof without the prior approval of the Purchaser, which approval shall not be unreasonably withheld or delayed.  In the case of each such Lease or Contract where the approval of the Purchaser is required, such approval shall be deemed to have been given if no response is received from the Purchaser within five (5) Business Days following written request therefor sent in accordance with the provisions hereof.

(b)           At any time after the date hereof, the Vendor shall not voluntarily amend, terminate or accept a surrender of any Lease (other than: (i) the lease, dated the 20^th day of August, 1998, between Malamar Developments Limited (a predecessor in interest of the Vendor), as landlord, and Heritage Fine Clothing Manufacturers Ltd., as tenant, in respect of premises, shown outlined in red on Schedule "B-1" to the said lease, located at 770 Lawrence

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Avenue West, Toronto, Ontario), and or release any Tenant from its liability under its Lease or any Approved Lease (other than the Lease excepted as set out above) or voluntarily materially amend or terminate any material Contract without the prior written consent of the Purchaser, such consent not to be unreasonably withheld or delayed.  In each such case where the approval of the Purchaser is required, such approval shall be deemed to have been given if no response is received from the Purchaser within five (5) Business Days following written request therefor sent in accordance with the provisions hereof.

(c)           If any Contracts involving the provision of services to the Property, or other similar Contracts, also apply to any other properties, the Vendor shall be entitled, with the consent of the Purchaser, prior to the Due Diligence Date, to amend each such Contract, or replace it with a new or restated agreement, in order to provide that the Contract, as so amended or replaced (it being agreed that the Contract as so amended or replaced is the Contract for all purposes of this Agreement), shall not apply to any properties other than the Property.  The provisions of Subsection 7.3(b) shall be applicable in respect of any such amendment or replacement of such Contract, if (but only if) such Contract is a material Contract and changes are being made thereto other than for the purpose described above (and all necessary conforming changes) or if the amount payable for such services is not currently allocated to each property covered by such Contract on a discrete basis.

(d)           Notwithstanding any other provision of this Agreement, no default by any Person other than the Vendor under any Lease, Permitted Encumbrances or Contract (including, without limitation, any bankruptcy or event of insolvency) or repudiation or termination thereof, or proceeding for relief therefrom, at any time after the Due Diligence Date, and no other change adverse to the Subject Assets or the Property or their value at any time after the Due Diligence Date (it being acknowledged that the Purchaser has a right of termination prior to the Due Diligence Date pursuant to Section 2.5 hereof), other than a change caused by the wrongful act of the Vendor, shall entitle the Purchaser to terminate this Agreement or to an abatement of the Purchase Price or any other right or remedy whatsoever, the Purchaser agreeing to accept the risk of the foregoing.  The foregoing does not relieve, however, the Vendor from any consequences of any default by the Vendor under any such Lease, Permitted Encumbrance or Contract where the result of such default would be the breach by the Vendor of any of its representations or warranties or non-satisfaction of the conditions set out in Section 4.2, it being agreed that in the case of any such default, if it has a material adverse effect on the Property, the Purchaser shall be entitled to an adjustment of the Purchase Price by the amount of the diminution in value of the Property caused by such default, if any, but no other remedy.

7.4 Assignment of Contracts

Nothing in this Agreement shall be construed as an assignment of, or an attempt to assign to the Purchaser, any Contract or Permitted Encumbrance which is (i) not assignable, or (ii) not assignable without the approval or consent of the other party or parties thereto, without first obtaining such approval or consent (collectively "Non-Assignable Rights").  The failure to obtain any such approval or consent, or the fact that a Contract or Permitted Encumbrance is not

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assignable, shall not entitle the Purchaser to terminate this Agreement or to any other right or remedy whatsoever (without prejudice to the right of the Purchaser to terminate this Agreement prior to the Due Diligence Date pursuant to and in accordance with Section 2.5 if the Purchaser is not satisfied with its Due Diligence).  In connection with such Non-Assignable Rights the Vendor shall, at the request of the Purchaser and in each case at the Purchaser's expense:

(a) apply for and use all reasonable efforts to obtain all such consents or approvals, in a form satisfactory to the Purchaser acting reasonably, provided that nothing herein shall require the Vendor to make any payment to any other party to any of the Contracts; and

(b) co-operate with the Purchaser in any reasonable and lawful arrangements designed to provide the benefits of such Non-Assignable Rights to the Purchaser, including without limitation, holding any such Non-Assignable Rights in trust for the Purchaser or acting as agent for the Purchaser, provided that pursuant to such arrangements the Purchaser fully indemnifies the Vendor for all obligations or liabilities incurred thereunder or in connection therewith.

In the event of any conflict or inconsistency between this Section and any other provision of this Agreement, this Section shall prevail.  This provision survives the Closing.

7.5 Trade-Marks

No trade-marks, trade-names, logos, commercial symbols, business names or other intellectual property rights are conveyed or intended to be conveyed to the Purchaser as part of the Subject Assets.

ARTICLE 8

GENERAL

8.1 Gender and Number

Words importing the singular include the plural and vice versa.  Words importing gender include all genders.

8.2 Captions

The captions and headings contained herein are for reference only and in no way affect this Agreement or its interpretation.

8.3 Obligations as Covenants

Each agreement and obligation of any of the parties hereto in this Agreement, even though not expressed as a covenant, is considered for all purposes to be a covenant.

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8.4 Applicable Law

This Agreement and all Closing Documents shall be construed and enforced in accordance with the laws of the Province of Ontario and the laws of Canada applicable thereto and shall be treated in all respects as Ontario contracts.

8.5 Currency

All reference to currency in this Agreement shall be deemed to be reference to Canadian dollars.

8.6 Invalidity

If any immaterial covenant, obligation, agreement or part thereof or the application thereof to any Person or circumstance, to any extent, shall be invalid or unenforceable, the remainder of this Agreement or the application of such covenant, obligation or agreement or part thereof to any Person, party or circumstance other than those to which it is held invalid or unenforceable shall not be affected thereby.  Each covenant, obligation and agreement in this Agreement shall be separately valid and enforceable to the fullest extent permitted by law.

8.7 Amendment of Agreement

No supplement, modification, waiver or termination (other than a termination pursuant to the terms of this Agreement) of this Agreement shall be binding unless executed in writing by the parties hereto in the same manner as the execution of this Agreement.

8.8 Time

Time shall be of the essence of this Agreement.  If anything herein is to be done on a day which is not a Business Day, the same shall be done on the next succeeding Business Day.  Unless otherwise provided hereto, all references to time shall mean Toronto time.

8.9 Further Assurances

Each of the parties hereto shall from time to time hereafter and upon any reasonable request of the other, execute and deliver, make or cause to be made all such further acts, deeds, assurances and things as may be required or necessary to more effectually implement and carry out the true intent and meaning of this Agreement.

8.10 Entire Agreement

This Agreement and any agreements, instruments and other documents made as of the date hereof or herein contemplated to be entered into between, by or including the parties hereto constitute the entire agreement between the parties hereto pertaining to the agreement of purchase and sale provided for herein and supersede all prior agreements, understandings,

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negotiations and discussions, whether oral or written, with respect thereto, and there are no other warranties or representations and no other agreements between the parties hereto in connection with the agreement of purchase and sale provided for herein except as specifically set forth in this Agreement or the Schedules attached hereto.

8.11 Waiver

No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision (whether or not similar) nor shall any waiver constitute a continuing waiver unless otherwise expressed or provided.

8.12 Solicitors as Agents and Tender

Any notice, approval, waiver, agreement, instrument, document or communication permitted, required or contemplated in this Agreement may be given or delivered and accepted or received by the Purchaser's Solicitors on behalf of the Purchaser and by the Vendor's Solicitors on behalf of the Vendor and any tender of Closing Documents and the Balance may be made upon the Vendor's Solicitors and the Purchaser's Solicitors, as the case may be.

8.13 Survival

Except as otherwise provided in this Agreement, no representations, warranties, covenants or agreements of either the Vendor or the Purchaser shall survive Closing.  This provision survives the Closing.

8.14 Successors and Assigns

All of the covenants and agreements in this Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall enure to the benefit of and be enforceable by the parties hereto and their respective successors and their permitted assigns pursuant to the terms and conditions of this Agreement.

8.15 Assignment

Until completion of the Closing, the Purchaser shall not assign its rights and/or obligations hereunder (or agree to do so) without the prior written consent of the Vendor, which consent may be withheld by the Vendor in its sole and absolute discretion; provided, however, that the Purchaser may assign its rights and/or obligations to an affiliate of the Purchaser.  In the case of any assignment, the Purchaser shall always remain jointly and severally liable of its obligations pursuant to the terms hereof.

The Purchaser shall provide the Vendor with all information about any proposed assignee or assignment that the Vendor requires, acting reasonably.

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8.16 Real Estate Commissions

The Vendor shall pay the commission payable or fee payable to Colliers International, which is the only real estate agent or broker that the Vendor has used in connection with the Transaction.  The Purchaser represents and warrants to the Vendor that the Purchaser has not used the services of any real estate agent or broker in connection with the purchase and sale of the Subject Assets contemplated hereby.  This Section shall not merge on, but shall survive, Closing.

8.17 Notice

Any notice, demand, approval, consent, information, agreement, offer, payment, request or other communication (hereinafter referred to as a "Notice") to be given under or in connection with this Agreement shall be in writing and shall be given by personal delivery or by telecopier or other electronic communication which results in a written or printed notice being given, addressed or sent as set out below or to such other address or electronic number as may from time to time be the subject of a Notice:

(a) Vendor: DOMGROUP LTD.

c/o Hollinger Inc.

10 Toronto Street

Toronto, ON M5C 2B7

Attention:   Mr. Randall C. Benson, President and Secretary

Telecopy:  (416) 363-4187

with a copy to:

DAVIES WARD PHILLIPS & VINEBERG LLP

P.O. Box 63, Suite 4400

1 First Canadian Place

Toronto, ON M5X 1B1

Attention:   Kent Beattie

Telecopy:  (416) 863-0871

(b) Purchaser: LANTERRA REALTY INC.

3625 Dufferin Street, Suite 230

Toronto, ON M3K 1N4

Attention:   Mr. Mark Mandelbaum

Fax: 416-635-6601

with a copy to:

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Minden Gross Grafstein & Greenstein LLP

Suite 700, 111 Richmond Street West

Toronto, ON  M5H 2H5

Attention:   Mr. David Kutner

Fax:  416-864-9223

Any Notice, if personally delivered, shall be deemed to have been validly and effectively given and received on the date of such delivery and if sent by telecopier or other electronic communication with confirmation of transmission, shall be deemed to have been validly and effectively given and received on the Business Day next following the day it was received.

8.18 Effect of Termination of Agreement

Notwithstanding the termination of this Agreement for any reason, the following provisions shall survive and shall remain in full force and effect: (i) the confidentiality provisions contained in the Confidentiality Agreement and Section 2.6 including, without limitation, the Purchaser's obligations to return documents to the Vendor; (ii) Subsection 2.4(b); and (iii) such other provisions (such as those relating to return of the Deposit following termination) the survival of which following termination are necessary to give practical effect thereto.  For greater certainty, it is confirmed that termination of this Agreement does not, for the purposes of this Section, include the Closing of this Agreement, and that Section 8.13 is relevant in respect of survival of provisions after the Closing.

8.19 No Registration of Agreement

The Purchaser shall not register this Agreement or any notice of this Agreement on title to the Lands.

8.20 Planning Act

This Agreement shall be effective to create an interest in any part of the Lands only if the provisions of Section 50 of the Planning Act (Ontario) are complied with by the Vendor at its own expense on or before the Closing Date.

8.21 Counterparts

This Agreement may be executed in counterparts by original or facsimile signature, each of which shall constitute an original and each of which taken together shall constitute one and the same instrument.

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IN WITNESS WHEREOF the parties hereto have executed this Agreement by their properly authorized officers in that behalf as of the day and year first above written.

DOMGROUP LTD.
By:	/s/ R.C. Benson
	Name: Randall C. Benson
	Title:   President and Secretary
	I have authority to bind the Corporation.

LANTERRA REALTY INC.
By:	/s/Mark Mandelbaum
	Name: Mark Mandelbaum
	Title:   President
	I have authority to bind the Corporation.

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SCHEDULE A

LANDS

LEGAL DESCRIPTION

770 Lawrence Avenue West

Toronto, Ontario

PIN # 10230-0106(LT)

Part of Lot 6, Concession 2, West of Yonge Street, Township of York as in Instrument No. NY246263, except Instrument No. NY569785, City of Toronto (formerly in the City of North York).

Being the whole of the said PIN.

Land Titles Division of the Toronto Registry Office No. 66.

3087-3101 Dufferin Street

Toronto, Ontario

PIN # 10230-0108(LT)

Part of Lot 6, Concession 2, West of Yonge Street, Township of York as in Instrument Nos. NY277333 and NY358876, except Instrument No. NY267089, City of Toronto (formerly in the City of North York).

Subject to Instrument No. NY358876.

Being the whole of the said PIN.

Land Titles Division of the Toronto Registry Office No. 66.

SCHEDULE B

LIST OF CERTAIN PERMITTED ENCUMBRANCES

GENERAL

1.      Encumbrances for real property taxes (which term includes charges, rates and assessments, and other governmental charges or levies) or charges for electricity, power, gas, water and other services and utilities in connection with the Property that (i) have accrued but are not yet due and owing or, if due and owing, are adjusted for pursuant to Section 3.3, or (ii) the validity of which is being contested in good faith.

2.      Registered easements, rights-of-way, restrictive covenants and servitudes and other similar rights in land granted to, reserved or taken by any Governmental Authority or public utility; or any registered subdivision, development, servicing, site plan or other similar agreement with any Governmental Authority or public utility.

3.      Facility sharing, cost sharing, tunnel, pedway, servicing, parking, reciprocal and other similar agreements with neighbouring landowners and/or Governmental Authorities.

4.      Restrictive covenants, private deed restrictions, and other similar land use controls or agreements.

5.      Minor encroachments by the Property over neighbouring lands which are permitted under agreements with neighbouring landowners and minor encroachments over the Property by improvements of neighbouring landowners.

6.      Any subsisting reservations, limitations, provisos, conditions or exceptions contained in the original grants of the Property from the Crown.

7.      All Contracts and Approved Contracts and registered notices, memorials, caveats or other registrations with respect to such Contracts.

8.      Any rights of expropriation, access, use or any other right conferred or reserved by or in any statute of Canada or the Province of Ontario.

9.      The provisions of Applicable Laws, including by-laws, regulations, ordinances and similar instruments relating to development and zoning.

10.     Any title defects, irregularities, easements, servitudes, encroachments, rights-of-way or other discrepancies in title or possession relating to the Property or the Subject Assets.

11.     Encumbrances of labourers, workmen, builders, contractors, suppliers of material or architects or other similar Encumbrances incidental to construction, maintenance or operations which have not at the time been registered or filed pursuant to law against the Property or which, although registered or filed, relate to obligations not overdue.

12.     Any title defects, irregularities or reserves in respect of the Property or the Subject Assets.

13.     Registrations under the Personal Property Security Act (Ontario) relating to any of the leased Chattels pursuant to any of the Contracts.

14.     All other Encumbrances which are Permitted Encumbrances.

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SCHEDULE C

FORM OF ASSIGNMENT AND ASSUMPTION OF CONTRACTS

MEMORANDUM OF AGREEMENT made as of the n day of n, 2006.

B E T W E E N:

DOMGROUP LTD.,

a corporation incorporated under the laws of the Province of Ontario,

(hereinafter referred to as the "Assignor"),

OF THE FIRST PART,

– and –

n,

a corporation incorporated under the laws of n,

(hereinafter referred to as the "Assignee"),

OF THE SECOND PART.

WHEREAS the Assignor and the Assignee have entered into an agreement of purchase and sale made as of the n day of n, 2006 (such agreement, as amended, supplemented and/or restated to the date hereof, the "Purchase Agreement") pursuant to which the Assignee has agreed to purchase from the Assignor, and the Assignor has agreed to sell to the Assignee, the Subject Assets;

AND WHEREAS pursuant to the Purchase Agreement, the Assignor has agreed to execute and deliver this assignment of its interest in the Assigned Contracts (as defined below);

NOW THEREFORE in consideration of the mutual covenants and agreements hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby covenant and agree as follows:

1.      Definitions.  Unless otherwise defined herein, all capitalized terms used in this agreement (the "Agreement") shall have the respective meanings ascribed to them in the Purchase Agreement.  In this Agreement, "Property" means the property municipally known as 3087-3101 Dufferin Street and 770 Lawrence Avenue West, Toronto, Ontario and more fully described in Schedule A hereto.

2.      Assignment.  Subject to Section 7.4 of the Purchase Agreement, the Assignor hereby assigns and transfers unto the Assignee all of the Assignor's right, title and interest in, to and under the Contracts relating to the Property, all of the foregoing being listed in Schedule B hereto (collectively, the "Assigned Contracts").  Except as provided in Section 6.1 of the Purchase Agreement, the Assigned Contracts are being assigned to and accepted by the Assignee on an "as is - where is" basis as provided for in Subsection 2.5(c) and Section 6.4 of the Purchase Agreement and without any representations or warranties (express or implied) of any nature whatsoever with respect to the Assigned Contracts or any aspect thereof including, without limitation, the Assignor's interest therein, the Assignor's ability to assign the Assigned Contracts or the good standing of the parties thereunder.  The provisions of Subsection 2.5(c) and Sections 6.4 and 7.4 of the Purchase Agreement are applicable to this Agreement and, without limiting the foregoing provisions of this sentence, the Assignee hereby unconditionally and irrevocably waives any and all actual or potential rights that the Assignee might have against the Assignor regarding any form of warranty, express or implied, of any type, other than those expressly set out in Section 6.1 of the Purchase Agreement relating to the Assigned Contracts.

3.      Assumption.  The Assignee hereby accepts the assignment and transfers contained in Section 2 hereof and covenants and agrees with the Assignor that, from and after the date hereof, the Assignee will observe, perform and fulfill each and every covenant, proviso, obligation, term and condition of the Assignor in, to and under the Assigned Contracts that is applicable at any time from and including the date of this Agreement to the same extent as if it and the Assignor had both been originally jointly named as a party to the Assigned Contracts in the place of the Assignor (or the Assignor's predecessor in title, if applicable).  The Assignee hereby agrees to fully indemnify and save harmless the Assignor from and against any and all liabilities, damages, costs, expenses, causes of action, suits, claims and judgments arising from or in connection with, or resulting from, any breach by the Assignee of its obligations hereunder and/or any act or omission of the Assignee or those for whom the Assignee is legally responsible with respect to the Assigned Contracts or the relevant Property.

4.      Successors and Assigns.  This Agreement shall enure to the benefit of and shall be binding upon the parties hereto and their respective successors and assigns.

5.      Governing Law.  This Agreement shall be construed and enforced in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein and shall be treated in all respects as an Ontario contract.

6.      Counterparts.  This Agreement may be executed in several counterparts and by facsimile transmission of an originally executed document, each of which shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument.

7.      Headings, Extended Meanings.  The headings in this Agreement are inserted for convenience of reference only and shall not constitute a part hereof and are not to be considered in the interpretation hereof.  In this Agreement, words importing the singular include the plural and vice versa; words importing the masculine gender include the feminine and vice versa; and words importing persons include firms or corporations and vice versa.

- 2 -

IN WITNESS WHEREOF the parties have executed this Agreement as of the date first mentioned.

DOMGROUP LTD.
by
	Name:                    n
	Title:                      n
	Name:                    n
	Title:                      n
I/We have authority to bind the Corporation.
[NAME OF ASSIGNEE]
by
	Name:                    n
	Title:                      n
	Name:                    n
	Title:                      n
I/We have authority to bind the Corporation.

- 3 -

SCHEDULE A

LANDS

LEGAL DESCRIPTION

770 Lawrence Avenue West

Toronto, Ontario

PIN # 10230-0106(LT)

Part of Lot 6, Concession 2, West of Yonge Street, Township of York as in Instrument No. NY246263, except Instrument No. NY569785, City of Toronto (formerly in the City of North York).

Being the whole of the said PIN.

Land Titles Division of the Toronto Registry Office No. 66.

3087-3101 Dufferin Street

Toronto, Ontario

PIN # 10230-0108(LT)

Part of Lot 6, Concession 2, West of Yonge Street, Township of York as in Instrument Nos. NY277333 and NY358876, except Instrument No. NY267089, City of Toronto (formerly in the City of North York).

Subject to Instrument No. NY358876.

Being the whole of the said PIN.

Land Titles Division of the Toronto Registry Office No. 66.

SCHEDULE D

FORM OF ASSIGNMENT AND ASSUMPTION OF LEASES

MEMORANDUM OF AGREEMENT made as of the n day of n, 2006.

B E T W E E N:

DOMGROUP LTD.,

a corporation incorporated under the laws of n,

(hereinafter referred to as the "Assignor"),

OF THE FIRST PART,

– and –

n,

a corporation incorporated under the laws of n,

(hereinafter referred to as the "Assignee"),

OF THE SECOND PART.

WHEREAS the Assignor and the Assignee have entered into an agreement of purchase and sale made as of n, 2006 (such agreement, as amended, supplemented and/or restated to the date hereof, the "Purchase Agreement") pursuant to which the Assignee has agreed to purchase from the Assignor, and the Assignor has agreed to sell to the Assignee, the Subject Assets;

AND WHEREAS pursuant to the Purchase Agreement, the Assignor has agreed to execute and deliver this assignment of its interest in the Assigned Leases (as defined below);

NOW THEREFORE in consideration of the mutual covenants and agreements hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby covenant and agree as follows:

1.      Definitions.  Unless otherwise defined herein, all capitalized terms used in this agreement (the "Agreement") shall have the respective meanings ascribed to them in the Purchase Agreement.  In this Agreement, "Property" means the property municipally 3087-3101 Dufferin Street and 770 Lawrence Avenue West, Toronto, Ontario and more fully described in Schedule A hereto.

2.      Assignment.  Subject to Section 7.4 of the Purchase Agreement, the Assignor hereby assigns and transfers unto the Assignee all of the Assignor's right, title and interest in, to and under the Leases relating to the Property, all of the foregoing being listed in Schedule B hereto

(collectively, the "Assigned Leases").  Except as provided in Section 6.1 of the Purchase Agreement, the Assigned Leases are being assigned to and accepted by the Assignee on an "as is - where is" basis as provided for in Subsection 2.5(c) and Section 6.4 of the Purchase Agreement and without any representations or warranties (express or implied) of any nature whatsoever with respect to the Assigned Leases or any aspect thereof including, without limitation, the Assignor's interest therein, the Assignor's ability to assign the Assigned Leases or the good standing of the parties thereunder.  The provisions of Section 6.4 of the Purchase Agreement are applicable to this Agreement and the Assignee hereby unconditionally and, without limiting the foregoing provisions of this sentence, irrevocably waives any and all actual or potential rights that the Assignee might have against the Assignor regarding any form of warranty, express or implied, of any type, other than those expressly set out in Section 6.1 of the Purchase Agreement relating to the Assigned Leases.

3.      Assumption.  The Assignee hereby accepts the assignment and transfers contained in Section 2 hereof and covenants and agrees with the Assignor that, from and after the date hereof, the Assignee will observe, perform and fulfill each and every covenant, proviso, obligation, term and condition of the Assignor in, to and under the Assigned Leases that is applicable at any time from and including the date of this Agreement to the same extent as if it and the Assignor had both been originally named as a party to the Assigned Leases in the place of the Assignor (or the Assignor's predecessor in title, if applicable) including, without limiting the generality of the foregoing, the covenant to pay, any real estate or leasing commissions, tenant inducements, tenant allowances and/or early termination fees, in each case if any, irrespective of when the obligation to pay same first arose.  The Assignee hereby agrees to fully indemnify and save harmless the Assignor from and against any and all liabilities, damages, costs, expenses, causes of action, suits, claims and judgments arising from or in connection with, or resulting from, any breach by the Assignee of its obligations hereunder and/or any act or omission of the Assignee or those for whom the Assignee is legally responsible with respect to the Assigned Leases or the Property.

4.      Successors and Assigns.  This Agreement shall enure to the benefit of and shall be binding upon the parties hereto and their respective successors and assigns.

5.      Governing Law.  This Agreement shall be construed and enforced in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein and shall be treated in all respects as an Ontario contract.

6.      Counterparts.  This Agreement may be executed in several counterparts and by facsimile transmission of an originally executed document, each of which shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument.

7.      Headings, Extended Meanings.  The headings in this Agreement are inserted for convenience of reference only and shall not constitute a part hereof and are not to be considered in the interpretation hereof.  In this Agreement, words importing the singular include the plural and vice versa; words importing the masculine gender include the feminine and vice versa; and words importing persons include firms or corporations and vice versa.

- 2 -

IN WITNESS WHEREOF the parties have executed this Agreement as of the date first mentioned.

DOMGROUP LTD.
by
	Name:                    n
	Title:                      n
	Name:                    n
	Title:                      n
I/We have authority to bind the Corporation.

[NAME OF ASSIGNEE]
by
	Name:                    n
	Title:                      n
	Name:                    n
	Title:                      n
I/We have authority to bind the Corporation.

- 3 -

SCHEDULE A

LANDS

LEGAL DESCRIPTION

770 Lawrence Avenue West

Toronto, Ontario

PIN # 10230-0106(LT)

Part of Lot 6, Concession 2, West of Yonge Street, Township of York as in Instrument No. NY246263, except Instrument No. NY569785, City of Toronto (formerly in the City of North York).

Being the whole of the said PIN.

Land Titles Division of the Toronto Registry Office No. 66.

3087-3101 Dufferin Street

Toronto, Ontario

PIN # 10230-0108(LT)

Part of Lot 6, Concession 2, West of Yonge Street, Township of York as in Instrument Nos. NY277333 and NY358876, except Instrument No. NY267089, City of Toronto (formerly in the City of North York).

Subject to Instrument No. NY358876.

Being the whole of the said PIN.

Land Titles Division of the Toronto Registry Office No. 66.

SCHEDULE B

LIST OF ASSIGNED LEASES

1.           Lease, dated the 1^stday of June, 1965, between Aldon Developments Limited (a predecessor in interest of the Vendor), as landlord, and Murray Koffler (a predecessor in interest of Goldman Investments Limited and the Estate of Max Glazer, as tenant, as amended by an amending agreement made as of the 23^rd day of March, 1966, in respect of premises, described in the said lease, located at 3089 Dufferin Street, Toronto, Ontario.

2.           Lease, dated the 21^st day of September, 1981, between DSL Properties Ltd. (a predecessor in interest of the Vendor), as landlord, and McDonalds Restaurants of Canada Limited, as tenant, in respect of premises, described in the said lease, located at 3095 Dufferin Street, Toronto, Ontario.

3.           Lease, dated the 1^st day of October, 2004, between the Vendor, as landlord, and Soma Sleep and Wellness Inc., as tenant, in respect of premises, shown hatched and cross hatched on Schedule "B" to the said lease, located at 770 Lawrence Avenue West, Toronto, Ontario.

4.           Lease, dated the 1^st day of April, 1999, between Domgroup Properties Ltd. (a predecessor in interest of the Vendor), as landlord, and Noori Enterprises Inc., as tenant, in respect of premises, shown outlined in red on Schedule "B" to the said lease, located at 3095 Dufferin Street, Toronto, Ontario.

5.           Lease, dated the 22^nd day of June, 1992, between Malamar Developments Limited (a predecessor in interest of the Vendor), as landlord, and Ikor Integrated Facilities Inc., as tenant, in respect of premises, shown outlined in red on Schedule "B" to the said lease, located at 770 Lawrence Avenue West, Toronto, Ontario.

6.           [Lease, dated the 20^th day of August, 1998, between Malamar Developments Limited (a predecessor in interest of the Vendor), as landlord, and Heritage Fine Clothing Manufacturers Ltd., as tenant, in respect of premises, shown outlined in red on Schedule "B-1" to the said lease, located at 770 Lawrence Avenue West, Toronto, Ontario.] [Note: Lease is currently in default, and may be terminated prior to closing.]

7.           Lease, dated the 1^st day of March, 2004, between the Vendor, as landlord, and 1604623 Ontario Limited, operating as Party Packagers, as tenant, in respect of premises, shown outlined in black on Schedule "B" to the said lease, located at 770 Lawrence Avenue West, Toronto, Ontario.

SCHEDULE E

FORM OF ASSIGNMENT AND ASSUMPTION OF PERMITTED ENCUMBRANCES

MEMORANDUM OF AGREEMENT made as of the ___ day of ______, 2006.

B E T W E E N:

DOMGROUP LTD.,

a corporation incorporated under the laws of the Province of Ontario,

(hereinafter referred to as the "Assignor"),

OF THE FIRST PART,

– and –

n,

a corporation incorporated under the laws of n,

(hereinafter referred to as the "Assignee"),

OF THE SECOND PART.

WHEREAS the Assignor and the Assignee have entered into an agreement of purchase and sale made as of the n day of n, 2006 (such agreement, as amended, supplemented and/or restated to the date hereof, the "Purchase Agreement") pursuant to which the Assignee has agreed to purchase from the Assignor, and the Assignor has agreed to sell to the Assignee, the Subject Assets;

AND WHEREAS pursuant to the Purchase Agreement,  the Assignor has agreed to execute and deliver this assignment of its interest in the Permitted Encumbrances (as defined below);

NOW THEREFORE in consideration of the mutual covenants and agreements hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby covenant and agree as follows:

1.                      Definitions.  Unless otherwise defined herein, all capitalized terms used in this agreement (this "Agreement") shall have the respective meanings ascribed to them in the Purchase Agreement.  In this Agreement, "Property" means the property municipally 3087-3101 Dufferin Street and 770 Lawrence Avenue West, Toronto, Ontario and more fully described in Schedule A hereto.

2.                      Assignment.  The Assignor hereby assigns absolutely and transfers unto the Assignee all of the Assignor's right, title and interest in, to and under the Permitted Encumbrances  that relate to the Property.  The Permitted Encumbrances are being assigned to and assumed by the Assignee subject to, and in accordance with the terms of the Purchase Agreement, including, without limitation, Sections 2.5 and 6.4 thereof.

3.                      Assumption and Indemnity.  The Assignee hereby accepts the assignment contained in Section 2 hereof.  The Assignee hereby agrees to fully indemnify and save harmless the Assignor from and against any and all Claims arising from or in connection with, or resulting from, (i) any breach by the Assignee of its obligations under the Permitted Encumbrances from and after Closing and/or any act or omission of the Assignee or those for whom the Assignee is legally responsible with respect to the Permitted Encumbrances occurring from and after Closing, and (ii) the failure by the Assignee to obtain the necessary consents or approvals for the assignment of the Permitted Encumbrances.

4.                      Indemnity by Assignor.  The Assignor hereby agrees to jointly and severally fully indemnify and save harmless the Assignee from and against any and all Claims arising from or in connection with, or resulting from, any breach by the Assignor of its obligations under the Permitted Encumbrances at any time prior to Closing and/or any act or omission by the Assignor or those for whom the Assignor is legally responsible with respect to the Permitted Encumbrances prior to Closing.  The parties hereto agree that this indemnity shall not extend or relate to any failure by the Assignor to fulfill any obligation to obtain the necessary consents or approvals for the assignment by the Assignor to the Assignee of the Permitted Encumbrances.

5.                      Successors and Assigns.  This Agreement shall enure to the  benefit of and shall be binding upon the parties hereto and their respective successors and assigns.

6.                      Governing Law.  This Agreement shall be construed and enforced in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein and shall be treated in all respects as an Ontario contract.

7.                      Counterparts.  This Agreement may be executed in several counterparts and may be delivered by facsimile transmission, each of which shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument.

8.                      Headings, Extended Meanings.  The headings in this Agreement are inserted for convenience of reference only and shall not constitute a part hereof and are not to be considered in the interpretation hereof.  In this Agreement, words importing the singular include the plural and vice versa; words importing the masculine gender include the feminine and vice versa; and words importing persons include firms or corporations and vice versa.

- 2 -

IN WITNESS WHEREOF the parties have executed this Agreement as of the date first mentioned.

DOMGROUP LTD.
by
	Name:                    n
	Title:                      n
	Name:                    n
	Title:                      n
I/We have authority to bind the Corporation.

[NAME OF ASSIGNEE]
by
	Name:                    n
	Title:                      n
	Name:                    n
	Title:                      n
I/We have authority to bind the Corporation.

- 3 -

SCHEDULE A

LANDS

LEGAL DESCRIPTION

770 Lawrence Avenue West

Toronto, Ontario

PIN # 10230-0106(LT)

Part of Lot 6, Concession 2, West of Yonge Street, Township of York as in Instrument No. NY246263, except Instrument No. NY569785, City of Toronto (formerly in the City of North York).

Being the whole of the said PIN.

Land Titles Division of the Toronto Registry Office No. 66.

3087-3101 Dufferin Street

Toronto, Ontario

PIN # 10230-0108(LT)

Part of Lot 6, Concession 2, West of Yonge Street, Township of York as in Instrument Nos. NY277333 and NY358876, except Instrument No. NY267089, City of Toronto (formerly in the City of North York).

Subject to Instrument No. NY358876.

Being the whole of the said PIN.

Land Titles Division of the Toronto Registry Office No. 66.

SCHEDULE F

FORM OF BILL OF SALE

TO: n (the "Purchaser")

RE: 3087-3101 DUFFERIN STREET AND 770 LAWRENCE AVENUE WEST, TORONTO, ONTARIO

In consideration of the sum of $2.00 and for good and other valuable consideration (the receipt and sufficiency of which are hereby acknowledged) the undersigned hereby sells, assigns and transfers to the Purchaser all of the undersigned's right, title and interest in and to the Included Chattels.

The Purchaser expressly acknowledges that the Included Chattels are being sold, assigned and transferred to and purchased and assumed by the Purchaser "as is-where is" and without any representation or warranty (express or implied) of any nature whatsoever except as provided in Section 6.1 of the Purchase Agreement (as defined below), and the provisions of Subsection 2.5(c) and Sections 6.4 and 8.13 of the agreement of purchase and sale made as of the n day of n, 2006 between the undersigned and the Purchaser, as amended, supplemented and/or restated prior to the date hereof (the "Purchase Agreement") are applicable to this Bill of Sale.

All capitalized terms used herein have the meaning ascribed to them in the Purchase Agreement.

DATED this n day of n, 2006.

DOMGROUP LTD.
by
	Name:                    n
	Title:                      n
	Name:                    n
	Title:                      n
I/We have authority to bind the Corporation.

SCHEDULE G

PURCHASER'S DECLARATION AND INDEMNITY

RE: GOODS AND SERVICES TAX

TO: DOMGROUP LTD.

AND TO: DAVIES WARD PHILLIPS & VINEBERG LLP, its solicitors herein

RE: 3087-3101 DUFFERIN STREET AND 770 LAWRENCE AVENUE WEST, TORONTO, ONTARIO (the "Property")

The undersigned hereby declares, certifies and agrees as follows:

(a) it is purchasing the Property as principal for its own account and same is not being purchased by the Purchaser as an agent, trustee or otherwise on behalf of or for another person;

(b) it is registered under Subdivision d of Division V of Part IX of the Excise Tax Act (Canada) (the "Act") for the collection and remittance of goods and services tax ("GST"); its registration number is Rn; and such registration is in good standing and has not been revoked;

(c) it shall be liable, shall self-assess and remit to the appropriate governmental authority all GST which is payable under the Act in connection with the transfer of the Property all in accordance with the Act; and

(d) it shall indemnify and save harmless the Vendor from and against any and all GST, penalties, costs and/or interest which may become payable by or assessed against the Vendor as a result of any failure by the Purchaser to comply with the provisions of this Declaration and Indemnity.

The undersigned acknowledges and agrees that the foregoing declaration and indemnity shall survive and not merge upon closing of the above-noted transaction.  Dated as of the n day of June, 2006.

LANTERRA REALTY INC.
by
	Name: Mark Mandelbaum
	Title: President
	Name:                    n
	Title:                      n
I/We have authority to bind the Corporation.

SCHEDULE H

FORM OF SATISFACTION NOTICE

TO:                 DOMGROUP LTD.

RE: 3087-3101 DUFFERIN STREET AND 770 LAWRENCE AVENUE WEST, TORONTO, ONTARIO

We refer to the Agreement of Purchase and Sale made between Domgroup Ltd.and LANTERRA REALTY INC., made as of the n day of June, 2006 (the "Purchase Agreement").  Pursuant to Section 2.5 of the Purchase Agreement, we hereby give you notice that we are satisfied with the results of our Due Diligence (as defined in the Purchase Agreement) including, without limiting the generality of the foregoing, the contents of the Tenant Estoppels.

DATED as of the n day of June, 2006.

LANTERRA REALTY INC.
by
	Name: Mark Mandelbaum
	Title: President
	Name:                    n
	Title:                      n
I/We have authority to bind the Corporation.

SCHEDULE I

FORM OF DEPOSIT AUTHORIZATION

TO:                      DOMGROUP LTD.

AND TO:            DAVIES WARD PHILLIPS & VINEBERG LLP

Unless otherwise defined herein, all capitalized terms used herein shall have the respective meanings ascribed to them in the agreement of purchase and sale made June      , 2006 between Domgroup Ltd. as vendor and LANTERRA REALTY INC.as purchaser with respect to the Subject Assets referred to therein (the "Purchase Agreement").

You are hereby directed to invest the amount of $250,000.00 Initial Deposit and $750,000.00 Additional Deposit into a redeemable term deposit at the Canadian Imperial Bank of Commerce which comes due on the Due Diligence Date, which amount together with accrued interest is to be rolled over at maturity in an interest bearing account until the Closing Date, unless otherwise notified, with interest to be for the exclusive benefit of Purchaser and otherwise held and released in accordance with the terms of the Purchase Agreement.

DATED the n day of June, 2006.

LANTERRA REALTY INC.
by
	Name: Mark Mandelbaum
	Title: President
	Name:
	Title:
I/We have authority to bind the Corporation.

SCHEDULE J

ADDITIONAL TERMS OF VTB MORTGAGE

The VTB Mortgage shall contain, and be subject to, the following terms, conditions and privileges, namely:

1.                      It is acknowledged by the parties hereto that interest is to be paid quarterly.

2.                      It is acknowledged by the parties hereto that the payment of principal is due and payable on maturity.

3.                      The VTB Mortgage shall provide that if the Property (or any portion thereof) is sold, transferred or conveyed by the Purchaser, save for any conveyance of any portion of the Property  to the City of Toronto (or to any other Governmental Authority) required as part of the development process in respect of the Property, then at the Vendor's sole option, the outstanding principal sum secured thereunder, together with all interest accrued thereon, shall immediately become due and payable.

4.                      The Purchaser shall be entitled to prepay the whole or any part of the principal amount at any time or times on reasonable prior notice but without penalty provided however that the VTB Mortgage shall not be discharged until all obligations are satisfied thereunder.

5.                      Subject to complying with the terms of the Leases, the Purchaser shall be entitled to completely demolish the Buildings, and to excavate, grade and/or commence and complete construction and servicing operations thereon, provided that the Purchaser has obtained all requisite permits therefor at its sole cost and expense, all without same being deemed an act of waste under the VTB Mortgage, and without triggering any payments thereunder.  Prior to any such demolition, excavation, grading, servicing and/or construction work being commenced on the Property, the Purchaser shall provide the Vendor with a copy of the builder's all-risk insurance policy and comprehensive third party liability insurance policy, obtained by Purchaser at its sole cost and expense, noting the interests of the Vendor as first mortgagee/loss payee.

6.                      The Vendor shall execute and deliver, without any fee or charge whatsoever, any consents and acknowledgements required by the Purchaser in connection with the entering into of any site plan agreement, engineering agreement, condominium development agreement, or similar agreement with any of the Governmental Authorities and/or any public or private utilities, and the Vendor shall also consent to (and postpone the VTB Mortgage in favour of) any easements granted to any of the Governmental Authorities (and/or any utility authorities) for the installation of storm and sanitary sewers, gas, telephone, cable television, hydro-electric and water services and/or similar services (and in favour of any easements for access and egress purposes in favour of any lands adjacent to the Property  which do not materially impair the proper functioning of the Property), all without any payment whatsoever, provided however that the Vendor shall not be responsible for any financial obligations incurred in connection therewith, and provided further that the foregoing agreements and/or easements shall not materially prejudice or materially impair the Vendor's security hereunder.

7.                      The Vendor shall execute and deliver, without any fee or charge whatsoever, such partial discharges of the VTB Mortgage as may be required in connection with the giving of any road widenings, park dedications, or other land contribution(s) to any of the Governmental Authorities as part of the development process in respect of the Property, provided however that:

(a) no more than fifteen (15%) percent of the total area of the Property is partially discharged pursuant to the provisions of this paragraph;

(b) no such partial discharge(s) shall leave the remaining undischarged portion of the Property landlocked;

(c) any such partial discharges shall comply with the part-lot control and subdivision control provisions of the Planning Act (Ontario), as amended; and

(d) any monies received by the Purchaser from any of the Governmental Authorities in connection with the foregoing land dedications and/or partial discharges shall forthwith be remitted to the Vendor in reduction of the mortgage indebtedness secured hereunder.

8.                      The Purchaser warrants that no Hazardous Substances (as hereinafter defined) will be used, stored, processed, manufactured, handled or discharged in, on, under or from the mortgaged premises, except in accordance with the requirements of all environmental laws, and any such Hazardous Substances shall be disclosed to the Vendor in writing.  The term "Hazardous Substances" as used herein shall mean substances or conditions that are prohibited, controlled or otherwise regulated or are otherwise hazardous in fact, including without limitation, contaminants, pollutants, toxic, dangerous or hazardous substances or materials, wastes, urea formaldehyde foam type of insulation, asbestos or asbestos-containing materials, polychlorinated biphenyls ("PCBs") or PCB contaminated fluids or equipment, explosives, radioactive substances, petroleum and associated products, underground storage tanks or surface impoundments.  The presence of Hazardous Substances within the any of the Buildings at any time after same has been substantially completed and ready for occupancy will be deemed a default under the VTB Mortgage.  The Purchaser shall be liable for, and shall indemnify and hold the Vendor harmless from and against any and all costs, expenses, damages or liabilities (including without limitation, reasonable solicitor's fees) directly or indirectly arising out of (or attributable to) non-compliance by the Purchaser with any environmental laws or the presence on, under or about the mortgaged premises of any Hazardous Substances, and all such amounts, if expended by the Vendor, shall be secured hereby and such indemnity shall survive the repayment of the mortgage indebtedness secured hereby (including any foreclosure or power of sale proceedings exercised under or pursuant to this VTB Mortgage, and/or any other exercise by the Vendor of any rights or remedies available to it against the Purchaser, and any other extinguishment of the obligations of the Purchaser hereunder).

9.                      In the event of a conflict or inconsistency between the provisions of the standard charge terms filed as No. 200033 and the provisions of this Schedule, then the provisions of this Schedule shall prevail and supersede in all events.

- 2 -

TABLE OF CONTENTS

ARTICLE 1

INTERPRETATION

1.1 Definitions  1

ARTICLE 2

AGREEMENT OF PURCHASE AND SALE

2.1 Agreement of Purchase and Sale/Allocation of Purchase Price  7

2.2 Initial Deliveries by Vendor  7

3.3 Tenant Estoppels  7

2.4 Access to Property  7

2.5  Purchaser's Investigations   9

2.6  Confidentiality    10

2.7    Settlement of Documents   11

2.8  Subsequent Deliveries    12

ARTICLE 3

PURCHASE PRICE

3.1 Deposit  12

3.2 Method of Payment of Purchase Price  13

3.3 Adjustments  13

3.4 VTB Mortgage  18

ARTICLE 4

CONDITIONS

4.1 Conditions for Vendor  18

4.2 Conditions for Purchaser  19

4.3	Non-Satisfaction of Conditions	19
4.4	Efforts to Satisfy Conditions

ARTICLE 5

CLOSING DOCUMENTS

5.1 Closing Arrangements  20

5.2 Vendor’s Closing Deliveries  20

5.3 Purchaser's Closing Deliveries  21

5.4 Registration and Other Costs  22

ARTICLE 6

REPRESENTATIONS, WARRANTIES AND COVENANTS

6.1 Vendor's Representations  23

6.2 Purchaser's Representations  23

6.3 Survival of Representations  24

6.4 "As-Is" Purchase  26

6.5 Bulk Sales Legislation  27

6.6 Third Party Claims  27

- i -

ARTICLE 7

OPERATION UNTIL CLOSING

7.1 Operation Before Closing  28

7.2 Damage Before Closing  28

7.3 Leasing and Contracts  29

7.4 Assignment of Contracts  30

7.5 Trade-Marks  31

ARTICLE 8

GENERAL

8.1 Gender and Number  31

8.2 Captions  31

8.3 Obligations as Covenants  31

8.4 Applicable Law  32

8.5 Currency  32

8.6 Invalidity  32

8.7 Amendment of Agreement  32

8.8 Time  32

8.9 Further Assurances  32

8.10 Entire Agreement  32

8.11 Waiver  33

8.12 Solicitors as Agents and Tender  33

8.13 Survival  33

8.14 Successors and Assigns  33

8.15 Assignment  33

8.16 Real Estate Commissions  34

8.17 Notice  34

8.18 Effect of Termination of Agreement  35

8.19 No Registration of Agreement  35

8.20 Planning Act  35

8.21 Counterparts  35

- ii -

SCHEDULES

Schedule A	Lands
Schedule B	List of Certain Permitted Encumbrances
Schedule C	Form of Assignment and Assumption of Contracts
Schedule D	Form of Assignment and Assumption of Leases
Schedule E	Form of Assignment and Assumption of Permitted Encumbrances
Schedule F	Form of Bill of Sale
Schedule G	Purchaser's Declaration and Indemnity Re: Goods and Services Tax
Schedule H	Form of Satisfaction Notice
Schedule I	Form of Deposit Authorization
Schedule J	Additional Terms of VTB Mortgage

EX-99.8

  
    ex99_8.htm





  
    

EX-99.9

Exhibit 99.9

EX-99.10

Exhibit 99.10

SIDE AGREEMENT RE VTB

MEMORANDUM OF AGREEMENT made as of the 31st day of October, 2006.

B E T W E E N:

DOMGROUP LTD.,

a corporation incorporated under the laws of the Province of Ontario,

(hereinafter referred to as the "Chargee"),

OF THE FIRST PART,

– and –

DUFLAW REALTY LTD., a corporation incorporated under the laws of the Province of Ontario, in its capacity as general partner for and on behalf of DUFLAW LIMITED PARTNERSHIP, a partnership formed under the laws of the Province of Ontario,

(hereinafter referred to as the "Chargor"),

OF THE SECOND PART.

WHEREAS the Chargee and Lanterra Realty Inc. have entered into an agreement of purchase and sale made as of the 28^th day of June, 2006 (such agreement, as amended, supplemented and/or restated to the date hereof, the "Purchase Agreement") pursuant to which Lanterra Realty Inc. agreed to purchase from the Chargee, and the Chargee agreed to sell to Lanterra Realty Inc., the Subject Assets;

AND WHEREAS Lanterra Realty Inc. has assigned its interest in the Purchase Agreement to the Chargor by agreement made as of October 31, 2006;

AND WHEREAS pursuant to the Purchase Agreement, the Chargee agreed to grant to the Chargee a Charge/Mortgage (the "Charge") in the principal amount of $9,800,000, in respect of respect of the Property (as defined below);

AND WHEREAS in furtherance of the Purchase Agreement, the Chargee has agreed to execute and deliver this agreement in respect of the Charge;

NOW THEREFORE in consideration of the mutual covenants and agreements hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby covenant and agree as follows:

1.      Definitions.  Unless otherwise defined herein, all capitalized terms used in this agreement (the "Agreement") shall have the respective meanings ascribed to them in the Purchase Agreement.  In this Agreement, "Property" means the property municipally known as 3087-3101 Dufferin Street and 770 Lawrence Avenue West, Toronto, Ontario and more fully described in Schedule A hereto.

2.      Agreement to Postpone.  The Chargee hereby agrees to postpone the Charge to a charge on the Property in favour of Goldman Investments Limited/Estate of Max Glazer (and/or as they may direct) in an amount not to exceed $4,000,000.00, such charge to be granted in connection with the buyout of the lease, dated the 1^stday of June, 1965, between Aldon Developments Limited (a predecessor in interest of the Chargee), as landlord, and Murray Koffler (a predecessor in interest of Goldman Investments Limited and the Estate of Max Glazer, as tenant, as amended by an amending agreement made as of the 23^rd day of March, 1966, in respect of premises, described in the said lease, located at 3089 Dufferin Street, Toronto, Ontario (the "Shoppers Drug Mart Ground Lease"), provided that, as a condition to granting such postponement: (i) the Shoppers Drug Mart Ground Lease shall have been terminated; (ii) any registrations in respect of the Shoppers Drug Mart Ground Lease shall have been discharged or released from title to the property;  and (iii) the sublease dated the 1^st  day of September, 1970 between Lea Glazer (a predecessor in interest of the Estate of Max Glazer) and Goldman Investments Limited, as sublandlords and Koffler Stores Limited (a predecessor in interest of Shoppers Drug Mart, a Division of Imasco Retail Inc.), as subtenant, as amended by a sublease amending agreement made as of the 27^th day of October, 1987 and by a second sublease amending agreement made as of the 21^st day of April, 1993, shall have been assigned by the sublandlords thereunder to the Chargor.

4.      Successors and Assigns.  This Agreement shall enure to the benefit of and shall be binding upon the parties hereto and their respective successors and assigns.

5.      Governing Law.  This Agreement shall be construed and enforced in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein and shall be treated in all respects as an Ontario contract.

6.      Counterparts.  This Agreement may be executed in several counterparts and by facsimile transmission of an originally executed document, each of which shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument.

7.      Headings, Extended Meanings.  The headings in this Agreement are inserted for convenience of reference only and shall not constitute a part hereof and are not to be considered in the interpretation hereof.  In this Agreement, words importing the singular include the plural and vice versa; words importing the masculine gender include the feminine and vice versa; and words importing persons include firms or corporations and vice versa.

- 2 -

IN WITNESS WHEREOF the parties have executed this Agreement as of the date first mentioned.

DOMGROUP LTD.

By:           /s/ R.C. Benson

Name:      Randall C. Benson

Title:        President and Secretary

I have authority to bind the Corporation

DUFLAW REALTY LTD., in its capacity

as general partner for and on behalf of

DUFLAW LIMITED PARTNERSHIP

By:           /s/ Mark Mandelbaum

Name:      Mark Mandelbaum

Title:        President

I have authority to bind the Corporation

- 3 -

SCHEDULE A

LEGAL DESCRIPTION

770 Lawrence Avenue West

Toronto, Ontario

PIN # 10230-0106(LT)

Part of Lot 6, Concession 2, West of Yonge Street, Township of York as in Instrument No. NY246263, except Instrument No. NY569785, City of Toronto (formerly in the City of North York).

Being the whole of the said PIN.

Land Titles Division of the Toronto Registry Office No. 66.

3087-3101 Dufferin Street

Toronto, Ontario

PIN # 10230-0108(LT)

Part of Lot 6, Concession 2, West of Yonge Street, Township of York as in Instrument Nos. NY277333 and NY358876, except Instrument No. NY267089, City of Toronto (formerly in the City of North York).

Subject to Instrument No. NY358876.

Being the whole of the said PIN.

Land Titles Division of the Toronto Registry Office No. 66.

EX-99.11

Exhibit 99.11

DOMGROUP LTD.

VENDOR

– and –

CHARIS DEVELOPMENTS LTD.

PURCHASER

_________________________________________________________________________________

AGREEMENT OF PURCHASE AND SALE

280 HURONTARIO STREET, COLLINGWOOD, ONTARIO

____________________________________________________________________________________________

	TABLE OF CONTENTS
		Page
ARTICLE 1	INTERPRETATION	1
1.1	Definitions	1
ARTICLE 2	AGREEMENT OF PURCHASE AND SALE	6
2.1	Agreement of Purchase and Sale/Allocation of Purchase Price	6
2.2	Initial Deliveries by Vendor	7
2.3	Tenant Estoppels	7
2.4	Access to Property	7
2.5	Purchaser’s Investigations	8
2.6	Confidentiality	9
2.7	Settlement of Documents	10
2.8	Subsequent Deliveries	11
ARTICLE 3	PURCHASE PRICE	11
3.1	Deposit	11
3.2	Method of Payment of Purchase Price	12
3.3	Adjustments	13
ARTICLE 4	CONDITIONS	17
4.1	Conditions for Vendor	17
4.2	Conditions for Purchaser	17
4.3	Non-Satisfaction of Conditions	18
4.4	Efforts to Satisfy Conditions	19
ARTICLE 5	CLOSING DOCUMENTS	19
5.1	Closing Arrangements	19
5.2	Vendor’s Closing Deliveries	19
5.3	Purchaser’s Closing Deliveries	20
5.4	Registration and Other Costs	21
5.5	Electronic Registration	22
5.6	Single Transaction.	23
ARTICLE 6	PRESENTATIONS, WARRANTIES AND COVENANTS	23
6.1	Vendor’s Representations	23
6.2	Purchaser’s Representations	24

- i -

TABLE OF CONTENTS (continued)
	Page

6.3	Survival of Representations	25
6.4	“As-Is” Purchase	26
6.5	Bulk Sales Legislation	28
6.6	Third Party Claims	28
ARTICLE 7	OPERATION UNTIL CLOSING	29
7.1	Operation Before Closing	29
7.2	Damage Before Closing	29
7.3	Leasing and Contracts	30
7.4	Assignment of Contracts	31
7.5	Trade-Marks	32
ARTICLE 8	GENERAL	32
8.1	Gender and Number	32
8.2	Captions	32
8.3	Obligations as Covenants	32
8.4	Applicable Law	32
8.5	Currency	33
8.6	Invalidity	33
8.7	Amendment of Agreement	33
8.8	Time	33
8.9	Further Assurances	33
8.1	Entire Agreement	33
8.11	Waiver	34
8.12	Solicitors as Agents and Tender	34
8.13	Survival	34
8.14	Successors and Assigns	34
8.15	Assignment	34
8.16	Real Estate Commissions	35
8.17	Notice	35
8.18	Effect of Termination of Agreement	36
8.19	No Registration of Agreement	36

- ii -

TABLE OF CONTENTS (continued)
	Page

8.2	Planning Act	36
8.21	Counterparts	36

- iii -

SCHEDULES

Schedule A	Lands
Schedule B	Purchaser’s Declaration and Indemnity Re: Goods and Services Tax
Schedule C	List of Certain Permitted Encumbrances
Schedule D	Form of Satisfaction Notice
Schedule E	Form of Assignment and Assumption of Contracts
Schedule F	Form of Assignment and Assumption of Leases
Schedule G	Form of Bill of Sale
Schedule H	Form of Assignment and Assumption of Permitted Encumbrances
Schedule I	Form of Deposit Authorization
Schedule J	Form of Tenant Estoppel

THIS AGREEMENT OF PURCHASE AND SALE made as of the 7^th day of November, 2006.

BETWEEN:

DOMGROUP LTD.

(hereinafter referred to as the “Vendor”)

OF THE FIRST PART,

– and –

CHARIS DEVELOPMENTS LTD.

(hereinafter referred to as the “Purchaser”)

OF THE SECOND PART.

WHEREAS the Vendor has agreed to sell, transfer and assign the Subject Assets to the Purchaser and the Purchaser has agreed to purchase and acquire the Subject Assets from the Vendor on the terms and conditions set forth in this Agreement.

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement and the sum of Ten ($10.00) Dollars paid by each of the Vendor and the Purchaser to the other and for good and other valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties hereto covenant and agree as follows:

ARTICLE 1

INTERPRETATION

1.1 Definitions

The terms defined in this Section 1.1 shall have, for all purposes of this Agreement, the following meanings, unless the context expressly or by necessary implication otherwise requires:

“Additional Deposit” has the meaning ascribed thereto in Subsection 3.1(b);

“Adjustments” means the adjustments to the Purchase Price provided for and determined pursuant to Section 3.3;

“affiliate” has the meaning ascribed thereto in the Business Corporations Act (Ontario);

“Agreement” means this Agreement of Purchase and Sale and the Schedules attached hereto, as amended from time to time;

“Applicable Laws” means all statutes, laws, by-laws, regulations, ordinances and orders of Governmental Authorities;

“Approved Contracts” means Contracts created after the date hereof without contravening Section7.3;

"Approved Leases" means Leases created after the date hereof without contravening Section 7.3;

“Article”, “Section” and “Subsection” mean and refer to the specified article, section and subsection of this Agreement;

“Assignment and Assumption of Contracts” means an assignment by the Vendor and assumption by the Purchaser of all of the Vendor’s right, title and interest in all Contracts in force at the Closing, such document to be in the form attached hereto as Schedule E;

"Assignment and Assumption of Leases" means an assignment and assumption of the Vendor's interest in all Leases in force at the Closing, such document to be in the form attached hereto as Schedule F;

“Assignment and Assumption of Permitted Encumbrances” means an assignment by the Vendor and an assumption by the Purchaser of (and full indemnification by the Purchaser of the Vendor from all Claims which arise or accrue during, or relate to, the period after the Closing Date in respect of) all of the Vendor’s right, title and interest in and to all Permitted Encumbrances, such document to be in the form attached hereto as Schedule H;

“Balance” has the meaning ascribed thereto in Subsection 3.2(b);

“Bill of Sale” means a bill of sale for the Chattels in the form attached hereto as Schedule G;

"Buildings" means, collectively, all buildings, structures and fixed improvements located on, in or under the Lands, and improvements and fixtures contained in or on such buildings and structures used in the operation of the Buildings, but excluding (i) improvements and fixtures not owned by the Vendor and (ii) those used by any Tenant in carrying on its business and those improvements and fixtures, which, in each case, are removable by any Tenant pursuant to its Lease, and "Building" means any one of the Buildings;

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

“Chattels” means all building systems (including security systems), light fixtures, window coverings, and supplies located in the Building which are owned or leased by the Vendor and used in the maintenance, repair and/or operation of the Property;

“Claiming Party” has the meaning ascribed thereto in Subsection 6.3(b)(ii) of this Agreement;

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“Claims” means all past, present and future claims, suits, proceedings, liabilities, obligations, losses, damages, penalties, judgments, costs, expenses, fines, disbursements, legal fees on a solicitor and clients basis, interest, demands and actions of any nature or any kind whatsoever;

“Closing” means the closing of this Agreement, including without limitation the payment of the Purchase Price and the delivery of the Closing Documents;

“Closing Date” means January 31, 2007, or such earlier or later date as the Purchaser and the Vendor may mutually agree;

“Closing Documents” means the agreements, instruments and other deliveries to be delivered to the Purchaser or the Purchaser’s Solicitors pursuant to Section 5.2 and the agreements, instruments and other deliveries to be delivered to the Vendor or the Vendor’s Solicitors pursuant to Section 5.3;

“Confidential Information” means all information with respect to the Subject Assets, the Property or the Vendor furnished to the Purchaser or its Representatives by the Vendor or the Vendor’s Representatives plus all information with respect to the Purchaser, or the Purchaser’s principals or affiliates furnished to the Vendor or its Representatives by the Purchaser or its Representatives in connection with the Transaction, in each case whether furnished before or after the Execution Date, whether oral or written, and regardless of the manner in which such information is furnished, and includes, without limiting the generality of the foregoing, all notes, analyses, compilations, studies, interpretations or other documents which contain, reflect or are based upon, in whole or in part, such information;

“Contracts” means any and all contracts and agreements (other than policies of insurance) relating to the Property to which the Vendor is a party or by which the Vendor or the Property is bound, in its capacity as owner of the Subject Assets, in respect of the ownership, development, maintenance, operation, cleaning, security, fire protection or servicing of the Property and all contracts and agreements relating to any equipment or other assets leased by the Vendor and located on or in the Property;

“Deposit” has the meaning ascribed thereto in Section 3.1;

“Disclosed to the Purchaser” means written information which:

(a) is Previously Disclosed Information; or

(b) is made available for the Purchaser’s review pursuant to Sections 2.2 and/or 2.7 hereof; or

(c) is otherwise communicated in writing by the Vendor or its advisors or Representatives to the Purchaser;

“Document Registration Agreement” and “DRA” have the respective meaningsascribed thereto in Subsection 5.5(a);

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“Due Diligence” has the meaning ascribed thereto in Subsection 2.4(a);

“Due Diligence Date” means the date which is thirty Days after the Execution Date, or if such date is not a Business Day, then the next following Business Day;

“Encumbrances” means, in the case of any given Subject Assets, all mortgages, pledges, charges, liens, debentures, trust deeds, assignments by way of security, security interests, conditional sales contracts or other title retention agreements or similar interests or instruments charging, or creating a security interest in, or against title to, such Subject Assets or any part thereof or interest therein, and any agreements, leases, options, easements, servitudes, rights of way, restrictions, executions or other charges or encumbrances (including notices or other registrations in respect of any of the foregoing) against title to the Subject Assets or any part thereof or interest therein;

“Encumbrances to be Discharged” means any Encumbrances, other than Permitted Encumbrances, registered against any Subject Assets or entered into or consented to by the Vendor after the date hereof;

“Execution Date” means the date upon which this Agreement is executed and delivered by each of the parties hereto;

“Existing Contracts” means all Contracts in existence as of the date hereof;

"Existing Leases" means all Leases in existence as of the date hereof;

“Final Adjustment Date” has the meaning ascribed thereto in Subsection 1.1(b);

“Governmental Authority” means any government, regulatory authority, government department, agency, commission, board, tribunal or court having jurisdiction on behalf of any nation, province or state or other subdivision thereof or any municipality, district or other subdivision thereof;

“GST Undertaking and Indemnity” means the GST undertaking and indemnity attached as Schedule B hereto;

“Initial Deposit” has the meaning ascribed thereto in Subsection 3.1(a);

“ITA” means the Income Tax Act (Canada), as amended;

“Lands” means the lands and premises described in Schedule A attached hereto;

"Leases" means all agreements to lease, leases, renewals of leases and other rights (including licences) granted by or on behalf of the Vendor or its predecessors in title as owner or ground lessee of the Property which entitle any Person to possess or occupy any space within the Property, together with all security, guarantees and indemnities relating thereto, in each case as amended, renewed or otherwise varied to the date hereof; and "Lease" means any one of the Leases;

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“Lender Representatives” has the meaning ascribed thereto in Subsection 2.5(a);

“Non-Assignable Rights” has the meaning ascribed thereto in Section 7.4;

“Permitted Encumbrances” means, with respect to the Property or the Subject Assets:

(a) those Encumbrances which, or notice of which, are registered against the title to the Property, the Subject Assets or the Vendor at 5:00 p.m. on the Business Day immediately prior to the date of this Agreement, other than registrations under the Personal Property Security Act (Ontario) that do not relate to any of the leased Chattels pursuant to any of the Contracts;

(b) all those Encumbrances described on Schedule C; and

(c) all other Encumbrances which, or notice of which, are registered against the title to the relevant Subject Assets after 5:00 p.m. on the Business Day immediately prior to the date of this Agreement and all unregistered Encumbrances in respect of the Subject Assets entered into by the Vendor after such time, in each case as approved by the Purchaser, acting reasonably;

“Person” means an individual, partnership, corporation, trust, unincorporated organization, government, or any department or agency thereof, and the successors and assigns thereof or the heirs, executors, administrators or other legal representatives of an individual;

“Post Closing Adjustments” has the meaning ascribed thereto in Subsection 1.1(b);

“Previously Disclosed Information” means: (i) issues, matters and/or information set out in or revealed by or in written documentation previously disclosed or made available to the Purchaser and/or its Representatives prior to the date of this Agreement in contemplation of the transactions contemplated hereby; (ii) issues, matters and/or information set out in this Agreement; and/or (iii) issues, matters and/or information which a sophisticated purchaser could reasonably be expected to have ascertained or derived from the issues, matters and/or information disclosed or made available pursuant to (i) and/or (ii) above;

“Property” means, collectively, the Lands and the Buildings;

“Property Conditions” has the meaning ascribed thereto in Subsection 6.4(b);

“Purchase Price” means CDN $2,810,000;

“Purchaser’s Solicitors” means Baulke Augaitis Stahr LLP or such other firm or firms of solicitors as are appointed by the Purchaser from time to time and notice of which is provided to the Vendor;

"Rechargeable Sum Estimates" and "Rechargeable Sums" have the meanings ascribed thereto in Subsection 3.3(c);

- 5 -

“Representatives” has the meaning ascribed thereto in Subsection 2.5(a);

“Responding Party” has the meaning ascribed thereto in Subsection 6.3(b) hereof;

“Requisition Notice” has the meaning ascribed thereto in Subsection 2.4(c);

“Satisfaction Notice” has the meaning ascribed thereto in Subsection 2.4(b);

“Subject Assets” means all of the Vendor’s right, title and interest in and to:

(a) the Property;

(b) the Existing Leases and any Approved Leases;

(c) the Existing Contracts and any Approved Contracts; and

(d) the Chattels.

“Substantial Damage” has the meaning ascribed thereto in Subsection 7.2(a);

“Tenant Estoppels” has the meaning ascribed thereto in Section 2.3;

“Tenants” means Persons having a right to possess or occupy space in the Property now or hereafter pursuant to an Existing Lease or an Approved Lease;

“Teraview Electronic Registration System” and “TERS” have the respective meanings ascribed thereto in Section 5.5;

“Third Party Claim” has the meaning ascribed thereto in Subsection 6.6(a) hereof;

“Transaction” means the purchase and sale of the Subject Assets provided for in this Agreement;

“Unsatisfied Condition” has the meaning ascribed thereto in Section 4.3; and

“Vendor’s Solicitors” means Davies Ward Phillips & Vineberg LLP, or such other firm or firms of solicitors as are appointed by the Vendor from time to time and notice of which is provided to the Purchaser.

ARTICLE 2

AGREEMENT OF PURCHASE AND SALE

2.1 Agreement of Purchase and Sale/Allocation of Purchase Price

The Vendor hereby agrees to sell, transfer and assign the Subject Assets to the Purchaser, free and clear of all Encumbrances, other than Permitted Encumbrances, and the Purchaser hereby agrees to purchase and acquire the Subject Assets from the Vendor for the Purchase Price, on and subject to the terms and conditions of this Agreement.

- 6 -

2.2 Initial Deliveries by Vendor

To the extent available and in the possession or control of the Vendor, the Vendor will make available to the Purchaser for the Purchaser’s review copies of the following until the Due Diligence Date and after such date at the Purchaser’s written request:

(a) existing surveys or certificates of location for the Property, if any;

(b) all Existing Contracts;

(c) the current rent roll for the Property and copies of all Existing Leases;

(d) written soil tests, engineering reports, structural reports and environmental reports, if any, pertaining to the Property prepared by independent third parties for the Vendor;

(e) all outstanding written directives and orders (including, without limitation, all work orders), if any, issued by any Governmental Authority pertaining to the Property;

(f) realty tax bills with respect to the Property for the two most recent tax years, and the most current tax assessment together with all assessment appeals, if any, and material filed in support thereof; and

(g) such other documents, plans, reports, bills, statements and other information relating to Subject Assets as the Purchaser may reasonably require.

The Vendor will execute and deliver to the Purchaser within three (3) Business Days after receipt of a written request from the Purchaser, authorizations to Governmental Authorities necessary to permit the Purchaser to obtain information from their files, provided each such authorization expressly states that there shall not be any inspections by a Governmental Authority with respect to the Property and none is authorized or requested and such authorization must otherwise be satisfactory to the Vendor, acting reasonably.  The Purchaser shall not request any Governmental Authority to inspect any of the Property.

2.3 Tenant Estoppels

The Vendor shall use its best efforts to obtain and deliver to the Purchaser estoppel certificates substantially in the form attached hereto as Schedule J from each of the Tenants (or from the Vendor as agent for a Tenant in the event that the Vendor has a right under the relevant Lease if such Tenant fails to deliver such estoppel certificate within the time prescribed in such Lease) (the "Tenant Estoppels").  The Vendor shall prepare and deliver the proposed Tenant Estoppels to the Purchaser for review and approval as soon as possible following the execution and delivery of this Agreement.  The Vendor shall make any changes to the proposed Tenant Estoppels requested by the Purchaser, acting reasonably, and shall deliver the revised Tenant Estoppels to the Tenants as soon as reasonably possible thereafter. The Vendor shall not be required to spend any monies to obtain such Tenant Estoppels, other than its own costs of preparing and distributing the forms.

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2.4 Access to Property

(a)           Subject to the Purchaser complying with each of its obligations herein and the rights of the Tenants under the Leases, from and after the Execution Date to and including the Due Diligence Date, the Purchaser and its agents, consultants and employees have had and shall continue to have access to the Property during the Vendor's normal business hours upon reasonable notice to the Vendor, at the Purchaser's sole risk and expense, for the purpose of inspecting the Property, including without limitation performing physical and structural inspections, soil tests and environmental audits.  Such inspections, tests and audits shall be conducted in a manner that minimizes interference with the use of the Property and does not contravene any Leases or unreasonably interfere with any Tenants.  The Purchaser and its agents, consultants and employees shall not have any communications with Tenants or their employees.  The Vendor shall have the right to accompany the Purchaser and its agents, consultants and employees on any inspections and shall have the right, acting reasonably, to approve, or to refuse approval for, invasive or intrusive inspections, tests and audits, if any are proposed by the Purchaser, prior to such inspections, tests and audits being undertaken.  No such inspections, tests or audits shall occur unless the Purchaser has given the Vendor at least one complete Business Day’s prior written notice and complies with the foregoing requirements;

(a) The Purchaser shall repair any damage caused by inspections, tests and audits performed by the Purchaser or its agents, consultants or employees and fully indemnify the Vendor from all costs of repairing any damage caused by such inspections, tests or audits and all Claims relating to any such inspections, tests and audits and from all Claims incurred by the Vendor as a result thereof.  This indemnity shall survive termination of this Agreement regardless of the cause of such termination.

2.5 Purchaser’s Investigations

(a) On or before 5:00 p.m. on the Due Diligence Date, the Purchaser shall conduct (subject to compliance with other relevant provisions of this Agreement) all investigations, inspections, reviews, tests and audits relating to the Subject Assets and the Property (including, without limitation, title to the Subject Assets and the Property and compliance with Applicable Laws) and the transactions provided for herein (collectively referred to herein as the “Due Diligence”) which the Purchaser deems necessary or desirable.

(b) The Purchaser shall be entitled, on or before 5:00 p.m. on the Due Diligence Date, in its sole and absolute discretion, to determine whether it is satisfied with the results of its Due Diligence.  The Purchaser shall be deemed to not be satisfied with the result of its Due Diligence unless it delivers to the Vendor on or before 5:00 p.m. on the Due Diligence Date a written notice in the form attached hereto (with the relevant details inserted therein) as Schedule D (the "Satisfaction Notice") stating that it is satisfied with the results of its Due Diligence including, without limiting the generality of the foregoing, the contents of the Tenant Estoppels.  If the Purchaser fails to give the Vendor a Satisfaction Notice by such time, then this Agreement shall terminate automatically at such time and, upon

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such termination, the Purchaser and Vendor shall be released from all obligations under this Agreement (except for those obligations which are expressly stated to survive the termination of this Agreement) and the Deposit and all interest earned on it shall be returned to the Purchaser.

(c) If the Purchaser does deliver the Satisfaction Notice to the Vendor by such time, notwithstanding any other provisions of this Agreement (including, without limitation, Section 2.1), the Purchaser shall be deemed to have irrevocably waived its right to raise any objection to, or to have or make any Claim regarding, any circumstance, defect, matter or issue in respect of the Subject Assets or the Property, or any other aspect thereof of any nature whatsoever (including, without limitation, any objection or Claim relating to the Vendor’s title to the Subject Assets or any matter relating to title to the Property or the existence of any Encumbrances (other than Encumbrances to be Discharged), as such title and Encumbrances exist on the Due Diligence Date, any non-compliance with Applicable Laws, or any Contract, Encumbrance or other instrument).  The Purchaser retains the right to make valid objections to title or other requisitions, in each case, in writing to the extent that any document or instrument that is not a Permitted Encumbrance is registered against title to the Property or any work order or deficiency notice or other similar notice of non-compliance is otherwise issued or filed after the Due Diligence Date and before the Closing Date.  If, within ten (10) Business Days following the receipt of such written requisition from the Purchaser, the Vendor advises the Purchaser in writing (the “Requisition Notice”) that the Vendor is unwilling or unable to remove or satisfy the Purchaser’s objections, then, notwithstanding any other provision contained herein or any intermediate acts or negotiations in respect of such objections, the Purchaser shall have the right to terminate this Agreement by written notice to the Vendor to be delivered by the earlier of (i) the date on which Closing is scheduled to occur, and (ii) the tenth Business Day after the Requisition Notice is received by the Purchaser.  In such event, the Deposit, together with all interest accrued thereon, shall be returned to the Purchaser forthwith without deduction.  Without limiting the generality of the foregoing, the Purchaser also agrees that the Purchaser shall not have the right to seek an abatement to the Purchase Price or any other remedy by virtue of any matters Disclosed to the Purchaser prior to the Due Diligence Date or as a result of any circumstance, defect, matter or issue in respect of the Subject Assets or the Property in respect of the Subject Assets or the Property, or any other aspect thereof of any nature whatsoever, in existence at the Due Diligence Date.

2.6 Confidentiality

(a) The Vendor and Purchaser agree that each party:

(i) shall keep all provisions of this Agreement confidential and shall not disclose any of its provisions to any Person; and

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(ii) shall keep confidential all Confidential Information and shall not disclose any Confidential Information to any Person, except as required by Applicable Laws or as permitted pursuant to Subsection 2.5(b) hereof and except (A) to those trustees, directors, officers, employees and advisors of each of the parties who are participating in the Transaction or are otherwise specifically in writing approved by the other party (all such Persons being referred to as “Representatives”), and (B) to the officers, employees and solicitors of any lender to the Purchaser (all such Persons being referred to as “Lender Representatives”) in connection with any financing to be undertaken by the Purchaser in connection with the Subject Assets.  The Vendor and the Purchaser shall cause all Representatives, and the Purchaser shall cause all Lender Representatives, who, in each case, receive any information of the nature referred to above to comply with the requirements of this Section 2.5.

(b) Neither the Vendor nor the Purchaser shall issue any press release or other public announcement or release information with respect to this Agreement to the press or the public unless the same has been mutually approved by the Vendor and the Purchaser or such disclosure is in the good faith opinion of the Purchaser or the Vendor, as the case may be, required in order to comply with any Applicable Laws, with any agreement between any affiliate of the Vendor and any inspector in respect of Hollinger Inc. appointed under the Canada Business Corporations Act, or the rules, orders or regulations of any stock exchange or to satisfy the obligations of the Vendor under Permitted Encumbrances, and then only after prior consultation with the other party hereto, if possible.

(c) It is agreed that if this Agreement is terminated for any reason, each party shall promptly return, or cause to be returned, to the other party all written Confidential Information in the possession or control of the other party or any other Person to whom Confidential Information has been provided and shall destroy, or cause to be destroyed, any Confidential Information stored in or on any computer memory, disk, tape or other contrivance whatsoever in the possession or control of the other party or any other Person to whom the other party has provided Confidential Information.  On request of a party, the other party shall certify that it has complied with its obligation under this Section.

(d) The provisions of this Section 2.5 shall survive the Closing or any termination of this Agreement, regardless of the cause of such termination.

2.7 Settlement of Documents

The parties shall proceed diligently and in good faith to attempt to agree, on or before the Due Diligence Date, upon the contents of all Closing Documents to be executed and delivered by the Vendor and the Purchaser; provided that in the case of any Closing Documents to be executed and delivered in the form set out in a schedule to this Agreement, such form shall not be subject to further negotiations and the Vendor shall provide all details and/or information

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necessary to complete such documents, subject to the Purchaser’s approval of the accuracy of such details and information, such approval not to be unreasonably withheld.

2.8 Subsequent Deliveries

Any documentation or other information provided by the Vendor to the Purchaser pursuant to Section 2.2 may be amended or supplemented by the Vendor as necessary from time to time until the third Business Day prior to the Due Diligence Date.  If the Purchaser delivers a Satisfaction Notice pursuant to Section 2.5 prior to 5:00 p.m. on the Due Diligence Date, the Purchaser shall be deemed to have accepted for all purposes all matters set out in the Tenant Estoppels and all matters which have been Disclosed to the Purchaser on or before third Business Day prior to the Due Diligence Date and if any representation or warranty of the Vendor is incorrect or inaccurate but the Purchaser has received written notice from the Vendor or its Representatives in the Tenant Estoppels on or before the third Business Day prior to the Due Diligence Date of the instrument, circumstance, action, omission, matter or issue which causes such representation or warranty to be incorrect or inaccurate, then such representation and warranty shall be deemed to have been qualified by reference to such instrument, circumstance, matter or issue.

ARTICLE 3

PURCHASE PRICE

3.1 Deposit

(a) Prior to 11:00 a.m. on the first Business Day following the date this Agreement is executed and delivered by both parties hereto the Purchaser shall pay $25,000 (the “Initial Deposit”) by certified cheque or negotiable bank draft to the Vendor’s Solicitors to be invested by the Vendor’s Solicitors in trust, as the Purchaser directs, in a term deposit or other similar certificate of deposit with a Canadian Schedule I chartered bank maturing on the Closing Date.  Contemporaneously with the payment of the Initial Deposit by the Purchaser to the Vendor’s Solicitors, the Purchaser shall deliver to the Vendor’s Solicitors a deposit authorization in the form attached hereto as Schedule I.

(b) Unless this Agreement has terminated pursuant to Section 2.5, prior to 11:00 a.m. (Toronto time) on the first Business Day following the Due Diligence Date, the Purchaser shall pay $125,000 (the “Additional Deposit”) as a further deposit to the Vendor’s Solicitors to be invested, as the Purchaser directs, by the Vendor’s Solicitors on the same terms as referred to in Subsection 3.1(a).  In this Agreement, “Deposit” means the Initial Deposit and, if applicable, the Additional Deposit.  Contemporaneously with the payment of the Additional Deposit by the Purchaser to the Vendor’s Solicitors, the Purchaser shall deliver to the Vendor’s Solicitors a deposit authorization in the form attached hereto as Schedule I.

(c) If the Transaction is not completed for any reason other than the default of the Purchaser (and for greater certainty the failure to submit a Satisfaction Notice is not a default of the Purchaser), the Deposit (together with all interest accrued

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thereon) shall be returned to the Purchaser forthwith thereafter without deduction.  If the Transaction is not completed as a result of the default of the Purchaser, the Deposit, together with interest thereon, shall be forfeited to the Vendor and thereupon be paid to the Vendor, without prejudice to the rights and remedies of the Vendor at law or in equity as a result of such default.

(d) If the Transaction is completed, the Deposit and accrued interest shall be credited against the Purchase Price due on Closing.

(e) In holding and dealing with the Deposit pursuant to this Agreement, the Vendor’s Solicitors are not bound in any way by any agreement other than this Agreement, and Vendor’s Solicitors shall not be considered to assume any duty, liability or responsibility other than to hold the Deposit in accordance with the provisions of this Agreement and to pay the Deposit to the Person becoming entitled thereto in accordance with the terms of this Agreement except in the event of a dispute between the parties as to entitlement to the Deposit; in the case of such dispute, the Vendor’s Solicitors may, in their discretion, pay the monies in dispute into court, whereupon the Vendor’s Solicitors shall have no further obligations relating to the Deposit and interest earned thereon.  The Vendor’s Solicitors will not, under any circumstances, be required to verify or determine the validity of any notice or other document whatsoever delivered to the Vendor’s Solicitors and the Vendor’s Solicitors are hereby relieved of any liability or responsibility for any loss or damage which may arise as the result of the acceptance by the Vendor’s Solicitors of any such notice or other document in good faith (provided that the Vendor’s Solicitors shall not be relieved of any liability or responsibility for any loss or damage which may arise if the Vendor’s Solicitors release the Deposit to a party hereto after having received prior written notice from the other party hereto claiming entitlement to such Deposit or a dispute to such entitlement).

3.2 Method of Payment of Purchase Price

On Closing the Purchase Price shall be satisfied as follows:

(a) by application of the Deposit and interest earned thereon held by the Vendor’s Solicitors; and

(b) by payment to the Vendor, or as the Vendor directs in writing, of an amount (the “Balance”) equal to the Purchase Price, as adjusted pursuant to Section 3.3, less the aggregate of the amounts referred to in paragraph 3.2(a).  The Balance shall be paid on Closing by the Purchaser by certified cheque or negotiable bank draft of one of the five largest (by asset size) Schedule I Canadian chartered banks.

If at any time the Vendor delivers to the Purchaser a direction in writing in respect of the payment of the Balance the Purchaser shall forthwith provide, at the Vendor’s request, in favour of any lender to the Vendor and/or affiliates of the Vendor an irrevocable

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acknowledgement of such direction and an agreement to act in accordance therewith unless otherwise agreed to by such lender.

3.3 Adjustments

(a) Except as otherwise provided herein, the Vendor shall be responsible for all expenses and liabilities, including, without limitation, the expense of paying and radiating all Encumbrances to be Discharged, and be entitled to receive all revenues, accrued in respect of the Subject Assets up to and including the Closing Date.  After the Closing Date, the Purchaser shall be responsible for all expenses and liabilities accruing in respect of the Subject Assets after the Closing Date and shall be entitled to all revenues accruing in respect of the Subject Assets after the Closing Date.  Except as otherwise provided herein, all adjustments for basic rent, additional rents, percentage rents, ground lease rents, parking income, damage/security deposits and interest thereon, if any, prepaid rents and interest thereon, if any, and other income and operating expenses, utilities, taxes (including local improvement charges and assessments and business taxes) and other adjustments established by the usual practice in the Town of Collingwood, shall be made as of the Closing Date and shall be paid on the Closing Date pursuant to a statement of adjustments to be prepared by the Vendor and approved by the Purchaser, each acting reasonably.

(b) If the final cost or amount of any item which is to be adjusted cannot be determined at Closing, then an initial adjustment for such item shall be made at Closing, such amount to be estimated by the Vendor, acting reasonably, as of the Closing Date on the basis of the best evidence available at the Closing as to what the final cost or amount of such item will be.  All amounts which have been estimated as at the Closing Date because they have not been finally determined at that date (the “Post Closing Adjustments”) shall be finally adjusted on a post-closing basis once they have been determined and finalized.  In each case when a Post Closing Adjustment is determined, the Vendor or the Purchaser, as the case may be, shall within thirty (30) days of determination, provide a complete statement thereof, together with particulars relating thereto in reasonable detail, to the other and within thirty (30) days thereafter the parties hereto shall make a final adjustment as of the Closing Date for the Post Closing Adjustment in question.  In the case of any dispute between the parties hereto with respect to any Post Closing Adjustments, the final amount of such Post Closing Adjustments shall be determined by the audit firm of Deloitte & Touche LLP and the cost of such determination shall be shared equally between the parties hereto.  Either party may refer any such dispute to Deloitte & Touche LLP for such determination and such determination shall be final and binding on the parties hereto.  The Vendor and Purchaser agree to execute and deliver on the Closing Date an undertaking to re-adjust and pay the amount of any Post Closing Adjustments as may be owing pursuant to the provisions of this Agreement.  Such undertaking shall include an undertaking by the Vendor to make available its records regarding the calculation of its capital tax and large corporation tax required pursuant to the Leases and all such information as may be necessary to allow the Purchaser and Vendor to

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proceed to Post-Closing Adjustments.  Notwithstanding the foregoing, all adjustments and Post Closing Adjustments to be made pursuant to this Subsection 3.3(b) shall, in any event, be completed on or before the date which is the first anniversary of the Closing Date (the "Final Adjustment Date") and no claim for any re-adjustment may be made by either party thereafter, unless such claim is a claim contemplated by the provisions of Section 6.3, in which case such provisions shall apply.  It is agreed that no adjustments shall be made with respect to insurance premiums and that the Purchaser shall not assume or take an assignment of the Vendor's insurance policies.

(c) The parties acknowledge that under the terms of Leases and Approved Leases, portions of certain payments, such as realty taxes and operating costs, (including, where recoverable, taxes on capital and large corporation taxes) although paid by the landlord, are charged to and payable by the Tenants under such Leases and Approved Leases (the "Rechargeable Sums") and are collected from such Tenants in monthly instalments on the basis of the landlord's estimates (the "Rechargeable Sum Estimates").  The Rechargeable Sum Estimates are subject to adjustment with the Tenants when the total amounts of the Rechargeable Sums are finally determined.  For greater certainty, Rechargeable Sums shall not include any expenditures or any portion thereof which are not recoverable from the Tenants by the terms of the Leases and Approved Leases.  It is agreed that, with respect to the Rechargeable Sums and the Rechargeable Sum Estimates, adjustments shall be made not at Closing but forthwith after the actual amount of the Rechargeable Sums has been ascertained for the relevant fiscal year, calendar year or tax year, as appropriate, for the Property.  Such adjustments shall be made as follows:

(i) the Purchaser shall provide to the Vendor a statement which sets out the amounts collected from each Tenant on account of Rechargeable Sums, as well as the Rechargeable Sums for the relevant fiscal year, calendar year or tax year, as appropriate, for the Property;

(ii) if such statement indicates that the Vendor has collected pursuant to the Rechargeable Sum Estimates more than the Vendor's share (as hereinafter defined) of the Rechargeable Sums for the relevant fiscal year, calendar year or tax year, as appropriate, the amount of such difference shall be paid by the Vendor to the Purchaser within ten Business Days after the amount of such difference has been finally determined pursuant to this Agreement in accordance with Subsection 3.3(b) and the Purchaser shall be responsible for, and make, the required adjustments with the Tenants in respect of such over-collection in accordance with the terms of the Leases; the "Vendor's share" of the Rechargeable Sums means the amount obtained by multiplying the Rechargeable Sums by a fraction, the numerator of which is the number of days in the relevant fiscal year, calendar year or tax year, prior to and including the Closing Date and the denominator of which is the total number of days in such fiscal, calendar or tax year; and

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(iii) if such statement indicates that the Vendor has collected pursuant to the Rechargeable Sum Estimates less than the Vendor's share of the Rechargeable Sums, the amount of such difference shall be paid by the Purchaser to the Vendor within ten Business Days after the amount of such difference has been finally determined pursuant to this Agreement in accordance with Subsection 3.3(b) and such amount has been collected from the Tenants and the Purchaser shall be entitled to the amount collected in respect of such difference.

It is agreed that the Purchaser shall be responsible to conclude all final reconciliations and to make all payments and satisfy all obligations with all Tenants relating to the Rechargeable Sums and Rechargeable Sum Estimates.

(d) The Vendor and the Purchaser hereby acknowledge and agree that:

(i) the Purchaser shall not be entitled to be paid or receive the benefit of any amount payable or owing under the Leases for rent or any other amounts for any period prior to Closing, including without limitation accounts receivable under and pursuant to the Leases as at Closing, and the Purchaser shall use reasonable commercial efforts to collect such amounts following Closing (which amounts shall remain the property of the Vendor after Closing) provided that the Purchaser shall not be obliged to seize for rent, terminate any Lease or bring any action for payment of indebtedness and to the extent the Purchaser does receive any of the aforementioned amounts after Closing, they shall be applied as follows:

(A) first, against any rent (including arrears of rent) and other amounts owing to the Purchaser by a Tenant or assumed by the Purchaser hereunder or arising after the Closing Date;

(B) second, against any reasonable third party costs (including accounting costs) incurred by the Purchaser in respect of the collection of such arrears in rent; and

(C) thereafter, the excess, if any, against the arrears in rent for periods prior to Closing, which the Purchaser shall pay to the Vendor within ten (10) Business Days after collection thereof, together with a statement as to the amount of such arrears and the application of the proceeds thereof;

(ii) in the event that there are any realty or business tax appeals for the period prior to Closing, the Vendor may, at its option, continue such appeals and shall be entitled to receive any payment resulting therefrom except to the extent that such payment is properly payable to any Tenants; provided that the Vendor shall consult with the Purchaser with respect to, and the Purchaser acting reasonably shall have the right to approve, any final settlement or disposition of any such appeal.  Any refund or reassessment

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for the 2006 calendar year (after deduction of out-of-pocket expenses in conducting any such appeal or reassessment, including any commissions payable to agents or consultants) shall be readjusted as of the Closing Date after the conclusion of any assessment appeal and notwithstanding such readjustment occurs after the Final Adjustment Date.  The Purchaser agrees to co-operate with the Vendor with respect to all such appeals or reassessments and to provide the Vendor with access to any necessary documents or materials required to continue any such appeals or reassessments.  To the extent the Purchaser receives payment of any refund or reassessment for the period prior to the Closing Date, the Purchaser shall hold such refund or reassessment payment in trust for the Vendor and shall endorse (without recourse) in favour of the Vendor and deliver to the Vendor all such payment cheques forthwith upon receipt; provided that in all cases, readjustments with the Tenants as the result of any refunds or reassessments may be effected by the Purchaser prior to the payment of any refund or reassessment to the Vendor or to the Purchaser and the amount otherwise owing to the Vendor in accordance with the foregoing shall be reduced by any amount payable to any Tenants as a result of any such adjustments.

(e) The Purchaser shall provide the Vendor and its auditors, during normal business hours at any time and from time to time after Closing upon reasonable prior notice to the Purchaser, access to the books, files and records of the Purchaser relating exclusively to the Subject Assets, for the purpose of calculating or verifying the amount of any Adjustments, Rechargeable Sums and Rechargeable Sum Estimates and dealing with any tax appeals.

(f) On the Closing Date, the Purchaser shall issue replacement letters of credit and/or security deposits for the letters of credit and/or security deposits with respect to the Property, if any, (all of which shall be Disclosed to the Purchaser at least twenty (20) days prior to the Due Diligence Date) and shall use its reasonable commercial efforts to cause the Vendor's letters of credit and/or security deposits with respect to the Property to be released and returned to the Vendor.  Provided that to the extent that the Purchaser is unable to cause such letters of credit and/or security deposits to be released and returned to the Vendor, in lieu of issuing the replacement letters of credit and/or security deposits referred to above, the Purchaser shall cause matching letters of credit and/or security deposits to be provided to the Vendor, which matching letters of credit and/or security deposits may be drawn upon by the Vendor if and to the extent that the Vendor's letters of credit and/or security deposits are drawn upon.

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ARTICLE 4

CONDITIONS

4.1 Conditions for Vendor

The obligation of the Vendor to complete the Transaction shall be subject to fulfilment of each of the following conditions on or before the Closing Date or such earlier date or time as may be herein specified:

(a) payment by the Purchaser of the Purchase Price and all of the other terms, covenants and conditions of this Agreement to be complied with or performed by the Purchaser shall have been complied with or performed in all material respects;

(b) Royal Bank of Canada shall not, within the time prescribed in its Lease in respect of the Property, have elected to purchase the Property pursuant to the right of first refusal contained therein;

(c) on Closing, the representations or warranties of the Purchaser set out in Section 6.2 shall be true and accurate as if made as of the Closing; and

(d) by the Closing Date no action or proceeding, at law or in equity, shall have been commenced by any Person to enjoin, restrict or prohibit the Closing which has not, by the Closing Date, been dismissed, quashed or permanently stayed without any further right of appeal or right to seek leave to appeal.

The conditions set forth in this Section 4.1 are for the benefit of the Vendor and may be waived in whole or in part by the Vendor by notice to the Purchaser.

4.2 Conditions for Purchaser

The obligations of the Purchaser to complete the Transaction shall be subject to fulfilment of each of the following conditions on or before the Closing Date or such earlier date or time as may be herein specified:

(a) all of the terms, covenants and conditions of this Agreement to be complied with or performed by the Vendor shall have been complied with or performed in all material respects;

(b) on Closing, the Vendors shall (subject to the Vendors’ right to deliver, pursuant to Subsection 5.2(f), discharge statements and undertakings in respect of Encumbrances to be Discharged, rather than discharge such Encumbrances to be Discharged on Closing) transfer all of the Vendors’ right, title and interest in and to the Subject Assets to the Purchaser free and clear of all Encumbrances, other than Permitted Encumbrances;

(c) Royal Bank of Canada shall not, within the time prescribed in its Lease in respect of the Property, have elected to purchase the Property pursuant to the right of first refusal contained therein;

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(d) on Closing, the representations and warranties of the Vendor set out in Section 6.1, as supplemented or amended by information Disclosed to the Purchaser no later than 5:00 p.m. on the last Business Day prior to the Due Diligence Date, shall be true and correct in all material respects;

(e) by the Closing Date no action or proceeding, at law or in equity, shall have been commenced by any Person to enjoin, restrict or prohibit the Closing which has not, by the Closing Date, been dismissed, quashed or permanently stayed without any further right of appeal or right to seek leave to appeal; and

(f) on or before 5:00 p.m. on the second Business Day prior to the Due Diligence Date, the Vendor shall have delivered to the Purchaser in accordance with Section 2.3, the Tenant Estoppels, substantially in the form attached hereto on Schedule J and otherwise in a form and containing content satisfactory to the Purchaser, acting reasonably.

The conditions set forth in Section 4.2 are for the benefit of the Purchaser, and may be waived in whole or in part by the Purchaser by notice to the Vendor.  For greater certainty, it is agreed that for the purposes of Subsection 4.2(d), representations and warranties of the Vendor shall be deemed to be true and accurate in all material respects unless the effect of the falsity or inaccuracy of such representations and warranties is that there is a material adverse effect upon the value of the Subject Assets, taken as a whole.

4.3 Non-Satisfaction of Conditions

(a)           Subject to Subsection 4.3(b), in the event any condition set forth in Section 4.1 or Section 4.2 is not satisfied or waived as therein provided on or before the applicable date or time referred to in Section 4.1 or Section 4.2, as the case may be (such condition being referred to as the “Unsatisfied Condition”), this Agreement shall, upon notice by the party having the benefit of the Unsatisfied Condition to the other party, be terminated and both parties hereto shall be released from all of their liabilities and obligations under this Agreement (other than the obligations referred to in Subsection 2.3(b) and Section 2.6) unless the reason for the Unsatisfied Condition not being satisfied is the breach by a party hereto of an obligation under this Agreement or a representation and warranty made by such party being incorrect or inaccurate, in which case a claim may be made against such party.  In the event of any such termination hereunder, the Deposit and all interest accrued thereon shall be disbursed in accordance with the provisions of Section 3.1(c).  Notwithstanding any other provisions of this Agreement, if by the applicable time or date referred to in Section 4.1 or Section 4.2, as the case may be, the party having the benefit of any given condition has not given notice to the other party that such condition has been waived or satisfied, such condition shall be deemed not to have been waived or satisfied.

(b)           Notwithstanding the provisions of Section 4.3(a), in the event the conditions set out in Subsection 4.1(d) and/or 4.2(e) are not satisfied or waived, either party may, by written notice to the other, extend the date of the Closing by ninety (90) days following the then scheduled Closing Date in order to permit the Vendor additional time to attempt to satisfy the conditions set out in Subsection 4.1(d) and/or 4.2(e).

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4.4 Efforts to Satisfy Conditions

Without derogating from any party’s other obligations under this Agreement, it is agreed that the Purchaser shall act in good faith and use reasonable efforts to satisfy, or cause to be satisfied, the conditions set forth in Section 4.1, and the Vendor shall act in good faith and use reasonable efforts to satisfy, or cause to be satisfied, the conditions set out in Section 4.2. Provided that, unless the Vendor has otherwise in this Agreement specifically agreed to do so, nothing in this Agreement shall be interpreted as requiring the Vendor to spend money (other than fees to its own professionals) to satisfy any conditions, or to address any defects, deficiencies or concerns identified by the Purchaser with respect to the Property, the Subject Assets or any other matter or aspect of the Transaction whatsoever.  Each of the Purchaser and the Vendor shall act in good faith in determining whether or not a condition in its favour has been satisfied.

ARTICLE 5

CLOSING DOCUMENTS

5.1 Closing Arrangements

The Closing shall commence at 10:00 a.m. on the Closing Date at the office of the Vendor’s Solicitors or at such other time or place as the parties shall mutually agree upon in writing and shall continue until the Closing is completed or this Agreement is validly terminated in accordance with the terms hereof.

5.2 Vendor’s Closing Deliveries

On or before Closing, subject to the provisions of this Agreement, the Vendor shall deliver, or cause to be delivered, to the Purchaser’s Solicitors the following:

(a) a registrable transfer (other than a land transfer tax affidavit) of the undivided 100% ownership interest of the Vendor in the Property in favour of the Purchaser, which shall exclude any representation or warranty, express or implied, of any nature whatsoever;

(b) the Assignment and Assumption of Contracts;

(c) the Assignment and Assumption of Leases;

(d) the Bill of Sale;

(e) the Tenant Estoppels received by the Vendor pursuant to Section 2.3;

(f) notices to Tenants advising of the sale of the Subject Assets in a form approved by the Purchaser, acting reasonably;

(g) registrable discharges of the Encumbrances to be Discharged, if any, in respect of the Subject Assets which have not been discharged as at the Closing Date or, in each case as an alternative to delivering such registrable discharges, discharge

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statements from the holder of the Encumbrances to be Discharged together with an irrevocable direction to pay in respect of the amounts secured by such Encumbrance and a solicitor’s undertaking to obtain and register a discharge of such Encumbrance as soon as reasonably practicable following Closing;

(h) the Assignment and Assumption of Permitted Encumbrances;

(i) a direction as to the payee or payees of the Purchase Price;

(j) an undertaking by the Vendor to re-adjust the Adjustments in accordance with Section 3.3;

(k) all third party consents, if any, with respect to any of the Contracts or Permitted Encumbrances that the Vendor is required to obtain pursuant to this Agreement;

(l) a statutory declaration or other evidence satisfactory to the Purchaser, acting reasonably, that the Purchase Price is not subject to withholding tax pursuant to the non-residency provisions of the ITA by reason of the fact that the Vendor is not a non-resident of Canada, as defined by Section 116 of the ITA and that the Property has never been occupied by any officer, director or shareholder of the Vendor or by any spouse of any officer, director or shareholder of the Vendor as a matrimonial home within the meaning of the Family Law Act (Ontario); and a certificate of the Vendor certifying that the representations and warranties of the Vendor contained in Section 6.1 are true and correct in all material respects as of the Closing Date;

(m) an indemnity regarding the Bulk Sales Act; and

(n) all keys, combinations and codes to all locks, safes, vaults and security systems located at the Buildings.

All documentation shall be in form and substance acceptable to the Purchaser’s Solicitors and the Vendor’s Solicitors, each acting reasonably and in good faith.

5.3 Purchaser’s Closing Deliveries

On or before Closing, subject to the terms and conditions of this Agreement, the Purchaser shall execute (where it is a party thereto) and shall deliver or cause to be delivered to the Vendor’s Solicitors the following:

(a) the Balance of the Purchase Price in accordance with Section 3.2;

(b) the Assignment and Assumption of Contracts;

(c) the Assignment and Assumption of Leases;

(d) the Assignment and Assumption of Permitted Encumbrances; and such assumption or other agreements, undertakings and other instruments in favour of

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other parties as may be required pursuant to the terms of any such Permitted Encumbrances or as the Vendor may require;

(e) an undertaking by the Purchaser to re-adjust the Adjustments in accordance with Section 3.3;

(f) the GST Undertaking and Indemnity;

(g) a certificate of the Purchaser certifying that the representations and warranties contained in Section 6.2 are true and correct in all material respects as of the Closing Date; and

(h) assumption agreements or other agreements, notices, undertakings or other instruments required to be delivered by the Purchaser in favour of any other Persons with an interest in the Property.

All documentation shall be in form and substance acceptable to the Purchaser’s Solicitors and the Vendor’s Solicitors, each acting reasonably and in good faith.

5.4 Registration and Other Costs

(a) The Vendor and the Purchaser shall be responsible for the costs of the Vendor’s Solicitors and the Purchaser’s Solicitors, respectively, in respect of the Transaction.  The Purchaser shall be responsible for and pay, in addition to the Purchase Price, any land transfer taxes payable on the transfer of the Subject Assets, all registration fees payable in respect of registration by it of any documents on Closing and all federal and provincial sales and other taxes, if any, payable by a purchaser upon or in connection with the conveyance or transfer of the Subject Assets, including provincial retail sales tax and goods and services tax.

(b) The Purchaser shall indemnify and save harmless the Vendor and its shareholders, directors, officers, employees and agents from all Claims incurred, suffered or sustained as a result of a failure by the Purchaser:

(i) to pay any federal, provincial or other taxes payable by the Purchaser in connection with the conveyance or transfer of the Subject Assets whether arising from a reassessment or otherwise, including provincial retail sales tax and goods and services tax, if applicable; or

(ii) to file any returns, certificates, filings, elections, notices or other documents required to be filed by the Purchaser with any federal, provincial or other taxing authorities in connection with the conveyance or transfer of the Subject Assets.

This indemnity shall survive and shall not merge on Closing.

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5.5 Electronic Registration

The Vendor and the Purchaser acknowledge that the electronic registration system (the “Teraview Electronic Registration System” or “TERS”) is operative in the land registry office where the Lands are located and, accordingly, the following provisions shall prevail, namely:

(a) the Vendor’s Solicitors and the Purchaser’s Solicitors shall each be obliged to be authorized TERS users and in good standing with the Law Society of Upper Canada, and they are hereby authorized by the parties hereto to enter into a document registration agreement in the form adopted by the Joint LSUC-CBAO Committee on Electronic Registration of Title Documents on March 29, 2004 or any successor version thereto (the “Document Registration Agreement” or “DRA”), together with the additional requirement that the registering solicitor shall also be obliged to provide the non-registering solicitor with a copy of the registration report printed by TERS upon the submission and receipt for registration of the electronic documents, as evidence of the registration thereof, within one Business Day following the Closing Date.  It is understood and agreed that the DRA shall outline or establish the procedures and timing for completing the transaction contemplated by this Agreement electronically, and shall be executed by both the Vendor’s Solicitors and the Purchaser’s Solicitors and exchanged by courier or facsimile transmission or e-mail between such solicitors (such that each solicitor has a photocopy or faxed copy of the DRA duly executed by both solicitors) by no later than one Business Day before the Closing Date;

(b) the delivery and exchange of the Closing Documents and the balance of the Purchase Price, and the release thereof to the Vendor and the Purchaser, as the case may be:

(i) shall not occur contemporaneously with the registration of the transfer/deed for the Lands and other Closing Documents, if any, to be registered electronically; and

(ii) shall be governed by the DRA, pursuant to which the solicitor receiving any Closing Documents, or the balance of the Purchase Price, will be required to hold the same in escrow, and will not be entitled to release the same except in strict accordance with the provisions of the DRA;

(c) each of the parties agrees that the delivery of any of the Closing Documents not intended or required to be registered against title to the Lands shall, unless the parties otherwise agree, be by way of delivery of originally signed copies thereof on the Closing Date to the other party or its solicitor;

(d) notwithstanding anything contained in this Agreement or in the DRA to the contrary, it is expressly understood and agreed by the parties hereto that an effective tender shall be deemed to have been validly made by either party (in this

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Section called the “Tendering Party”) upon the other party (in this Section called the “Receiving Party”) when the solicitor for the Tendering Party has:

(i) delivered all applicable Closing Documents and/or the balance of the Purchase Price to the Receiving Party’s solicitor in accordance with the provisions of this Agreement and the DRA;

(ii) advised the solicitor for the Receiving Party in writing that the Tendering Party is ready, willing and able to complete the transaction contemplated by this Agreement in accordance with the terms and provisions of this Agreement; and

(iii) completed all steps required by TERS in order to complete the transaction contemplated by this Agreement that can be performed or undertaken by the Tendering Party’s solicitor without the co-operation or participation of the Receiving Party’s solicitor, and specifically when the Tendering Party’s solicitor has electronically “signed” the transfer/deed(s) and any other Closing Document, if any, to be registered electronically for completeness and granted “access” to the Receiving Party’s solicitor (but without the Tendering Party’s solicitor releasing the same for registration by the Receiving Party’s solicitor).

5.6 Single Transaction.  

Subject to Section 5.5, all documents and cheques shall be delivered in escrow as specified in Section 5.5 on the Closing Date pending submission and receipt for registration of the Closing Documents as reasonably required by the solicitors for the parties and receipt of such evidence as they shall reasonably request that all conditions of this Agreement have been satisfied.  It is a condition of Closing that all matters of payment, execution and delivery of documents by each party to the other and the submission and receipt for registration of the appropriate documents in the appropriate offices of public record shall be deemed to be concurrent requirements and it is specifically agreed that nothing will be complete at the Closing until everything required at the Closing has been paid, executed and delivered and until all documents have been submitted and receipted for registration.

ARTICLE 6

REPRESENTATIONS, WARRANTIES AND COVENANTS

6.1 Vendor’s Representations

The Vendor hereby represents and warrants to and in favour of the Purchaser that as of the date of this Agreement (unless otherwise specified) and as of the Closing Date:

(a) the Vendor is (and will be at Closing) a corporation existing and governed by the laws of the Province of Ontario and has the necessary authority, power and capacity to own the Property and the other property constituting the Subject Assets and to enter into this Agreement and the documents and transactions contemplated herein and to complete the Transaction and perform its obligations

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under the documents and transactions contemplated herein on the terms and conditions herein contained;

(b) the agreement of purchase and sale constituted on the execution and delivery of this Agreement and the obligations of the Vendor hereunder and the documents and transactions contemplated herein have been duly and validly authorized by all requisite proceedings of the Vendor and constitute and will constitute at Closing, legal, valid and binding obligations of the Vendor enforceable against such Vendor in accordance with its and their terms;

(c) neither the execution and delivery of this Agreement by the Vendor and the completion by the Vendor of the Transaction will not, subject to Section 6.5, result in the breach or violation of any of the provisions of, or constitute a default under, or conflict with or cause the acceleration of any obligation of the Vendor under:

(i) any provision of the constating documents, by-laws or resolutions of the board of directors of the Vendor; or

(ii) any Applicable Laws;

(d) no approval or consent of any Governmental Authority is required in connection with the completion of the Transaction by the Vendor other than as referred to in  Section 4.1(e)(ii) above; and

(e) the Vendor is a resident of Canada for the purposes of the ITA.

6.2 Purchaser’s Representations

The Purchaser hereby represents and warrants to and in favour of the Vendor that as of the date of this Agreement (unless otherwise specified) and as of the Closing Date:

(a) the Purchaser is (or if an affiliate of the Purchaser will be taking title to the Subject Assets at Closing, such affiliate will be at Closing) a corporation existing and governed by the laws of the Province of Ontario and has, or will have, as the case may be, the necessary corporate authority, power and capacity to own the Subject Assets and to enter into this Agreement and the documents and transactions contemplated herein and to complete the Transaction and perform its obligations under the documents and transactions contemplated herein on the terms and conditions herein contained;

(b) the agreement of purchase and sale constituted on the execution and delivery of this Agreement and the obligations of the Purchaser hereunder and the documents and transactions contemplated herein have been duly and validly authorized by all requisite corporate proceedings of the Purchaser and constitute (and will constitute at Closing), legal, valid and binding obligations of the Purchaser enforceable against the Purchaser in accordance with its and their terms; and neither the entering into nor delivery of this Agreement nor the completion by the

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Purchaser of the Transaction will conflict with or constitute a default under any Applicable Laws; and no approval or consent of any Governmental Authority is required in connection with the execution and delivery of this Agreement by the Purchaser and the completion of the Transaction by the Purchaser;

(c) the Purchaser is duly registered, and if an affiliate of the Purchaser will be taking title to the Subject Assets at Closing, such affiliate will be duly registered, in virtue of Subsection (d) of Section V of Part IX of the Excise Tax Act (Canada), and in consequence, in virtue of paragraph 221(2)(b) of such law, the Vendor is not obliged to collect the tax known as the goods and services tax from the Purchaser or such affiliate, as the case may be;

(d) the Purchaser is purchasing the Subject Assets as principal for its own account and same are not being purchased by the Purchaser as an agent, trustee or otherwise on behalf of or for another Person and, the Purchaser is not Purchasing the Subject Assets, in whole or in part, on behalf of, nor is it in a partnership, co-ownership, or joint venture with, in connection with the purchase of the Subject Assets, any Person that is an affiliate of the Vendor, and/or any officer, director, shareholder or employee of any such Person;

(e) except for this Agreement and the Closing Documents to be delivered in connection therewith, the Purchaser has not, with respect to the Subject Assets,  entered into any contractual arrangements with any former or current director, officer, and/or employee of the Vendor, any affiliate of the Vendors, or any Person controlled by any of the foregoing;

(f) the Purchaser is not a non-Canadian within the meaning of the Investment Canada Act (Canada); and

(g) the Purchaser has not retained the services of any real estate broker or agent in connection with the transactions contemplated by this Agreement.

6.3 Survival of Representations

(a) The representations, warranties and certifications contained in this Agreement or in any Closing Documents shall not merge on Closing but shall survive until the Final Adjustment Date. The party which has received a representation, warranty or certification, whether in this Agreement or in any Closing Document, shall give written notice to the other party of each breach of the representation, warranty or certification, together with details thereof, promptly after becoming aware of the breach and no later than the Final Adjustment Date.  Notwithstanding any other provision of this Agreement or of any Closing Document, no claim may be asserted or pursued against any party hereto, or any action, suit or other proceedings commenced or pursued, for or in respect of any breach of any representation, warranty or certification made by such party in this Agreement or in any Closing Document unless written notice of such Claim is received by such party describing in detail the facts and circumstances with respect to the subject

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matter of such Claim on or prior to the Final Adjustment Date, irrespective of whether the subject matter of such Claim shall have occurred before or after the Final Adjustment Date; and following the Final Adjustment Date all such representations, warranties and certifications shall cease to have any effect except to the extent a written notice of Claim has been previously given in respect thereof in accordance with this Subsection.

(b) Notwithstanding the foregoing provisions of this Section or any other provisions of this Agreement or any Closing Documents, the liability of any party to this Agreement (herein referred to as the “Responding Party”) after Closing in respect of any representation, warranty or certification made by such Responding Party in or pursuant to this Agreement or in any Closing Document shall be subject to and limited by the following:

(i) the limitations contained in Subsections 6.3(a) and (b);

(ii) no Claim shall be brought against the Responding Party by the other party to this Agreement (the “Claiming Party”) until the aggregate of all the amounts claimed pursuant to such Claim or Claims that have then been made by the Claiming Party against the Responding Party exceed $25,000; provided that if the aggregate of all such Claims exceeds $25,000, the Purchaser shall be entitled to recover the full amount of the Claim or Claims, including the initial $25,000 if such Claims are successful;

(iii) if any breach of a representation, warranty or certification can be remedied within a reasonable period of time (not to exceed ninety (90) days after written notice thereof is given) the Responding Party shall be given a reasonable opportunity to remedy any such breach, provided it is capable of being remedied;

(iv) the Responding Party shall not be responsible for any Claim to the extent, if any, that the Claiming Party is otherwise indemnified for such Claim under insurance policies in the absence of any such Claim;

(v) to the extent that a Responding Party becomes liable to pay any amount for the breach of a representation, warranty or certification, and such amount is deductible by the Claiming Party for income tax purposes, the Responding Party shall, notwithstanding any other provision hereof, be obligated to pay the Claiming Party only the loss that the Claiming Party actually suffers after having regard to the effect of such deductions; and

(vi) the provisions of Section 6.6, if applicable.

6.4 “As-Is” Purchase

(a) The Purchaser acknowledges and agrees that the Subject Assets and all other aspects of the Transaction are being sold and purchased “as-is, where-is”, without any representation, warranty or covenant except as expressly set forth in this

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Agreement.  The Purchaser agrees to exercise its rights to perform Due Diligence on or before the Due Diligence Date and shall rely solely upon its own findings resulting therefrom and not upon any information, documentation, statement or opinion, written or oral, provided by the Vendor or any agent of the Vendor other than the representations and warranties set out in Section 6.1.

(b) Except as expressly provided in Section 6.1, the Vendor makes no representations or warranties of any nature whatsoever with respect to any information or documentation Disclosed to the Purchaser, nor with respect to the Subject Assets (including, without limitation, the Vendor's title thereto and any Encumbrances), the Property or any other assets or the Transaction including, without limitation, (i) the structural integrity or any other aspect of the physical condition of the Buildings, (ii) the conformity of the Buildings to any plans or specifications for the Property (including, but not limited to, any plans and specifications that may have been or which may be provided to the Purchaser), (iii) the conformity of the Property to past, current or future applicable zoning or building code requirements or other Applicable Laws, (iv) the existence of soil instability, past soil repairs, soil additions or conditions of soil fill or any other matter affecting the stability or integrity of the Lands, or any Building situated on or as part of the Property, (v) the sufficiency of any drainage, (vi) whether the Property is located wholly or partially in a flood plain or a flood hazard boundary or similar area, (vii) the existence or non-existence of underground storage tanks, (viii) the availability of public utilities and services for the Property, (ix) the fitness or suitability of the Property for occupancy or any intended use (including matters relating to health and safety and the environment), (x) the potential for further development of the Property, (xi) the existence of land use, zoning or building entitlements affecting the Property, (xii) the existence of any unused density that would permit a redevelopment of the Property, (xiii) the status of any of the Leases, Contracts or Permitted Encumbrances, and or that any of the Leases, Contracts or Permitted Encumbrances is assignable or in good standing, (xiv) the presence of toxic wastes, hazardous materials or contaminants in, on or about the Property or any other environmental issue or condition, or (xv) the conformity of the Property to the Heritage Act (Ontario) or to any municipal by-laws relating to the preservation of heritage, cultural or historical properties (collectively, the "Property Conditions").

(c) As part of the Purchaser’s agreement to purchase the Subject Assets and accept the Subject Assets and the Property “as-is, where-is”, and not as a limitation on such agreement, the Purchaser hereby unconditionally and irrevocably waives any and all actual or potential rights or claims the Purchaser might have against the Vendor pursuant to any warranty, express or implied, of any kind or type, other than those representations and warranties expressly set forth in this Agreement, or in any of the Closing Documents relating to the Property or any other assets, the Subject Assets, the Property Conditions or any other aspect of the Transaction.  Such waiver is absolute, unlimited and includes, but is not limited to, waiver of express warranties, implied warranties, warranties of fitness for a particular use, warranties of merchantability, warranties of occupancy, strict liability and claims

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of every kind and type, including, but not limited to, claims regarding defects, whether or not discoverable, product liability claims, or similar claims, and to all other extent or later created or conceived of strict liability or strict liability type claims and rights.

(d) Except as otherwise expressly provided in Section 6.1, the Vendor shall not be responsible or liable for any misrepresentation, lack of disclosure or incorrect or incomplete disclosure of any nature whatsoever or failure to investigate the Property on the part of any real estate broker or sales agent, or any other purported or acknowledged agent, representative, contractor, consultant or employee of the Vendor or any third party.

6.5 Bulk Sales Legislation

The Purchaser agrees that it shall not require that the Vendor comply with the provisions of any statutes governing bulk sales or similar legislation applicable to the Transaction.  The Vendor agrees to indemnify and save harmless the Purchaser from and against all Claims which the Purchaser may suffer or incur as a result of or arising out of such non-compliance by the Vendor except those that are attributable to the Purchaser’s breach after Closing of its obligations under any Contracts, or other obligations that have been assigned to it, or assumed by it, on Closing pursuant to this Agreement.  This Section 6.5 shall survive Closing.

6.6 Third Party Claims

(a) In the case of Claims made by a third party after the Closing (a “Third Party Claim”) with respect to which the Claiming Party seeks to make a Claim against the Responding Party as a result of the breach by the Responding Party of any representation, warranty, certification or covenant made by such Responding Party in or pursuant to this Agreement or any Closing Document, the Claiming Party shall give written notice to the Responding Party of any such Third Party Claim forthwith after receiving notice thereof.  If the Claiming Party fails to give such written notice to the Responding Party, such failure shall not preclude the Claiming Party from making such Claim against the Responding Party, but its right to indemnification may be reduced to the extent that such delay prejudiced the defence of the Third Party Claim or increased the amount of liability or the cost of the defence.

(b) The Responding Party shall have the right, by written notice to the Claiming Party given not later than thirty (30) days after receipt of the notice referred to in Subsection 6.6(a), to assume the control of the defence, compromise or settlement of the Third Party Claim.

(c) Upon the assumption of control of any Third Party Claim by the Indemnifying Party as contemplated by Subsection 6.6(b), the Responding Party shall diligently proceed with the defence, compromise or settlement of the Third Party Claim at its sole expense, including, if necessary, employment of counsel reasonably satisfactory to the Claiming Party and, in connection therewith, the Claiming

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Party shall co-operate fully (but at the expense of the Responding Party with respect to any reasonable out-of-pocket expenses incurred by the Claiming Party) to make available to the Responding Party all pertinent information and witnesses under the Claiming Party’s control, make such assignments and take such other steps as in the opinion of counsel for the Responding Party, acting reasonably, are reasonably necessary to enable the Claiming Party to conduct such defence.  The Claiming Party shall have the right to participate in the negotiation, settlement or defence of any Third Party Claim at its own expense and no Third Party Claim shall be settled, compromised or otherwise disposed of without the prior written consent of the Claiming Party, such consent not to be unreasonably withheld or delayed.  If the Responding Party elects to assume control of the Third Party Claim as contemplated by Subsection 6.6(b), the Claiming Party shall not pay, or permit to be paid, any part of the Third Party Claim unless the Responding Party consents in writing to such payment or unless the Responding Party, subject to the last sentence of Subsection 6.6(d), withdraws from the defence of such Third Party Claim or unless a final judgment from which no appeal may be taken by or on behalf of the Responding Party is entered against the Claiming Party in respect of such Third Party Claim.

(d) If the Responding Party fails to give written notice to the Claiming Party as contemplated by Subsection 6.6(b), the Claiming Party shall be entitled to make such settlement of the Third Party Claim, or otherwise deal therewith, as it deems appropriate, acting reasonably, and such settlement or any other final determination of the claim or demand shall be binding upon the Responding Party.  If the Responding Party fails to defend or, if after commencing or undertaking such defence, fails to prosecute or withdraws from such defence, the Claiming Party shall have the right to undertake the defence or settlement thereof.  If the Claiming Party assumes the defence of any Third Party Claim and proposes to settle it prior to a final judgment thereon or to forego any appeal with respect thereto, then the Claiming Party shall give the Responding Party prompt written notice thereof, and the Responding Party shall have the right to participate in the settlement or assume or reassume the defence of such Third Party Claim.

ARTICLE 7

OPERATION UNTIL CLOSING

7.1 Operation Before Closing

From the date hereof until Closing, the Vendor shall operate the Property in accordance with its current management practices applicable to the Property.

7.2 Damage Before Closing

The interest of the Vendor in and to the Property shall be at the risk of the Vendor until Closing, subject to the terms and conditions of this Agreement.  If loss or damage to the Property occurs, then:

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(a) if the cost of repair or restoration, in the opinion of the Vendor’s architect or engineer, will exceed an amount equal to 35% of the Purchase Price (such damage being referred to herein as “Substantial Damage”), then the Vendor or the Purchaser may by notice to the other party within ten (10) Business Days after the occurrence of such Substantial Damage, elect to terminate this Agreement in which event this Agreement shall automatically terminate, be null and void and of no further force and effect whatsoever, the Purchaser and Vendor shall be released from all obligations under this Agreement (except those which are expressly stated to survive any termination of this Agreement) and the Deposit and all interest earned thereon shall be returned to the Purchaser forthwith without deduction; and

(b) if such loss or damage is not Substantial Damage, or is Substantial Damage but neither party has elected to exercise the termination right with respect to the Agreement, pursuant to Subsection 7.2(a), then neither party shall have any right to terminate this Agreement by virtue thereof, the Vendor shall pay any insurance deductibles in respect of such loss or damage, the Purchaser shall be entitled to all proceeds of property insurance in respect of such loss or damage (except that portion, if any, required to reimburse the Vendor for repair or restoration work it has done prior to Closing and insurance for loss of income prior to Closing, all of which shall be paid to the Vendor), the parties shall complete the Transaction and the Purchaser shall promptly and diligently repair such damage at its own expense following Closing.

If the damage or destruction occurs at such time that there is insufficient time for the Vendor or the Purchaser to make its election hereunder, the Closing Date shall be postponed to a date which is five (5) Business Days after the earlier of the date such election is made or the period for making such election has expired, or if such date is not a Business Day, then the next Business Day thereafter.

7.3 Leasing and Contracts

(a)           The Vendor shall not enter into any new Lease after the date hereof without the prior approval of the Purchaser (which approval may be unreasonably withheld or delayed) provided that the requirement for the approval of the Purchaser shall not apply in the event that the Vendor is bound to enter into the relevant new Lease on specified terms and conditions pursuant to a lease, agreement or offer in existence prior to the date hereof.  The Vendor shall not enter into any new material Contract (unless such Contract is terminable without penalty upon notice of not more than 180 days) after the date hereof without the prior approval of the Purchaser, which approval shall not be unreasonably withheld or delayed.  In the case of each such Lease or Contract where the approval of the Purchaser is required, such approval shall be deemed to have been given if no response is received from the Purchaser within five (5) Business Days following written request therefor sent in accordance with the provisions hereof.

(b)           At any time after the date hereof, the Vendor shall not voluntarily amend, terminate or accept a surrender of any Lease, and or release any Tenant from its liability under its Lease or any Approved Lease (other than the Lease excepted as set out above) or voluntarily materially amend or terminate any material Contract without the prior written consent of the Purchaser, such consent not to be unreasonably withheld or delayed.  In each such case where the

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approval of the Purchaser is required, such approval shall be deemed to have been given if no response is received from the Purchaser within five (5) Business Days following written request therefor sent in accordance with the provisions hereof.

(c)           If any Contracts involving the provision of services to the Property, or other similar Contracts, also apply to any other properties, the Vendor shall be entitled, with the consent of the Purchaser, prior to the Due Diligence Date, to amend each such Contract, or replace it with a new or restated agreement, in order to provide that the Contract, as so amended or replaced (it being agreed that the Contract as so amended or replaced is the Contract for all purposes of this Agreement), shall not apply to any properties other than the Property.  The provisions of Subsection 7.3(b) shall be applicable in respect of any such amendment or replacement of such Contract, if (but only if) such Contract is a material Contract and changes are being made thereto other than for the purpose described above (and all necessary conforming changes) or if the amount payable for such services is not currently allocated to each property covered by such Contract on a discrete basis.

(d)            Notwithstanding any other provision of this Agreement, no default by any Person other than the Vendor under any Lease, Permitted Encumbrances or Contract (including, without limitation, any bankruptcy or event of insolvency) or repudiation or termination thereof, or proceeding for relief therefrom, at any time after the Due Diligence Date, and no other change adverse to the Subject Assets or the Property or their value at any time after the Due Diligence Date (it being acknowledged that the Purchaser has a right of termination prior to the Due Diligence Date pursuant to Section 2.4 hereof), other than a change caused by the wrongful act of the Vendor, shall entitle the Purchaser to terminate this Agreement or to an abatement of the Purchase Price or any other right or remedy whatsoever, the Purchaser agreeing to accept the risk of the foregoing.  The foregoing does not relieve, however, the Vendor from any consequences of any default by the Vendor under any such Lease, Permitted Encumbrance or Contract where the result of such default would be the breach by the Vendor of any of its representations or warranties or non-satisfaction of the conditions set out in Section 4.2, it being agreed that in the case of any such default, if it has a material adverse effect on the Property, the Purchaser shall be entitled to an adjustment of the Purchase Price by the amount of the diminution in value of the Property caused by such default, if any, but no other remedy.

7.4 Assignment of Contracts

Nothing in this Agreement shall be construed as an assignment of, or an attempt to assign to the Purchaser, any Contract or Permitted Encumbrance which is (i) not assignable, or (ii) not assignable without the approval or consent of the other party or parties thereto, without first obtaining such approval or consent (collectively “Non-Assignable Rights”).  The failure to obtain any such approval or consent, or the fact that a Contract or Permitted Encumbrance is not assignable, shall not entitle the Purchaser to terminate this Agreement or to any other right or remedy whatsoever (without prejudice to the right of the Purchaser to terminate this Agreement prior to the Due Diligence Date pursuant to and in accordance with Section 2.5 if the Purchaser is not satisfied with its Due Diligence).  In connection with such Non-Assignable Rights the Vendor shall, at the request of the Purchaser and in each case at the Purchaser’s expense:

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(a) apply for and use all reasonable efforts to obtain all such consents or approvals, in a form satisfactory to the Purchaser acting reasonably, provided that nothing herein shall require the Vendor to make any payment to any other party to any of the Contracts; and

(b) co-operate with the Purchaser in any reasonable and lawful arrangements designed to provide the benefits of such Non-Assignable Rights to the Purchaser, including without limitation, holding any such Non-Assignable Rights in trust for the Purchaser or acting as agent for the Purchaser, provided that pursuant to such arrangements the Purchaser fully indemnifies the Vendor for all obligations or liabilities incurred thereunder or in connection therewith.

In the event of any conflict or inconsistency between this Section and any other provision of this Agreement, this Section shall prevail.  This provision survives the Closing.

7.5 Trade-Marks

No trade-marks, trade-names, logos, commercial symbols, business names or other intellectual property rights are conveyed or intended to be conveyed to the Purchaser as part of the Subject Assets.

ARTICLE 8

GENERAL

8.1 Gender and Number

Words importing the singular include the plural and vice versa.  Words importing gender include all genders.

8.2 Captions

The captions and headings contained herein are for reference only and in no way affect this Agreement or its interpretation.

8.3 Obligations as Covenants

Each agreement and obligation of any of the parties hereto in this Agreement, even though not expressed as a covenant, is considered for all purposes to be a covenant.

8.4 Applicable Law

This Agreement and all Closing Documents shall be construed and enforced in accordance with the laws of the Province of Ontario and the laws of Canada applicable thereto and shall be treated in all respects as Ontario contracts.

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8.5 Currency

All reference to currency in this Agreement shall be deemed to be reference to Canadian dollars.

8.6 Invalidity

If any immaterial covenant, obligation, agreement or part thereof or the application thereof to any Person or circumstance, to any extent, shall be invalid or unenforceable, the remainder of this Agreement or the application of such covenant, obligation or agreement or part thereof to any Person, party or circumstance other than those to which it is held invalid or unenforceable shall not be affected thereby.  Each covenant, obligation and agreement in this Agreement shall be separately valid and enforceable to the fullest extent permitted by law.

8.7 Amendment of Agreement

No supplement, modification, waiver or termination (other than a termination pursuant to the terms of this Agreement) of this Agreement shall be binding unless executed in writing by the parties hereto in the same manner as the execution of this Agreement.

8.8 Time

Time shall be of the essence of this Agreement.  If anything herein is to be done on a day which is not a Business Day, the same shall be done on the next succeeding Business Day.  Unless otherwise provided hereto, all references to time shall mean Toronto time.

8.9 Further Assurances

Each of the parties hereto shall from time to time hereafter and upon any reasonable request of the other, execute and deliver, make or cause to be made all such further acts, deeds, assurances and things as may be required or necessary to more effectually implement and carry out the true intent and meaning of this Agreement.

8.10 Entire Agreement

This Agreement and any agreements, instruments and other documents made as of the date hereof or herein contemplated to be entered into between, by or including the parties hereto constitute the entire agreement between the parties hereto pertaining to the agreement of purchase and sale provided for herein and supersede all prior agreements, understandings, negotiations and discussions, whether oral or written, with respect thereto, and there are no other warranties or representations and no other agreements between the parties hereto in connection with the agreement of purchase and sale provided for herein except as specifically set forth in this Agreement or the Schedules attached hereto.

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8.11 Waiver

No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision (whether or not similar) nor shall any waiver constitute a continuing waiver unless otherwise expressed or provided.

8.12 Solicitors as Agents and Tender

Any notice, approval, waiver, agreement, instrument, document or communication permitted, required or contemplated in this Agreement may be given or delivered and accepted or received by the Purchaser’s Solicitors on behalf of the Purchaser and by the Vendor’s Solicitors on behalf of the Vendor and any tender of Closing Documents and the Balance may be made upon the Vendor’s Solicitors and the Purchaser’s Solicitors, as the case may be.

8.13 Survival

Except as otherwise provided in this Agreement, no representations, warranties, covenants or agreements of either the Vendor or the Purchaser shall survive Closing.  This provision survives the Closing.

8.14 Successors and Assigns

All of the covenants and agreements in this Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall enure to the benefit of and be enforceable by the parties hereto and their respective successors and their permitted assigns pursuant to the terms and conditions of this Agreement.

8.15 Assignment 

The Purchaser is not entitled to assign its rights under this Agreement without the prior written consent of the Vendor, which consent may be withheld in the Vendor's sole and absolute discretion.  The Purchaser may direct title to the Property to be registered in the name of an Affiliate provided that: (i) the Purchaser shall not be released from its obligations and liabilities under this Agreement or any documents delivered pursuant to this Agreement, and (ii) the Purchaser shall be jointly and severally liable with the designated Affiliate with respect to all covenants, obligations, liabilities and indemnities in favour of the Vendor in this Agreement or any document delivered at or relating to Closing.

The Purchaser shall provide the Vendor with all information about any proposed Affiliate to whom the Purchaser proposed to direct title to the Property that the Vendor requires, acting reasonably.

At the request of the Vendor, the Purchaser shall forthwith deliver to the Vendor, in writing, a list of all Persons that, directly or indirectly, own the shares of the Purchaser, including, for greater certainty, a list of all of Persons that, directly or indirectly, own the shares of holding body corporate(s) (as such term is defined in the Business Corporations Act (Ontario)), if any, of the Purchaser.

- 34 -

8.16 Real Estate Commissions

The Vendor shall pay the commission payable or fee payable to Colliers International, which is the only real estate agent or broker that the Vendor has used in connection with the Transaction.  The Purchaser represents and warrants to the Vendor that the Purchaser has not used the services of any real estate agent or broker in connection with the purchase and sale of the Subject Assets contemplated hereby.  This Section shall not merge on, but shall survive, Closing.

8.17 Notice

Any notice, demand, approval, consent, information, agreement, offer, payment, request or other communication (hereinafter referred to as a “Notice”) to be given under or in connection with this Agreement shall be in writing and shall be given by personal delivery or by telecopier or other electronic communication which results in a written or printed notice being given, addressed or sent as set out below or to such other address or electronic number as may from time to time be the subject of a Notice:

(a) Vendor: DOMGROUP LTD.

c/o Hollinger Inc.

10 Toronto Street

Toronto, ON M5C 2B7

Attention:   Randall Benson, President and Secretary

Telecopy:  (416) 363-4187

with a copy to:

DAVIES WARD PHILLIPS & VINEBERG LLP

P.O. Box 63, Suite 4400

1 First Canadian Place

Toronto, ON M5X 1B1

Attention:   Kent Beattie

Telecopy:  (416) 863-0871

(b) Purchaser: CHARIS DEVELOPMENTS LTD.

P.O. Box 429

Collingwood, Ontario  L9Y 3Z7

Attention:   Steve Assaff

Telecopy:  (705) 445-5904

with a copy to:

- 35 -

BAULKE AUGAITIS STAHR LLP

150 Hurontario Street

P.O. Box 100

Collingwood, ON  L9Y 3Z4

Attention:   Thomas D. Baulke

Telecopy:  (705) 445-1871

Any Notice, if personally delivered, shall be deemed to have been validly and effectively given and received on the date of such delivery and if sent by telecopier or other electronic communication with confirmation of transmission, shall be deemed to have been validly and effectively given and received on the Business Day next following the day it was received.

8.18 Effect of Termination of Agreement

Notwithstanding the termination of this Agreement for any reason, the following provisions shall survive and shall remain in full force and effect: (i) the confidentiality provisions contained in Section 2.6 including, without limitation, the Purchaser’s obligations to return documents to the Vendor; (ii) Subsection 2.5(b); and (iii) such other provisions (such as those relating to return of the Deposit following termination) the survival of which following termination are necessary to give practical effect thereto.  For greater certainty, it is confirmed that termination of this Agreement does not, for the purposes of this Section, include the Closing of this Agreement, and that Section 8.13 is relevant in respect of survival of provisions after the Closing.

8.19 No Registration of Agreement

The Purchaser shall not register this Agreement or any notice of this Agreement on title to the Lands.

8.20 Planning Act

This Agreement shall be effective to create an interest in any part of the Lands only if the provisions of Section 50 of the Planning Act (Ontario) are complied with by the Vendor at its own expense on or before the Closing Date.

8.21 Counterparts

This Agreement may be executed in counterparts by original or facsimile signature, each of which shall constitute an original and each of which taken together shall constitute one and the same instrument.

- 36 -

IN WITNESS WHEREOF the parties hereto have executed this Agreement by their properly authorized officers in that behalf as of the day and year first above written.

DOMGROUP LTD.

By:           /s/ R.C. Benson

Name:       Randall C. Benson

Title:         President and Secretary

I have authority to bind the Corporation

CHARIS DEVELOPMENTS LTD.

By:           /s/ Steve Assaff

Name:      Steve Assaff

Title:        President

I have authority to bind the Corporation

- 37 -

SCHEDULE A

LANDS

LEGAL DESCRIPTION

Property Identifier No.:                                                      Lots 43-46  58279-0116(LT)

        Lot 47          58279-0115 (LT)

Lots 43, 44, 45, 46 and 47 West of Hurontario Street, Registered Plan 73, Town of Collingwood, County of Simcoe.

SCHEDULE B

PURCHASER’S DECLARATION AND INDEMNITY

RE: GOODS AND SERVICES TAX

TO:                      DOMGROUP LTD.

AND TO:            DAVIES WARD PHILLIPS & VINEBERG LLP, its solicitors herein

RE: SALE OF 280 HURONTARIO STREET, COLLINGWOOD, ONTARIO (the “Property”)

The undersigned hereby declares, certifies and agrees as follows:

(a) it is purchasing the Property as principal for its own account and same is not being purchased by the Purchaser as an agent, trustee or otherwise on behalf of or for another person;

(b) it is registered under Subdivision d of Division V of Part IX of the Excise Tax Act (Canada) (the “Act”) for the collection and remittance of goods and services tax (“GST”); its registration number is R·; and such registration is in good standing and has not been revoked;

(c) it shall be liable, shall self-assess and remit to the appropriate governmental authority all GST which is payable under the Act in connection with the transfer of the Property all in accordance with the Act; and

(d) it shall indemnify and save harmless the Vendor from and against any and all GST, penalties, costs and/or interest which may become payable by or assessed against the Vendor as a result of any failure by the Purchaser to comply with the provisions of this Declaration and Indemnity.

The undersigned acknowledges and agrees that the foregoing declaration and indemnity shall survive and not merge upon closing of the above-noted transaction.  Dated as of the · day of ·, 2007.

[NAME OF PURCHASER]

By: ____________________                                                               

Name:                      ·

Title:                        ·

By: ____________________                                                               

Name:                      ·

Title:                        ·

I/We have authority to bind the Corporation

- 2 -

SCHEDULE C

LIST OF CERTAIN PERMITTED ENCUMBRANCES

GENERAL

1.           Encumbrances for real property taxes (which term includes charges, rates and assessments, and other governmental charges or levies) or charges for electricity, power, gas, water and other services and utilities in connection with the Property that (i) have accrued but are not yet due and owing or, if due and owing, are adjusted for pursuant to Section 3.3, or (ii) the validity of which is being contested in good faith.

2.           Registered easements, rights-of-way, restrictive covenants and servitudes and other similar rights in land granted to, reserved or taken by any Governmental Authority or public utility; or any registered subdivision, development, servicing, site plan or other similar agreement with any Governmental Authority or public utility.

3.           Facility sharing, cost sharing, tunnel, pedway, servicing, parking, reciprocal and other similar agreements with neighbouring landowners and/or Governmental Authorities.

4.           Restrictive covenants, private deed restrictions, and other similar land use controls or agreements.

5.           Minor encroachments by the Property over neighbouring lands which are permitted under agreements with neighbouring landowners and minor encroachments over the Property by improvements of neighbouring landowners.

6.           Any subsisting reservations, limitations, provisos, conditions or exceptions contained in the original grants of the Property from the Crown.

7.           All Contracts and Approved Contracts and registered notices, memorials, caveats or other registrations with respect to such Contracts.

8.           All Leases and registered notices, memorials, caveats or other registrations with respect to such Leases.

9.           Any rights of expropriation, access, use or any other right conferred or reserved by or in any statute of Canada or the Province of Ontario.

10.           The provisions of Applicable Laws, including by-laws, regulations, ordinances and similar instruments relating to development and zoning.

11.           Any minor title defects, irregularities, easements, servitudes, encroachments, rights-of-way or other discrepancies in title or possession relating to the Property or the Subject Assets.

12.           Encumbrances of labourers, workmen, builders, contractors, suppliers of material or architects or other similar Encumbrances incidental to construction, maintenance or operations

which have not at the time been registered or filed pursuant to Applicable Laws against the Property.

13.           Registrations under the Personal Property Security Act (Ontario) relating to any of the leased Chattels pursuant to any of the Contracts.

14.           All other Encumbrances which are Permitted Encumbrances.

- 2 -

SCHEDULE D

FORM OF SATISFACTION NOTICE

TO:                         DOMGROUP LTD.

RE: 280 HURONTARIO STREET, COLLINGWOOD, ONTARIO

We refer to the Agreement of Purchase and Sale made between Domgroup Ltd. and Charis Developments Ltd., made as of the 7^th day of November, 2006 (the “Purchase Agreement”).  Pursuant to Section 2.5 of the Purchase Agreement, we hereby give you notice that we are satisfied with the results of our Due Diligence (as defined in the Purchase Agreement).

DATED as of the ___ day of , 2007.

CHARIS DEVELOPMENTS LTD.

By:________________________                                                                

Name:                      ·

Title:                        ·

By:_________________________                                                                

Name:                      ·

Title:                        ·

I/We have authority to bind the Corporation

SCHEDULE E

FORM OF ASSIGNMENT AND ASSUMPTION OF CONTRACTS

MEMORANDUM OF AGREEMENT made as of the · day of ·, 2007.

B E T W E E N:

DOMGROUP LTD.,

a corporation incorporated under the laws of the Province of Ontario,

(hereinafter referred to as the “Assignor”),

OF THE FIRST PART,

- and -

·,

a corporation incorporated under the laws of ·,

(hereinafter referred to as the “Assignee”),

OF THE SECOND PART.

WHEREAS the Assignor and the Assignee have entered into an agreement of purchase and sale made as of the · day of ·, 2006 (such agreement, as amended, supplemented and/or restated to the date hereof, the “Purchase Agreement”) pursuant to which the Assignee has agreed to purchase from the Assignor, and the Assignor has agreed to sell to the Assignee, the Subject Assets;

AND WHEREAS pursuant to the Purchase Agreement, the Assignor has agreed to execute and deliver this assignment of its interest in the Assigned Contracts (as defined below);

NOW THEREFORE in consideration of the mutual covenants and agreements hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby covenant and agree as follows:

1.           Definitions.  Unless otherwise defined herein, all capitalized terms used in this agreement (the “Agreement”) shall have the respective meanings ascribed to them in the Purchase Agreement.  In this Agreement, “Property” means the property municipally known as 280 Hurontario Street, Collingwood, Ontario and more fully described in Schedule A hereto.

2.           Assignment.  Subject to Section 7.4 of the Purchase Agreement, the Assignor hereby assigns and transfers unto the Assignee all of the Assignor’s right, title and interest in, to and under the Contracts relating to the Property, all of the foregoing being listed in Schedule B hereto (collectively, the “Assigned Contracts”).  Except as provided in Section 6.1 of the Purchase Agreement, the Assigned Contracts are being assigned to and accepted by the Assignee on an “as is - where is” basis as provided for in Subsection 2.5(c) and Section 6.4 of the Purchase Agreement and without any representations or warranties (express or implied) of any nature whatsoever with respect to the Assigned Contracts or any aspect thereof including, without limitation, the Assignor’s interest therein, the Assignor’s ability to assign the Assigned Contracts or the good standing of the parties thereunder.  The provisions of Subsection 2.5(c) and Sections 6.4 and 7.4 of the Purchase Agreement are applicable to this Agreement and, without limiting the foregoing provisions of this sentence, the Assignee hereby unconditionally and irrevocably waives any and all actual or potential rights that the Assignee might have against the Assignor regarding any form of warranty, express or implied, of any type, other than those expressly set out in Section 6.1 of the Purchase Agreement relating to the Assigned Contracts.

3.           Assumption and Indemnity.  The Assignee hereby accepts the assignment and transfers contained in Section 2 hereof and covenants and agrees with the Assignor that, from and after the date hereof, the Assignee will observe, perform and fulfill each and every covenant, proviso, obligation, term and condition of the Assignor in, to and under the Assigned Contracts that is applicable at any time from and including the date of this Agreement to the same extent as if it and the Assignor had both been originally jointly named as a party to the Assigned Contracts in the place of the Assignor (or the Assignor’s predecessor in title, if applicable).  The Assignee hereby agrees to fully indemnify and save harmless the Assignor from and against any and all liabilities, damages, costs, expenses, causes of action, suits, claims and judgments arising from or in connection with, or resulting from, any breach by the Assignee of its obligations hereunder and/or any act or omission of the Assignee or those for whom the Assignee is legally responsible with respect to the Assigned Contracts or the Property.

4.           Successors and Assigns.  This Agreement shall enure to the benefit of and shall be binding upon the parties hereto and their respective successors and assigns.

5.           Governing Law.  This Agreement shall be construed and enforced in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein and shall be treated in all respects as an Ontario contract.

6.           Counterparts.  This Agreement may be executed in several counterparts and by facsimile transmission of an originally executed document, each of which shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument.

7.           Headings, Extended Meanings.  The headings in this Agreement are inserted for convenience of reference only and shall not constitute a part hereof and are not to be considered in the interpretation hereof.  In this Agreement, words importing the singular include the plural and vice versa; words importing the masculine gender include the feminine and vice versa; and words importing persons include firms or corporations and vice versa.

- 3 -

IN WITNESS WHEREOF the parties have executed this Agreement as of the date first mentioned.

DOMGROUP LTD.

By:____________________________                                                                

Name:                      ·

Title:                        ·

I  have authority to bind the Corporation

[NAME OF ASSIGNEE]

By: ____________________________                                                               

Name:                      ·

Title:                        ·

By: ____________________________                                                               

Name:                      ·

Title:                        ·

I/We have authority to bind the Corporation

- 4 -

SCHEDULE F

FORM OF ASSIGNMENT AND ASSUMPTION OF LEASES

MEMORANDUM OF AGREEMENT made as of the n day of n, 2007.

B E T W E E N:

DOMGROUP LTD.,

a corporation incorporated under the laws of the Province of Ontario,

(hereinafter referred to as the “Assignor”),

OF THE FIRST PART,

- and -

·,

a corporation incorporated under the laws of ·,

(hereinafter referred to as the “Assignee”),

OF THE SECOND PART.

WHEREAS the Assignor and the Assignee have entered into an agreement of purchase and sale made as of the · day of ·, 2006 (such agreement, as amended, supplemented and/or restated to the date hereof, the “Purchase Agreement”) pursuant to which the Assignee has agreed to purchase from the Assignor, and the Assignor has agreed to sell to the Assignee, the Subject Assets;

AND WHEREAS pursuant to the Purchase Agreement, the Assignor has agreed to execute and deliver this assignment of its interest in the Assigned Leases (as defined below);

NOW THEREFORE in consideration of the mutual covenants and agreements hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby covenant and agree as follows:

1.           Definitions.  Unless otherwise defined herein, all capitalized terms used in this agreement (the “Agreement”) shall have the respective meanings ascribed to them in the Purchase Agreement.  In this Agreement, “Property” means the property municipally known as 280 Hurontario Street, Collingwood, Ontario and more fully described in Schedule A hereto.

2.           Assignment.  Subject to Section 7.4 of the Purchase Agreement, the Assignor hereby assigns and transfers unto the Assignee all of the Assignor's right, title and interest in, to and

under the Leases relating to the Property, all of the foregoing being listed in Schedule B hereto (collectively, the "Assigned Leases").  Except as provided in Section 6.1 of the Purchase Agreement, the Assigned Leases are being assigned to and accepted by the Assignee on an "as is - where is" basis as provided for in Subsection 2.4(c) and Section 6.4 of the Purchase Agreement and without any representations or warranties (express or implied) of any nature whatsoever with respect to the Assigned Leases or any aspect thereof including, without limitation, the Assignor's interest therein, the Assignor's ability to assign the Assigned Leases or the good standing of the parties thereunder.  The provisions of Section 6.4 of the Purchase Agreement are applicable to this Agreement and the Assignee hereby unconditionally and, without limiting the foregoing provisions of this sentence, irrevocably waives any and all actual or potential rights that the Assignee might have against the Assignor regarding any form of warranty, express or implied, of any type, other than those expressly set out in Section 6.1 of the Purchase Agreement relating to the Assigned Leases.

3.           Assumption.  The Assignee hereby accepts the assignment and transfers contained in Section 2 hereof and covenants and agrees with the Assignor that, from and after the date hereof, the Assignee will observe, perform and fulfill each and every covenant, proviso, obligation, term and condition of the Assignor in, to and under the Assigned Leases that is applicable at any time from and including the date of this Agreement to the same extent as if it and the Assignor had both been originally named as a party to the Assigned Leases in the place of the Assignor (or the Assignor's predecessor in title, if applicable) including, without limiting the generality of the foregoing, the covenant to pay, any real estate or leasing commissions, tenant inducements, tenant allowances and/or early termination fees, in each case if any, irrespective of when the obligation to pay same first arose.  The Assignee hereby agrees to fully indemnify and save harmless the Assignor from and against any and all liabilities, damages, costs, expenses, causes of action, suits, claims and judgments arising from or in connection with, or resulting from, any breach by the Assignee of its obligations hereunder and/or any act or omission of the Assignee or those for whom the Assignee is legally responsible with respect to the Assigned Leases or the Property.

4.           Successors and Assigns.  This Agreement shall enure to the benefit of and shall be binding upon the parties hereto and their respective successors and assigns.

5.           Governing Law.  This Agreement shall be construed and enforced in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein and shall be treated in all respects as an Ontario contract.

6.           Counterparts.  This Agreement may be executed in several counterparts and by facsimile transmission of an originally executed document, each of which shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument.

7.           Headings, Extended Meanings.  The headings in this Agreement are inserted for convenience of reference only and shall not constitute a part hereof and are not to be considered in the interpretation hereof.  In this Agreement, words importing the singular include the plural and vice versa; words importing the masculine gender include the feminine and vice versa; and words importing persons include firms or corporations and vice versa.

- 2 -

IN WITNESS WHEREOF the parties have executed this Agreement as of the date first mentioned.

DOMGROUP LTD.

By:____________________________                                                                

Name:                      n

Title:                        n

I  have authority to bind the Corporation

[NAME OF ASSIGNEE]

By: ____________________________                                                               

Name:                      n

Title:                        n

By: ____________________________                                                               

Name:                      n

Title:                        n

I/We have authority to bind the Corporation

- 3 -

SCHEDULE A

LANDS

LEGAL DESCRIPTION

Property Identifier No.:                                                      Lots 43-46  58279-0116(LT)

                              Lot 47         58279-0115 (LT)

Lots 43, 44, 45, 46 and 47 West of Hurontario Street, Registered Plan 73, Town of Collingwood, County of Simcoe.

SCHEDULE B

LIST OF ASSIGNED LEASES

1.           Lease, dated January 5, 1993 between Domgroup Properties Ltd. (now Domgroup Ltd.), as landlord, and Royal Bank of Canada, as tenant, in respect of premises on the Property, as amended by a lease renewal agreement made as of the 1^st day of July, 2003.

2.           Lease, dated April 1, 1994, between Domgroup Properties Ltd. (now Domgroup Ltd.), as landlord, and First Choice Haircutters Ltd., as tenant, in respect of premises on the Property, as amended by a lease renewal agreement made as of February 17, 1999 and as further amended by a lease extension agreement made December 3, 2003.

SCHEDULE G

FORM OF BILL OF SALE

TO:           · (the “Purchaser”)

RE:           280 HURONTARIO STREET, COLLINGWOOD, ONTARIO

In consideration of the sum of $2.00 and for good and other valuable consideration (the receipt and sufficiency of which are hereby acknowledged) the undersigned hereby sells, assigns and transfers to the Purchaser all of the undersigned’s right, title and interest in and to the Chattels.

The Purchaser expressly acknowledges that the Chattels are being sold, assigned and transferred to and purchased and assumed by the Purchaser “as is-where is” and without any representation or warranty (express or implied) of any nature whatsoever except as provided in Section 6.1 of the Purchase Agreement (as defined below), and the provisions of Subsection 2.5(c) and Sections 6.4 and 8.13 of the agreement of purchase and sale made as of the 7^th day of  November, 2006 between the undersigned and the Purchaser, as amended, supplemented and/or restated prior to the date hereof (the “Purchase Agreement”) are applicable to this Bill of Sale.

All capitalized terms used herein have the meaning ascribed to them in the Purchase Agreement.

DATED this · day of ·, 2007.

DOMGROUP LTD.

By: ____________________                                                               

Name:                      ·

Title:                        ·

I have authority to bind the Corporation

SCHEDULE H

FORM OF ASSIGNMENT AND ASSUMPTION OF PERMITTED ENCUMBRANCES

MEMORANDUM OF AGREEMENT made as of the ___ day of ______, 2007.

B E T W E E N:

DOMGROUP LTD.,

a corporation incorporated under the laws of the Province of Ontario,

(hereinafter referred to as the “Assignor”),

OF THE FIRST PART,

- and -

·,

a corporation incorporated under the laws of ·,

(hereinafter referred to as the “Assignee”),

OF THE SECOND PART.

WHEREAS the Assignor and the Assignee have entered into an agreement of purchase and sale made as of the · day of ·, 2006 (such agreement, as amended, supplemented and/or restated to the date hereof, the “Purchase Agreement”) pursuant to which the Assignee has agreed to purchase from the Assignor, and the Assignor has agreed to sell to the Assignee, the Subject Assets;

AND WHEREAS pursuant to the Purchase Agreement,  the Assignor has agreed to execute and deliver this assignment of its interest in the Permitted Encumbrances (as defined below);

NOW THEREFORE in consideration of the mutual covenants and agreements hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby covenant and agree as follows:

1.           Definitions.  Unless otherwise defined herein, all capitalized terms used in this agreement (this “Agreement”) shall have the respective meanings ascribed to them in the Purchase Agreement.  In this Agreement, “Property” means the property described in Schedule A hereto.

2.           Assignment.  The Assignor hereby assigns absolutely and transfers unto the Assignee all of the Assignor’s right, title and interest in, to and under the Permitted Encumbrances  that relate to the Property.  The Permitted Encumbrances are being assigned to and assumed by the Assignee subject to, and in accordance with the terms of the Purchase Agreement, including, without limitation, Sections 2.5 and 6.4 thereof.

3.           Assumption and Indemnity.  The Assignee hereby accepts the assignment contained in Section 2 hereof.  The Assignee hereby agrees to fully indemnify and save harmless the Assignor from and against any and all Claims arising from or in connection with, or resulting from, (i) any breach by the Assignee of its obligations under the Permitted Encumbrances from and after Closing and/or any act or omission of the Assignee or those for whom the Assignee is legally responsible with respect to the Permitted Encumbrances occurring from and after Closing, and (ii) the failure by the Assignee to obtain the necessary consents or approvals for the assignment of the Permitted Encumbrances.

4.           Successors and Assigns.  This Agreement shall enure to the  benefit of and shall be binding upon the parties hereto and their respective successors and assigns.

5.           Governing Law.  This Agreement shall be construed and enforced in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein and shall be treated in all respects as an Ontario contract.

6.           Counterparts.  This Agreement may be executed in several counterparts and may be delivered by facsimile transmission, each of which shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument.

7.           Headings, Extended Meanings.  The headings in this Agreement are inserted for convenience of reference only and shall not constitute a part hereof and are not to be considered in the interpretation hereof.  In this Agreement, words importing the singular include the plural and vice versa; words importing the masculine gender include the feminine and vice versa; and words importing persons include firms or corporations and vice versa.

- 2 -

IN WITNESS WHEREOF the parties have executed this Agreement as of the date first mentioned.

DOMGROUP LTD.

By: ___________________                                                               

Name:                      ·

Title:                        ·

I have authority to bind the Corporation

[NAME OF ASSIGNEE]

By: ___________________                                                               

Name:                      ·

Title:                        ·

By: ___________________                                                               

Name:                      ·

Title:                        ·

I/We have authority to bind the Corporation

- 3 -

SCHEDULE A

LEGAL DESCRIPTION OF THE PROPERTY

Property Identifier No.:                                                      Lots 43-46  58279-0116(LT)

                              Lot 47          58279-0115 (LT)

Lots 43, 44, 45, 46 and 47 West of Hurontario Street, Registered Plan 73, Town of Collingwood, County of Simcoe.

SCHEDULE I

FORM OF DEPOSIT AUTHORIZATION

TO:                                 DOMGROUP LTD.

AND TO:                      DAVIES WARD PHILLIPS & VINEBERG LLP

Unless otherwise defined herein, all capitalized terms used herein shall have the respective meanings ascribed to them in the agreement of purchase and sale made November 7, 2006, between Domgroup Ltd. as vendor and Charis Developments Ltd. as purchaser with respect to the Subject Assets referred to therein (the “Purchase Agreement”).

You are hereby directed to invest the amount of $· into a redeemable term deposit at the Canadian Imperial Bank of Commerce which comes due on [insert Due Diligence Date], which amount together with accrued interest is to be rolled over at maturity in an interest bearing account until the Closing Date, unless otherwise notified, with interest to be for the exclusive benefit of Purchaser and otherwise held and released in accordance with the terms of the Purchase Agreement.

DATED the · day of ·, 2006.

CHARIS DEVELOPMENTS LTD.

By: _____________________                                                                

Name:                      ·

Title:                        ·

By: _____________________                                                                

Name:                      ·

Title:                        ·

I/We have authority to bind the Corporation

SCHEDULE J

FORM OF TENANT ESTOPPEL

TO: DOMGROUP LTD. (the "Landlord")

RE: Lease between the Landlord and [tenant] dated 9 for premises located at 280 Hurontario Street, Collingwood, Ontario (the "Property") [insert details of all written and executed amendments, assignments, subleases etc., if any] (the "Lease").

                                This is to confirm that with respect to the Lease:

1. The commencement date was:  _____________________________________.

2. The expiry date is _____________________________________ and there is no renewal option or other right to extend such date except as follows:  _______________. [If necessary, add statement regarding right of first refusal/offer on space.]

3. The gross leaseable area of the leased premises is ___________________ square feet.

4. The undersigned is in possession of the leased premises, and has paid all rent payable pursuant to the Lease to ____________, 2006, subject to any applicable year end adjustments in respect of amounts other than annual minimum rent.

5. Minimum monthly rent is _______________________________.

6. The undersigned has delivered to the Landlord $____________ representing a security deposit which amount has not been applied to any rent payable under the Lease.

7. The undersigned is not aware of any default by the Landlord in completing all construction, if any, required to be done by it in connection with the leased premises.

8. There are no tenant inducements, tenant allowances, lease takeover obligations, or other incentives payable or to be performed by the Landlord outstanding in connection with the Lease and no future rent-free or rent abatement periods under the Lease [except as follows:  9].

9. The undersigned has no notice of any default by the Landlord under the Lease, including any default that will give rise to any claim to any deduction, abatement or set-off of any rent or other amount due and payable under the Lease.

10. The undersigned has no options to purchase the Property or any part thereof or interest therein or any right of first refusal, first offer or similar rights relating to the purchase of the Property [except as follows:  9].

11. The Lease is in full force and effect and is the entire agreement between the Landlord and the undersigned governing their respective rights and obligations in respect of the leased

premises, and there are no modifications or changes in, or assignments of, the Lease other than those listed above, if applicable, nor has all or any part of the leased premises been sublet by the undersigned other than as listed above.

12. The undersigned acknowledges that this document may be relied upon by Landlord and its successors and assigns and also any entity taking security on the above-noted property from the Landlord or its successors or assigns.

DATED this____  day of __________,  2006.

TENANT

By: _____________________                                                                

Name:                      

Title:                        

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EX-99.12

Exhibit 99.12

10 TORONTO STREET INC.

VENDOR

– and –

MORGAN MEIGHEN & ASSOCIATES LIMITED

PURCHASER

______________________________________________________________________

AGREEMENT OF PURCHASE AND SALE

10 TORONTO STREET

________________________________________________________________________________

TABLE OF CONTENTS

		Page
ARTICLE 1	INTERPRETATION	1
1.1	Definitions	1
ARTICLE 2	AGREEMENT OF PURCHASE AND SALE	6
2.1	Agreement of Purchase and Sale/Allocation of Purchase Price	6
2.2	Initial Deliveries by Vendor	6
2.3	Access to Property	7
2.4	Purchaser’s Investigations	8
2.5	Confidentiality	9
2.6	Settlement of Documents	10
2.7	Subsequent Deliveries	10
2.8	Excluded Chattels	11
ARTICLE 3	PURCHASE PRICE	11
3.1	Deposit	11
3.2	Method of Payment of Purchase Price	12
3.3	Adjustments	13
3.4	Allocation of Purchase Price	15
ARTICLE 4	CONDITIONS	15
4.1	Conditions for Vendor	15
4.2	Conditions for Purchaser	15
4.3	Non-Satisfaction of Conditions	16
4.4	Efforts to Satisfy Conditions	16
ARTICLE 5	CLOSING DOCUMENTS	17
5.1	Closing Arrangements	17
5.2	Vendor’s Closing Deliveries	17
5.3	Purchaser’s Closing Deliveries	18
5.4	Title Insurance, Registration and Other Costs	19
5.5	Electronic Registration	19
5.6	Single Transaction.	21
ARTICLE 6	REPRESENTATIONS, WARRANTIES AND COVENANTS	21
6.1	Vendor’s Representations	21

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TABLE OF CONTENTS

(continued)

		Page
6.2	Purchaser’s Representations	22
6.3	Survival of Representations	23
6.4	“As-Is” Purchase	24
6.5	Bulk Sales Legislation	26
6.6	Third Party Claims	26
ARTICLE 7	OPERATION UNTIL CLOSE	27
7.1	Operation Before Closing	27
7.2	Damage Before Closing	27
7.3	Leasing and Contracts	28
7.4	Assignment of Contracts	29
7.5	Trade-Marks	30
ARTICLE 8	GENERAL	30
8.1	Gender and Number	30
8.2	Captions	30
8.3	Obligations as Covenants	30
8.4	Applicable Law	30
8.5	Currency	31
8.6	Invalidity	31
8.7	Amendment of Agreement	31
8.8	Time	31
8.9	Further Assurances	31
8.1	Entire Agreement	31
8.11	Waiver	32
8.12	Solicitors as Agents and Tender	32
8.13	Survival	32
8.14	Successors and Assigns	32
8.15	Assignment	32
8.16	Real Estate Commissions	33
8.17	Notice	33
8.18	Effect of Termination of Agreement	34

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TABLE OF CONTENTS

(continued)

		Page
8.19	No Registration of Agreement	34
8.2	Planning Act	35
8.21	Counterparts	35

SCHEDULES

Schedule A	Lands
Schedule B	Purchaser’s Declaration and Indemnity Re: Goods and Services Tax
Schedule C	List of Certain Permitted Encumbrances
Schedule D	Form of Satisfaction Notice
Schedule E	Form of Assignment and Assumption of Contracts
Schedule F	Form of Bill of Sale
Schedule G	Form of Assignment and Assumption of Permitted Encumbrances
Schedule H	Form of Deposit Authorization

THIS AGREEMENT OF PURCHASE AND SALE made as of the 6^th day of October, 2006.

BETWEEN:

10 TORONTO STREET INC.

(hereinafter referred to as the “Vendor”)

OF THE FIRST PART,

– and –

MORGAN MEIGHEN & ASSOCIATES LIMITED

(hereinafter referred to as the “Purchaser”)

OF THE SECOND PART.

WHEREAS the Vendor has agreed to sell, transfer and assign the Subject Assets to the Purchaser and the Purchaser has agreed to purchase and acquire the Subject Assets from the Vendor on the terms and conditions set forth in this Agreement.

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement and the sum of Ten ($10.00) Dollars paid by each of the Vendor and the Purchaser to the other and for good and other valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties hereto covenant and agree as follows:

ARTICLE 1

INTERPRETATION

1.1 Definitions

The terms defined in this Section 1.1 shall have, for all purposes of this Agreement, the following meanings, unless the context expressly or by necessary implication otherwise requires:

“Additional Deposit” has the meaning ascribed thereto in Subsection 3.1(b);

“Adjustments” means the adjustments to the Purchase Price provided for and determined pursuant to Section 3.3;

“affiliate” has the meaning ascribed thereto in the Canada Business Corporations Act;

“Agreement” means this Agreement of Purchase and Sale and the Schedules attached hereto, as amended from time to time;

“Applicable Laws” means all statutes, laws, by-laws, regulations, ordinances and orders of Governmental Authorities;

“Approved Contracts” means Contracts created after the date hereof without contravening Section 7.3;

“Article”, “Section” and “Subsection” mean and refer to the specified article, section and subsection of this Agreement;

“Assignment and Assumption of Contracts” means an assignment by the Vendor and assumption by the Purchaser of all of the Vendor’s right, title and interest in all Contracts in force at the Closing, such document to be in the form attached hereto as Schedule E;

“Assignment and Assumption of Permitted Encumbrances” means an assignment by the Vendor and an assumption by the Purchaser of all of the Vendor’s right, title and interest in and to all Permitted Encumbrances, such document to be in the form attached hereto as Schedule G;

“Balance” has the meaning ascribed thereto in Subsection 3.2(b);

“Bill of Sale” means a bill of sale for the Included Chattels in the form attached hereto as Schedule F;

“Building” means, collectively, all buildings, structures and fixed improvements located on, in or under the Lands, and improvements and fixtures contained in or on such buildings and structures used in the operation of the Building;

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

“Claiming Party” has the meaning ascribed thereto in Subsection 6.3(b)(ii) of this Agreement;

“Claims” means all past, present and future claims, suits, proceedings, liabilities, obligations, losses, damages, penalties, judgments, costs, expenses, fines, disbursements, legal fees on a substantial indemnity basis, interest, demands and actions of any nature or any kind whatsoever;

“Closing” means the closing of this Agreement, including without limitation the payment of the Purchase Price and the delivery of the Closing Documents;

“Closing Date” means, subject to Section 5.1(b), the day which is one hundred and eighty (180) days after the Due Diligence Date, or if such day is not a Business Day then the first Business Day thereafter; or such earlier or later date as the Purchaser and the Vendor may mutually agree;

“Closing Documents” means the agreements, instruments and other deliveries to be delivered to the Purchaser or the Purchaser’s Solicitors pursuant to Section 5.2 and the agreements, instruments and other deliveries to be delivered to the Vendor or the Vendor’s Solicitors pursuant to Section 5.3;

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“Confidentiality Agreement” means the agreement between the Vendor and the Purchaser, made as of April 28, 2006 relating to confidentiality and other related matters, as amended or supplemented;

“Confidential Information” means all information with respect to the Subject Assets, the Property or the Vendor furnished to the Purchaser or its Representatives by the Vendor or the Vendor’s Representatives plus all information with respect to the Purchaser, or the Purchaser’s principals or affiliates furnished to the Vendor or its Representatives by the Purchaser or its Representatives in connection with the Transaction, in each case whether furnished before or after the Execution Date, whether oral or written, and regardless of the manner in which such information is furnished, and includes, without limiting the generality of the foregoing, all notes, analyses, compilations, studies, interpretations or other documents which contain, reflect or are based upon, in whole or in part, such information;

“Contracts” means any and all contracts and agreements (other than policies of insurance, and other than the contract between Hollinger Inc. and Ben Soave Associates Inc., dated December 16, 2005, which contract is to be terminated by Hollinger Inc. on or before Closing) relating to the Property to which the Vendor is a party or by which the Vendor or the Property is bound, in its capacity as owner of the Subject Assets, in respect of the ownership, development, maintenance, operation, cleaning, security, fire protection or servicing of the Property and all contracts and agreements relating to any equipment or other assets leased by the Vendor and located on or in the Property;

“Deposit” has the meaning ascribed thereto in Section 3.1;

“Disclosed to the Purchaser” means written information which:

(a) is Previously Disclosed Information; or

(b) is made available for the Purchaser’s review pursuant to Sections 2.2 and/or 2.7 hereof; or

(c) is otherwise communicated in writing by the Vendor or its advisors or Representatives to the Purchaser;

“Document Registration Agreement” and “DRA” have the respective meaningsascribed thereto in Subsection 5.5(a);

“Due Diligence” has the meaning ascribed thereto in Subsection 2.4(a);

“Due Diligence Date” means the date which is thirty (30) days after the Execution Date, or such further number of days as contemplated by Section 2.3(a), or if such date is not a Business Day, then the next following Business Day;

“Encumbrances” means, in the case of any given Subject Assets, all mortgages, pledges, charges, liens, debentures, trust deeds, assignments by way of security, security interests,

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conditional sales contracts or other title retention agreements or similar interests or instruments charging, or creating a security interest in, or against title to, such Subject Assets or any part thereof or interest therein, and any agreements, leases, options, easements, servitudes, rights of way, restrictions, executions or other charges or encumbrances (including notices or other registrations in respect of any of the foregoing) against title to the Subject Assets or any part thereof or interest therein;

“Encumbrances to be Discharged” means any Encumbrances, other than Permitted Encumbrances, registered against any Subject Assets or entered into or consented to by the Vendor after the date hereof;

“Excluded Chattels” means all furniture, works of art, and all other personal property (other than the Included Chattels) located in the Building;

“Execution Date” means the date upon which this Agreement is executed and delivered by each of the parties hereto;

“Existing Contracts” means all Contracts in existence as of the date hereof;

“Final Adjustment Date” has the meaning ascribed thereto in Subsection 3.3(b);

“Governmental Authority” means any government, regulatory authority, government department, agency, commission, board, tribunal or court having jurisdiction on behalf of any nation, province or state or other subdivision thereof or any municipality, district or other subdivision thereof;

“GST Undertaking and Indemnity” means the GST undertaking and indemnity attached as Schedule B hereto;

“Included Chattels” means all building systems (including security systems), light fixtures, window coverings, and supplies located in the Building which are owned or leased by the Vendor and used in the maintenance, repair and/or operation of the Property, together with:

(a) the rolling file cabinets located in the basement of the Building;

(b) the boardroom table and chairs located in the main boardroom of the Building; and

(c) an antique oak office table and matching side table located on the Execution Date in the blue room on the second floor of the Building (being the room at the northwest corner of the Building);

“Initial Deposit” has the meaning ascribed thereto in Subsection 3.1(a);

“ITA” means the Income Tax Act (Canada), as amended;

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“Lands” means the lands and premises described in Schedule A attached hereto;

“Lender Representatives” has the meaning ascribed thereto in Subsection 2.5(a);

“Non-Assignable Rights” has the meaning ascribed thereto in Section 7.4;

“Permitted Encumbrances” means, with respect to the Property or the Subject Assets:

(a) those Encumbrances which, or notice of which, are registered against the title to the Property, the Subject Assets or the Vendor at 5:00 p.m. on the Business Day immediately prior to the date of this Agreement, other than registrations under the Personal Property Security Act (Ontario) that do not relate to any of the leased Included Chattels pursuant to any of the Contracts;

(b) all those Encumbrances described on Schedule C; and

(c) all other Encumbrances which, or notice of which, are registered against the title to the relevant Subject Assets after 5:00 p.m. on the Business Day immediately prior to the date of this Agreement and all unregistered Encumbrances in respect of the Subject Assets entered into by the Vendor after such time, in each case as approved by the Purchaser, acting reasonably;

“Person” means an individual, partnership, corporation, trust, unincorporated organization, government, or any department or agency thereof, and the successors and assigns thereof or the heirs, executors, administrators or other legal representatives of an individual;

“Post Closing Adjustments” has the meaning ascribed thereto in Subsection 3.3(b);

“Previously Disclosed Information” means: (i) issues, matters and/or information set out in or revealed by or in written documentation previously disclosed or made available to the Purchaser and/or its Representatives prior to the date of this Agreement in contemplation of the transactions contemplated hereby; (ii) issues, matters and/or information set out in this Agreement; and/or (iii) issues, matters and/or information which a sophisticated purchaser could reasonably be expected to have ascertained or derived from the issues, matters and/or information disclosed or made available pursuant to (i) and/or (ii) above;

“Property” means, collectively, the Lands and the Building;

“Property Conditions” has the meaning ascribed thereto in Subsection 6.4(b);

“Purchase Price” means CDN $14,000,000;

“Purchaser’s Solicitors” means Blake, Cassels & Graydon LLP or such other firm or firms of solicitors as are appointed by the Purchaser from time to time and notice of which is provided to the Vendor;

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“Responding Party” has the meaning ascribed thereto in Subsection 6.3(b) hereof;

“Representatives” has the meaning ascribed thereto in Subsection 2.5(a);

“Satisfaction Notice” has the meaning ascribed thereto in Subsection 2.4(b);

“Subject Assets” means all of the Vendor’s right, title and interest in and to:

(a) the Property;

(b) the Existing Contracts and any Approved Contracts; and

(c) the Included Chattels.

“Substantial Damage” has the meaning ascribed thereto in Subsection 7.2(a);

“Teraview Electronic Registration System” and “TERS” have the respective meanings ascribed thereto in Section 5.5;

“Third Party Claim” has the meaning ascribed thereto in Subsection 6.6(a) hereof;

"Title Insurance Commitment" has the meaning ascribed thereto in Subsection 4.1(a) hereof;

"Title Insurance Policy" has the meaning ascribed thereto in Subsection 4.1(b) hereof;

“Transaction” means the purchase and sale of the Subject Assets provided for in this Agreement;

“Unsatisfied Condition” has the meaning ascribed thereto in Section 4.3; and

“Vendor’s Solicitors” means Davies Ward Phillips & Vineberg LLP, or such other firm or firms of solicitors as are appointed by the Vendor from time to time and notice of which is provided to the Purchaser.

ARTICLE 2

AGREEMENT OF PURCHASE AND SALE

2.1 Agreement of Purchase and Sale/Allocation of Purchase Price

The Vendor hereby agrees to sell, transfer and assign the Subject Assets to the Purchaser, free and clear of all Encumbrances, other than Permitted Encumbrances, and the Purchaser hereby agrees to purchase and acquire the Subject Assets from the Vendor for the Purchase Price, on and subject to the terms and conditions of this Agreement.

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2.2 Initial Deliveries by Vendor

To the extent available and in the possession or control of the Vendor, the Vendor will make available to the Purchaser for the Purchaser’s review copies of the following until the Due Diligence Date and after such date at the Purchaser’s written request:

(a) existing surveys or certificates of location for the Property, if any;

(b) all Existing Contracts;

(c) written soil tests, engineering reports, structural reports and environmental reports, if any, pertaining to the Property prepared by independent third parties for the Vendor;

(d) all outstanding written directives and orders (including, without limitation, all work orders), if any, issued by any Governmental Authority pertaining to the Property;

(e) realty tax bills with respect to the Property for the two most recent tax years, and the most current tax assessment together with all assessment appeals, if any, and material filed in support thereof;

(f) a certificate of insurance issued by the Vendor’s insurer, confirming the Vendor’s insurance coverage with respect to the Building; and

(g) such other documents, plans, reports, bills, statements and other information relating to Subject Assets as the Purchaser may reasonably require.

The Vendor will execute and deliver to the Purchaser within three (3) Business Days after receipt of a written request from the Purchaser, authorizations to Governmental Authorities necessary to permit the Purchaser to obtain information from their files, provided each such authorization expressly states that there shall not be any inspections by a Governmental Authority with respect to the Property and none is authorized or requested and such authorization must otherwise be satisfactory to the Vendor, acting reasonably.  The Purchaser shall not request any Governmental Authority to inspect any of the Property.

2.3 Access to Property

(a) Subject to the Purchaser complying with each of its obligations herein, from and after the Execution Date to and including the Due Diligence Date, and subject to any restrictions on the Vendor’s ability to grant access to the Property (which the Vendor shall use its best efforts to have waived), the Purchaser and its Representatives shall have access to the Property during the Vendor’s normal business hours upon reasonable notice to the Vendor, at the Purchaser’s sole risk and expense, for the purpose of inspecting the Property, including without limitation performing physical and structural inspections, soil tests and environmental audits.  Such inspections, tests and audits shall be conducted in a

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manner that minimizes interference with the use of the Property. The Vendor or its agents shall accompany the Purchaser and its agents, consultants and employees on any inspections and shall have the right, acting reasonably, to approve, or to refuse approval for, invasive or intrusive inspections, tests and audits, if any are proposed by the Purchaser, prior to such inspections, tests and audits being undertaken.  No such inspections, tests or audits shall occur unless the Purchaser has given the Vendor at least three (3) complete Business Day’s prior written notice and complies with the foregoing requirements.  If, at any time, the Purchaser’s access to the Property shall be denied or impeded for any reason (other than by reason of the Purchaser's failure to comply with, or the proper imposition by the Vendor of, the access conditions set out in this Section 2.3(a)) such that the Purchaser is unable to conduct its Due Diligence of the Property, the Due Diligence Date shall automatically be extended by the number of days corresponding to the number of days on which such access was so denied or impeded.

(b) The Purchaser shall repair any damage caused by inspections, tests and audits performed by the Purchaser or its agents, consultants or employees and fully indemnify the Vendor from all costs of repairing any damage caused by such inspections, tests or audits and all Claims relating to any such inspections, tests and audits and from all Claims incurred by the Vendor as a result thereof.  This indemnity shall survive termination of this Agreement regardless of the cause of such termination.

2.4 Purchaser’s Investigations

(a) On or before 5:00 p.m. on the Due Diligence Date, the Purchaser shall conduct (subject to compliance with other relevant provisions of this Agreement) all investigations, inspections, reviews, tests and audits relating to the Subject Assets and the Property (including, without limitation, title to the Subject Assets and the Property and compliance with Applicable Laws) and the transactions provided for herein (collectively referred to herein as the “Due Diligence”) which the Purchaser deems necessary or desirable.

(b) The Purchaser shall be entitled, on or before 5:00 p.m. on the Due Diligence Date, in its sole and absolute discretion, to determine whether it is satisfied with the results of its Due Diligence.  The Purchaser shall be deemed to not be satisfied with the result of its Due Diligence unless the Purchaser delivers to the Vendor on or before 5:00 p.m. on the Due Diligence Date a written notice in the form attached hereto (with the relevant details inserted therein) as Schedule D (the “Satisfaction Notice”) stating that it is satisfied with the results of its Due Diligence.  If the Purchaser fails to give the Vendor a Satisfaction Notice by such time, then this Agreement shall terminate automatically at such time and, upon such termination, the Purchaser and Vendor shall be released from all obligations under this Agreement (except for those obligations which are expressly stated to

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survive the termination of this Agreement) and the Deposit and all interest earned thereon shall be returned to the Purchaser forthwith without deduction.

(c) If the Purchaser does deliver the Satisfaction Notice to the Vendor by such time, notwithstanding any other provisions of this Agreement (including, without limitation, Section 2.1), the Purchaser shall be deemed to have irrevocably waived its right to raise any objection to, or to have or make any Claim regarding, any circumstance, defect, matter or issue in respect of the Subject Assets or the Property, or any other aspect thereof of any nature whatsoever (including, without limitation, any objection or Claim relating to the Vendor’s title to the Subject Assets or any matter relating to title to the Property or the existence of any Encumbrances (other than Encumbrances to be Discharged), as such title and Encumbrances exist on the Due Diligence Date, any non-compliance with Applicable Laws, or any Contract, Encumbrance or other instrument).  The Purchaser retains the right to make valid objections to title or other requisitions, in each case, in writing to the extent that any document or instrument that is not a Permitted Encumbrance is registered against title to the Property or any work order or deficiency notice or other similar notice of non-compliance is otherwise issued or filed after the Due Diligence Date and before the Closing Date.  If, within ten (10) Business Days following the receipt of such written requisition from the Purchaser, the Vendor advises the Purchaser in writing (the “Requisition Notice”) that the Vendor is unwilling or unable to remove or satisfy the Purchaser’s objections, then, notwithstanding any other provision contained herein or any intermediate acts or negotiations in respect of such objections, the Purchaser shall have the right to terminate this Agreement by written notice to the Vendor to be delivered by the earlier of (i) the date on which Closing is scheduled to occur, and (ii) the tenth Business Day after the Requisition Notice is received by the Purchaser.  In such event, the Deposit, together with all interest accrued thereon, shall be returned to the Purchaser forthwith without deduction.  Without limiting the generality of the foregoing, the Purchaser also agrees that, subject to Section 7.3(d), the Purchaser shall not have the right to seek an abatement to the Purchase Price or any other remedy by virtue of any matters Disclosed to the Purchaser prior to the Due Diligence Date or as a result of any circumstance, defect, matter or issue in respect of the Subject Assets or the Property in respect of the Subject Assets or the Property, or any other aspect thereof of any nature whatsoever, in existence at the Due Diligence Date.  Notwithstanding the foregoing, however, if the Closing does take place the foregoing does not derogate from the Purchaser’s rights in the event of any breach of a representation or warranty made in this Agreement by the Vendor, except as is otherwise provided in the last sentence of Section 2.7.

2.5 Confidentiality

(a) The Vendor and Purchaser agree that each party:

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(i) shall keep all provisions of this Agreement confidential and shall not disclose any of its provisions to any Person; and

(ii) shall keep confidential all Confidential Information and shall not disclose any Confidential Information to any Person, except as required by Applicable Laws or as permitted pursuant to Subsection 2.5(b) hereof and except (A) to those trustees, directors, officers, employees and advisors of each of the parties who are participating in the Transaction or are otherwise specifically in writing approved by the other party (all such Persons being referred to as “Representatives”), and (B) to the officers, employees and solicitors of any lender to the Purchaser (all such Persons being referred to as “Lender Representatives”) in connection with any financing to be undertaken by the Purchaser in connection with the Subject Assets.  The Vendor and the Purchaser shall cause all Representatives, and the Purchaser shall cause all Lender Representatives, who, in each case, receive any information of the nature referred to above to comply with the requirements of this Section 2.5.

(b) Neither the Vendor nor the Purchaser shall issue any press release or other public announcement or release information with respect to this Agreement to the press or the public unless the same has been mutually approved by the Vendor and the Purchaser or such disclosure is in the good faith opinion of the Purchaser or the Vendor, as the case may be, required in order to comply with any Applicable Laws, with any agreement between any affiliate of the Vendor and any inspector in respect of Hollinger Inc. appointed under the Canada Business Corporations Act, or the rules, orders or regulations of any stock exchange or to satisfy the obligations of the Vendor under Permitted Encumbrances, and then only after prior consultation with the other party hereto, if possible.

(c) It is agreed that if this Agreement is terminated for any reason, each party shall promptly return, or cause to be returned, to the other party all written Confidential Information in the possession or control of the other party or any other Person to whom Confidential Information has been provided and shall destroy, or cause to be destroyed, any Confidential Information stored in or on any computer memory, disk, tape or other contrivance whatsoever in the possession or control of the other party or any other Person to whom the other party has provided Confidential Information.  On request of a party, the other party shall certify that it has complied with its obligation under this Section.

(d) The provisions of this Section are supplementary to the provisions of the Confidentiality Agreement and do not in any way derogate from the obligations of the Purchaser pursuant to the Confidentiality Agreement.  In the case of any conflict between the provisions of this Section and the provisions of the Confidentiality Agreement, the latter shall prevail.

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(e) The provisions of this Section 2.5 shall survive the Closing or any termination of this Agreement, regardless of the cause of such termination.

2.6 Settlement of Documents

The parties shall proceed diligently and in good faith to attempt to agree, on or before the Due Diligence Date, upon the contents of all Closing Documents to be executed and delivered by the Vendor and the Purchaser; provided that in the case of any Closing Documents to be executed and delivered in the form set out in a schedule to this Agreement, such form shall not be subject to further negotiations and the Vendor shall provide all details and/or information necessary to complete such documents, subject to the Purchaser’s approval of the accuracy of such details and information, such approval not to be unreasonably withheld.

2.7 Subsequent Deliveries

Any documentation or other information provided by the Vendor to the Purchaser pursuant to Section 2.2 may be amended or supplemented by the Vendor as necessary from time to time until the Due Diligence Date.  In addition, if the Vendor becomes aware of a failure to provide any document or other information that it is required to provide in accordance with Section 2.2 at any time prior to the Due Diligence Date, it may advise the Purchaser in writing of such failure and deliver such information to the Purchaser at any time prior to the Due Diligence Date.  If the Purchaser delivers a Satisfaction Notice pursuant to Section 2.4 prior to 5:00 p.m. on the Due Diligence Date, the Purchaser shall be deemed to have accepted for all purposes all matters which have been Disclosed to the Purchaser on or before the Due Diligence Date and if any representation or warranty of the Vendor is incorrect or inaccurate but the Purchaser has received written notice from the Vendor or its Representatives on or before the Due Diligence Date of the instrument, circumstance, action, omission, matter or issue which causes such representation or warranty to be incorrect or inaccurate, then such representation and warranty shall be deemed to have been qualified by reference to such instrument, circumstance, matter or issue.

If the Vendor receives from any Governmental Authority any directives or orders referred to in Section 2.2(d) between the Due Diligence Date and the Closing Date, the Vendor shall deliver a copy of same to the Purchaser as expeditiously as possible.

2.8 Excluded Chattels

For greater certainty, the Subject Assets shall not include any of the Excluded Chattels, and the Excluded Chattels shall not be conveyed to the Purchaser on Closing.

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ARTICLE 3

PURCHASE PRICE

3.1 Deposit

(a) Prior to 11:00 a.m. on the first Business Day following the date this Agreement is executed and delivered by both parties hereto the Purchaser shall pay $500,000 (the “Initial Deposit”) by certified cheque or negotiable bank draft to the Vendor’s Solicitors to be invested by the Vendor’s Solicitors in trust, as the Purchaser directs, in a term deposit or other similar certificate of deposit with a Canadian Schedule I chartered bank maturing on the Closing Date.  Contemporaneously with the payment of the Initial Deposit by the Purchaser to the Vendor’s Solicitors, the Purchaser shall deliver to the Vendor’s Solicitors a deposit authorization in the form attached hereto as Schedule H.

(b) Unless this Agreement has terminated pursuant to Section 2.4, prior to 11:00 a.m. (Toronto time) on the first Business Day following the Due Diligence Date, the Purchaser shall pay $500,000 (the “Additional Deposit”) as a further deposit to the Vendor’s Solicitors to be invested, as the Purchaser directs, by the Vendor’s Solicitors on the same terms as referred to in Subsection 3.1(a).  In this Agreement, “Deposit” means the Initial Deposit and, if applicable, the Additional Deposit.  Contemporaneously with the payment of the Additional Deposit by the Purchaser to the Vendor’s Solicitors, the Purchaser shall deliver to the Vendor’s Solicitors a deposit authorization in the form attached hereto as Schedule H.

(c) If the Transaction is not completed for any reason other than the default of the Purchaser (and for greater certainty the failure to submit a Satisfaction Notice is not a default of the Purchaser), the Deposit (together with all interest accrued thereon) shall be returned to the Purchaser forthwith thereafter without deduction.  If the Transaction is not completed as a result of the default of the Purchaser, the Deposit, together with interest thereon, shall be forfeited to the Vendor and thereupon be paid to the Vendor, without prejudice to the rights and remedies of the Vendor at law or in equity as a result of such default.

(d) If the Transaction is completed, the Deposit and accrued interest shall be credited against the Purchase Price due on Closing.

(e) In holding and dealing with the Deposit pursuant to this Agreement, the Vendor’s Solicitors are not bound in any way by any agreement other than this Agreement, and Vendor’s Solicitors shall not be considered to assume any duty, liability or responsibility other than to hold the Deposit in accordance with the provisions of this Agreement and to pay the Deposit to the Person becoming entitled thereto in accordance with the terms of this Agreement except in the event of a dispute between the parties as to entitlement to the Deposit; in the case of such dispute, the Vendor’s Solicitors may, in their discretion, pay the monies in dispute into court, whereupon the Vendor’s Solicitors shall have no further obligations

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relating to the Deposit and interest earned thereon.  The Vendor’s Solicitors will not, under any circumstances, be required to verify or determine the validity of any notice or other document whatsoever delivered to the Vendor’s Solicitors and the Vendor’s Solicitors are hereby relieved of any liability or responsibility for any loss or damage which may arise as the result of the acceptance by the Vendor’s Solicitors of any such notice or other document in good faith (provided that the Vendor’s Solicitors shall not be relieved of any liability or responsibility for any loss or damage which may arise if the Vendor’s Solicitors release the Deposit to a party hereto after having received prior written notice from the other party hereto claiming entitlement to such Deposit or a dispute to such entitlement).

3.2 Method of Payment of Purchase Price

On Closing the Purchase Price shall be satisfied as follows:

(a) by application of the Deposit and interest earned thereon held by the Vendor’s Solicitors; and

(b) by payment to the Vendor, or as the Vendor directs in writing, of an amount (the “Balance”) equal to the Purchase Price, as adjusted pursuant to Section 3.3, less the aggregate of the amounts referred to in paragraph 3.2(a).  The Balance shall be paid on Closing by the Purchaser by certified cheque or negotiable bank draft of one of the five largest (by asset size) Schedule I Canadian chartered banks.

If at any time the Vendor delivers to the Purchaser a direction in writing in respect of the payment of the Balance the Purchaser shall forthwith provide, at the Vendor’s request, in favour of any lender to the Vendor and/or affiliates of the Vendor an irrevocable acknowledgement of such direction and an agreement to act in accordance therewith unless otherwise agreed to by such lender.

3.3 Adjustments

(a) Except as otherwise provided herein, the Vendor shall be responsible for all expenses and liabilities, including, without limitation, the expense of paying and registering discharges of all Encumbrances to be Discharged, and be entitled to receive all revenues accrued in respect of the Subject Assets up to and including the Closing Date.  After the Closing Date, the Purchaser shall be responsible for all expenses and liabilities accruing in respect of the Subject Assets after the Closing Date and shall be entitled to all revenues accruing in respect of the Subject Assets after the Closing Date.  Except as otherwise provided herein, all adjustments for income and operating expenses, utilities, taxes (including local improvement charges and assessments and business taxes) and other adjustments established by the usual practice in the City of Toronto, shall be made as of the Closing Date and shall be paid on the Closing Date pursuant to a statement of adjustments to be prepared by the Vendor and approved by the Purchaser, each acting reasonably.

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(b) If the final cost or amount of any item which is to be adjusted cannot be determined at Closing, then an initial adjustment for such item shall be made at Closing, such amount to be estimated by the Vendor, acting reasonably, as of the Closing Date on the basis of the best evidence available at the Closing as to what the final cost or amount of such item will be.  All amounts which have been estimated as at the Closing Date because they have not been finally determined at that date (the “Post Closing Adjustments”) shall be finally adjusted on a post-closing basis once they have been determined and finalized.  In each case when a Post Closing Adjustment is determined, the Vendor or the Purchaser, as the case may be, shall within thirty (30) days of determination, provide a complete statement thereof, together with particulars relating thereto in reasonable detail, to the other and within thirty (30) days thereafter the parties hereto shall make a final adjustment as of the Closing Date for the Post Closing Adjustment in question.  In the case of any dispute between the parties hereto with respect to any Post Closing Adjustments, the final amount of such Post Closing Adjustments shall be determined by the audit firm of Deloitte & Touche LLP and the cost of such determination shall be shared equally between the parties hereto.  Either party may refer any such dispute to Deloitte & Touche LLP for such determination and such determination shall be final and binding on the parties hereto.  The Vendor and Purchaser agree to execute and deliver on the Closing Date an undertaking to re-adjust and pay the amount of any Post Closing Adjustments as may be owing pursuant to the provisions of this Agreement.  Notwithstanding the foregoing, all adjustments and Post Closing Adjustments to be made pursuant to this Subsection 3.3(b) shall, in any event, be completed on or before the date which is the first anniversary of the Closing Date (the “Final Adjustment Date”) and no claim for any re-adjustment may be made by either party thereafter, unless such claim is a claim contemplated by the provisions of Section 6.3, in which case such provisions shall apply.  It is agreed that no adjustments shall be made with respect to insurance premiums and that the Purchaser shall not assume or take an assignment of the Vendor’s insurance policies.

(c) In the event that there are any realty or business tax appeals for the period prior to Closing, the Vendor may, at its option, continue such appeals and shall be entitled to receive any payment resulting therefrom, provided that the Vendor shall consult with the Purchaser with respect to, and the Purchaser acting reasonably shall have the right to approve, any final settlement or disposition of any such appeal.  Any refund or reassessment for the 2006 calendar year (after deduction of out-of-pocket expenses in conducting any such appeal or reassessment, including any commissions payable to agents or consultants) shall be readjusted as of the Closing Date after the conclusion of any assessment appeal and notwithstanding such readjustment occurs after the Final Adjustment Date.  The Purchaser agrees to co-operate with the Vendor with respect to all such appeals or reassessments (provided that such cooperation shall not entail the expenditure of any money by the Purchaser other than its own administrative expenses and any legal fees incurred by the Purchaser in connection therewith) and to provide the Vendor

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with access to any necessary documents or materials required to continue any such appeals or reassessments.  To the extent the Purchaser receives payment of any refund or reassessment for the period prior to the Closing Date, the Purchaser shall hold such refund or reassessment payment in trust for the Vendor and shall endorse (without recourse) in favour of the Vendor and deliver to the Vendor all such payment cheques forthwith upon receipt.

(d) The Purchaser shall provide the Vendor and its auditors, during normal business hours at any time and from time to time after Closing until the Final Adjustment Date upon reasonable prior notice to the Purchaser, access to the books, files and records of the Purchaser relating exclusively to the Subject Assets, for the purpose of calculating or verifying the amount of any Adjustments and dealing with any tax appeals.

(e) On the Closing Date, the Purchaser shall issue replacement letters of credit and/or security deposits for the letters of credit and/or security deposits with respect to the Property, if any, (all of which shall be Disclosed to the Purchaser prior to the Due Diligence Date) and shall use its reasonable commercial efforts to cause the Vendor’s letters of credit and/or security deposits with respect to the Property to be released and returned to the Vendor.  Provided that to the extent that the Purchaser is unable to cause such letters of credit and/or security deposits to be released and returned to the Vendor, in lieu of issuing the replacement letters of credit and/or security deposits referred to above, the Purchaser shall cause matching letters of credit and/or security deposits to be provided to the Vendor, which matching letters of credit and/or security deposits may be drawn upon by the Vendor if and to the extent that the Vendor’s letters of credit and/or security deposits are drawn upon.

3.4 Allocation of Purchase Price

On or before thirty (30) days after the Purchaser has delivered the Satisfaction Notice to the Vendor, the parties hereto shall use all reasonable commercial efforts to agree as to the manner in which the Purchase Price shall be allocated among the various classes of assets comprising the Subject Assets.

ARTICLE 4

CONDITIONS

4.1 Conditions for Vendor

The obligation of the Vendor to complete the Transaction shall be subject to fulfilment of each of the following conditions on or before the Closing Date or such earlier date or time as may be herein specified:

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(a) on or before the Due Diligence Date, the Purchaser shall have received and delivered to the Vendor's Solicitors a signed irrevocable binding Commitment to Title Insurance in respect of the Property in form and substance satisfactory to the Purchaser's Solicitors and the Vendor's Solicitors including a gap endorsement (the "Title Insurance Commitment");

(b) on or before Closing the Purchaser shall have received a title insurance policy in respect of the Property (the "Title Insurance Policy") in accordance with the terms of the Title Insurance Commitment;

(c) payment by the Purchaser of the Purchase Price and all of the other terms, covenants and conditions of this Agreement to be complied with or performed by the Purchaser shall have been complied with or performed in all material respects;

(d) on Closing, the representations or warranties of the Purchaser set out in Section 6.2 shall be true and accurate as if made as of the Closing; and

(e) by the Closing Date: (i) no action or proceeding, at law or in equity, shall have been commenced by any Person to enjoin, restrict or prohibit the Closing which has not, by the Closing Date, been dismissed, quashed or permanently stayed without any further right of appeal or right to seek leave to appeal; and (ii) the Vendor shall have obtained an amendment, variation, modification or discharge of any order of a Governmental Authority required to permit the removal of documents or other personal property from the Property.

The conditions set forth in this Section 4.1 are for the benefit of the Vendor and may be waived in whole or in part by the Vendor by notice to the Purchaser.

4.2 Conditions for Purchaser

The obligations of the Purchaser to complete the Transaction shall be subject to fulfilment of each of the following conditions on or before the Closing Date or such earlier date or time as may be herein specified:

(a) on or before the Due Diligence Date, the Purchaser shall have received the Title Insurance Commitment;

(b) on or before Closing the Purchaser shall have received the Title Insurance Policy;

(c) all of the terms, covenants and conditions of this Agreement to be complied with or performed by the Vendor shall have been complied with or performed in all material respects;

(d) on Closing, the Vendors shall (subject to the Vendors’ right to deliver, pursuant to Subsection 5.2(d), discharge statements and undertakings in respect of Encumbrances to be Discharged, rather than discharge such Encumbrances to be Discharged on Closing) transfer all of the Vendors’ right, title and interest in and to the Subject Assets to the Purchaser free and clear of all Encumbrances, other than Permitted Encumbrances;

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(e) on Closing, the representations and warranties of the Vendor set out in Section 6.1, as supplemented or amended by information Disclosed to the Purchaser no later than 5:00 p.m. on the last Business Day prior to the Due Diligence Date, shall be true and correct in all material respects; and

(f) by the Closing Date: (i) no action or proceeding, at law or in equity, shall have been commenced by any Person to enjoin, restrict or prohibit the Closing which has not, by the Closing Date, been dismissed, quashed or permanently stayed without any further right of appeal or right to seek leave to appeal; and (ii) the Vendor shall have obtained an amendment, variation, modification or discharge of any order of a Governmental Authority required to permit the removal of documents or other personal property from the Property.

The conditions set forth in Section 4.2 are for the benefit of the Purchaser, and may be waived in whole or in part by the Purchaser by notice to the Vendor.  For greater certainty, it is agreed that for the purposes of Subsection 4.2(e), representations and warranties of the Vendor shall be deemed to be true and accurate in all material respects unless the effect of the falsity or inaccuracy of such representations and warranties is that there is a material adverse effect upon the value of the Subject Assets, taken as a whole.

4.3 Non-Satisfaction of Conditions

(a)           Subject to Subsection 4.3(b), in the event any condition set forth in Section 4.1 or Section 4.2 is not satisfied or waived as therein provided on or before the applicable date or time referred to in Section 4.1 or Section 4.2, as the case may be (such condition being referred to as the “Unsatisfied Condition”), this Agreement shall, upon notice by the party having the benefit of the Unsatisfied Condition to the other party, be terminated and both parties hereto shall be released from all of their liabilities and obligations under this Agreement (other than the obligations referred to in Subsection 2.3(b) and Section 2.5) unless the reason for the Unsatisfied Condition not being satisfied is the breach by a party hereto of an obligation under this Agreement or a representation and warranty made by such party being incorrect or inaccurate, in which case a claim may be made against such party.  In the event of any such termination hereunder, the Deposit and all interest accrued thereon shall be disbursed in accordance with the provisions of Section 3.1(c).  Notwithstanding any other provisions of this Agreement, if by the applicable time or date referred to in Section 4.1 or Section 4.2, as the case may be, the party having the benefit of any given condition has not given notice to the other party that such condition has been waived or satisfied, such condition shall be deemed not to have been waived or satisfied.

(b)           Notwithstanding the provisions of Section 4.3(a), in the event the conditions set out in Subsection 4.1(e) and/or 4.2(f) are  not satisfied or waived, either party may, by written notice to the other, extend the date of the Closing by ninety (90) days following the then scheduled Closing Date in order to permit the Vendor additional time to attempt to satisfy the conditions set out in Subsection 4.1(e) and/or 4.2(f).

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4.4 Efforts to Satisfy Conditions

Without derogating from any party’s other obligations under this Agreement, it is agreed that the Purchaser shall act in good faith and use reasonable efforts to satisfy, or cause to be satisfied, the conditions set forth in Section 4.1, and the Vendor shall act in good faith and use reasonable efforts to satisfy, or cause to be satisfied, the conditions set out in Section 4.2. Provided that, unless the Vendor has otherwise in this Agreement specifically agreed to do so, nothing in this Agreement shall be interpreted as requiring the Vendor to spend money (other than fees to its own professionals) to satisfy any conditions, or to address any defects, deficiencies or concerns identified by the Purchaser with respect to the Property, the Subject Assets or any other matter or aspect of the Transaction whatsoever.  Each of the Purchaser and the Vendor shall act in good faith in determining whether or not a condition in its favour has been satisfied.

ARTICLE 5

CLOSING DOCUMENTS

5.1 Closing Arrangements

(a) The Closing shall commence at 10:00 a.m. on the Closing Date at the office of the Vendor’s Solicitors or at such other time or place as the parties shall mutually agree upon in writing and shall continue until the Closing is completed or this Agreement is validly terminated in accordance with the terms hereof.

(b) The Vendor shall have the one time right, exercisable in its sole and absolute discretion, by written notice to the Purchaser delivered no later than sixty (60) days before the Closing Date, to extend the date of the Closing by up to sixty (60) days following the original Closing Date.

5.2 Vendor’s Closing Deliveries

On or before Closing, subject to the provisions of this Agreement, the Vendor shall deliver, or cause to be delivered, to the Purchaser’s Solicitors the following:

(a) a registrable transfer (other than a land transfer tax affidavit) of the undivided 100% ownership interest of the Vendor in the Property in favour of the Purchaser, which shall exclude the implied covenants set out in Section 5(1) of the Land Registration Reform Act (Ontario);

(b) the Assignment and Assumption of Contracts;

(c) the Bill of Sale;

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(d) registrable discharges of the Encumbrances to be Discharged, if any, in respect of the Subject Assets which have not been discharged as at the Closing Date or, in each case as an alternative to delivering such registrable discharges, discharge statements from the holder of the Encumbrances to be Discharged together with an irrevocable direction to pay in respect of the amounts secured by such Encumbrance and a solicitor’s undertaking to obtain and register a discharge of such Encumbrance as soon as reasonably practicable following Closing;

(e) the Assignment and Assumption of Permitted Encumbrances;

(f) a direction as to the payee or payees of the Purchase Price;

(g) an undertaking by the Vendor to re-adjust the Adjustments in accordance with Section 3.3;

(h) all third party consents, if any, with respect to any of the Contracts or Permitted Encumbrances that the Vendor is required to obtain pursuant to this Agreement;

(i) a statutory declaration or other evidence satisfactory to the Purchaser, acting reasonably, that the Purchase Price is not subject to withholding tax pursuant to the non-residency provisions of the ITA by reason of the fact that the Vendor is not a non-resident of Canada, as defined by Section 116 of the ITA and that the Property has never been occupied by any officer, director or shareholder of the Vendor or by any spouse of any officer, director or shareholder of the Vendor as a matrimonial home within the meaning of the Family Law Act (Ontario); and a certificate of the Vendor certifying that the representations and warranties of the Vendor contained in Section 6.1 are true and correct in all material respects as of the Closing Date;

(j) such documentation as may be contemplated or required pursuant to the Bulk Sales Act (Ontario) evidencing compliance with the provisions thereof; and

(k) all keys, combinations and codes to all locks, safes, vaults and security systems located at the Building.

All documentation shall be in form and substance acceptable to the Purchaser’s Solicitors and the Vendor’s Solicitors, each acting reasonably and in good faith.

5.3 Purchaser’s Closing Deliveries

On or before Closing, subject to the terms and conditions of this Agreement, the Purchaser shall execute (where it is a party thereto) and shall deliver or cause to be delivered to the Vendor’s Solicitors the following:

(a) the Balance of the Purchase Price in accordance with Section 3.2;

(b) the Assignment and Assumption of Contracts;

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(c) the Assignment and Assumption of Permitted Encumbrances; and such assumption or other agreements, undertakings and other instruments in favour of other parties as may be required pursuant to the terms of any such Permitted Encumbrances or as the Vendor may require;

(d) an undertaking by the Purchaser to re-adjust the Adjustments in accordance with Section 3.3;

(e) the GST Undertaking and Indemnity;

(f) pursuant to Section 35 of the Heritage Act (Ontario), a notice to the clerk of the City of Toronto advising of the change of ownership of the Property;

(g) a certificate of the Purchaser certifying that the representations and warranties contained in Section 6.2 are true and correct in all material respects as of the Closing Date; and

(h) assumption agreements or other agreements, notices, undertakings or other instruments required to be delivered by the Purchaser in favour of any other Persons with an interest in the Property.

All documentation shall be in form and substance acceptable to the Purchaser’s Solicitors and the Vendor’s Solicitors, each acting reasonably and in good faith.

5.4 Title Insurance, Registration and Other Costs

(a) The Vendor shall be responsible for, and shall pay to the title insurer that issues the Title Insurance Policy,  the premium in respect of the Title Insurance Policy (estimated to be approximately $10,000).  The Vendor and the Purchaser shall be responsible for the costs of the Vendor’s Solicitors and the Purchaser’s Solicitors, respectively, in respect of the Transaction.  The Purchaser shall be responsible for and pay, in addition to the Purchase Price, any land transfer taxes payable on the transfer of the Subject Assets, all registration fees payable in respect of registration by it of any documents on Closing and all federal and provincial sales and other taxes, if any, payable by a purchaser upon or in connection with the conveyance or transfer of the Subject Assets, including provincial retail sales tax and goods and services tax.

(b) The Purchaser shall indemnify and save harmless the Vendor and its shareholders, directors, officers, employees and agents from all Claims incurred, suffered or sustained as a result of a failure by the Purchaser:

(i) to pay any federal, provincial or other taxes payable by the Purchaser in connection with the conveyance or transfer of the Subject Assets whether arising from a reassessment or otherwise, including provincial retail sales tax and goods and services tax, if applicable; or

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(ii) to file any returns, certificates, filings, elections, notices or other documents required to be filed by the Purchaser with any federal, provincial or other taxing authorities in connection with the conveyance or transfer of the Subject Assets.

This indemnity shall survive and shall not merge on Closing.

5.5 Electronic Registration

The Vendor and the Purchaser acknowledge that the electronic registration system (the “Teraview Electronic Registration System” or “TERS”) is operative in the land registry office where the Lands are located and, accordingly, the following provisions shall prevail, namely:

(a) the Vendor’s Solicitors and the Purchaser’s Solicitors shall each be obliged to be authorized TERS users and in good standing with the Law Society of Upper Canada, and they are hereby authorized by the parties hereto to enter into a document registration agreement in the form adopted by the Joint LSUC-CBAO Committee on Electronic Registration of Title Documents on March 29, 2004 or any successor version thereto (the “Document Registration Agreement” or “DRA”), together with the additional requirement that the registering solicitor shall also be obliged to provide the non-registering solicitor with a copy of the registration report printed by TERS upon the submission and receipt for registration of the electronic documents, as evidence of the registration thereof, within one Business Day following the Closing Date.  It is understood and agreed that the DRA shall outline or establish the procedures and timing for completing the transaction contemplated by this Agreement electronically, and shall be executed by both the Vendor’s Solicitors and the Purchaser’s Solicitors and exchanged by courier or facsimile transmission or e-mail between such solicitors (such that each solicitor has a photocopy or faxed copy of the DRA duly executed by both solicitors) by no later than one Business Day before the Closing Date;

(b) the delivery and exchange of the Closing Documents and the balance of the Purchase Price, and the release thereof to the Vendor and the Purchaser, as the case may be:

(i) shall not occur contemporaneously with the registration of the transfer/deed for the Lands and other Closing Documents, if any, to be registered electronically; and

(ii) shall be governed by the DRA, pursuant to which the solicitor receiving any Closing Documents, or the balance of the Purchase Price, will be required to hold the same in escrow, and will not be entitled to release the same except in strict accordance with the provisions of the DRA;

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(c) each of the parties agrees that the delivery of any of the Closing Documents not intended or required to be registered against title to the Lands shall, unless the parties otherwise agree, be by way of delivery of originally signed copies thereof on the Closing Date to the other party or its solicitor;

(d) notwithstanding anything contained in this Agreement or in the DRA to the contrary, it is expressly understood and agreed by the parties hereto that an effective tender shall be deemed to have been validly made by either party (in this Section called the “Tendering Party”) upon the other party (in this Section called the “Receiving Party”) when the solicitor for the Tendering Party has:

(i) delivered all applicable Closing Documents and/or the balance of the Purchase Price to the Receiving Party’s solicitor in accordance with the provisions of this Agreement and the DRA;

(ii) advised the solicitor for the Receiving Party in writing that the Tendering Party is ready, willing and able to complete the transaction contemplated by this Agreement in accordance with the terms and provisions of this Agreement; and

(iii) completed all steps required by TERS in order to complete the transaction contemplated by this Agreement that can be performed or undertaken by the Tendering Party’s solicitor without the co-operation or participation of the Receiving Party’s solicitor, and specifically when the Tendering Party’s solicitor has electronically “signed” the transfer/deed(s) and any other Closing Document, if any, to be registered electronically for completeness and granted “access” to the Receiving Party’s solicitor (but without the Tendering Party’s solicitor releasing the same for registration by the Receiving Party’s solicitor).

5.6 Single Transaction.  

Subject to Section 5.5, all documents and cheques shall be delivered in escrow as specified in Section 5.5 on the Closing Date pending submission and receipt for registration of the Closing Documents as reasonably required by the solicitors for the parties and receipt of such evidence as they shall reasonably request that all conditions of this Agreement have been satisfied.  It is a condition of Closing that all matters of payment, execution and delivery of documents by each party to the other and the submission and receipt for registration of the appropriate documents in the appropriate offices of public record shall be deemed to be concurrent requirements and it is specifically agreed that nothing will be complete at the Closing until everything required at the Closing has been paid, executed and delivered and until all documents have been submitted and receipted for registration.

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ARTICLE 6

Representations, Warranties and Covenants

6.1 Vendor’s Representations

The Vendor hereby represents and warrants to and in favour of the Purchaser that as of the date of this Agreement (unless otherwise specified) and as of the Closing Date:

(a) the Vendor is (and will be at Closing) a corporation existing and governed by the laws of the Province of Ontario and has the necessary authority, power and capacity to own the Property and the other property constituting the Subject Assets and to enter into this Agreement and the documents and transactions contemplated herein and to complete the Transaction and perform its obligations under the documents and transactions contemplated herein on the terms and conditions herein contained;

(b) the agreement of purchase and sale constituted on the execution and delivery of this Agreement and the obligations of the Vendor hereunder and the documents and transactions contemplated herein have been duly and validly authorized by all requisite proceedings of the Vendor and constitute and will constitute at Closing, legal, valid and binding obligations of the Vendor enforceable against such Vendor in accordance with its and their terms;

(c) neither the execution and delivery of this Agreement by the Vendor and the completion by the Vendor of the Transaction will not, subject to Section 6.5, result in the breach or violation of any of the provisions of, or constitute a default under, or conflict with or cause the acceleration of any obligation of the Vendor under:

(i) any provision of the constating documents, by-laws or resolutions of the board of directors of the Vendor; or

(ii) any Applicable Laws;

(d) no approval or consent of any Governmental Authority is required in connection with the completion of the Transaction by the Vendor other than as referred to in  Section 4.1(e)(ii) above;

(e) the Vendor is a resident of Canada for the purposes of the ITA;

(f) no Person has any right of first opportunity, right of first refusal, option or other right to purchase or acquire any interest in the Subject Assets or any part thereof; and

(g) to the best of the Vendor’s knowledge, the Vendor has not done, omitted or permitted anything whereby the Lands are or may be encumbered, except as the records of the land registry office disclose.

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For the purposes of this Section 6.1, “to the best of the Vendor’s knowledge” shall mean to the best of the knowledge of one or more of the current members of the board of directors of the Vendor.

6.2 Purchaser’s Representations

The Purchaser hereby represents and warrants to and in favour of the Vendor that as of the date of this Agreement (unless otherwise specified) and as of the Closing Date:

(a) the Purchaser is (or if an affiliate of the Purchaser will be taking title to the Subject Assets at Closing, such affiliate will be at Closing) a corporation existing and governed by the laws of the Province of Ontario and has, or will have, as the case may be, the necessary corporate authority, power and capacity to own the Subject Assets and to enter into this Agreement and the documents and transactions contemplated herein and to complete the Transaction and perform its obligations under the documents and transactions contemplated herein on the terms and conditions herein contained;

(b) the agreement of purchase and sale constituted on the execution and delivery of this Agreement and the obligations of the Purchaser hereunder and the documents and transactions contemplated herein have been duly and validly authorized by all requisite corporate proceedings of the Purchaser and constitute (and will constitute at Closing), legal, valid and binding obligations of the Purchaser enforceable against the Purchaser in accordance with its and their terms; and neither the entering into nor delivery of this Agreement nor the completion by the Purchaser of the Transaction will conflict with or constitute a default under any Applicable Laws; and no approval or consent of any Governmental Authority is required in connection with the execution and delivery of this Agreement by the Purchaser and the completion of the Transaction by the Purchaser;

(c) the Purchaser is duly registered, and if an affiliate of the Purchaser will be taking title to the Subject Assets at Closing, such affiliate will be duly registered, in virtue of Subsection (d) of Section V of Part IX of the Excise Tax Act (Canada), and in consequence, in virtue of paragraph 221(2)(b) of such law, the Vendor is not obliged to collect the tax known as the goods and services tax from the Purchaser or such affiliate, as the case may be;

(d) the Purchaser is purchasing, or if an affiliate of the Purchaser will be taking title to the Subject Assets at Closing, such affiliate will be purchasing, the Subject Assets as principal for its own account and same are not being purchased by the Purchaser, or such affiliate, as the case may be, as an agent, trustee or otherwise on behalf of or for another Person;

(e) the Purchaser is not a non-Canadian within the meaning of the Investment Canada Act (Canada); and

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(f) the Purchaser has not retained the services of any real estate broker or agent in connection with the transactions contemplated by this Agreement.

6.3 Survival of Representations

(a) The representations, warranties and certifications contained in this Agreement or in any Closing Documents shall not merge on Closing but shall survive until the Final Adjustment Date. The party which has received a representation, warranty or certification, whether in this Agreement or in any Closing Document, shall give written notice to the other party of each breach of the representation, warranty or certification, together with details thereof, promptly after becoming aware of the breach and no later than the Final Adjustment Date.  Notwithstanding any other provision of this Agreement or of any Closing Document, no claim may be asserted or pursued against any party hereto, or any action, suit or other proceedings commenced or pursued, for or in respect of any breach of any representation, warranty or certification made by such party in this Agreement or in any Closing Document unless written notice of such Claim is received by such party describing in detail the facts and circumstances with respect to the subject matter of such Claim on or prior to the Final Adjustment Date, irrespective of whether the subject matter of such Claim shall have occurred before or after the Final Adjustment Date; and following the Final Adjustment Date all such representations, warranties and certifications shall cease to have any effect except to the extent a written notice of Claim has been previously given in respect thereof in accordance with this Subsection.

(b) Notwithstanding the foregoing provisions of this Section or any other provisions of this Agreement or any Closing Documents, the liability of any party to this Agreement (herein referred to as the “Responding Party”) after Closing in respect of any representation, warranty or certification made by such Responding Party in or pursuant to this Agreement or in any Closing Document shall be subject to and limited by the following:

(i) the limitations contained in Subsections 6.3(a) and (b);

(ii) no Claim shall be brought against the Responding Party by the other party to this Agreement (the “Claiming Party”) until the aggregate of all the amounts claimed pursuant to such Claim or Claims that have then been made by the Claiming Party against the Responding Party exceed $250,000; provided that if the aggregate of all such Claims exceeds $250,000, the Purchaser shall be entitled to recover the full amount of the Claim or Claims, including the initial $250,000 if such Claims are successful;

(iii) if any breach of a representation, warranty or certification can be remedied within a reasonable period of time (not to exceed ninety (90) days after written notice thereof is given) the Responding Party shall be given a

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reasonable opportunity to remedy any such breach, provided it is capable of being remedied;

(iv) the Responding Party shall not be responsible for any Claim to the extent, if any, that the Claiming Party is otherwise indemnified for such Claim under insurance policies in the absence of any such Claim;

(v) to the extent that a Responding Party becomes liable to pay any amount for the breach of a representation, warranty or certification, and such amount is deductible by the Claiming Party for income tax purposes, the Responding Party shall, notwithstanding any other provision hereof, be obligated to pay the Claiming Party only the loss that the Claiming Party actually suffers after having regard to the effect of such deductions; and

(vi) the provisions of Section 6.6, if applicable.

6.4 “As-Is” Purchase

(a) The Purchaser acknowledges and agrees that the Subject Assets and all other aspects of the Transaction are being sold and purchased “as-is, where-is”, without any representation, warranty or covenant except as expressly set forth in this Agreement.  The Purchaser agrees to exercise its rights to perform Due Diligence on or before the Due Diligence Date and shall rely solely upon its own findings resulting therefrom and not upon any information, documentation, statement or opinion, written or oral, provided by the Vendor or any agent of the Vendor other than the representations and warranties set out in Section 6.1.

(b) Except as expressly provided in Section 6.1, the Vendor makes no representations or warranties of any nature whatsoever with respect to any information or documentation Disclosed to the Purchaser, nor with respect to the Subject Assets (including, without limitation, the Vendor’s title thereto and any Encumbrances), the Property or any other assets or the Transaction including, without limitation, (i) the structural integrity or any other aspect of the physical condition of the Building, (ii) the conformity of the Building to any plans or specifications for the Property (including, but not limited to, any plans and specifications that may have been or which may be provided to the Purchaser), (iii) the conformity of the Property to past, current or future applicable zoning or building code requirements or other Applicable Laws, (iv) the existence of soil instability, past soil repairs, soil additions or conditions of soil fill or any other matter affecting the stability or integrity of the Lands, or any Building situated on or as part of the Property, (v) the sufficiency of any drainage, (vi) whether the Property is located wholly or partially in a flood plain or a flood hazard boundary or similar area, (vii) the existence or non-existence of underground storage tanks, (viii) the availability of public utilities and services for the Property, (ix) the fitness or suitability of the Property for occupancy or any intended use (including matters relating to health and safety and the environment), (x) the potential for further development of the

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Property, (xi) the existence of land use, zoning or building entitlements affecting the Property, (xii) the existence of any unused density that would permit a redevelopment of the Property, (xiii) the status of any Contracts or Permitted Encumbrances, and or that any of the Contracts or Permitted Encumbrances is assignable or in good standing, (xiv) the presence of toxic wastes, hazardous materials or contaminants in, on or about the Property or any other environmental issue or condition, or (xv) the conformity of the Property to the Heritage Act (Ontario) or to any municipal by-laws relating to the preservation of heritage, cultural or historical properties (collectively, the “Property Conditions”).

(c) As part of the Purchaser’s agreement to purchase the Subject Assets and accept the Subject Assets and the Property “as-is, where-is”, and not as a limitation on such agreement, the Purchaser hereby unconditionally and irrevocably waives any and all actual or potential rights or claims the Purchaser might have against the Vendor pursuant to any warranty, express or implied, of any kind or type, other than those representations and warranties expressly set forth in this Agreement, or in any of the Closing Documents relating to the Property or any other assets, the Subject Assets, the Property Conditions or any other aspect of the Transaction.  Such waiver is absolute, unlimited and includes, but is not limited to, waiver of express warranties, implied warranties, warranties of fitness for a particular use, warranties of merchantability, warranties of occupancy, strict liability and claims of every kind and type, including, but not limited to, claims regarding defects, whether or not discoverable, product liability claims, or similar claims, and to all other extent or later created or conceived of strict liability or strict liability type claims and rights.

(d) Except as otherwise expressly provided in Section 6.1, the Vendor shall not be responsible or liable for any misrepresentation, lack of disclosure or incorrect or incomplete disclosure of any nature whatsoever or failure to investigate the Property on the part of any real estate broker or sales agent, or any other purported or acknowledged agent, representative, contractor, consultant or employee of the Vendor or any third party.

6.5 Bulk Sales Legislation

The Vendor shall comply with the provisions of any statutes governing bulk sales or similar legislation applicable to the Transaction on or before Closing.

6.6 Third Party Claims

(a) In the case of Claims made by a third party after the Closing (a “Third Party Claim”) with respect to which the Claiming Party seeks to make a Claim against the Responding Party as a result of the breach by the Responding Party of any representation, warranty, certification or covenant made by such Responding Party in or pursuant to this Agreement or any Closing Document, the Claiming Party shall give written notice to the Responding Party of any such Third Party

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Claim forthwith after receiving notice thereof.  If the Claiming Party fails to give such written notice to the Responding Party, such failure shall not preclude the Claiming Party from making such Claim against the Responding Party, but its right to indemnification may be reduced to the extent that such delay prejudiced the defence of the Third Party Claim or increased the amount of liability or the cost of the defence.

(b) The Responding Party shall have the right, by written notice to the Claiming Party given not later than thirty (30) days after receipt of the notice referred to in Subsection 6.6(a), to assume the control of the defence, compromise or settlement of the Third Party Claim.

(c) Upon the assumption of control of any Third Party Claim by the Indemnifying Party as contemplated by Subsection 6.6(b), the Responding Party shall diligently proceed with the defence, compromise or settlement of the Third Party Claim at its sole expense, including, if necessary, employment of counsel reasonably satisfactory to the Claiming Party and, in connection therewith, the Claiming Party shall co-operate fully (but at the expense of the Responding Party with respect to any reasonable out-of-pocket expenses incurred by the Claiming Party) to make available to the Responding Party all pertinent information and witnesses under the Claiming Party’s control, make such assignments and take such other steps as in the opinion of counsel for the Responding Party, acting reasonably, are reasonably necessary to enable the Claiming Party to conduct such defence.  The Claiming Party shall have the right to participate in the negotiation, settlement or defence of any Third Party Claim at its own expense and no Third Party Claim shall be settled, compromised or otherwise disposed of without the prior written consent of the Claiming Party, such consent not to be unreasonably withheld or delayed.  If the Responding Party elects to assume control of the Third Party Claim as contemplated by Subsection 6.6(b), the Claiming Party shall not pay, or permit to be paid, any part of the Third Party Claim unless the Responding Party consents in writing to such payment or unless the Responding Party, subject to the last sentence of Subsection 6.6(d), withdraws from the defence of such Third Party Claim or unless a final judgment from which no appeal may be taken by or on behalf of the Responding Party is entered against the Claiming Party in respect of such Third Party Claim.

(d) If the Responding Party fails to give written notice to the Claiming Party as contemplated by Subsection 6.6(b), the Claiming Party shall be entitled to make such settlement of the Third Party Claim, or otherwise deal therewith, as it deems appropriate, acting reasonably, and such settlement or any other final determination of the claim or demand shall be binding upon the Responding Party.  If the Responding Party fails to defend or, if after commencing or undertaking such defence, fails to prosecute or withdraws from such defence, the Claiming Party shall have the right to undertake the defence or settlement thereof.  If the Claiming Party assumes the defence of any Third Party Claim and proposes

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to settle it prior to a final judgment thereon or to forego any appeal with respect thereto, then the Claiming Party shall give the Responding Party prompt written notice thereof, and the Responding Party shall have the right to participate in the settlement or assume or reassume the defence of such Third Party Claim.

ARTICLE 7

OPERATION UNTIL CLOSING

7.1 Operation Before Closing

From the date hereof until Closing, the Vendor shall operate the Property in accordance with its current management practices applicable to the Property.

7.2 Damage Before Closing

The interest of the Vendor in and to the Property shall be at the risk of the Vendor until Closing, subject to the terms and conditions of this Agreement.  The Vendor covenants and agrees to notify the Purchaser in writing of any and all loss or damage to the Property in excess of $50,000 forthwith following the occurrence thereof.  If loss or damage to the Property occurs, then:

(a) if the cost of repair or restoration, in the opinion of the Vendor’s architect or engineer, will exceed an amount equal to 35% of the Purchase Price (such damage being referred to herein as “Substantial Damage”), then the Vendor or the Purchaser may by notice to the other party within ten (10) Business Days after the occurrence of such Substantial Damage, elect to terminate this Agreement in which event this Agreement shall automatically terminate, be null and void and of no further force and effect whatsoever, the Purchaser and Vendor shall be released from all obligations under this Agreement (except those which are expressly stated to survive any termination of this Agreement) and the Deposit and all interest earned thereon shall be returned to the Purchaser forthwith without deduction; and

(b) if such loss or damage is not Substantial Damage, or is Substantial Damage but neither party has elected to exercise the termination right with respect to the Agreement, pursuant to Subsection 7.2(a), then neither party shall have any right to terminate this Agreement by virtue thereof, the Vendor shall pay any insurance deductibles in respect of such loss or damage, the Purchaser shall be entitled to all proceeds of property insurance in respect of such loss or damage (except that portion, if any, required to reimburse the Vendor for repair or restoration work it has done prior to Closing and insurance for loss of income prior to Closing, all of which shall be paid to the Vendor), the parties shall complete the Transaction and the Purchaser shall promptly and diligently repair such damage at its own expense following Closing.

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The Vendor covenants and agrees that, during the entire period of time from and including the Execution Date to and including the Closing Date, the Vendor shall maintain the same or substantially similar insurance as disclosed to the Purchaser pursuant to Section 2.2(f) above.  If the damage or destruction occurs at such time that there is insufficient time for the Vendor or the Purchaser to make its election hereunder, the Closing Date shall be postponed to a date which is five (5) Business Days after the earlier of the date such election is made or the period for making such election has expired, or if such date is not a Business Day, then the next Business Day thereafter.

7.3 Leasing and Contracts

(a) The Vendor shall not enter into any new material Contract (unless such Contract is terminable without penalty upon notice of not more than thirty (30) days) after the date hereof without the prior approval of the Purchaser, which approval shall not be unreasonably withheld or delayed.  In the case of each such Contract where the approval of the Purchaser is required, such approval shall be deemed to have been given if no response is received from the Purchaser within ten (10) Business Days following written request therefor sent in accordance with the provisions hereof.

(b) At any time after the date hereof, the Vendor shall not voluntarily materially amend or terminate any material Contract without the prior written consent of the Purchaser, such consent not to be unreasonably withheld or delayed .  In each such case where the approval of the Purchaser is required, such approval shall be deemed to have been given if no response is received from the Purchaser within ten (10) Business Days following written request therefor sent in accordance with the provisions hereof.

(c) If any Contracts involving the provision of services to the Property, or other similar Contracts, also apply to any other properties, the Vendor shall be entitled, with the consent of the Purchaser, prior to the Due Diligence Date, to amend each such Contract, or replace it with a new or restated agreement, in order to provide that the Contract, as so amended or replaced (it being agreed that the Contract as so amended or replaced is the Contract for all purposes of this Agreement), shall not apply to any properties other than the Property.

(d) Notwithstanding any other provision of this Agreement, no default by any Person other than the Vendor under any Permitted Encumbrances or Contract (including, without limitation, any bankruptcy or event of insolvency) or repudiation or termination thereof, or proceeding for relief therefrom, at any time after the Due Diligence Date, and no other change adverse to the Subject Assets or the Property or their value at any time after the Due Diligence Date (it being acknowledged that the Purchaser has a right of termination prior to the Due Diligence Date pursuant to Section 2.4 hereof), other than a change caused by the wrongful act of the Vendor, shall entitle the Purchaser to terminate this Agreement or to an

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abatement of the Purchase Price or any other right or remedy whatsoever, the Purchaser agreeing to accept the risk of the foregoing.  The foregoing does not relieve, however, the Vendor from any consequences of any default by the Vendor under any such Permitted Encumbrance or Contract where the result of such default would be the breach by the Vendor of any of its representations or warranties or non-satisfaction of the conditions set out in Section 4.2, it being agreed that in the case of any such default, if it has a material adverse effect on the Property, the Purchaser shall be entitled to an adjustment of the Purchase Price by the amount of the diminution in value of the Property caused by such default, if any, but no other remedy.

7.4 Assignment of Contracts

Nothing in this Agreement shall be construed as an assignment of, or an attempt to assign to the Purchaser, any Contract or Permitted Encumbrance which is (i) not assignable, or (ii) not assignable without the approval or consent of the other party or parties thereto, without first obtaining such approval or consent (collectively “Non-Assignable Rights”).  The failure to obtain any such approval or consent, or the fact that a Contract or Permitted Encumbrance is not assignable, shall not entitle the Purchaser to terminate this Agreement or to any other right or remedy whatsoever (without prejudice to the right of the Purchaser to terminate this Agreement prior to the Due Diligence Date pursuant to and in accordance with Section 2.4 if the Purchaser is not satisfied with its Due Diligence).  In connection with such Non-Assignable Rights the Vendor shall, at the request of the Purchaser and in each case at the Purchaser’s expense:

(a) apply for and use all reasonable efforts to obtain all such consents or approvals, in a form satisfactory to the Purchaser acting reasonably, provided that nothing herein shall require the Vendor to make any payment to any other party to any of the Contracts; and

(b) co-operate with the Purchaser in any reasonable and lawful arrangements designed to provide the benefits of such Non-Assignable Rights to the Purchaser, including without limitation, holding any such Non-Assignable Rights in trust for the Purchaser or acting as agent for the Purchaser, provided that pursuant to such arrangements the Purchaser fully indemnifies the Vendor for all obligations or liabilities incurred thereunder or in connection therewith.

In the event of any conflict or inconsistency between this Section and any other provision of this Agreement, this Section shall prevail.  This provision survives the Closing.

7.5 Trade-Marks

No trade-marks, trade-names, logos, commercial symbols, business names or other intellectual property rights are conveyed or intended to be conveyed to the Purchaser as part of the Subject Assets.

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ARTICLE 8

GENERAL

8.1 Gender and Number

Words importing the singular include the plural and vice versa.  Words importing gender include all genders.

8.2 Captions

The captions and headings contained herein are for reference only and in no way affect this Agreement or its interpretation.

8.3 Obligations as Covenants

Each agreement and obligation of any of the parties hereto in this Agreement, even though not expressed as a covenant, is considered for all purposes to be a covenant.

8.4 Applicable Law

This Agreement and all Closing Documents shall be construed and enforced in accordance with the laws of the Province of Ontario and the laws of Canada applicable thereto and shall be treated in all respects as Ontario contracts.

8.5 Currency

All reference to currency in this Agreement shall be deemed to be reference to Canadian dollars.

8.6 Invalidity

If any immaterial covenant, obligation, agreement or part thereof or the application thereof to any Person or circumstance, to any extent, shall be invalid or unenforceable, the remainder of this Agreement or the application of such covenant, obligation or agreement or part thereof to any Person, party or circumstance other than those to which it is held invalid or unenforceable shall not be affected thereby.  Each covenant, obligation and agreement in this Agreement shall be separately valid and enforceable to the fullest extent permitted by law.

8.7 Amendment of Agreement

No supplement, modification, waiver or termination (other than a termination pursuant to the terms of this Agreement) of this Agreement shall be binding unless executed in writing by the parties hereto in the same manner as the execution of this Agreement.

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8.8 Time

Time shall be of the essence of this Agreement.  If anything herein is to be done on a day which is not a Business Day, the same shall be done on the next succeeding Business Day.  Unless otherwise provided hereto, all references to time shall mean Toronto time.

8.9 Further Assurances

Each of the parties hereto shall from time to time hereafter and upon any reasonable request of the other, execute and deliver, make or cause to be made all such further acts, deeds, assurances and things as may be required or necessary to more effectually implement and carry out the true intent and meaning of this Agreement.

8.10 Entire Agreement

This Agreement and any agreements, instruments and other documents made as of the date hereof or herein contemplated to be entered into between, by or including the parties hereto constitute the entire agreement between the parties hereto pertaining to the agreement of purchase and sale provided for herein and supersede all prior agreements, understandings, negotiations and discussions, whether oral or written, with respect thereto, and there are no other warranties or representations and no other agreements between the parties hereto in connection with the agreement of purchase and sale provided for herein except as specifically set forth in this Agreement or the Schedules attached hereto.

8.11 Waiver

No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision (whether or not similar) nor shall any waiver constitute a continuing waiver unless otherwise expressed or provided.

8.12 Solicitors as Agents and Tender

Any notice, approval, waiver, agreement, instrument, document or communication permitted, required or contemplated in this Agreement may be given or delivered and accepted or received by the Purchaser’s Solicitors on behalf of the Purchaser and by the Vendor’s Solicitors on behalf of the Vendor and any tender of Closing Documents and the Balance may be made upon the Vendor’s Solicitors and the Purchaser’s Solicitors, as the case may be.

8.13 Survival

Except as otherwise provided in this Agreement, no representations, warranties, covenants or agreements of either the Vendor or the Purchaser shall survive Closing.  This provision survives the Closing.

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8.14 Successors and Assigns

All of the covenants and agreements in this Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall enure to the benefit of and be enforceable by the parties hereto and their respective successors and their permitted assigns pursuant to the terms and conditions of this Agreement.

8.15 Assignment

Until completion of the Closing, the Purchaser shall not assign its rights and/or obligations hereunder (or agree to do so) without the prior written consent of the Vendor, which consent may be withheld by the Vendor in its sole and absolute discretion; provided, however, that the Purchaser may assign all of its rights and/or obligations under this Agreement to an affiliate of the Purchaser without the consent of the Vendor.  In the case of any assignment, the Purchaser shall always remain jointly and severally liable of its obligations pursuant to the terms hereof.  In addition, the Purchaser shall be entitled, by written notice to the Vendor, to direct that title be taken in the name of an affiliate of Purchaser on Closing and, in the event the Purchaser delivers such written notice to the Vendor, the Vendor shall engross the Closing Documents (including the transfer of the Property) accordingly.

The Purchaser shall provide the Vendor with all information about any proposed assignee or assignment that the Vendor requires, acting reasonably.

At the request of the Vendor, the Purchaser shall forthwith deliver to the Vendor, in writing, a list of all Persons that, directly or indirectly, own the shares of the Purchaser, including, for greater certainty, a list of all of Persons that, directly or indirectly, own the shares of holding body corporate(s) (as such term is defined in the Business Corporations Act (Ontario)), if any, of the Purchaser.

8.16 Real Estate Commissions

The Vendor shall pay the commission payable or fee payable to Colliers International, which is the only real estate agent or broker that the Vendor has used in connection with the Transaction.  The Purchaser represents and warrants to the Vendor that the Purchaser has not used the services of any real estate agent or broker in connection with the purchase and sale of the Subject Assets contemplated hereby.  This Section shall not merge on, but shall survive, Closing.

8.17 Notice

Any notice, demand, approval, consent, information, agreement, offer, payment, request or other communication (hereinafter referred to as a “Notice”) to be given under or in connection with this Agreement shall be in writing and shall be given by personal delivery or by telecopier or other electronic communication which results in a written or printed notice being given, addressed or sent as set out below or to such other address or electronic number as may from time to time be the subject of a Notice:

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with a copy to:

(a) Vendor: 10 TORONTO STREET INC.

c/o Hollinger Inc.

10 Toronto Street

Toronto, ON M5C 2B7

Attention:   Randall Benson, President and Secretary

Telecopy:  (416) 363-4187

with a copy to:

DAVIES WARD PHILLIPS & VINEBERG LLP

      P.O. Box 63, Suite 4400

      1 First Canadian Place

      Toronto, ON M5X 1B1

Attention:   Kent Beattie

Telecopy:  (416) 863-0871

(b) Purchaser: MORGAN MEIGHEN & ASSOCIATES LIMITED

110 Yonge Street

Toronto, ON  M5C 1T4

Attention:   Vanessa L. Morgan

President 

Telecopy:  (416) 366-2729

with a copy to:

BLAKE, CASSELS & GRAYDON LLP

199 Bay Street

Suite 2800

Toronto, ON  M5L 1A9

Attention:   David O’Brien

Telecopy:  (416) 863-2653

Any Notice, if personally delivered, shall be deemed to have been validly and effectively given and received on the date of such delivery and if sent by telecopier or other electronic communication with confirmation of transmission, shall be deemed to have been validly and effectively given and received on the Business Day next following the day it was received.

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8.18 Effect of Termination of Agreement

Notwithstanding the termination of this Agreement for any reason, the following provisions shall survive and shall remain in full force and effect: (i) the confidentiality provisions contained in the Confidentiality Agreement and Section 2.5 including, without limitation, the Purchaser’s obligations to return documents to the Vendor; (ii) Subsection 2.4(b); and (iii) such other provisions (such as those relating to return of the Deposit following termination) the survival of which following termination are necessary to give practical effect thereto.  For greater certainty, it is confirmed that termination of this Agreement does not, for the purposes of this Section, include the Closing of this Agreement, and that Section 8.13 is relevant in respect of survival of provisions after the Closing.

8.19 No Registration of Agreement

The Purchaser shall not register this Agreement or any notice of this Agreement on title to the Lands.

8.20 Planning Act

This Agreement shall be effective to create an interest in any part of the Lands only if the provisions of Section 50 of the Planning Act (Ontario) are complied with by the Vendor at its own expense on or before the Closing Date.

8.21 Counterparts

This Agreement may be executed in counterparts by original or facsimile signature, each of which shall constitute an original and each of which taken together shall constitute one and the same instrument.

IN WITNESS WHEREOF the parties hereto have executed this Agreement by their properly authorized officers in that behalf as of the day and year first above written.

10 TORONTO STREET INC.

By:               /s/ R.C. Benson

Name:                      Randall C. Benson

Title:                        President and Secretary

By:                                                                

Name:

Title:

I/We have authority to bind the Corporation

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MORGAN MEIGHEN & ASSOCIATES LIMITED

By:               /s/ Vanessa L. Morgan

Name:                      Vanessa L. Morgan

Title:                        President

By:                          /s/ Jonathan A. Morgan

Name:                      Jonathan A. Morgan

Title:                       Senior Vice President

We have authority to bind the Corporation

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SCHEDULE A

LANDS

LEGAL DESCRIPTION

10 Toronto Street, Toronto, Ontario

PIN 21401-0022(LT)

PCL 2-12 SEC Y1

PT TOWN LT 2 E/S OLD TORONTO ST PL TOWN OF YORK TORONTO

PT 1 66R14117

City of Toronto and Province of Ontario,

Land Titles Division of the Toronto Registry Office (No. 66)

SCHEDULE B

PURCHASER’S DECLARATION AND INDEMNITY

RE: GOODS AND SERVICES TAX

TO:           10 TORONTO STREET INC.

AND TO:               DAVIES WARD PHILLIPS & VINEBERG LLP, its solicitors herein

RE:           SALE OF 10 TORONTO STREET, TORONTO, ONTARIO (the “Property”)

The undersigned hereby declares, certifies and agrees as follows:

(a) it is purchasing the Property as principal for its own account and same is not being purchased by the Purchaser as an agent, trustee or otherwise on behalf of or for another person;

(b) it is registered under Subdivision d of Division V of Part IX of the Excise Tax Act (Canada) (the “Act”) for the collection and remittance of goods and services tax (“GST”); its registration number is R·; and such registration is in good standing and has not been revoked;

(c) it shall be liable, shall self-assess and remit to the appropriate governmental authority all GST which is payable under the Act in connection with the transfer of the Property all in accordance with the Act; and

(d) it shall indemnify and save harmless the Vendor from and against any and all GST, penalties, costs and/or interest which may become payable by or assessed against the Vendor as a result of any failure by the Purchaser to comply with the provisions of this Declaration and Indemnity.

The undersigned acknowledges and agrees that the foregoing declaration and indemnity shall survive and not merge upon closing of the above-noted transaction.  Dated as of the · day of ·, 2006.

[NAME OF PURCHASER]

By:____________________                                                                

Name:                      ·

Title:                        ·

By:____________________                                                                

Name:                      ·

Title:                        ·

I/We have authority to bind the Corporation

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SCHEDULE C

LIST OF CERTAIN PERMITTED ENCUMBRANCES

GENERAL

1.           Encumbrances for real property taxes (which term includes charges, rates and assessments, and other governmental charges or levies) or charges for electricity, power, gas, water and other services and utilities in connection with the Property that (i) have accrued but are not yet due and owing or, if due and owing, are adjusted for pursuant to Section 3.3, or (ii) the validity of which is being contested in good faith.

2.           Registered easements, rights-of-way, restrictive covenants and servitudes and other similar rights in land granted to, reserved or taken by any Governmental Authority or public utility; or any registered subdivision, development, servicing, site plan or other similar agreement with any Governmental Authority or public utility.

3.           Facility sharing, cost sharing, tunnel, pedway, servicing, parking, reciprocal and other similar agreements with neighbouring landowners and/or Governmental Authorities.

4.           Restrictive covenants, private deed restrictions, and other similar land use controls or agreements.

5.           Minor encroachments by the Property over neighbouring lands which are permitted under agreements with neighbouring landowners and minor encroachments over the Property by improvements of neighbouring landowners.

6.           Any subsisting reservations, limitations, provisos, conditions or exceptions contained in the original grants of the Property from the Crown.

7.           All Contracts and Approved Contracts and registered notices, memorials, caveats or other registrations with respect to such Contracts.

8.           Any rights of expropriation, access, use or any other right conferred or reserved by or in any statute of Canada or the Province of Ontario.

9.           The provisions of Applicable Laws, including by-laws, regulations, ordinances and similar instruments relating to development and zoning.

10.           Any minor title defects, irregularities, easements, servitudes, encroachments, rights-of-way or other minor discrepancies in title or possession relating to the Property or the Subject Assets.

11.           Encumbrances of labourers, workmen, builders, contractors, suppliers of material or architects or other similar Encumbrances incidental to construction, maintenance or operations which have not at the time been registered or filed pursuant to Applicable Laws against the Property.

12.           Registrations under the Personal Property Security Act (Ontario) relating to any of the leased Included Chattels pursuant to any of the Contracts.

13.           All other Encumbrances which are Permitted Encumbrances.

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SCHEDULE D

FORM OF SATISFACTION NOTICE

TO:           10 TORONTO STREET INC.

RE:           10 TORONTO STREET, TORONTO, ONTARIO

We refer to the Agreement of Purchase and Sale made between 10 Toronto Street Inc. and ·, made as of the · day of ·, 2006 (the “Purchase Agreement”).  Pursuant to Section 2.4 of the Purchase Agreement, we hereby give you notice that we are satisfied with the results of our Due Diligence (as defined in the Purchase Agreement).

DATED as of the · day of ·, 2006.

[NAME OF PURCHASER]

By: ___________________                                                               

Name:                      ·

Title:                        ·

By: ___________________                                                               

Name:                      ·

Title:                        ·

I/We have authority to bind the Corporation

SCHEDULE E

FORM OF ASSIGNMENT AND ASSUMPTION OF CONTRACTS

MEMORANDUM OF AGREEMENT made as of the · day of ·, 2006.

B E T W E E N:

10 TORONTO STREET INC.,

a corporation incorporated under the laws of the Province of Ontario,

(hereinafter referred to as the “Assignor”),

OF THE FIRST PART,

- and -

·,

a corporation incorporated under the laws of ·,

(hereinafter referred to as the “Assignee”),

OF THE SECOND PART.

WHEREAS the Assignor and the Assignee have entered into an agreement of purchase and sale made as of the · day of ·, 2006 (such agreement, as amended, supplemented and/or restated to the date hereof, the “Purchase Agreement”) pursuant to which the Assignee has agreed to purchase from the Assignor, and the Assignor has agreed to sell to the Assignee, the Subject Assets;

AND WHEREAS pursuant to the Purchase Agreement, the Assignor has agreed to execute and deliver this assignment of its interest in the Assigned Contracts (as defined below);

NOW THEREFORE in consideration of the mutual covenants and agreements hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby covenant and agree as follows:

1.           Definitions.  Unless otherwise defined herein, all capitalized terms used in this agreement (the “Agreement”) shall have the respective meanings ascribed to them in the Purchase Agreement.  In this Agreement, “Property” means the property municipally known as 10 Toronto Street, Toronto, Ontario and more fully described in Schedule A hereto.

2.           Assignment.  Subject to Section 7.4 of the Purchase Agreement, the Assignor hereby assigns and transfers unto the Assignee all of the Assignor’s right, title and interest in, to and under the Contracts relating to the Property, all of the foregoing being listed in Schedule B hereto (collectively, the “Assigned Contracts”).  Except as provided in Section 6.1 of the Purchase Agreement, the Assigned Contracts are being assigned to and accepted by the Assignee on an “as is - where is” basis as provided for in Subsection 2.4(c) and Section 6.4 of the Purchase Agreement and without any representations or warranties (express or implied) of any nature whatsoever with respect to the Assigned Contracts or any aspect thereof including, without limitation, the Assignor’s interest therein, the Assignor’s ability to assign the Assigned Contracts or the good standing of the parties thereunder.  The provisions of Subsection 2.4(c) and Sections 6.4 and 7.4 of the Purchase Agreement are applicable to this Agreement and, without limiting the foregoing provisions of this sentence, the Assignee hereby unconditionally and irrevocably waives any and all actual or potential rights that the Assignee might have against the Assignor regarding any form of warranty, express or implied, of any type, other than those expressly set out in Section 6.1 of the Purchase Agreement relating to the Assigned Contracts.

3.           Assumption and Indemnity.  The Assignee hereby accepts the assignment and transfers contained in Section 2 hereof and covenants and agrees with the Assignor that, from and after the date hereof, the Assignee will observe, perform and fulfill each and every covenant, proviso, obligation, term and condition of the Assignor in, to and under the Assigned Contracts that is applicable at any time from and including the date of this Agreement to the same extent as if it and the Assignor had both been originally jointly named as a party to the Assigned Contracts in the place of the Assignor (or the Assignor’s predecessor in title, if applicable).  The Assignee hereby agrees to fully indemnify and save harmless the Assignor from and against any and all liabilities, damages, costs, expenses, causes of action, suits, claims and judgments arising from or in connection with, or resulting from, any breach by the Assignee of its obligations hereunder and/or any act or omission of the Assignee or those for whom the Assignee is legally responsible with respect to the Assigned Contracts or the Property.

4.           Indemnity by Assignor.  The Assignor hereby agrees to fully indemnify and save harmless the Assignee from and against any and all Claims arising from or in connection with, or resulting from, any breach by the Assignor of its obligations under the Assigned Contracts at any time prior to Closing and/or any act or omission by the Assignor or those for whom the Assignor is legally responsible with respect to the Assigned Contracts prior to Closing.  The parties hereto agree that this indemnity shall not extend or relate to any failure by the Assignor to fulfill any obligation to obtain the necessary consents or approvals for the assignment by the Assignor to the Assignee of the Assigned Contracts.

5.           Successors and Assigns.  This Agreement shall enure to the benefit of and shall be binding upon the parties hereto and their respective successors and assigns.

6.           Governing Law.  This Agreement shall be construed and enforced in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein and shall be treated in all respects as an Ontario contract.

- 2 -

7.           Counterparts.  This Agreement may be executed in several counterparts and by facsimile transmission of an originally executed document, each of which shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument.

8.           Headings, Extended Meanings.  The headings in this Agreement are inserted for convenience of reference only and shall not constitute a part hereof and are not to be considered in the interpretation hereof.  In this Agreement, words importing the singular include the plural and vice versa; words importing the masculine gender include the feminine and vice versa; and words importing persons include firms or corporations and vice versa.

IN WITNESS WHEREOF the parties have executed this Agreement as of the date first mentioned.

10 TORONTO STREET INC.

By: ____________________                                                               

Name:                      ·

Title:                        ·

By: ____________________                                                               

Name:                      ·

Title:                        ·

I/We have authority to bind the Corporation

[NAME OF ASSIGNEE]

By: ____________________                                                               

Name:                      ·

Title:                        ·

By: ____________________                                                               

Name:                      ·

Title:                        ·

I/We have authority to bind the Corporation

- 2 -

SCHEDULE F

FORM OF BILL OF SALE

TO:           · (the “Purchaser”)

RE:           10 TORONTO STREET, TORONTO, ONTARIO

In consideration of the sum of $2.00 and for good and other valuable consideration (the receipt and sufficiency of which are hereby acknowledged) the undersigned hereby sells, assigns and transfers to the Purchaser all of the undersigned’s right, title and interest in and to the Included Chattels.

The Purchaser expressly acknowledges that the Included Chattels are being sold, assigned and transferred to and purchased and assumed by the Purchaser “as is-where is” and without any representation or warranty (express or implied) of any nature whatsoever except as provided in Section 6.1 of the Purchase Agreement (as defined below), and the provisions of Subsection 2.4(c) and Sections 6.4 and 8.13 of the agreement of purchase and sale made as of the · day of ·, 2006 between the undersigned and the Purchaser, as amended, supplemented and/or restated prior to the date hereof (the “Purchase Agreement”) are applicable to this Bill of Sale.

All capitalized terms used herein have the meaning ascribed to them in the Purchase Agreement.

DATED this · day of ·, 2006.

10 TORONTO STREET INC.

By:____________________                                                                

Name:                      ·

Title:                        ·

By:____________________                                                                

Name:                      ·

Title:                        ·

I/We have authority to bind the Corporation

SCHEDULE G

FORM OF ASSIGNMENT AND ASSUMPTION OF PERMITTED ENCUMBRANCES

MEMORANDUM OF AGREEMENT made as of the ___ day of ______, 2006.

B E T W E E N:

10 TORONTO STREET INC.,

a corporation incorporated under the laws of the Province of Ontario,

(hereinafter referred to as the “Assignor”),

OF THE FIRST PART,

- and -

·,

a corporation incorporated under the laws of ·,

(hereinafter referred to as the “Assignee”),

OF THE SECOND PART.

WHEREAS the Assignor and the Assignee have entered into an agreement of purchase and sale made as of the · day of ·, 2006 (such agreement, as amended, supplemented and/or restated to the date hereof, the “Purchase Agreement”) pursuant to which the Assignee has agreed to purchase from the Assignor, and the Assignor has agreed to sell to the Assignee, the Subject Assets;

AND WHEREAS pursuant to the Purchase Agreement,  the Assignor has agreed to execute and deliver this assignment of its interest in the Permitted Encumbrances (as defined below);

NOW THEREFORE in consideration of the mutual covenants and agreements hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby covenant and agree as follows:

1.           Definitions.  Unless otherwise defined herein, all capitalized terms used in this agreement (this “Agreement”) shall have the respective meanings ascribed to them in the Purchase Agreement.  In this Agreement, “Property” means the property described in Schedule A hereto.

2.           Assignment.  The Assignor hereby assigns absolutely and transfers unto the Assignee all of the Assignor’s right, title and interest in, to and under the Permitted Encumbrances  that relate to the Property.  The Permitted Encumbrances are being assigned to and assumed by the Assignee subject to, and in accordance with the terms of the Purchase Agreement, including, without limitation, Sections 2.4 and 6.4 thereof.

3.           Assumption and Indemnity.  The Assignee hereby accepts the assignment contained in Section 2 hereof.  The Assignee hereby agrees to fully indemnify and save harmless the Assignor from and against any and all Claims arising from or in connection with, or resulting from, (i) any breach by the Assignee of its obligations under the Permitted Encumbrances from and after Closing and/or any act or omission of the Assignee or those for whom the Assignee is legally responsible with respect to the Permitted Encumbrances occurring from and after Closing, and (ii) the failure by the Assignee to obtain the necessary consents or approvals for the assignment of the Permitted Encumbrances.

4.           Indemnity by Assignor.  The Assignor hereby agrees to fully indemnify and save harmless the Assignee from and against any and all Claims arising from or in connection with, or resulting from, any breach by the Assignor of its obligations under the Permitted Encumbrances at any time prior to Closing and/or any act or omission by the Assignor or those for whom the Assignor is legally responsible with respect to the Permitted Encumbrances prior to Closing.  The parties hereto agree that this indemnity shall not extend or relate to any failure by the Assignor to fulfill any obligation to obtain the necessary consents or approvals for the assignment by the Assignor to the Assignee of the Permitted Encumbrances.

5.           Successors and Assigns.  This Agreement shall enure to the  benefit of and shall be binding upon the parties hereto and their respective successors and assigns.

6.           Governing Law.  This Agreement shall be construed and enforced in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein and shall be treated in all respects as an Ontario contract.

7.           Counterparts.  This Agreement may be executed in several counterparts and may be delivered by facsimile transmission, each of which shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument.

8.           Headings, Extended Meanings.  The headings in this Agreement are inserted for convenience of reference only and shall not constitute a part hereof and are not to be considered in the interpretation hereof.  In this Agreement, words importing the singular include the plural and vice versa; words importing the masculine gender include the feminine and vice versa; and words importing persons include firms or corporations and vice versa.

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IN WITNESS WHEREOF the parties have executed this Agreement as of the date first mentioned.

10 TORONTO STREET INC.

By:_____________________                                                                

Name:                      ·

Title:                        ·

By: ____________________                                                               

Name:                      ·

Title:                        ·

I/We have authority to bind the Corporation

[NAME OF ASSIGNEE]

By: ____________________                                                               

Name:                      ·

Title:                        ·

By: ____________________                                                               

Name:                      ·

Title:                        ·

I/We have authority to bind the Corporation

- 3 -

SCHEDULE A

LEGAL DESCRIPTION OF THE PROPERTY

10 Toronto Street, Toronto, Ontario

PIN 21401-0022(LT)

PCL 2-12 SEC Y1

PT TOWN LT 2 E/S OLD TORONTO ST PL TOWN OF YORK TORONTO

PT 1 66R14117

City of Toronto and Province of Ontario,

Land Titles Division of the Toronto Registry Office (No. 66)

- 4 -

SCHEDULE H

FORM OF DEPOSIT AUTHORIZATION

TO:                           10 TORONTO STREET INC.

AND TO:                 DAVIES WARD PHILLIPS & VINEBERG LLP

Unless otherwise defined herein, all capitalized terms used herein shall have the respective meanings ascribed to them in the agreement of purchase and sale made ·, 2006 between 10 Toronto Street Inc. as vendor and · as purchaser with respect to the Subject Assets referred to therein (the “Purchase Agreement”).

You are hereby directed to invest the amount of $· into a redeemable term deposit at the Canadian Imperial Bank of Commerce which comes due on the Due Diligence Date, which amount together with accrued interest is to be rolled over at maturity in an interest bearing account until the Closing Date, unless otherwise notified, with interest to be for the exclusive benefit of Purchaser and otherwise held and released in accordance with the terms of the Purchase Agreement.

DATED the · day of ·, 2006.

[PURCHASER]

By:____________________                                                                

Name:                      ·

Title:                        ·

By: ____________________                                                               

Name:                      ·

Title:                        ·

I/We have authority to bind the Corporation

EX-99.13

Exhibit 99.13

Toronto Real Estate Board   AGREEMENT OF PURCHASE AND SALE                         (FOR USE IN THE PROVINCE OF ONTARIO)                            

PURCHASER,	1330629 ONTARIO INC.	agrees to purchase from
	(full legal names of all Purchasers)

VENDOR,	DOMGROUP LTD.	the following
	(full legal names of all Vendors)

REAL PROPERTY: ALSO SOMETIMES CALLED THE "LANDS"

Address                                                fronting on the                           North                 side of                      The Queensway

In the                                                CITY OF TORONTO

and having a frontage of     550 feet    more or less by a depth of   142 feet more or less and legally described as

as per Sketch attached and being Lot 219 on Registrar's Compiled Plan 9875

(Legal description of land including easements not described elsewhere)    (the "property")

PURCHASE PRICE:  THREE MILLION FIVE-HUNDRED THOUSAND   Dollars (CDN$3,500,000.00)

DEPOSIT:

Purchaser submits (   within 24 hours of   )	TWENTY-FIVE THOUSAND	Dollars (CDN$25,000.00)
acceptance
(herewith upon acceptance)

cash or negotiable cheque payable to     THE Vendor's solicitors  to be held in trust pending completion or

other termination of this Agreement and to be credited toward the Purchase Price on completion. Purchaser agrees to pay the balance as follows:

1.Purchaser to pay the sum of SEVENTY-FIVE THOUSAND ($75,000.00) CANADIAN DOLLARS by cash or certified cheque, to the Vendor's solicitors, as a further deposit to be held by the Vendor's solicitors, in trust, pending completion or other termination of this agreement and to be credited on account of the purchase price on completion, such further deposit to be paid within twenty-four (24) hours of the waiver by the Purchaser of the condition contained in paragraph 3 of Schedule "A" hereto;

2.Purchaser to pay on closing by certified cheque to the Vendor, subject to the usual adjustments, a sum, which together with the two deposits noted above equals twenty-five (25%) percent of the Purchase Price; and

3.For the balance of the purchase price the Vendor shall take back and the Purchaser shall give back a first mortgage having a term of three (3) years and otherwise on the terms and conditions as set out in Schedule "B" hereto.

SCHEDULE(S) "A", "B" and Sketch attached hereto form(s) part of this Agreement.

1.            CHATTELS INCLUDED: n/a 

2.            FIXTURES INCLUDED: n/a 

3.            RENTAL ITEMS: The following equipment is rented and not included in the Purchase Price.  The Purchaser agrees to assume the rental contract(s), if assumable: 

4.             IRREVOCABILITY: This Offer shall be irrevocable by VENDOR until 6:00 p.m. on the 13^th day of March, 2002, after which time, if not accepted, this Offer shall be null and void and the deposit shall be returned to the Purchaser in full without interest (the "Effective Date").

5.             COMPLETION DATE: This Agreement shall be completed by no later than 6:00 p.m. on the ________ day of (see paragraph 8 Schedule A)_____, 20_____.  Upon completion, vacant possession of the property shall be given to the Purchaser unless otherwise provided for in this Agreement.

6.             NOTICES: Vendor hereby appoints the Listing Broker as Agent for the purpose of giving and receiving notices pursuant to this Agreement.  Only if the Co-operating Broker representsthe interests of the Purchaser in this transaction, the Purchaser hereby appoints the Co-operating Broker as Agent for the purpose of giving and receiving notices pursuant to this Agreement.  Any notice relating hereto or provided for herein shall be in writing.  This Offer, any counter offer, notice of acceptance thereof, or any notice shall be deemed given and received, when hand delivered to the address for service provided in the Acknowledgement below, or where a facsimile number is provided herein, when transmitted electronically to that facsimile number.

FAX No.  416-259-3097  (For delivery of notices to Vendor)  Fax No.  416-636-6222  (For delivery of notices to Purchaser

7.   GST: If this transaction is subject to Goods and Services Tax (G.S.T.), then such tax shall be ______________________ the

 (included in/in addition to)

Purchase Price.

If this transaction is not subject to G.S.T., Vendor agrees to certify on or before closing, that the transaction is not subject to G.S.T.

8.   TITLE SEARCH: Purchaser shall be allowed until   thirty (30) days before Closing  , (Requisition Date) to examine the title to the property at his own expense and until the earlier of (i) thirty days from the later of the Requisition Date or the date on which the conditions in this Agreement are fulfilled or otherwise waived or, (ii) five days prior to completion, to satisfy himself that there are no outstanding work orders or deficiency notices affecting the property, that its present use (               ) may be lawfully continued and that the principal building may be insured against risk of fire.  Vendor hereby consents to the municipality or other governmental agencies releasing to Purchaser details of all outstanding work orders affecting the property, and Vendor agrees to execute and deliver such further authorizations in this regard as Purchaser may reasonably require.

9.   FUTURE USE: Vendor and Purchaser agree that there is no representation or warranty of any kind that the future intended use of the property by Purchaser is or will be lawful except as may be specifically provided for in this Agreement.

10.   TITLE: Provided that the title to the property is good and free from all registered restrictions, charges, liens, and encumbrances except as otherwise specifically provided in this Agreement and save and except for (a) any registered restrictions or covenants that run with the land providing that such are complied with; (b) any registered municipal agreements with publicly regulated utilities providing such have been complied with, or security has been posted to ensure compliance and completion, as evidenced by a letter from the relevant municipality or regulated utility; (c) any minor easements for the supply of domestic utility or telephone services to the property or adjacent properties; and (d) any easements for drainage, storm or sanitary sewers, public utility lines, telephone lines, cable television lines or other services which do not materially affect the present use of the property.  If within the specified times referred to in paragraph 8 any valid objection to title or to any outstanding work order or deficiency notice, or to the fact the said present use may not lawfully be continued, or that the principal building may not be insured against risk of fire is made in writing to Vendor and which Vendor is unable or unwilling to remove, remedy or satisfy or obtain insurance save and except against risk of fire in favour of the Purchaser and any mortgagee (with all related costs at the expense of the Vendor, and which Purchaser will not waive, this Agreement notwithstanding any intermediate acts or negotiations in respect of such objections, shall be at an end and all monies paid shall be returned without interest or deduction and Vendor, Listing Broker and Co-operating Broker shall not be liable for any costs or damages.  Save as to any valid objection so made by such day and except for any obligation going to the root of the title, Purchaser shall be conclusively deemed to have accepted Vendor's title to the property.

11.   CLOSING ARRANGEMENTS: Where each of the Vendor and Purchaser retain a lawyer to complete the Agreement of Purchase and Sale of the property, and where the transaction will be completed by electronic registration pursuant to Part III of the Land Registration Reform Act, R.S.O. 1990, Chapter L4 and any amendments thereto, the Vendor and Purchaser acknowledge and agree that the delivery of documents and the release thereof to the Vendor and Purchaser may, at the lawyer's discretion: (a) not occur contemporaneously with the registration of the transfer/deed (and other registrable documentation), and (b) be subject to conditions whereby the lawyer receiving documents and/or money will be required to hold them in trust and not release them except in accordance with the terms of a written agreement between the lawyers.

12.   DOCUMENTS AND DISCHARGE: Purchaser shall not call for the production of any title deed, abstract, survey or other evidence of title to the property except such as are in the possession or control of Vendor. If requested by Purchaser, Vendor will deliver any sketch or survey of the property within Vendor's control to Purchaser as soon as possible and prior to the Requisition Date. If a discharge or any Charge/Mortgage held by a corporation incorporated pursuant to the Trust And Loan Companies Act (Canada), Chartered Bank, Trust Company, Credit Union, Caisse Populaire or Insurance Company and which is not to be assumed by Purchaser on funds, a discharge in registrable form and to register same on title within a reasonable period of time after completion, provided that on or before completion Vendor shall provide to Purchaser a mortgage statement prepared by the mortgagee setting out the balance required to obtain the discharge, together with a direction executed by Vendor directing payment to the mortgagee of the amount required to obtain the discharge out of the balance due on completion.

13.   INSPECTION: Purchaser acknowledges having had the opportunity to inspect the property and understands that upon acceptance of this Offer there shall be a binding agreement of purchase and sale between Purchaser and Vendor.

14.   INSURANCE: All buildings on the property and all other things being purchased shall be and remain until completion at the risk of Vendor. Pending completion, Vendor shall hold all insurance policies, if any, and the proceeds thereof in trust for the parties as their interests may appear and in the event of substantial damage, Purchaser may either terminate this Agreement and have all monies paid returned without interest or deduction or else take the proceeds of any insurance and complete the purchase. No insurance shall be transferred on completion. If Vendor is taking back a Charge/Mortgage, or Purchaser is assuming a Charge/Mortgage, Purchaser shall supply Vendor with reasonable evidence of adequate insurance to protect Vendor's or other mortgagee's interest on completion.

15.   PLANNING ACT: This Agreement shall be effective to create an interest in the property only if Vendor complies with the subdivision control provisions of the Planning act by completion and Vendor covenants to proceed diligently at his expense to obtain any necessary consent by completion.

16.   DOCUMENT PREPARATION: The Transfer/Deed shall, save for the Land Transfer Tax Affidavit, be prepared in registrable form at the expense of Vendor, and any Charge/Mortgage to be given back by the Purchaser to Vendor at the expense of the Purchaser. If requested by Purchaser, Vendor covenants that the Transfer/Deed to be delivered on completion shall contain the statements contemplated by Section 50(22) of the Planning Act, R.S.O. 1990.

17.   RESIDENCY: Purchaser shall be credited towards the Purchase Price with the amount, if any, necessary for Purchaser to pay to the Minister of National Revenue to satisfy Purchaser's liability in respect of tax payable by Vendor under the non-residency provisions of the Income Tax Act by reason of this sale. Purchaser shall not claim such credit if Vendor delivers on completion the prescribed certificate or a statutory declaration that Vendor is not then a non-resident of Canada.

18.   ADJUSTMENTS: Any rents, mortgage interest, realty taxes including local improvement rates and unmetered public or private utility charges and unmetered cost of fuel, as applicable, shall be apportioned and allowed to the day of completion, the day of completion itself to be apportioned to Purchaser.

19.   TIME LIMITS: Time shall in all respects be of the essence hereof provided that the time for doing or completing of any matter provided for herein may be extended or abridged by an agreement in writing signed by Vendor and Purchaser or by their respective lawyers who may be specifically authorized in that regard.

20.   TENDER: Any tender of documents or money hereunder may be made upon Vendor or Purchaser or their respective lawyers on the day set for completion. Money may be tendered by bank draft or cheque certified by a Chartered Bank, Trust Company, Province of Ontario Savings Office, Credit Union or Caisse Populaire.

21.   FAMILY LAW ACT: Vendor warrants that spousal consent is not necessary to this transaction under the provisions of the Family Law Act, R.S.O. 1990 unless Vendor's spouse has executed the consent hereinafter provided.

22.   UFFI: Vendor represents and warrants to Purchaser that during the time Vendor has owned the property, Vendor has not caused any building on the property to be insulated with insulation containing ureaformaldehyde, and that to the best of the Vendor's knowledge no building on the property contains or has ever contained insulation that contains ureaformaldehyde. This warranty shall survive and not merge on the completion of this transaction and if the building is part of a multiple unit building, this warranty shall only apply to that part of the building which is subject of this transaction.

23.   CONSUMER REPORTS: The Purchaser is hereby notified that a consumer report containing credit and/or personal information may be referred to in connection with this transaction.

24.   AGENCY: It is understood that the brokers involved in the transaction represent the parties as set out in the Confirmation of Representation below.

25.   AGREEMENT IN WRITING: If there is conflict or discrepancy between any provision added to this Agreement (including any Schedule attached hereto) and any provision in the standard pre-set portion hereof, the added provision shall supersede the standard pre-set provision to the extent of such conflict or discrepancy. This Agreement including any Schedule attached hereto, shall constitute the entire Agreement between Purchaser and Vendor. There is no representation, warranty, collateral agreement or condition, which affects this Agreement other than as expressed herein. This Agreement shall be read with all changes of gender or number required by the context.

26.   SUCCESSORS AND ASSIGNS: The heirs, executors, administrators, successors and assigns of the undersigned are bound by the terms herein.

SPOUSAL CONSENT:  The Undersigned Spouse of the Vendor hereby consents in the disposition evidenced  herein pursuant to the provisions of the family Law Act, R.S.O. 1990, and hereby agrees with the Purchaser that he/she will execute all necessary or incidental documents to give full force and effect to the sale evidenced herein.

(witness)     (Spouse)   (seal)           DATE

CONFIRMATION OF EXECUTION:  Notwithstanding anything contained herein to the contrary, I confirm this Agreement with all changes both typed and written was finally executed.

by all parties                                a.m./p.m.. this                      day of                                ,20

at                                                                                                    (Signature of Vendor or Purchaser)

ACKNOWLEDGEMENT

I acknowledge receipt of my signed copy of this accepted Agreement of Purchase and Sale and I authorize the Agent to forward a copy to my lawyer: (Name)                                                      DATE   (Vendor)                                                   DATE   Address                      for   Service Tel. No. (                  )   Vendor's                      Fraser, Milner, (Peter Hand) Lawyer Address                      1 First Canadian Place, 100 King St. West, Toronto, Ontario M5X 1B2 (416)  863-4582                     (416) 863-4592 Tel No.                                  FAX No. I acknowledge receipt of my signed copy of this accepted Agreement of Purchase and Sale and I authorize the Agent to forward a copy to my lawyer.   (Purchaser)                                           DATE   (Purchaser)                                           DATE   Address for Service 333 Wilson Avenue, Toronto, M3H 1T2                                     Tel No. 416         836-4111   Purchaser's Lawyer Owens, Wright, LLP, (Arthur L. Shapero   Address 20 Holly Street, Suite 300, Toronto, Ontario, M4S 3B1   ( 416 ) 848-4743                                   ( 416) 486-3309 Tel No.                                                        FAX No.

SCHEDULE "A"

CO-OPERATION

1.From and after the date of acceptance herein, the Vendor agrees to co-operate with the Purchaser, and to execute, and deliver without payment except for reasonable solicitor's fees, any and all plans, applications and documents which may in the Purchaser's opinion be necessary or desirable in order to facilitate the development and servicing of the Property, and it shall consent in writing to any submission of draft plan of condominium, site plan applications or to any official plan amendment, zoning application, severance or minor variance application or applications which the Purchaser may make.

SALES CENTRE

2.The Vendor agrees that the Purchaser, immediately upon waiver of the condition contained in paragraph 3 of this Schedule "A", may have access to the Property and thereafter upon 45 days written notice to the Vendor, may use the existing building (which shall be vacant and in a broom-swept condition) on the Property, as a sales centre and may erect all signage in connection therewith and conduct its sales program therefrom. The Vendor also agrees to allow the Purchaser, if required, to hook up to any existing hydro, at the Purchaser's sole cost and expense. The Purchaser shall comply with all municipal by-laws and obtain all appropriate consents and insurance.

APPROVAL PERIOD

3.(a) The Purchaser shall have a period of ninety (90) days from the Effective Date (the "Approval Period") to enter on the Property and to conduct such physical and other inspections and tests of the Property as it deems necessary and to conduct such studies and investigations of the Property or relating to the Property by such agents, consultants, engineers, surveyors or other persons as it deems necessary, in order to determine in its sole, arbitrary and absolute discretion the viability and suitableness of the Property for purchase and development.  The Vendor assumes no responsibility for the Purchaser hereby indemnifies and saves harmless the Vendor from and against all claims, demands, costs, damages, expenses and liabilities whatsoever arising out of the Purchaser's presence on the Property or of its activities on or in connection with the Property.  In the event that the Purchaser terminates this Agreement in accordance with the provisions of paragraph 3(b) of this Schedule "A", the Purchaser shall restore the Property at its expense such that the Property is in the same condition as it was prior to the Purchaser conducting any such physical and other inspections and tests of the Property.

(b)  If the Purchaser or its solicitors notifies the Vendor or its solicitors in writing on or before the end of the Approval Period that it is not satisfied in its sole, arbitrary and absolute discretion with its physical and other examination of the Property, or with the viability and suitableness of the Property for purchase and development, then notwithstanding any intermediate acts or negotiations, this Agreement shall be of no further force or effect and shall thereupon be terminated and the deposit(s) shall forthwith be returned to the Purchaser, with interest and without deduction whatsoever and the Vendor and the Purchaser shall be relieved of any obligations or liabilities pursuant to this Agreement, except the aforesaid obligation to restore the Property.

PURCHASE PRICE ADJUSTMENT

4.The purchase price of $3,500,000.00 (the "Purchase Price") has been arrived at on the basis of the Purchaser obtaining from the City of Toronto the right to build 251,856 square feet of gross floor area of residential dwelling units (being the total area of all residential floors above grade measured between the outside surfaces of exterior walls or between the outside surfaces of exterior walls and the center line of party walls dividing a residential dwelling unit from any other residential dwelling unit or other portion of a building, but excluding any machinery and boiler rooms, stairwells and elevator shafts).  In the event, on or before closing, the Property is zoned in final and binding form (with no appeals, appeal periods or references outstanding) to allow for gross floor area (as previously defined) in excess of 251,856 square feet, then the Purchase Price shall be increased by a sum equal to $12.30 times each square foot of gross floor area in excess of 251,856 including retail gross floor area.  In no event shall the Purchase Price be reduced should the residential gross floor area be less than 251,856 square feet.

REPRESENTATIONS AND WARRANTIES

5.The Vendor represents and warrants to the Purchaser and hereby acknowledges and confirms that the Purchaser is relying on such representations and warranties in connection with the purchase by it of the Lands, that:

(a)   Expropriation

no notice has been received by the Vendor, its agents or employees relating to any threatened or impending condemnation or expropriation affecting the Property;

(b)   No Other Agreements

no other Person, other than the Purchaser has any written or oral agreement, option, understanding or commitment for the purchase from the Vendor of any interest in the Property or any part thereof and the Vendor has full right, power and authority to enter into this Agreement; and

(c)   Litigation

there are no actions, suits or proceedings to the knowledge of the Vendor or its servants, agents or any of them, threatened against or affecting the Property or the Vendor relating to the Property, at law or in equity before any Authority.

COVENANTS

6.Vendor's Covenants

The Vendor covenants and agrees with the Purchaser that:

(i)   except for the encumbrances described on Schedule "B", the Vendor shall discharge by the Closing any and all mortgages, charges, security interests, debentures, liens, easements, rights-of-way, licenses, leases, tenancies, or restrictions, options or any other encumbrance or cloud of any nature or kind whatsoever relating to or registered against the Property; and

(ii)   each of the representations and warranties of the Vendor made pursuant to this Agreement shall be true and correct and complied with fully in all respect at Closing.

CONDITIONS

7.(a) The fulfillment of each of the following is a condition precedent to the Purchaser's obligations to complete the purchase of the Property.  The parties acknowledge that these conditions are inserted for the Purchaser's benefit only and may be waived by the Purchaser or its solicitors in whole or in part, by notice to the Vendor or its solicitors at any time or times prior to the date by which the condition must be satisfied:

(i)   that on or before the Condition Date: (a) the Purchaser has obtained site plan approval from the City of Toronto, pursuant to The Planning Act (Ontario)for the Purchaser's Development, which site plan approval is final and there are no appeal periods, appeals or references outstanding, all on terms and conditions satisfactory to the Purchaser in its sole and absolute discretion; and (b) the City of Toronto has passed a by-law, in final form, with no appeals, appeal periods or references outstanding, zoning the Lands for the Purchaser's Development, with no holding prefix or holding designation whatsoever.

(b)   If any of the conditions set forth in paragraph 7(a) shall not be fulfilled or complied with in accordance with their terms, the Purchaser may, subject to paragraph 7(c) hereof, at its option, either:

(i)   rescind this Agreement by notice to the Vendor and in such event deposits shall forthwith be returned to the Purchaser together with interest and without deduction and the Purchaser and the Vendor shall be relieved from all obligations hereunder; or

(ii)   complete the transaction.

Provided that any of the said conditions may be waived in whole or in part by the Purchaser without prejudice to its rights, including without limitation the right of rescission in the event of the non-fulfillment or non-performance of any other condition or conditions.

(c)   In the event that the conditions contained in Paragraph 7(a) have not been complied with, in full, on or before the Condition Date, the Purchaser shall have the option to be exercised in writing, on or before that date, of extending the Condition Date for: (i) a period of twelve (12) months in the event the zoning condition has not been satisfied; and (ii) a period of four (4) months in the event the zoning condition has been satisfied but the site plan condition has not.  In the event that neither the zoning condition nor the site plan condition is satisfied on or before the Condition Date then the Purchaser's total extension rights amount to sixteen (16) months.  During each extension period as provided for herein, the provisions of paragraph 7 hereof shall continue to apply.  In the event that the Condition Date is not extended by the Purchaser from time to time or the conditions are not waived, and in any event, if the conditions have not been satisfied or waived by the expiry of the last of the extended periods, then thereupon this Agreement shall be null and void and the Vendor shall forthwith return to the Purchaser all deposit monies paid with interest and without deduction whatsoever and the parties hereto shall have no rights, obligations or liabilities whatsoever with respect to this Agreement.

(d)   The Purchaser may accelerate the Closing Date on 10 days' written notice to the Vendor.

CLOSING DATE

8.This Agreement and the transaction arising therefrom shall be completed thirty (30) days after the conditions in paragraph 7 hereof have been satisfied or waived by the Purchaser (which date of completion shall be referred to as the "closing", the "closing date", the "Closing" or the "Closing Date").

NON-MERGER

9.The Vendor's representations, warranties, covenants and agreements contained in this Agreement shall not merge on the closing of this transaction or on the delivery and registration of a transfer but shall survive the closing of this transaction.

G.S.T.

10.If this transaction is subject to Goods and Services Tax ("G.S.T.") pursuant to The Excise Tax Act (Canada), (the "Act"), then the Purchaser shall be liable for, shall self-assess and remit to the appropriate authority all G.S.T. which is payable under the Act in connection with the Lands.  Provided that the Purchaser has provided satisfactory evidence that it is a registrant under the Act, the Vendor shall not collect G.S.T. on closing and shall allow the Purchaser to self-assess and remit G.S.T. in accordance with the Act.

AGENTS

11.The parties acknowledge and agree that the Purchaser has not been introduced to the Property by any broker or agent.

DEFINITIONS

12.The following terms shall have, for all purposes of this Agreement, the following meanings:

(a)   "Agreement" means this agreement of purchase and sale as it may be amended or supplemented from time to time and all Schedules referred to herein;

(b)   "Authorities" means any municipal, regional, provincial or federal department, commission, board, bureau, branch, agency, regulating authority or other authority or utility or quasi utility whatsoever having or purporting to have jurisdiction over the Lands.  "Authority" has a corresponding meaning;

(c)   "Condition Date" means March 31, 2003;

(d)   "Lands" has the same meaning as "Property";

(e)   "Person" means an individual, partnership, corporation, trust or unincorporated organization, a government or agency or political subdivision thereof or any combination of the foregoing; and

(f)   "Purchasers Development": means such mixed use commercial/residential development relating to the Lands satisfactory to the Purchaser in its sole, absolute and arbitrary discretion.

SCHEDULE "B"

MORTGAGE CLAUSES

1.   The Mortgagee agrees to co-operate with the Mortgagor, and to execute, without payment of any principal and/or interest, or any other monies, any and all plans, documents and agreements whatsoever which may be necessary or desirable in order to facilitate the development of the real property including the registration of a plan or plans of condominium, or the construction of any building or dwelling unit upon the real property and it shall consent in writing to any condominium plan application, site plan agreement, official or district plan amendments, rezoning application or applications or to any severance or minor variance application or applications which the Mortgagor may make including the execution of any and all agreements or documents required by the appropriate municipality or by any governing authority or public agency or utility as a condition of permitting or completing any such condominium, site plan, official or district plan amendment, rezoning, severance or minor variance, provided only that the Mortgagee incurs no costs, expenses or financial obligation in connection therewith.

2.   The Mortgagee shall execute and deliver without payment of any principal and/or interest, or other monies, such partial discharge or discharges or other assurances as may be required to convey to any municipality, public authority, other governmental body or authority, school board, utility (whether public or private), or conservation authority, any lands required for municipal, public or any other purposes, in order to permit an official or district plan amendment, zoning, severance or minor variance application to proceed or to comply with any conditions thereof or to complete, comply with or obtain the approval of any site plan agreement or the registration of a plan or plans of condominium, or for any other municipal or other public purpose, including but without limiting in any way the generality of the foregoing, such public or private purposes as roads, road widenings, highways, walkways, reserves and parks.

3.   Subject to the provisions of Section 6, the Mortgagee agrees to grant partial discharges of any portion of the mortgaged lands upon payment in reduction of principal, of a sum prorated as based on the area of the lands to be discharged against the total area of the mortgaged property, together with interest accrued thereon and the Mortgagee's fees therefor, provided that the Mortgagor shall comply with the provisions of The Planning Act.

4.   The Mortgagee agrees to execute and deliver without any payment of principal, interest or other monies, such partial discharge or discharges and any consents, subordinations or postponements required in order to create and grant easements, rights-of-way, licences or reserves for governmental, municipal or utility purposes, whether public, quasi public or private and whether for gas, water, electricity, telephone, sewer (sanitary and storm), cable television or similar services or purposes, provided that the Mortgagee incurs no costs, expenses or financial obligations in connection therewith.  Furthermore, the Mortgagee agrees to consent to and execute in writing any document required by the Mortgagor in connection with the entering into of any condominium, development, site plan, engineering or similar development agreement with the relevant municipality, public or private utility or other governmental authority, provided that the Mortgagee incurs no costs, expenses or financial obligations in connection therewith.  The Mortgagor shall have the right to do grading, construct roads, install water mains, sewers and other services and utilities within the mortgaged property and to remove or demolish any buildings on the mortgaged property and to otherwise develop the mortgaged property without being in default herein or without creating waste.

5.   The Mortgagee agrees to consent in writing to any application or document that may be required to register the mortgaged property as a plan of subdivision pursuant to the Planning Act, or a plan of condominium pursuant to the Condominium Act or to have the lands registered under the Land Titles Act or under any certification of titles procedure under any other statute, provided that the Mortgagee incurs no costs, expenses or financial obligations in connection therewith.

6.   (a) Provided that the Mortgagor is not in default of this Mortgage, the Mortgagee agrees to grant partial discharges on a per unit (the "Unit") basis for registered and proposed plans of condominium on the following basis of payment of principal, together with all interest accrued thereon and the Mortgagee's fees therefor:

Number of Unit(s) to be discharged                                 Total number of dwelling units within any registered and proposed plan of condominium approved for the charged property Original principal amount x       of mortgage

(b)   In addition to the partial discharge privilege in paragraphs 3 and 6(a) above, the Mortgagor shall pay to the Mortgagee with each partial discharge, a further payment of $3,000.00 per dwelling unit.

7.   The Mortgagee agrees to postpone and subordinate, this charge, all principal and interest relating thereto, the security and debt thereby created, to any financings (including all and any replacements, renewals or substitutions of any such financing) arranged by the Mortgagor, for the construction of buildings and dwelling units on the mortgaged property, for securing purchaser deposits (whether for the initial $20,000.00 or excess deposits, if applicable) under The Condominium Act, and Ontario New Home Warranty program and for the provision of necessary bonds and letters of credit to the Ontario New Home Warranty program, to secure deposits, construction and warranties.

8.   The Mortgagee shall upon written request execute any of the documentation or discharges as provided for in this mortgage, or do any other matter or thing as may be provided for or as the Mortgagee may have agreed to pursuant to this mortgage within seven (7) days of written request therefor.

9.   The Mortgagee, its successors and assigns, agrees to provide to the Mortgagor's construction lender (the "Lender"), from time to time, an acknowledgment of the Mortgagee confirming that the Lender may obtain partial discharges of this Mortgage, on the same terms and conditions as herein contained.

10.   Interest shall be calculated quarter-yearly, at the Bank of Nova Scotia prime rate of interest but interest shall be fully capitalized and not be paid, except upon a partial discharge as provided for in paragraphs 3 and 6 hereof or otherwise at the end of the term of this Mortgage.

11.   Notwithstanding anything above to the contrary, the Mortgagee shall not be required to provide a partial discharge where to do so would leave landlocked any undischarged lands.

12.   If the Mortgagor is delayed or prevented from completion of the building(s) to be erected on the mortgaged lands and the eventual closings of the dwelling units therein contained by reason of strikes, fire, storm, flood, earthquake, explosion, sabotage or other similar event beyond the control of the Mortgagor and as a result thereof, the Mortgage term matures prior to the closings of the dwelling units, then the Mortgagee agrees that the Mortgage term shall automatically be extended from time to time for a period or periods of time equivalent to the period of such delay.

SCHEDULE "B"

to Agreement of Purchase and Sale between DOMGROUP LTD. as Vendor and

1330629 ONTARIO INC., as Purchaser

PERMITTED ENCUMBRANCES

1.   Site Control Agreement with the Borough of Etobicoke registered October 19, 1978 as Instrument No. EB501465.

EX-99.14

Exhibit 99.14

CONSULTING SERVICES AGREEMENT

This Consulting Services Agreement (the "Agreement") is made this 20^th day of June, 2007, with effect as of April 16, 2007 (the "Effective Date"), by and between Hollinger Inc. ("Hollinger"), G. Wesley Voorheis ("Voorheis") and VC & Co. Incorporated ("VC").

Recitals:

A.           Hollinger has requested VC to provide it with certain services; and

B.           VC will provide the services to Hollinger on the terms set forth below.

For and in consideration of the premises and mutual covenants in this Agreement, Hollinger, Voorheis and VC agree as follows:

1.   Services

1.1   During the term of this Agreement, VC will provide certain services (the "Executive Services") to Hollinger through Voorheis, who will serve as Chief Executive Officer of Hollinger ("CEO") reporting directly to its board of directors (the “Board”).  The Executive Services to be provided are defined in Sections 1.2(a) to (f) below.  Voorheis will also remain a member of the Board.  Voorheis will be employed solely by VC and he will not be entitled to receive any remuneration directly from Hollinger, other than the Options as described in Section 5.1 of this Agreement.

1.2   Voorheis will have primary executive responsibility at Hollinger:

(a)   to supervise all legal, regulatory and similar proceedings and investigations and related matters in which Hollinger (or any of its wholly-owned subsidiaries) are involved;

(b)   to negotiate and arrange a Noteholder Resolution;

(c)   to negotiate a resolution of outstanding issues between Hollinger and Sun-Times Media Group, Inc. ("Sun Times");

(d)   to negotiate and arrange, if possible, a financing to provide Hollinger with additional liquidity and working capital;

(e)   to exert Hollinger's and its subsidiaries' influence, as necessary and appropriate, to cause or encourage Sun Times to take such actions as are necessary to improve its operational performance including, to the extent required, effecting a reconstitution of the board of directors of Sun Times; and

(f)   for such additional responsibilities as may be assigned by the Board from time to time.

1.3   Voorheis shall devote as much of his working time and effort as is necessary to properly and responsibly provide the Executive Services hereunder and shall use his best efforts to promote Hollinger's interests.

1.4   Hollinger acknowledges and agrees that Voorheis has other professional and business commitments which he will be obliged and permitted to continue during the term of this Agreement and that Voorheis may continue to provide services to third parties during the term of this Agreement.

1.5   Nothing in this Agreement shall create or confer upon the parties hereto, in any way or for any purpose, any relationship except that of contracting parties, and in particular this Agreement does not create an employer-employee relationship between Hollinger and Voorheis or between Hollinger and any other of VC's employees.

2.   Other Conditions

2.1   Notwithstanding any other provision in this Agreement, the parties agree that Voorheis and VC and their affiliates, including Voorheis & Co. LLP, and any of the individuals employed by or partners of any of them will:

(a)   terminate all retainers that any of them has with The Catalyst Capital Group Inc., any of its affiliates or any existing or future funds managed by it or any of its affiliates, including but not limited to, Catalyst Fund General Partner I Inc. (collectively, "Catalyst"); and

(b)   not accept any retainers from Catalyst while VC provides the Executive Services to Hollinger during the term of this Agreement.

3.   Term of this Agreement

3.1   This Agreement is effective as of the Effective Date and will terminate in accordance with Section 9.

4.   Base Monthly Fees and Milestone Fees

4.1   Hollinger will pay VC, for the Executive Services, a fee of $75,000 per month (the "Base Monthly Fee") from the Effective Date of this Agreement until its termination, due and payable in advance on the first day of each calendar month commencing in respect of the month of May 2007. VC shall also be entitled to a pro rated Base Monthly Fee of $37,500 for April 2007.

4.2   Hollinger will also pay VC certain fees in relation to achieving substantial completion of certain matters ("Milestone Fees") as described below:

(a) upon substantial completion of the matters referred to in Section 1.2(b) of this Agreement, a Milestone Fee equal to $1.2 million;

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(b) provided substantial completion of the matters referred to in Section 1.2(b) of this Agreement has been achieved, an additional Milestone Fee equal to $1.4 million upon the first to be completed of:

(i) the sale or other disposition by Hollinger and its wholly-owned subsidiaries of substantially all of their shares of Sun Times;

(ii) a transaction, supported by the Board, involving the sale or other disposition of a majority of the outstanding common shares (or other equity-like securities) of Hollinger; or

(iii) the sale or other disposition of all or substantially all of the assets of either Sun Times or Hollinger (provided, for greater certainty, that a sale or other disposition does not include any charge or pledge of shares or assets, including in respect of a refinancing of the Senior Notes including any financing for Hollinger necessary to allow such refinancing to occur); and

(c) upon substantial completion of any matter referred to in Section 1.2, other than the matters described in Sections 1.2(b) or (c), or in the circumstances where one of the matters contemplated by Sections 4.2(b)(i), (ii) or (iii) occurs prior to substantial completion of the matters referred to in Section 1.2(b), an additional Milestone Fee in an amount that is fair and reasonable in the circumstances.

4.3   The amount of each Milestone Fee payable under Section 4.2(c) shall be a function of:

(a)   the nature and extent of the success, if any, achieved by Hollinger in connection with the matter or transaction giving rise to such payment;

(b)   the importance to Hollinger of such matter or transaction;

(c)   the circumstances in which any such success was achieved; and

(d)   such other factors as the Board and VC may agree are relevant to the determination.

4.4   Each Milestone Fee will be due and payable within ten business days of substantial completion of the matter or transaction for which the Milestone Fee is being paid.

4.5   In addition to the fees provided for in Sections 4.1 and 4.2, Hollinger will pay VC, upon execution of this Agreement, a Milestone Fee of $169,500 for matters accomplished by Voorheis during the period from January 15, 2007 to the Effective Date.

5.   Stock Options and Other Compensation

5.1   The grant of stock options (the "Options") on May 7, 2007 by Hollinger to Voorheis under Hollinger's Executive Share Option Plan, amended and restated as of September 13, 1994, further amended as of December 3, 1996 and as modified by the terms of the share option agreement dated as of May 7, 2007 between Hollinger and Voorheis (the "Option Agreement"), each of which are attached hereto as Schedule "A", to purchase up to an aggregate of 1,000,000 Hollinger common shares at an exercise price equal to $0.70 per share, which was conditional upon the execution of this Agreement, shall be effective.

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5.2   In the event that, during the twelve months following January 15, 2007, Hollinger issues additional common shares or securities which are convertible into, carry the right to receive or provide Hollinger with the right to issue (directly or indirectly) additional common shares of Hollinger (or other equity-like securities) (a "Specified Financing"), VC shall thereafter be entitled, at the time Voorheis exercises any of the Options, to receive a cash payment from Hollinger (the "Cash Settlement Amount"), as described in Section 5.3, multiplied times the number of Options so exercised on that date.  For greater certainty, VC's entitlement to this Cash Settlement Amount shall be in addition to Voorheis' right to receive the number of common shares of Hollinger issuable upon the exercise of such Options.

5.3   With respect to Options exercised on any particular date (the "Exercise Date"), the Cash Settlement Amount shall be the amount that results from the following formula:

(A x (B-C)) – (D x (E-F))

 D

where:

A equals the number of common shares (or other equity-like securities) of Hollinger (the “Post-Financing Underlying Securities”) that would have been held by Voorheis had Voorheis previously been issued and thereafter fully and completely exercised, in lieu of the Options, replacement options to acquire 3% of the outstanding common shares (or equity-like securities) of Hollinger calculated on a fully-diluted basis after giving effect to the issuance of all additional common shares or other equity-like securities issued or issuable in connection with all Specified Financings undertaken prior to the Exercise Date;

B equals the market price of the Post-Financing Underlying Securities calculated as of the close of business on the Exercise Date;

C equals the lowest of (i) the market price of the Post-Financing Underlying Securities immediately following the completion of any Specified Financing undertaken prior to the Exercise Date and (ii) the price at which the Post-Financing Underlying Securities are issued or issuable in connection with any such Specified Financing;

D equals 1,000,000, being the number of Options;

E equals the market price of the common shares of Hollinger calculated as of the close of business on the Exercise Date; and

F equals $0.70, being the exercise price of the Options.

For greater certainty, in the event that there exists more than one type of Post-Financing Underlying Security as of any Exercise Date, the calculation of (A x (B-C)) contemplated

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within the above formula shall be done separately for each type of Post-Financing Underlying Security (as if the 3% replacement options notionally issued to Voorheis were held in proportion to the number of each type of Post-Financing Underlying Securities issued or issuable by Hollinger) with the cumulative sum of such calculations being the value used for (A x (B-C)) within such formula.  Further, in the event that no published market exists for a particular security at a relevant date contemplated by the above formula, the market value of that security shall be deemed to be the fair market value thereof on the relevant date, and Hollinger and VC shall work in good faith to agree within seven days of the relevant date upon such fair market value.  The parties also agree that, in connection with any Specified Financing, they will work in good faith to confirm the impact of the Specified Financing on any subsequent calculation of the Cash Settlement Amount in a manner that gives effect to the purpose and intent of this Section 5.

6.   Indemnity

6.1   Voorheis shall be provided with an indemnity from Hollinger in the form currently provided to him.

7.   Reimbursement of Expenses and Taxes

7.1   Hollinger will reimburse VC for: (a) all reasonable expenses incurred by Voorheis or VC in providing the Executive Services, including, but not limited to, travel and lodging expenses and communication charges, and (b) any legal fees that Voorheis or VC may reasonably incur arising out of or in connection with this Agreement from and after the date upon which it is executed, including with respect to the validity or enforceability of, or liability under, any provision of this Agreement or any action by VC to enforce its rights hereunder.

7.2   Hollinger will pay for all taxes in connection with the provision of the Executive Services in this Agreement including, but not limited to, sales, use, excise, value-added, goods and services, consumption, and other similar taxes or duties.  For greater certainty, and without limiting the generality of the foregoing, an additional amount equal to any applicable federal Goods and Services Tax and any applicable provincial sales tax will be charged to and payable by Hollinger in respect of all payments to VC hereunder.  Each party will be responsible for taxes based on its own net income, employment taxes of its own employees, and for taxes on any property it owns or leases.

8.   Other Services

8.1   Upon Voorheis' recommendation, Hollinger may also retain VC or any of its affiliates (including Voorheis & Co. LLP) to obtain the services of other partners or employees of VC or any of its affiliates to provide assistance to Hollinger in connection with Hollinger's business and affairs (the "Other Services").  VC and its affiliates will not provide the Other Services to Hollinger unless prior notice of the nature and scope of such Other Services has been provided to the Chairman of the Board, and the Chairman of the Board does not object to such Other Services being provided.  For greater certainty, Voorheis will not provide Other Services to Hollinger.  Notwithstanding any other provision in this Agreement, the parties agree that the Chairman of the Board shall be unilaterally entitled at any time, for any and no reason, to terminate the provision of the Other Services.  If the Other Services are terminated, VC and its affiliates will not be entitled to any further fees other than those accrued to the time of termination.

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8.2   Hollinger will pay VC or its affiliates, for Other Services, fees based on the usual hourly rates of the partners and employees of VC or its affiliates providing the Other Services, and accounts for such Other Services shall be sent to the Chairman of the Board for approval.

9.   Termination

9.1   This Agreement will immediately terminate upon the death of Voorheis.

9.2   Hollinger may also terminate this Agreement if Voorheis suffers a physical or mental disability that prevents VC from providing the Executive Services for a period of sixty days, whether or not consecutive and that is, in the opinion of a duly qualified medical practitioner selected by Hollinger, likely to continue to the same degree for a further period of more than 30 days (a “Disability”).  Voorheis agrees to submit to any reasonably required medical examination by such practitioner for the purposes of this Section 9.1 and that such medical practitioner may reveal the results of such medical examination to Hollinger.

9.3   Hollinger may also terminate this Agreement at any time for Sufficient Cause.

9.4   Hollinger may also at any time, by written notice, immediately terminate this Agreement other than for Sufficient Cause or Disability.

9.5   VC may terminate this Agreement at any time for Good Reason.

9.6   If this Agreement terminates pursuant to Section 9.1 or is terminated by Hollinger pursuant to Section 9.2, then:

(a)   VC will cease to be entitled to any further payments under Section 4 and, in lieu thereof, will be entitled to immediate payment of that amount in relation to unpaid Milestone Fees described in Section 4.2 that could reasonably be considered to have been earned, prior to the termination of this Agreement, based upon the degree of success achieved and/or the progress made by Hollinger with respect to the relevant matters or transactions up to the date of such termination; and

(b)   if such termination occurs prior to the date which is 18 months following the Effective Date, notwithstanding the terms of the Option Agreement, Voorheis shall cease to be entitled to exercise any Options on that date which is 120 days following the termination of this Agreement (with any Options that remain unexercised following such 120^th day being forfeited and, for greater certainty, VC ceasing to be entitled to any Cash Settlement Amount(s) in respect of such unexercised Options).

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9.7   If this Agreement is terminated by Hollinger pursuant to Section 9.3 or is terminated by VC other than for Good Reason, then VC will not be entitled to any further Base Monthly Fees, Milestone Fees, Cash Settlement Amount(s) and, notwithstanding the terms of the Option Agreement, Voorheis shall forfeit all unexercised Options.

9.8   If this Agreement is terminated by Hollinger pursuant to Section 9.4, other than following a Change of Control or in circumstances where it is reasonably demonstrated that such termination was a Change of Control Termination, then VC will cease to be entitled to any further payments under Section 4 and, in lieu thereof, will be entitled to immediate payment of an amount equal to the aggregate of:

(a)   nine times the Base Monthly Fee; and

(b)   that amount in relation to unpaid Milestone Fees described in Section 4.2 that could reasonably be considered to have been earned, prior to the written notice of termination of this Agreement, based upon the degree of success achieved and/or the progress made by Hollinger with respect to the relevant matters or transactions up to the date of such termination.

9.9   If VC terminates this Agreement pursuant to Section 9.5, or if Hollinger terminates this Agreement pursuant to Section 9.4 following a Change of Control or in circumstances where it is reasonably demonstrated that such termination was a Change of Control Termination, then VC will cease to be entitled to any further payments under Section 4 and, in lieu thereof, will be entitled to immediate payment of an amount equal to the aggregate of:

(a)   twelve times the Base Monthly Fee;

(b)   if the Milestone Fees described in Sections 4.2(a) and (b) have not both been paid in full, an amount equal to $1.6 million less any amounts previously paid in respect of such Milestone Fees; and

(c)   that amount in relation to unpaid Milestone Fees described in Section 4.2(c) that could reasonably be considered to have been earned, prior to the termination of this Agreement, based upon the degree of success achieved and/or the progress made by Hollinger with respect to the relevant matters or transactions up to the date of such termination,

provided that, if the relevant Change of Control resulted from a refinancing of the Senior Notes (including any financing for Hollinger necessary to allow such refinancing) in respect of which the Milestone Fee described in Section 4.2(a) has been or will be paid, VC shall be entitled to receive, in lieu of the amount described in Section 9.9(b), an amount in relation to the Milestone Fee described in Section 4.2(b) that could reasonably be considered to have been earned, prior to the termination of this Agreement, based upon the degree of success achieved and/or the progress made by Hollinger with respect to the matters contemplated by Section 4.2(b) up to the date of such termination.

9.10   For greater certainty, no amount shall be payable pursuant to Section 9.9 in the event this Agreement is terminated after substantial completion of all matters referred to in Sections 4.2(a), (b) and (c) for which Milestone Fees have been paid or are payable (or in connection with completing the final such matter for which a Milestone Fee is otherwise payable hereunder).

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9.11   Voorheis’ rights to continue to hold and exercise the Options in accordance with the Option Agreement and VC’s rights to receive the Cash Settlement Amount upon any exercise of the Options by Voorheis shall survive, and remain in force unaffected by, any termination of this Agreement, except: (a) a termination by Hollinger for Sufficient Cause, (b) a termination by VC other than for Good Reason, or (c) a termination, prior to the date which is 18 months following the Effective Date, upon Voorheis’ death or Disability.  Further, no termination of this Agreement for any reason shall affect or alter any of Hollinger’s obligations under Section 6 (Indemnity) or Section 7 (Reimbursement of Expenses and Taxes).

10.   General Provisions

10.1   This Agreement will be binding upon the parties and their respective successors, permitted assigns, heirs, executors, administrators and other legal representatives.  Each party is prohibited from assigning this Agreement to any person without first obtaining the written consent of the other parties and any assignment without consent is null and void.  Hollinger shall require any successor (whether direct or indirect, by purchase, amalgamation, arrangement, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Hollinger to assume expressly and agree to perform this Agreement in the same manner and to the same extent that Hollinger would be required to perform it if no such succession had taken place.  As used in this Agreement, “Hollinger” shall mean Hollinger (as herein defined) and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law or otherwise.

10.2   Nothing in this Agreement shall prevent Voorheis from resigning as a director of Hollinger at any time.

10.3   Hollinger’s obligations to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, defence or other claim, right or action which Hollinger may have or may allege to have against Voorheis or VC or others.

10.4   Whenever this Agreement requires or contemplates any action, consent or approval by a party, such party will act reasonably and in good faith.

10.5   The parties agree that, in the event of a dispute or alleged breach, they will first work together in good faith to resolve the matter as between themselves and, then if necessary, to use a mutually agreed alternative dispute resolution technique prior to resorting to litigation.  In the event the parties fail to mutually agree upon such technique within thirty days after good faith attempts at resolution have failed, either party may resort to litigation.

10.6   This Agreement and the Option Agreement contain the entire agreement between the parties with respect to the subject matter hereof and thereof and supersedes all prior agreements, negotiations, representations and proposals, written and oral, relating to their subject matter.  The terms of this Agreement will not be modified subsequently except by a written agreement signed by all parties. No waiver of any provision of this Agreement is binding unless it is in writing and signed by all parties to this Agreement entitled to grant the waiver. No failure to exercise, and no delay in exercising, any right or remedy, under this Agreement will be deemed to be a waiver of that right or remedy.  No waiver of any breach of any provision of this Agreement will be deemed to be a waiver of any subsequent breach of that provision.

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10.7   Each party will from time to time promptly execute and deliver all further documents and take all further action necessary or appropriate to give effect to the provisions of this Agreement.

10.8   Each party agrees that, in its respective dealings with the other parties under or in connection with this Agreement, it will act in good faith.

10.9   This Agreement will in all respects be governed by, subject to, interpreted and enforced exclusively in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. Each of the parties irrevocably submits to the non-exclusive jurisdiction of the courts of the Province of Ontario.

10.10   If any provision of this Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction, the illegality, invalidity or unenforceability of that provision will not affect the legality, validity or enforceability of the remaining provisions of this Agreement; or the legality, validity or enforceability of that provision in any other jurisdiction.

10.11   Any notice, demand or other communication required or permitted to be given under this Agreement will be in writing and will be delivered by hand or courier or by confirmed facsimile, in each case to the address of such party set forth below:

if to Hollinger:

120 Adelaide Street West, Suite 512

Toronto, ON

M5H 1T1

Attention: Chief Financial Officer

Fax: 416-364-2088

if to Voorheis or VC:

120 Adelaide Street West, Suite 908

Toronto, ON

M5H 1T1

Attention: Wes Voorheis

Fax: 416-947-1256

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10.12   All references to dollars in this Agreement are to Canadian dollars.

10.13   For every provision of this Agreement, time is of the essence.

11.   Certain Defined Terms

For the purposes of this Agreement, the following terms will be defined as follows:

(a)   “Change of Control” means the occurrence, on or after August 15, 2007, of any of the following events:

(i)   the acquisition by any person or group of persons acting jointly or in concert, or persons associated or affiliated within the meaning of the Canada Business Corporations Act with any such person or group, other than Catalyst or RSM Richter Inc. and their respective subsidiaries, affiliates and associates, of beneficial ownership or control and direction over 25% of more of the outstanding common shares or other equity-like securities of Hollinger (or the right or obligation, whether or not on conditions, to acquire such common shares or other securities including through the ownership of securities which are convertible into, carry the right to receive or provide Hollinger with the right to issue, directly or indirectly, such common shares or other equity-like securities);

(ii)   the individuals who were elected to the Board at Hollinger’s shareholders’ meeting on May 7, 2007 ceasing to constitute a majority of the Board;

(iii)   a sale or other disposition of all or substantially all of the assets of Hollinger; or

(iv)   the appointment, other than at the behest of the Board, of any receiver, trustee, administrator, monitor or other substantially similar appointment in respect of Hollinger or its assets and undertakings.

(b)   “Change of Control Termination” means a termination of this Agreement by Hollinger that either (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control, or (ii) otherwise arose in connection with or anticipation of a Change of Control.

(c)   “Good Reason” means the occurrence of any of the following, after a Change of Control, without VC’s written consent (except in connection with the termination of this Agreement for Sufficient Cause or a as a result of Disability):

(i)   a material adverse change in Voorheis’ position or duties or responsibilities (including, without limitation, to whom Voorheis reports and who reports to Voorheis) or title; or

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(ii)   the good faith determination by Voorheis that, as a result of the Change of Control or any action or event thereafter, Voorheis’ status or responsibility at Hollinger or its subsidiaries has been materially diminished or Voorheis is being effectively prevented from carrying out his duties and responsibilities as they existed immediately prior to the Change of Control; or

(iii)   the failure by Hollinger to obtain, in a form satisfactory to VC, acting reasonably, an effective assumption of Hollinger’s obligations hereunder by any successor to Hollinger referred to in Section 10.1;

provided that, for purposes of this Section 11(c), notwithstanding anything in this Agreement to the contrary, a termination of this Agreement by VC for any reason whatsoever (and whether or not any event referred to in Section 11(b)(i), (ii) or (iii) above has occurred) during the three month period commencing on the date that is 90 days immediately following the date on which a Change of Control occurs shall be deemed to be a termination of this Agreement for “Good Reason” for all purposes of this Agreement.

(d)   “Noteholder Resolution” means a refinancing of the Senior Notes, including any financing for Hollinger necessary to allow such refinancing to occur, or other transaction (including a redemption or other repayment) or agreement which has the effect of waiving, curing or otherwise eliminating the existing events of default under the Senior Notes (including an agreement by the holders of a majority of the Senior Notes to forbear in respect of such events of default) or any other consensual resolution of outstanding issues with the holders of the Senior Notes (which, for greater certainty, shall include a circumstance where one of the matters contemplated by Sections 4.2(b)(i), (ii) or (iii) occurs prior to the holders of the Senior Notes enforcing their rights under the Senior Notes).

(e)   “Senior Notes” means the U.S. $78 million principal amount of 11.875% senior secured notes due 2011 issued by Hollinger on or about March 10, 2003 and the U.S. $15 million of 11.875% senior secured notes due 2011 issued by Hollinger on or about September 30, 2004.

(f)   “Sufficient Cause” means:

(i)   a wilful criminal act of theft or dishonesty by Voorheis in the performance of the Executive Services;

(ii)   a material breach by VC of its obligations under this Agreement which is not cured within 10 days of written notification to VC from Hollinger;

(iii)   a breach by VC or any of its affiliates of Section 2.1; or

(iv)   notwithstanding Section 1.4, the Board, acting reasonably, having concluded that Voorheis is not devoting sufficient time to Hollinger with Voorheis failing to remedy that circumstance within a reasonable period of time after Hollinger provides him with written notice thereof.

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The parties have executed this Agreement as of the date first indicated above, and this Agreement shall be effective as of April 16, 2007.

VC & CO. INCORPORATED
by	/s/ G. Wesley Voorhies
	Name:                      G. Wesley Voorheis
	Title:                      Managing Director

/s/ G. Wesley Voorheis

G. Wesley Voorheis

- 12 -

HOLLINGER

____________________

EXECUTIVE SHARE OPTION PLAN

AMENDED AND RESTATED AS OF SEPTEMBER 13, 1994

AMENDED DECEMBER 3, 1996

____________________

1.           Purpose

The purpose of this Plan is to provide an incentive to certain key executives of the Company or its subsidiary or affiliated companies to achieve the longer term objectives of the Company, to give suitable recognition to the ability and industry of such executives which contribute materially to the success of the Company and to attract and retain in the employ of the Company and its subsidiary and affiliated companies persons of experience and ability.

2.           Definitions

Wherever used in this Plan, unless there is something in the subject matter or context inconsistent therewith, the following words and terms shall have the respective meanings ascribed to them as follows:

"Board of Directors" means the board of directors of Hollinger Inc.

"Company" means Hollinger Inc. and any successor corporation and any reference herein to action by the Company means action by or under the authority of its Board of Directors or a duly empowered committee appointed by the Board of Directors.

"Date of Grant" means with respect to each Option the date of the resolution of the Board of Directors or a duly empowered committee appointed by the Board of Directors granting the Eligible Employee the Option.

"Eligible Employee" means a person who is an officer and/or employee of a Participating Company and is designated by the Board of Directors or a duly authorized committee of the Board of Directors as being eligible to be granted Options pursuant to this Plan.

"Exercise Period" means with respect to each Option the period commencing on the Date of Grant thereof and terminating on the date six (6) years thereafter.

"Exercise Price" means with respect to each Option the weighted average price per share for all board lots of Shares traded on The Toronto Stock Exchange on each of the ten (10) consecutive trading days ending on the third trading day preceding the Date of Grant; for the purpose of this Plan, the expression "trading day" means a day on which shares are traded on The Toronto Stock Exchange and on which at least one board lot of Shares is traded.

"Expiration Date" means the last day of the Exercise Period.

"Normal Retirement" means the last day of the month in which the 65^th birthday of the Eligible Employee occurs or such later date upon which the Eligible Employee actually retires.

"Option" has the meaning attributed thereto in section 3.1.

"Optionee" means an Eligible Employee to whom an Option has been granted pursuant to section 3.1.

"Participating Company" means the Company and any subsidiary or affiliated company of the Company.  A "subsidiary company" is a company in which the Company directly or indirectly may exercise voting rights with respect to more than fifty percent (50%) of the issued and outstanding voting shares.  An "affiliated company" is a company other than a subsidiary company in which the Company directly or indirectly may exercise voting rights with respect to a substantial percentage of the issued and outstanding voting shares and is designated by the Board of Directors or a duly empowered committee appointed by the Board of Directors as an affiliated company.

1

"Plan" means the Hollinger Inc. Executive Share Option Plan as amended from time to time.

"Shares" means the Common Shares of the Company and any shares or securities of the Company into which such Common Shares are changed, converted, subdivided, consolidated or reclassified.

3.           Grants to Individual Employees

3.1           The Board of Directors may at any time and from time to time grant to Eligible Employees non-transferable rights ("Options") to purchase up to a specified maximum number of Shares at the Exercise Price, subject to the power of the Board of Directors to delegate its authority in this regard to a committee of the Board of Directors as provided in Article 7.  Notice of the grant of such Options shall be given forthwith to the respective Optionees.

3.2           An Optionee may, subject to section 4, exercise his Options by signing and delivering to the Company, in the form prescribed by the Company, the following:

(a)           a subscription to purchase the Shares; and

(b) payment in full of the Exercise Price of the Shares purchased pursuant to the exercise of the Options.

3.3           Any decision regarding the granting or exercise of Options shall not affect an Eligible Employee's employment with any Participating Company.

3.4           Options in respect of an aggregate of up to 5,560,000 Shares less the number of Shares which the Board of Directors may in the future issue or reserve for issuance pursuant to any other share compensation arrangement of the Company shall be available for award under the Plan.  No officer or employee shall be awarded Options in respect of more than 5% of the issued and outstanding Shares.  If any Option shall cease to be exercisable in whole or in part for any reason, the Shares which were covered by such Option but as to which the Option had not been exercised shall again be available under the Plan.

4.           Vesting, Cessation of Employment and Adjustments

4.1           General

Subject to sections 4.2, 4.3 and 4.4 below, an Option shall become exercisable as to the following maximum number of Shares (rounded to a whole number if a fraction of Shares is obtained);

(a) on or after the first anniversary of the Date of Grant, up to twenty-five per cent (25%) of the Shares subject to the Option;

(b) on or after the second anniversary of the Date of Grant, up to fifty per cent (50%) of the Shares (including those previously exercised pursuant to paragraph (a));

(c) on or after the third anniversary of the Date of Grant, up to seventy-five per cent (75%) of the Shares subject to the Option (including those previously exercised pursuant to paragraphs (a) and (b)); and

(d) on or after the fourth anniversary of the Date of Grant, up to one hundred per cent (100%) of the Shares subject to the Option.

4.2           On Cessation of Employment

(a) Retirement – If the Optionee ceases to be employed, either by the Company or a Participating Company, as a result of Normal Retirement, his Options shall be immediately and fully exercisable.  Such Options may be exercised at any time during the period which commences on the date of Normal Retirement, and ends on the earlier of the date which is one (1) year thereafter, or the Expiration Date, provided that if the Optionee dies during such period, the Options may be exercised by his executor or other personal representative, in whole or in part, at any time or from time to time, during the period which commences on the date of death and ends on the earlier of six (6) months from the date of death of the Optionee or the Expiration Date.

(b) Termination – If the Optionee ceases to be employed, either by the Company or a Participating Company as a result of (i) his voluntarily leaving such employment (other than by Normal Retirement referred to in paragraph (a) above) or (ii) being dismissed for cause, his Options shall thereafter be exercisable only with respect to the number of Shares in respect of which they are exercisable immediately prior to the time he ceased to be employed.  Such limited Options may be exercised at any time during the period which commences on the date of termination of employment and ends on the earlier of the date which is one (1) month thereafter or the Expiration Date.

2

(c) Death – In the case of termination of employment by the Company or a Participating Company caused by the death of the Optionee, his Options shall be immediately and fully exercisable and may be exercised by his executor or other personal representative, in whole or in part, at any time or from time to time, during the period which commences on the date of death and ends on the earlier of the date which is one (1) year thereafter or the Expiration Date.

(d) Other Termination – If the Optionee ceases to be employed either by the Company or a Participating Company for any reason other than the ones referred to in paragraphs (a), (b) or (c) above, his Options shall be immediately and fully exercisable, and may be exercised, in whole or in part, at any time or from time to time during the period which commences on the date of termination of employment and ends on the earlier of the date which is one (1) month thereafter or the Expiration Date.

4.3           Offer

In the event that an offer is made:

(a) to all or substantially all of the holders of the Shares of the Company, or

(b) to all or substantially all of the holders of all the Shares of the Company whose last address on the records of the Company is in Canada, at a price at least equal to the market price of the Shares immediately prior to the making of the offer,

then the outstanding Options shall become immediately and fully exercisable during the period of such offer notwithstanding section 4.1 and such holder may exercise such Options, in whole or in part, at any time or from time to time during the period of such offer.

4.4           Adjustments

In the event that the Company during the Exercise Period of any Option shall change, convert, subdivide, consolidate or reclassify its Shares, the terms of the Option shall be adjusted by the Board of Directors to the extent necessary to ensure that the rights of the Optionee shall remain unimpaired.

5.           Other Conditions

An Optionee's rights or interests under this Plan shall not be assignable or transferable.  This Plan shall not give any Eligible Employee the right to be employed by, or to continue to be employed by, the Company or a Participating Company.

6.           Applicable Law

This Plan shall be governed by, administered and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein.

7.           Administration, Amendments or Termination

7.1           This Plan shall be administered by the Board of Directors or a duly empowered committee appointed by the Board of Directors.  The Board of Directors or such committee shall have full and final discretion to interpret the provisions of the Plan and to prescribe, amend, rescind and waive rules and regulations hereunder.  All decisions and interpretations made by the Board of Directors or such committee shall be binding and conclusive on the Eligible Employees and the Company.  Any amendment to this Plan or to the Options outstanding under this Plan is subject to the approval of The Toronto Stock Exchange, The Montreal Exchange and the Vancouver Stock Exchange.

3

HOLLINGER INC.

EXECUTIVE SHARE OPTION PLAN

AMENDED AND RESTATED AS OF SEPTEMBER 13, 1994

1.   Purpose

The purpose of this Plan is to provide an incentive to certain key executives of the Company or its subsidiary or affiliated companies to achieve the longer term objectives of the Company. to give. suitable recognition to the ability and industry of such executives which contribute materially to the success of the Company and to attract and retain in the employ of the Company and its subsidiary and affiliated companies persons of experience and ability.

2.Definitions

Wherever used in this Plan, unless there is something in the subject matter or context inconsistent therewith. the following words and terms shall have the respective meanings ascribed to them as follows:

''Board of Directors" means the board of directors of Hollinger Inc.

"Company" mean Hollinger Inc. and any successor corporation and any reference herein to action by the Company mean action by or under the authority of its Board of Directors or a duly empowered committee appointed by the Board of Directors.

"Date of Grant" means with respect to each Option the date of the resolution of the Board of Directors or a duly empowered committee appointed by the Board of Directors granting the Eligible Employee the Option.

"Eligible Employee" mean a person who is an officer and/or employee of a Participating Company and is designated by the Board of Directors or a duly authorized committee of the Board of Directors as being eligible to be granted Options pursuant to this Plan.

"Exercise Period" means with respect to each Option the period commencing on the Date of Grant thereof and terminating on the date six (6) years thereafter.

"Exercise Price" means with respect to each Option the weighted average price per share for all board lots of Shares traded on The Toronto Stock Exchange on each of the ten (10) consecutive trading days ending on the third trading day preceding the Date of Grant; for the purpose of this Plan, the expression "trading day" means a day on which shares are traded on The Toronto Stock Exchange and on which at least one board lot of Shares is traded.

"Expiration Date" means the last day of the Exercise Period.

1

"Normal Retirement" means the last day of the month in which the 65th birthday of the Eligible Employee occurs or such later date upon which the Eligible Employee actually retires.

"Option" has the meaning attributed thereto in section 3.1.

"Optionee" means an Eligible Employee to whom an Option has been granted pursuant to section 3.1.

"Participating Company" means the Company and any subsidiary or affiliated company of the Company. A "subsidiary company" is a company in which the Company directly or indirectly may exercise voting rights with respect to more than fifty percent (50%) of the issued and outstanding voting shares. An "affiliated company" is a company other than a subsidiary company in which the Company directly or indirectly may exercise voting rights with respect to a substantial percentage of the issued and outstanding voting shares and is designated by the Board of Directors or a duly empowered committee appointed by the Board of Directors as an affiliated company.

"Plan" means the Hollinger Inc. Executive Share Option Plan as amended from time to time.

"Shares" means the Common Shares of the Company and any shares or securities of the Company into which such Common Shares are changed, converted, subdivided, consolidated or reclassified.

3.Grants to Individual Employees

3.1           The Board of Directors may at any time and from time to time grant to Eligible Employees non-transferable rights ("Options") to purchase up to a specified maximum number of Shares at the Exercise Price, subject to the power of the Board of Directors to delegate its authority in this regard to a committee of the Board of Directors as provided in Article 7. Notice of the grant of such Options shall be given forthwith to the respective Optionees.

3.2           An Optionee may, subject to section 4, exercise his Options by signing and delivering to the Company, in the form prescribed by the Company, the following:

(a)   a subscription to purchase the Shares; and

(b)   payment in full  of the Exercise Price of the Shares purchased pursuant to the exercise of the Options.

3.3           Any decision regarding the granting or exercise of Options shall not affect an Eligible Employee's employment with any Participating Company.

2

3.4           Options in respect of an aggregate of up to 5,560,000 Shares less the . number of Shares which the Board of Directors may in the future issue or reserve for issuance pursuant to any other share compensation arrangement of the Company shall be available for award under the Plan. No officer or employee shall be awarded Options in respect of more than 5% of the issued and outstanding Shares. If any Option shall cease to be exercisable in whole or in part for any reason, the Shares which were covered by such Option but as to which the Option had not been exercised shall again be available under the Plan.

4.Vesting, Cessation or Employment and Adjustments

4.1           General

Subject to sections 4.2, 4.3 and 4.4 below, an Option shall become exercisable as to the following maximum number of Shares (rounded to a whole number if a fraction of Shares is obtained):

(a)   on or after the first anniversary of the Date of Grant, up to twenty-five per cent (25%) of the Shares subject to the Option;

(b)   on or after the second anniversary of the Date of Grant, up to fifty per cent (50%) of the Shares (including those previously exercised pursuant to paragraph (a));

(c)   on or after the third anniversary of the Date of Grant, up to seventy-five per cent (75%) of the Shares subject to the Option (including those previously exercised pursuant to paragraphs (a) and (b)); and

(d)   on or after the fourth anniversary of the Date of Grant, up to one hundred per cent (100%) of the Shares subject to the Option.

4.2           On Cessation of Employment

(a)   Retirement - If the Optionee ceases to be employed, either by the Company or a Participating Company, as a result of Normal Retirement, his Options shall be immediately and fully exercisable. Such Options may be exercised at any time during the period which commences on the date of Normal Retirement, and ends on the earlier of the date which is one (1) month thereafter, or the Expiration Date, provided that if the Optionee dies during such period, the Options may be exercised by his executor or other personal representative, in whole or in part, at any time or from time to time, during the period which commences on the date of death and ends on the earlier of six (6) months from the date of death of the Optionee or the Expiration Date.

(b)   Termination - If the Optionee ceases to be employed, either by the Company or a Participating Company as a result of (i) his voluntarily leaving such employment (other than by Normal Retirement referred to in paragraph (a) above) or (ii) being dismissed for cause, his Options shall thereafter be exercisable only with respect to the number of Shares in respect of which they are exercisable immediately prior to the time he ceased to be employed. Such limited Options may be exercised at any time during the period which commences on the date of termination of employment and ends on the earlier of the date which is one (1) month thereafter or the Expiration Date.

3

(c)   Death - In the case of termination of employment by the Company or a Participating Company caused by the death of the Optionee, his Options shall be immediately and fully exercisable and may be exercised by his executor or other personal representative, in whole or in part at any time or from time to time, during the period which commences on the date of death and ends on the earlier of the date which is six (6) month thereafter or the Expiration Date.

(d)   Other Termination - If the Optionee ceases to be employed either by the Company or a Participating Company for any reason other than the ones referred to in paragraphs (a), (b) or (c) above, his Options shall be immediately and fully exercisable, and may be exercised, in whole or in part, at any time or from time to time during the period which commences on the date of termination of employment and ends on the earlier of the date which is one (1) month thereafter or the Expiration Date.

4.3           Offer

In the event that an offer is made:

(a)   to all or substantially all of the holders of the Shares of the Company; or

(b)   to all or substantially all of the holders of all the Shares of the Company whose last address on the records of the Company is in Canada, at a price at least equal to the market price of the Shares immediately prior to the making of the offer, then the outstanding Options shall become immediately and fully exercisable during the period of such offer notwithstanding section 4.1 and such holder may exercise such Options, in whole or in part at any tie or from tie to time during the period of such offer.

4.4           Adjustments

In the event that the Company during the Exercise Period of any Option shall change, convert, subdivide, consolidate or reclassify its Shares, the terms of the Option shall be adjusted by the Board or Directors to the extent necessary to ensure that the rights of the Optionee shall remain unimpaired.

4

5.           Other Conditions

An Optionee's rights or interests under this Plan shall not be assignable or transferable. This Plan shall not give any Eligible Employee the right to be employed by, or to continue to be employed by, the Company or a Participating Company.

6.           Applicable Law

This Plan shall be governed by, administered and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein.

7.           Administration, Amendments or Termination

7.1           This Plan shall be administered by the Board of Directors or a duly empowered committee appointed by the Board of Directors. The Board of Directors or such committee shall have full and final discretion to interpret the provisions of the Plan and to prescribe, amend, rescind and waive rules and regulations hereunder. All decisions and interpretations made by the Board of Directors or such committee shall be binding and conclusive on the Eligible Employees and the Company. Any amendment to this Plan or to the Options outstanding under this Plan is subject to the approval of The Toronto Stock Exchange, The Montréal Exchange and the Vancouver Stock Exchange.

7.2           The Board of Directors may delegate to a committee of the Board composed of Directors who are not Eligible Employees, the authority to grant Options pursuant to this Plan to Eligible Employees within the aggregate number of Shares specified in section 3 hereof, all in the manner and on the terms authorized by the Board of Directors.

7.3           From time to time the Board of Directors may amend or waive any provision of this Plan, but no amendment or waiver of this Plan or any termination of this Plan pursuant to section 7.4 hereof shall adversely affect the rights of any Optionee pursuant to the term of this Plan.

7.4           Subject to section 7.3 hereof, the Board of Directors may terminate this Plan at any time, the effect of such termination being that no further Options may be issued under this Plan after such termination.

8.           Notices

Any notice, payment, request or demand (herein collectively called a "Notice") required or permitted to be given or made hereunder shall be in writing and shall be sufficiently given if delivered to the Company or to the Optionee, as the case may be, or if sent by prepaid registered mail, addressed,  in the case of any Notice to the Company, to The Secretary, Hollinger Inc., 10 Toronto Street, Toronto, Ontario  M5C 2B7 and in the case of the Optionee, to such Optionee at the address set forth in the register of Options granted hereunder to be maintained by the Company, provided that the Company or the Optionee may by notice in writing change its or the Optionee's address to a different address stipulated in the Notice Any Notice delivered by hand shall be considered to have been given on the date of delivery. Any Notice mailed as aforesaid shall be deemed to have been given on the third business day following the date of such mailing; provided that in the event of a disruption in postal service any Notice so mailed shall be deemed to have been given on the third business day following the resumption of regular postal service.

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9.           Costs

The Company shall bear all costs of administering the Plan.

Effective Date

The amendments to this Plan as incorporated herein shall become effective on September 13. 1994 but shall have no effect on the rights of Eligible Employees granted previously pursuant to this Plan.

6

EXERCISE OF SHARE OPTION

TO:                      HOLLINGER INC.

Pursuant to the provisions of the Share Option Agreement entered into as of December 14, 1994 (the "Agreement'') between Hollinger Inc. (the "Company") and the undersigned Optionee, the undersigned hereby exercises the Option granted under the terms of the Agreement to the extent of ____________________________ Shares of the Company and delivers to the Company herewith $____________________________ therefor.

Date:_____________________________________	_____________________________________________
	Optionee
	_____________________________________________
	Address
	_____________________________________________

7

HOLLINGER INC.

Executive Share Option Plan

Amended and Restated as of September 13, 1994

Amended December 3, 1996

Share Option Agreement

THIS AGREEMENT made as of the 7th day of May, 2007.

BETWEEN:

HOLLINGER INC., a corporation incorporated under the laws of Canada

(the "Company")

- and -

G. WESLEY VOORHEIS, an individual resident in Ontario

(the "Optionee")

WHEREAS the Company, VC & Co. Incorporated and the Optionee entered into an agreement dated January 15, 2007 under which it was agreed, among other things, that the Optionee would act as a senior executive of the Company on the terms therein set forth, which terms the parties subsequently agreed to amend (the "Engagement Agreement");

WHEREAS the Company desires to have the Optionee act as Chief Executive Officer of the Company and to provide the Optionee with an incentive to put forth maximum effort for the success of the business;

WHEREAS in order to provide such an incentive to its employees and officers, the Company has adopted the Hollinger Inc. Executive Share Option Plan, amended and restated as of September 13, 1994 as amended December 3, 1996 (the "Plan"), a copy of which is attached as Exhibit A hereto; and

WHEREAS the Engagement Agreement provides, among other things, that the Company will grant to the Optionee under the Plan options to purchase common shares of the Company ("Shares") contemplated hereby;

NOW THEREFORE in consideration of the mutual covenants and representations herein contained and intending to be legally bound, the parties hereto agree as follows:

ARTICLE 1

GRANT OF OPTIONS

1.1   Subject to the terms and conditions of this Agreement and the Plan, the Company hereby grants to the Optionee Options to purchase from the Company up to, but not exceeding in the aggregate, 1,000,000 Shares.

1.2   Notwithstanding the definition of "Exercise Price" in Section 2 of the Plan, the Exercise Price of the Options represented hereby shall be $0.70 per Share.

1.3   Notwithstanding the definition of "Exercise Period" in Section 2 of the Plan, the Exercise Period of the Options represented hereby shall commence on May 7, 2007 (the "Date of Grant") and expire on May7, 2012.

ARTICLE 2

VESTING, EXERCISE AND WITHHOLDING

2.1   Notwithstanding Section 4.1 of the Plan, Options granted to the Optionee hereunder shall immediately vest and be exercisable as of the Date of Grant.  The Options may be exercised at any time and from time to time during the Exercise Period.

2.2   Notwithstanding Section 4.2 of the Plan, the Exercise Period as set out in Section 1.3 of this Agreement shall not expire prior to May 7, 2012 except in accordance with the terms and conditions of a definitive consulting services agreement to be entered into between the Company, the Optionee and VC & Co. Incorporated.

2.3   Options shall be exercised by the Optionee by delivering to the Company a notice in the form set forth as Exhibit B hereto, together with a cheque payable to the order of the Company.

2.4   The Company shall notify the Optionee of the amount of withholding tax, if any, which must be paid under federal and provincial laws in connection with the exercise of an Option.  The Company may require the Optionee to pay the amount thereof to the Company prior to the delivery of the Shares.

ARTICLE 3

MISCELLANEOUS

3.1   Capitalized terms used but not defined herein have the meaning assigned to them in the Plan.

3.2   The Optionee shall not be deemed for any purpose to be a shareholder of the Company in respect of any shares as to which the Options shall not have been exercised as herein provided.

3.3   Notwithstanding any other provision hereof, the Optionee hereby agrees that he will not exercise the Options granted hereunder, and that the Company will not be obligated to issue any Shares to the Optionee hereunder, if the exercise thereof or the issuance of such Shares shall constitute a violation by the Optionee or the Company of any provision of any law or regulation of any governmental authority.  The Company shall in no event be obligated to take any affirmative action in order to cause the exercise of the Options or the issuance of Shares pursuant thereto to comply with any law or regulation of any governmental authority.

3.4   No amounts of income received by the Optionee pursuant to this Agreement shall be considered compensation for purposes of any pension or retirement plan, insurance plan or any other employee benefit plan of the Company unless otherwise provided in such plan.

3.5   Every notice or other communication relating to this Agreement shall be in writing and shall be mailed to or delivered to the party for whom it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided; provided, however, that unless and until some other address be so designated, all notices or communications by the Optionee to the Company shall be mailed or delivered to the Company at its office at:

120 Adelaide Street West

Suite 512

Toronto, Ontario

M5H 1T1

Attention:  Chief Financial Officer

All notice or communications by the Company to the Optionee may be given to the Optionee personally or may be mailed to him or her. Notice given by delivery shall be deemed to have been received on the day it is delivered and notice given by mail shall be deemed to have been received on the third business day after mailing.

IN WITNESS WHEREOF the parties hereto have executed this Agreement on the day and year first above written.

HOLLINGER INC.

By:

SIGNED, SEALED & DELIVERED in the presence of:
Witness	G. Wesley Voorheis

Exhibit

Exercise of Share Option

To:                          Hollinger Inc,

Pursuant to the provisions of the Share Option Agreement entered into as of May 7, 2007 (the "Agreement") between Hollinger Inc. (the "Company") and the undersigned Optionee, the undersigned hereby exercises the Option granted under the terms of the Agreement to the extent of ____________________ Shares of the Company and delivers to the Company herewith $____________ therefore.

Date:_____________________________________	______________________________________
	Optionee
	____________________________________________
	Address
	____________________________________________

EX-99.15

Exhibit 99.15

STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this "Agreement") is entered into as of April 6, 2007 between:

HOLLINGER INC.,

a corporation incorporated under the Canada Business Corporations Act ("Seller");

SRB CR LIMITADA,

a corporation organized under the laws of the Republic of Costa Rica ("Buyer");

Fred Blaser, an individual residing in the Republic of Costa Rica ("Blaser"); and

Rosemary Engels, an individual residing in the Republic of Costa Rica ("Engels");

WHEREAS the Seller owns 10 shares having a par value of 1,000 colonnes each (the "Gironte Shares") of the common stock of Gironte, S.A., a corporation organized under the laws of the Republic of Costa Rica (the "Company"), representing all of the issued and outstanding shares in the capital of the Company;

AND WHEREAS Blaser and Engels own all of the issued and outstanding shares in the capital of the Buyer;

AND WHEREAS the Seller wishes to sell and the Buyer wishes to purchase all Gironte Shares, subject to the terms and conditions of this Agreement;

NOW THEREFORE, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

For the purposes of this Agreement, the following terms shall have the following meanings:

"Balance of the Purchase Price" has the meaning set forth in Section 2.3(c).

"Business Day" means a day (other than Saturday or Sunday) on which banks are generally open in Toronto, Ontario and San Jose, Costa Rica for ordinary business.

"Closing" has the meaning set forth in Section 8.1.

"Closing Date" means May 30, 2007 or such other date as the parties may mutually agree.

"Deposit" has the meaning set forth in Section 2.3(a).

"ELR" means Editorial La Razon, S.A., a corporation organized under the laws of the Republic of Costa Rica.

"Escrow Agent" means a Costa Rican subsidiary of a Canadian chartered bank satisfactory to both parties, acting reasonably, acting as escrow agent at its main branch in San Jose, Costa Rica or such other entity or location as the parties may from time to time agree;

"Escrow Agreement" means an escrow agreement in form acceptable to the Buyer and the Seller, acting reasonably, pursuant to which the Escrow Agent will act as escrow agent hereunder;

"Gironte Shares" has the meaning set forth in the recitals to this Agreement.

"law" means all laws, statutes, ordinances, rules, regulations, decisions and orders of any governmental authority, including any nation, state or other political subdivision of any nation or state.

"person" means and includes an individual, a partnership, a joint venture, a corporation, a limited liability company, a limited liability partnership, a trust, an unincorporated organization or a government or any department or agency thereof.

"Purchase Price" has the meaning set forth in Section 2.2.

"Transfer" has the meaning set forth in Section 2.1.

ARTICLE 1

PURCHASE AND SALE OF SHARES

2.1   Purchase and Sale of Shares.

Upon the terms and subject to the conditions set forth herein, on the Closing Date, the Seller shall sell and deliver to the Buyer, and the Buyer shall purchase from the Seller, all Gironte Shares (the "Transfer").

2.2   Purchase Price.

The aggregate consideration payable by the Buyer to the Seller for the purchase of the Gironte Shares pursuant to Section 2.1 shall be US$2,000,000 (the "Purchase Price").

2.3   Payment of Purchase Price.

The Purchase Price shall be payable by the Buyer as follows:

(a)   By April 20, 2007, US$700,000 (the "Deposit") shall be paid by bank draft or certified cheque in immediately available U.S. dollar funds to the Escrow Agent to be held by the Escrow Agent pursuant to the terms of the Escrow Agreement as a non-refundable deposit by the Buyer, to be forfeited by the Buyer to the Seller in the event that this Agreement is terminated for any reason other than termination by the Buyer pursuant to Section 9.1(a);

(b)   On Closing, the Escrow Agent shall pay the Deposit to the Seller by bank draft or certified cheque in immediately available U.S. dollar funds pursuant to the provisions of the Escrow Agreement; and

(c)   US$1,300,000 (the "Balance of the Purchase Price") shall be paid to the Seller at Closing, in accordance with Section 8.3(b)(i).

2.4   Return of Deposit.

If the Escrow Agent  is required pursuant to Section 2.3(a) to return the Deposit to the Buyer, it shall do so by bank draft or certified cheque in immediately available U.S. dollar funds no later than five Business Days following the termination of this Agreement.

2.5   Interest on Deposit

The Escrow Agent shall pay any interest earned on the Deposit to the party who receives the Deposit pursuant to the provisions of this Agreement.

ARTICLE 3                            

REPRESENTATIONS AND WARRANTIES OF BUYER, BLASER AND ENGELS

Each of the Buyer, Blaser and Engels makes the following representations and warranties for the benefit of the Seller (and each of them acknowledges that the Seller is relying on such representations and warranties), each of which is true and correct on the date hereof:

3.1   Organization and Corporate Power.

The Buyer is incorporated, validly existing and in good standing under the laws of the Republic of Costa Rica. The Buyer has the requisite corporate capacity and power to execute, deliver and perform its obligations under this Agreement.

3.2   Authorization; Validity.

The execution, delivery and performance by the Buyer of this Agreement have been duly authorized by all requisite corporate action on the part of the Buyer.  This Agreement has been duly executed and delivered by the Buyer, Blaser and Engels and constitutes the legal, valid and binding obligation of the Buyer, Blaser and Engels enforceable against the Buyer, Blaser and Engels in accordance with its terms.

3.3   No Conflict.

The execution, delivery and performance by the Buyer, Blaser and Engels of this Agreement and the consummation of the transactions contemplated hereby will not (i) in the case of the Buyer, violate, conflict with or result in a breach of any provisions of the charter documents of the Buyer or any resolution adopted by the board of directors or shareholders of the Buyer, (ii) violate any law or regulation applicable to the Buyer, Blaser or Engels or any order of any court or governmental authority having jurisdiction over the Buyer, Blaser or Engels, or (iii) violate or conflict with, or constitute (with due notice or lapse of time or both) a default under, any material agreement or instrument to which the Buyer, Blaser or Engels is a party or by which he, she or it is bound.

3.4   Consents and Approvals.

No registration or filing with, or consent or approval of or other action by, any governmental agency or instrumentality or any other person is or will be necessary for the valid execution, delivery and performance by the Buyer, Engels or Blaser of this Agreement and the consummation of the Transfer.

3.5   Financial Statements.

To the best of the knowledge, information and belief of each of the Buyer, Blaser and Engels, the unaudited balance sheet of ELR as at September 30, 2006 and the related unaudited statement of income and returned earnings for the year then ended and the unaudited balance sheet of ELR as at January 31, 2007 and the related unaudited statement of income and retained earnings for the four month period then ended, in the form delivered by the Buyer to the Seller, fairly present the financial condition of ELR as of the respective dates thereof and the results of its operations for the respective periods covered thereby.

3.6   Survival.

These representations and warranties in Article 3 shall survive the Closing and continue in full force and effect for a period of two (2) years following the Closing Date.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE SELLER

The Seller makes the following representations and warranties for the benefit of the Buyer, Engels and Blaser (and the Seller acknowledges that each of them is relying on such representations and warranties), each of which is true and correct on the date hereof:

4.1   Organization and Corporate Power.

The Seller is incorporated, validly existing and in good standing under the laws of Canada.  The Seller has the requisite corporate capacity and power to execute, deliver and perform its obligations under this Agreement.

4.2   Authorization; Validity.

The execution, delivery and performance by the Seller of this Agreement have been duly authorized by all requisite corporate action on the part of the Seller.  This Agreement has been duly executed and delivered by the Seller and constitutes the legal, valid and binding obligation of the Seller, enforceable against the Seller in accordance with its terms.

4.3   No Conflict.

The execution, delivery and performance by the Seller of this Agreement and the consummation of the transactions contemplated hereby will not (i) violate, conflict with or result in a breach of any provisions of the charter documents of the Seller or any resolution adopted by the board of directors or shareholders of the Seller, (ii) violate any law or regulation applicable to the Seller, or any order of any court or governmental authority having jurisdiction over the Seller, or (iii) violate or conflict with, or constitute (with due notice or lapse of time or both) a default under, any material agreement or instrument to which the Seller is a party or by which it is bound.

4.4   Consents and Approvals.

No registration or filing with, or consent or approval of or other action by, any governmental agency or instrumentality or any other person is or will be necessary for the valid execution, delivery and performance by the Seller of this Agreement and the consummation of the Transfer.

4.5   Capital Stock

The Gironte Shares represent all of the issued and outstanding shares of capital stock of the Company, and the Seller has good and marketable title to the Gironte Shares, free and clear of any claims or encumbrances.  The Seller is the sole beneficial owner of the Gironte Shares and has not granted (nor caused the Company to grant) any rights, options, rights of conversion or warrants to any person to acquire any shares of the capital stock of the Company.

4.6   Survival.

These representations and warranties in Article 4 shall survive the Closing and continue in full force and effect for a period of two (2) years following the Closing Date.

ARTICLE 5

ADDITIONAL COVENANTS

5.1   Auditors

At the expense of ELR, the Buyer, Blaser and Engels shall cause ELR: (i) to engage Grant Thornton as soon as possible to complete (A) an audit of ELR's financial statements for the year ended September 30, 2006 and (B) a review of ELR's financial statements for the six months ended March 31, 2007; (ii)  to provide the Seller and the Seller's auditors with open access to Grant Thornton during the course of such audit and review; and (iii) to provide the results of such audit and review, as well as a copy of both, to the Seller and the Seller's auditors as soon as available. The Buyer, Blaser and Engels shall co-operate fully with Grant Thornton and provide (and cause ELR to provide) all relevant information reasonably requested by Grant Thornton.

5.2    Forgiveness of Indebtedness

The Seller agrees that, immediately prior to Closing (but conditional on the Closing occurring), the Seller will forgive the Company and ELR for all indebtedness owed by either the Company or ELR to the Seller.

5.3   Further Assurances.

From time to time from the date hereof until the Closing Date, as and when requested by either party hereto, the requested party shall use reasonable efforts to execute and deliver, or cause to be executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such further or other actions as such other party may reasonably deem necessary to consummate the transactions contemplated by this Agreement.

5.4   Transfer Taxes.

All stamp, documentary, recording, transfer and sales and use taxes incurred in connection with this Agreement and the transactions contemplated hereby shall be borne by the Buyer, and the Buyer at its own expense shall file, to the extent required by applicable law, all necessary tax returns and other documentation with respect to all such transfer or sales and use taxes.

5.5   Notice of Changes.

Prior to the Closing, each party will promptly advise the other party in writing with respect to any matter arising after execution of this Agreement of which that party obtains knowledge and which, if existing or occurring at the date of this Agreement, would cause or constitute a breach of any of the representations and warranties set forth in this Agreement.

5.6   Operation of ELR's Business in Ordinary Course.

Each of the Buyer, Blaser and Engels agrees to run the business of ELR in the ordinary course from the date hereof until Closing, and agrees that, without the prior written consent of the Seller, ELR shall not enter into any transactions with the Buyer, Blaser or Engels or any of their respective affiliates during the period from the date hereof until Closing, other than (i) payments in ordinary course to Blaser and Engels as officers and employees of ELR and (ii)  payments to the Buyer in respect of the printing press used by ELR and paid for by the Buyer, any such payments per month not to exceed the amount per month indicated as being so paid on the January 31, 2007 financial statements provided to the Seller.

5.7   Absence of Unusual Transactions by the Company

The Seller shall not at any time after the Company's corporate records were delivered to the Seller's Costa Rican counsel and prior to Closing have caused the Company to do or resolve to do any act or thing or enter into any agreement, other than (i) the replacement of the directors and officers of the Company with the Seller's nominees (which has already been done) or (ii) in respect of which the prior written consent of Blaser and Engels has been obtained by the Seller.

5.8   Mutual Releases

On Closing, the Seller (on behalf of itself and each of its subsidiaries (other than Sun-Times Media Group, Inc. and its subsidiaries)) will fully release the Buyer, ELR, Engels and Blaser from all claims any of them may have against each of the Buyer, ELR, Engels and Blaser, except in respect of breaches of this Agreement.  On Closing, each of the Buyer, ELR, Engels and Blaser will release the Seller (and its affiliates (other than Sun-Times Media Group, Inc. and its subsidiaries)) and their respective officers, directors and employees from all claims the Buyer, ELR, Engels and Blaser may have against any of them, except in respect of breaches of this Agreement.

5.9   No Intent to Sell

Each of the Buyer, Blaser and Engels agrees that (i) he, she or it has no current intention to sell ELR or any substantial part of its business or assets to another person and (ii) if any such sale occurs within 12 months of Closing for any reason other than the death or permanent disability of Engels or Blaser, he, she and it will cause to be paid to the Seller cash in an amount equal to 50% of the amount by which the value of the aggregate consideration received on any such sale exceeds US$2 million.

5.10   Reasonable Efforts.

Subject to the terms and conditions hereof, each of the Seller, the Buyer, Engels and Blaser shall cooperate and use its, his or her reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement and to cause the conditions to each other's obligation to consummate the transactions contemplated hereby as set forth in Article 6 and Article 7 to be satisfied.

5.11   Access to Corporate Records.

Until the Closing Date, the Seller shall give to the Buyer and its professional advisers and representatives full access to the minute books, share certificate books and other corporate records of the Company which the Seller has in its possession.

ARTICLE 6

CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS

The obligations of the Buyer under this Agreement shall be subject to the satisfaction (or waiver by the Buyer), at or before the Closing, of each of the following conditions:

6.1   Representations and Warranties.

The representations and warranties of the Seller contained in Article 4 shall be true and correct in all material respects as of the Closing Date as though such representations and warranties were made at and as of the Closing Date, and the Buyer shall have received at the Closing a certificate, dated the Closing Date signed on behalf of the Seller by an authorized representative of the Seller, to such effect.

6.2   Performance.

The Seller shall have performed and complied, in all material aspects, with all agreements and covenants required hereby to be performed or complied with by it at or prior to the Closing (including the delivery of the delivery items listed in Section 8.3(a)) and the Buyer shall have received at the Closing a certificate of the Seller, dated the Closing Date signed by an authorized representative of the Seller, to such effect.

6.3   Litigation

No material claim, action, suit, litigation, arbitration, investigation or proceedings at law or equity or before any court or governmental body, arising out of or as a result of facts or circumstances or acts or omissions on the part of the Seller or any of its affiliates existing or arising prior to Closing, shall be pending or threatened which would restrict or prohibit the purchase and sale of the Gironte Shares or any part thereof as contemplated herein.

ARTICLE 7                    

CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS

The obligations of the Seller under this Agreement shall be subject to the satisfaction (or waiver by the Seller), at or before the Closing, of each of the following conditions:

7.1   Representations and Warranties.

The representations and warranties of the Buyer, Engels and Blaser contained in Article 3 shall be true and correct in all material respects as of the Closing Date as though such representations and warranties were made at and as of the Closing Date, and the Seller shall have received at the Closing a certificate, dated the Closing Date signed on behalf of the Buyer by an authorized representative of the Buyer and by Blaser and Engels, to such effect.

7.2   Performance.

The Buyer, Engels and Blaser shall have performed and complied, in all material respects, with all agreements and covenants required hereby to be performed or complied with by it, him or her on or prior to the Closing (including the delivery of the delivery items listed in Section 8.3(b)), and Seller shall have received at the Closing a certificate, dated the Closing Date signed on behalf of the Buyer by an authorized representative of the Buyer and by Blaser and Engels, to such effect.

7.3   Litigation

No material claim, action, suit, litigation, arbitration, investigation or proceedings at law or equity or before any court or governmental body, arising out of or as a result of facts or circumstances or acts or omissions on the part of the Seller or any of its affiliates existing or arising prior to Closing, shall be pending or threatened which would restrict or prohibit the purchase and sale of the Gironte Shares or any part thereof as contemplated herein.

ARTICLE 8

CLOSING

8.1   Time and Place.

Subject to the provisions of Articles 6 and 7 and unless otherwise agreed to by the parties, the closing of the Transfer (the "Closing") shall take place at the offices of the Buyer's counsel in San Jose, Costa Rica on the Closing Date.

8.2   Payments.

At the Closing, upon the terms and subject to the conditions set forth herein, the Escrow Agent and the Buyer shall pay the Purchase Price by bank draft or certified cheque of immediately available U.S. dollar funds.

8.3   Deliveries.

(a)   Seller's Delivery.  At Closing, the Seller shall deliver to the Buyer:

(i)   a duly executed instrument of transfer in favour of the Buyer of all Gironte Shares, in Spanish and governed by the laws of the Republic of Costa Rica in a form that is acceptable to each of the Buyer and the Seller, acting reasonably;

(ii)   all minute books, share certificate books and corporate records pertaining to the Company which are in the Seller's possession;

(iii)   resignations from all nominees of the Seller who are directors or officers of the Company effective as of the Closing Date;

(iv)   the share certificate representing the Gironte Shares;

(v)   the release referred to in Section 5.8; and

(vi)   the certificates relating to representations and warranties and the performance of obligations referred to in Sections 6.1 and 6.2.

(b)   Buyer's Deliveries.  At Closing, the Buyer shall deliver to the Seller:

(i)   a certified cheque, bank draft or wire transfer of immediately available U.S. dollar funds in the amount of the Balance of the Purchase Price;

(ii)   the certificates relating to representations and warranties and the performance of obligations referred to in Sections 7.1 and 7.2; and

(iii)   the release referred to in Section 5.8.

(c)   Other Closing Transactions.  Each of the parties shall take such other actions required hereby to be performed by it prior to or on the Closing Date, including without limitation satisfying the conditions set forth in Articles 6 and 7.

(d)   Additional Documents.  Each party shall execute and deliver to the other party all documents which the other party reasonably determines are necessary to consummate the transactions contemplated hereby.

ARTICLE 9

TERMINATION AND ABANDONMENT

9.1   Methods of Termination.

This Agreement may be terminated and the transactions herein contemplated may be abandoned:

(a)   by the Buyer on May 30, 2007 if (i) any of the conditions provided for in Article 6 shall not have been satisfied or waived in writing by the Buyer prior to such date and the Buyer shall not be in breach of its obligations hereunder; or (ii) the Seller is unable to lawfully complete any of the transactions contemplated by this Agreement for any reason whatsoever; or

(b)   by the Seller on May 30, 2007 if any of the conditions provided for in Article 7 shall not have been satisfied or waived in writing by the Seller prior to such date and the Seller shall not be in breach of its obligations hereunder.

9.2   Procedure Upon Termination and Consequences.

The Buyer or the Seller, as the case may be, may terminate this Agreement when permitted pursuant to Section 9.1 by delivering written notice of such termination, and such termination shall be effective upon delivery of such notice in accordance with Section 11.3. If this Agreement is terminated as provided herein, no party hereto shall have any liability or further obligation to the other party, except with respect to (i) the confidentiality provisions hereof, which shall survive the termination of this Agreement and (ii) such remedies which a party may have by reason of any breach of this Agreement by another party prior to the date of such termination.

ARTICLE 10

INDEMNIFICATION

10.1   Obligations.

The Seller and the Buyer agree to indemnify and hold harmless each other and each other’s directors, officers, employees, agents, representatives, affiliates and permitted assigns and the directors, officers, employees, agents and representatives of each such affiliate and assign (each, an “Indemnified Party”) from and against any and all losses based upon or arising from any inaccuracy in any of the representations and warranties made by the Seller or the Buyer, as the case may be, in or pursuant to this Agreement or any breach of the covenants made by the Seller or the Buyer, as the case may be, in or pursuant to this Agreement (each, an "Indemnifiable Loss").

10.2   Procedure.

(a)   Notice of  Claims.  Any Indemnified Party seeking indemnification from the other party (the “Indemnifying Party”) of any Indemnifiable Loss or potential Indemnifiable Loss pursuant to this Agreement shall give written notice to the Indemnifying Party.  If such Indemnifiable Loss relates to a claim asserted by a third party, such written notice shall be given by the Indemnified Party promptly after its receipt of an assertion of liability from the third party; provided, however, that no failure to provide such notice shall relieve the Indemnifying Party of any liability hereunder except to the extent that Indemnifying Party is materially prejudiced thereby.

(b)   Defence.  The Indemnifying Party may, at its option, control the defence of an claim related to an Indemnifiable Loss asserted by a third party.  Notwithstanding the foregoing, the Indemnified Party shall have the right to retain counsel of its choice at its own expense and participate in the defence of such claim.  If the Indemnifying Party does not assume such defence within 30 days after being notified by the Indemnified Party or the Indemnifying Party notifies the Indemnified Party within such 30 days that it will not assume such defence, the Indemnified Party may control the defence of such claim and may settle the claim on behalf of and for the account and risk of the Indemnifying Party, who shall be bound by the result.  In all cases, the party without the right to control the defence of the Indemnified Claim may participate in the defence at its own expense.

10.3   Limitations on Indemnification.

All Indemnifiable Losses shall be computed net of (i) any tax benefit resulting therefrom to the Indemnified Party and (ii) any amounts recovered from any third parties based on claims the Indemnified Party has against such third parties which would reduce the Indemnifiable Losses that would otherwise be sustained.

10.4   Remedies Exclusive.

The remedies provided for in this Article 10 shall constitute the sole and exclusive remedy for any claims arising after the Closing made for breach of this Agreement or otherwise in connection with the transactions contemplated by this Agreement, except for claims against either party based upon fraud or wilful misconduct.

10.5   Mitigation.

Nothing in this Agreement shall be deemed to relieve any party from any duty under applicable law to mitigate any loss or damage incurred by it as a result of any breach by the other party of any representations, warranties or covenants in or pursuant to this Agreement.

ARTICLE 11

MISCELLANEOUS

11.1   Amendment.

This Agreement may be amended only by written agreement between the Seller and the Buyer.

11.2   Waiver.

The rights of each of the parties hereunder shall not be capable of being waived or varied otherwise than by an express waiver or variation in writing.  Failure to exercise or any delay in exercising any of such rights also shall not operate as a waiver or variation of that or any other such right.  Defective or partial exercise of any of such rights shall not preclude any other or further exercise of that or any other such right.  No act or course of conduct or negotiation on the part of either party shall in any way preclude such party from exercising any such right or constitute a suspension or any variation of any such right.

11.3   Notice.

All notices and other communications required or permitted to be given under this Agreement shall be in writing and may be given by any of the following methods: (a) personal delivery, (b) facsimile transmission, or (c) international courier service.  Notices shall be sent to the other party at its address or facsimile number given below (or at such other address or facsimile number for such party as shall be specified by notice given hereunder).

If to the Seller, to:

Hollinger Inc.

(prior to May 1, 2007)

10 Toronto Street,

Toronto, ON M5C 2B7

Fax:           416-363-4187

(May 1, 2007 and after)

120 Adelaide Street West,

Suite 512

Toronto, ON  M5H 1T1

Fax:           416-363-4187

If to the Buyer, to:

c/o la republica

apdo 2130-1000

San Jose, Costa Rica

(for courier, etc)

La Republica

Barrio Tournon

a lado de hotel Radisson

San Jose, Costa Rica

Fax No.:          011-506-222-7665

All such notices and communications shall be deemed received upon (i) actual receipt thereof by the addressee, (ii) actual delivery thereof to the appropriate address or (iii) in the case of a facsimile transmission, transmission thereof by the sender and issuance by the transmitting machine of a confirmation slip that the number of pages constituting the notice have been transmitted without error.

11.4   Binding Nature; Assignment.

This Agreement shall be binding upon and enure to the benefit of the parties hereto and their respective heirs, executors, other personal representatives, successors and permitted assigns.  No party may assign this Agreement or any of the rights, interests or obligations hereunder to another person without the prior written consent of the other parties, provided, however, that notwithstanding any such assignment by a party, the assigning party shall remain jointly liable with its assignee in respect of such party's obligations hereunder.

11.5   Entire Agreement.

This Agreement embodies the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein.  This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter and supersedes any letters, memoranda or other documents or communications, whether oral, written or electronic, submitted or made by any party or its agents or representatives.

11.6   Expenses.

Each party will pay its own expenses in connection with the negotiation of this Agreement, the performance of its obligations hereunder, and the consummation of the transactions contemplated herein.

11.7   Governing Law.

This Agreement shall be construed and enforced in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein.  The courts of the Province of Ontario shall have the exclusive jurisdiction to hear all disputes arising in connection with this Agreement and each of the parties hereto attorns to the jurisdiction of such courts.

11.8   Construction.

All terms defined herein have the meanings assigned to them herein for all purposes.  "Include", "includes" and "including" shall be deemed to be followed by "without limitation" whether or not they are in fact followed by such words or words of like import.  "Writing", "written" and comparable terms refer to printing, typing, lithography and other means of reproducing words in a visible form.  Any instrument or law defined or referred to herein means such instrument or law as from time to time amended, modified or supplemented, including (in the case of instruments) by waiver or consent and (in the case of any law) by succession of comparable successor laws and includes (in the case of instruments) references to all attachments thereto and instruments incorporated therein.  References to a person are, unless the context otherwise requires, also to its successors and assigns.  References to the singular include, unless the context otherwise requires, references to the plural and vice versa.

[Signature page follows]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the day and year first above written.

HOLLINGER INC.
by	/s/ G. Wesley Voorheis
	G. Wesley Voorheis
	Director

SRB CR LIMITADA
by	/s/ Rosemary Engels
	Rosemary Engels
	Director
	/s/ Fred Blaser
	Fred Blaser
	Director

SIGNED, SEALED & DELIVERED in the presence of: /s/ N. McDonald	} } } } }	/s/ Fred Blaser	(seal)
Witness		Fred Blaser

SIGNED, SEALED & DELIVERED in the presence of: /s/ N. McDonald	} } } } }	/s/ Rosemary Engels	(seal)
Witness		Rosemary Engels

EX-99.16

Exhibit 99.16

U.S. Department of Justice           

	United States Attorney Northern District of Illinois
Eric H. Sussman Assistant United States Attorney	Dirksen Federal Building 219 South Dearborn Street, Fifth Floor Chicago, Illinois  60604	Direct Line: (312) 353-1412 Fax: (312) 353-4324

  May 15, 2006

Nathan P. Eimer, Esq.

Eimer Stahl Klevorn & Solberg LLP

223 South Michigan Avenue

Suite 1100

Chicago, Illinois 60604

Re:              Hollinger Inc.

Dear Mr. Eimer:

The purpose of this letter is to set forth the agreement between you, your client Hollinger Inc. ("Inc."), and the United States Attorney's Office for the Northern District of Illinois (the "government"). This agreement is entered into between Inc. and the government in recognition of Inc.'s acceptance of responsibility and its ongoing cooperation with the government.

Introduction

1.           The government is conducting a criminal investigation and prosecution relating to the fraudulent diversion of funds from Hollinger International, Inc. ("International"). During the course of the investigation, the government notified Inc. that, in the government's view, certain former Inc. officers, directors, and personnel have violated federal criminal law in a manner that implicates Inc. criminally. In particular, the government notified Inc. that from in or about January of 1998 through in or about November 2000, in connection with the sale of various International newspaper publishing groups in the United States from 1998 through November 2000, these Inc. officers and directors, including but not limited to, Conrad Black, David Radler, John Boultbee and Peter Atkinson, violated federal criminal law for the purpose of benefiting themselves and in part, of benefiting Inc., thus subjecting Inc. to criminal liability. In connection with these transactions, the government notified Inc. that Conrad Black and his associates fraudulently deprived International of money and honest services by inserting themselves and their entities, including Inc., as non-competition covenantors and recipients of non-competition fees. As a result of this criminal conduct, Inc. received non-competition fees totalling approximately $16.55 million, which  money  was  fraudulently  diverted  from  International.  Additionally, Inc. has been advised that Conrad Black and his associates concealed their fraudulent conduct by, among other things, causing International to make filings with the SEC that contained material falsehoods and omissions, and by making false and fraudulent statements to International's shareholders and other outsiders.

2.          Inc. acknowledges that the government has developed evidence during its investigation that Inc. is criminally liable because one or more of Inc.'s former officers, directors or employees violated federal criminal law with the intent, in part, to benefit Inc. in connection with the above-described fraudulent diversion of approximately $16.55 million from International to Inc. Inc. further acknowledges that one or more of its officers, directors or employees acted illegally in connection with Inc.'s receipt of approximately $16.55 million in non-compete payments and that it is responsible for the repayment of such money. Inc. does not endorse, ratify or condone criminal conduct and has expressed its willingness to continue to cooperate with the government in its investigation of matters relating to International.

3.         The government acknowledges that Inc. has taken substantial steps to remedy the criminal conduct described above and ensure that it would not be repeated. Among other things, full restitution has been made to International of the non-compete funds received by Inc., with interest. Inc. has taken affirmative steps to remove Conrad Black and his associates from Inc.'s board of directors and management. Additionally, Inc. has reconstituted its board of directors in an effort to ensure that the directors are, and remain, independent of Black and his associates.

Agreement

4.         Based upon Inc.'s acceptance of responsibility as set forth above and its willingness to continue to cooperate with the government in its investigation and prosecution of matters relating to International, the government, on the understandings specified below, agrees that it will not prosecute Inc. in the Northern District of Illinois for any crimes committed by its officers, directors or employees relating to the sale of various international newspaper publishing groups in the United States between 1998 and 2000. Inc. understands and agrees that if it violates this Agreement, the government can prosecute Inc. for any crimes committed by its officers, directors or employees relating to the sale of various International newspaper publishing groups in the United States between 1998 and 2000. This Agreement does not provide any protection to any individual or any entity other than as set forth above.

5.         Inc. shall truthfully disclose all information with respect to the activities of Inc., its officers and employees concerning all matters relating to the sale of various International newspaper publishing groups in the United States between 1998 and 2000 about which the government shall inquire, and shall continue to fully cooperate

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with the government. This obligation of truthful disclosure includes an obligation to provide to the government, on request, any document, record or other tangible evidence relating to the sale of various International newspaper publishing groups in the United States between 1998 and 2000 about which the government shall inquire of Inc. This obligation of truthful disclosure includes an obligation upon Inc. to provide to the government access to Inc.'s facilities, documents and employees, to the extent Inc. is not prohibited by court order from doing so. This paragraph does not apply to any information provided to counsel after January 2004 in connection with the provision of legal advice and the legal advice itself.

6.         Upon request of the government, with respect to any issue relevant to its investigation of matters relating to International, and/or the prosecution of Conrad Black, David Radler, John Boultbee, Peter Atkinson, Mark Kipnis, or the Ravelston Corporation, Inc. shall designate knowledgeable employees, agents or attorneys to provide non-privileged information and/or materials on Inc.'s behalf to the government. Inc. also agrees to make its employees, agents and attorneys available for testimony at the request of the government. It is further understood that Inc. must at all times give complete, truthful and accurate information and testimony.

7.         With respect to any information, testimony, document, record or other tangible evidence relating to International provided to the government or a grand jury, Inc. consents to any and all disclosures of such materials as the government, in its sole discretion, deems appropriate. With respect to any such materials that constitute "matters occurring before the grand jury" within the meaning of Rule 6(e) of the Federal Rules of Criminal Procedure, Inc. further consents to: a) any order sought by the government permitting such disclosure; and b) the government's ex parte or in camera application for such orders.

8.         Inc. further agrees that it will not, through its attorneys, board of directors, agents, officers or employees, make any public statement, in litigation or otherwise, contradicting Inc.'s acceptance of responsibility set forth above. Any such contradictory statement by Inc., its attorneys, board of directors, agents, officers or employees shall constitute a breach of this Agreement, and Inc. thereafter would be subject to prosecution as set forth in paragraph 4 of this Agreement. Upon the government's notifying Inc. of such a contradictory statement, Inc. may avoid a breach of this Agreement by publicly repudiating such statement within 48 hours after notification by the government. This paragraph is not intended to apply to any statement made by any Inc. employee who has been charged with a crime.

9.         It is further understood that should the government, in its sole discretion, determine that Inc. has given deliberately false, incomplete, or misleading information under this Agreement, or has committed any crimes other than those for which Inc. has accepted responsibility,  or that  Inc. otherwise violated  any provision  of this Agreement, Inc.

3

shall, in the government's sole discretion, thereafter be subject to prosecution for any criminal violation of which the government has knowledge. Any such prosecutions may be premised on information provided by Inc. Moreover, Inc. agrees that any prosecutions relating to International that are not time-barred by the applicable statute of limitations on the date of this Agreement may be commenced against Inc. in accordance with this Agreement, notwithstanding the expiration of the statute of limitations between the signing of this Agreement and June 15, 2008. By this Agreement Inc. expressly intends to and does waive any rights in this respect.

10.       It is further agreed that in the event that the government, in its sole discretion, determines that Inc. has violated any provision of this Agreement: a) all statements made by or on behalf of Inc. to the government, or any testimony given by Inc. before a grand jury, the United States Congress, the SEC, or elsewhere, whether prior or subsequent to this Agreement, or any leads derived from such statements or testimony, shall be admissible in evidence in any and all criminal proceedings brought by the government against Inc.; and b) Inc. shall not assert any claim under the United States Constitution, Rule 11(e)(6) of the Federal Rules of Criminal Procedure, Rule 410 of the Federal Rules of Evidence, or any other federal rule, that statements made by or on behalf of Inc. prior to or subsequent to this Agreement, or any leads therefrom, should be suppressed.

11.       The decision whether conduct and/or statements of any individual will be imputed to Inc. for the purpose of determining whether Inc. has violated any provision of this Agreement shall be in the sole discretion of the government.

12.       This Agreement may be publicly disclosed by either party.

13.       This Agreement expires on June 15, 2008, or the conclusion of all criminal proceedings in United States v. Black et al., 05 CR 727 (including any direct appeals), whichever is later. Upon the expiration of this Agreement and assuming Inc. has fulfilled all the terms and conditions of the Agreement, no prosecution for the crimes described in paragraph 4 of this Agreement will be instituted by the government in this District. It is further understood that this Agreement is binding only on the government and Inc.

14.       This Agreement has been submitted to the Board of Directors of Inc., which has manifested its intention and agreement by corporate resolution, properly executed, to enter into this Agreement, and directed its attorney, NATHAN P. EIMER, to enter the Agreement for Inc.

15.       This Agreement may not be modified except in writing signed by all the parties.

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If the foregoing accurately reflects our agreement, please sign this letter, and return it to Assistant United States Attorney Eric H. Sussman.

Very truly yours,

/s/ Patrick J. Fitzgerald

PATRICK J. FITZGERALD

UNITED STATES ATTORNEY

AGREED:

/s/ Nathan P. Eimer	(dated) 5/15/06
NATHAN P. EIMER Attorney for Hollinger Inc.	Date

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EX-99.17

Exhibit 99.17

  Auditors’ Report


To the Shareholders of Hollinger Inc.
We have audited the consolidated balance sheets of Hollinger Inc. (the “Corporation”) as at March 31, 2007, March 31, 2006 and December 31, 2005 and the consolidated statements of operations, deficit, accumulated other comprehensive income and cash flows for the year ended March 31, 2007, the three months ended March 31, 2006 and the year ended December 31, 2005.  These financial statements are the responsibility of the Corporation’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with Canadian generally accepted auditing standards.  Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and the significant estimates made by management as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Corporation as at March 31, 2007, March 31, 2006 and December 31, 2005 and the results of its operations and its cash flows for the year ended March 31, 2007, the three months ended March 31, 2006 and the year ended December 31, 2005 in accordance with Canadian generally accepted accounting principles.




         /s/ Zeifman and Company, LLP
Toronto, Ontario          Chartered Accountants June 20, 2007        Licensed Public Accountants                                        
 

HOLLINGER INC.

CONSOLIDATED BALANCE SHEETS

				March 31,		December 31,
			2007		2006	2005
(expressed in thousands of dollars)
ASSETS
CURRENT
	Cash and cash equivalents		$            31,288		$            18,645	$            14,193
	Restricted cash (note 2)		-		33,007	49,077
	Accounts receivable		577		915	907
	Amounts due from related parties (note 3)		-		839	876
	Prepaid expenses and other		1,619		1,031	1,443
	Assets held for sale (note 6)		7,210		8,959	-
			40,694		63,396	66,496
MORTGAGES RECEIVABLE (note 4)			11,445		2,949	2,909
INVESTMENTS (note 5)			89,174		154,112	164,625
PROPERTY AND EQUIPMENT (note 7)			1,376		1,588	10,433
RESTRICTED CASH (note 2)			1,751		9,916	9,866
FUTURE INCOME TAX ASSETS (note 8)			10,851		11,011	10,014
			$          155,291		$          242,972	$          264,343
LIABILITIES
CURRENT
	Accounts payable and accrued liabilities		$            12,002		$              9,983	$            13,683
	Amounts due to related parties (note 3)		89,944		75,617	73,688
	Income taxes payable (note 8)		3,979		5,536	5,558
	Dividends payable - Series II Preference Shares		5,188		5,276	5,226
	Retractable preference shares (note 9)		4,423		7,647	8,167
	Secured notes (note 10)		107,229		108,531	108,401
			222,765		212,590	214,723
FUTURE INCOME TAXES (note 8)			13,589		26,020	27,484
POST RETIREMENT BENEFITS (note 11)			9,436		9,837	10,082
			245,790		248,447	252,289
SHAREHOLDERS' EQUITY (DEFICIENCY)
CAPITAL STOCK (note 12)			345,932		345,932	345,932
CONTRIBUTED SURPLUS (note 17)			22,733		22,706	22,509
ACCUMULATED OTHER COMPREHENSIVE LOSS			(53)		(190)	(21)
DEFICIT			(459,111)		(373,923)	(356,366)
			(459,164)		(374,113)	(356,387)
			(90,499)		(5,475)	12,054
			$          155,291		$          242,972	$          264,343
Contingencies and legal matters (notes 13, 14 and 15)			-		-	-
Subsequent events (note 20)
APPROVED ON BEHALF OF THE BOARD:
		/s/ Stanley M. Beck	/s/ G. Wesley Voorheis
		Director	Director

See accompanying notes to consolidated financial statements

HOLLINGER INC.

CONSOLIDATED STATEMENTS OF ACCUMULATED

OTHER COMPREHENSIVE LOSS

	Year Ended			Three Months			Year Ended
	March 31,			Ended March 31,			December 31,
	2007			2006			2005
(expressed in thousands of dollars)
BALANCE - Beginning of period	$	(190	)	$	(21	)	$	(127	)
Foreign currency translation adjustment		137			(169	)		106
BALANCE - End of period	$	(53	)	$	(190	)	$	(21	)

See accompanying notes to consolidated financial statements

HOLLINGER INC.
CONSOLIDATED STATEMENTS OF DEFICIT
	Year Ended			Three Months			Year Ended
	March 31,			Ended March 31,			December 31,
	2007			2006			2005
(expressed in thousands of dollars)
DEFICIT - Beginning of period	$	(373,923	)	$	(356,366	)	$	(264,133	)
Net loss for the period		(85,188	)		(17,557	)		(92,233	)
DEFICIT - End of period	$	(459,111	)	$	(373,923	)	$	(356,366	)

See accompanying notes to consolidated financial statements

HOLLINGER INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
		Year Ended	Three Months	Year Ended
		March 31,	Ended March 31,	December 31,
		2007	2006	2005
(expressed in thousands of dollars except share and per share amounts)
REVENUE
	Investment and dividend income	$             4,836	$                  1,614	$           65,396
	Newspaper publishing revenues	4,117	719	3,992
	Other revenues	775	257	1,508
		9,728	2,590	70,896
EXPENSES
	Newspaper publishing expenses	3,906	614	3,889
	Amortization	282	114	521
	General and administrative	5,077	2,087	8,539
	Directors' fees	388	175	6,391
	Stock-based compensation (note 16)	27	197	1,669
	Professional fees and other expenses	21,410	3,944	14,308
	Legal fees indemnity (note 3)	11,523	-	-
	Unrealized and realized losses on investments (note 5)	64,938	10,468	132,035
	Unrealized and realized gains on Series II Preference shares (note 9)	(3,224)	(520)	(6,550)
	Gain on sale of properties	(18,589)	(69)	(1,651)
	Provision for amounts due from related parties (note 3)	-	2	5,970
	Interest on secured notes	13,579	3,456	14,505
	Interest expense - Series II Preference Shares (note 9)	84	43	2,906
	Interest expense - related parties	7,972	1,870	7,199
	Other interest	1,595	145	579
		108,968	22,526	190,310
NET FOREIGN CURRENCY GAINS (LOSSES)		605	(266)	3,128
NET LOSS BEFORE INCOME TAXES		(98,635)	(20,202)	(116,286)
PROVISION FOR (RECOVERY OF) INCOME TAXES
	Current	(1,176)	(184)	881
	Future	(12,271)	(2,461)	(24,934)
		(13,447)	(2,645)	(24,053)
NET LOSS		$         (85,188)	$               (17,557)	$         (92,233)
Loss per retractable common share
	Basic	$             (2.44)	$                  (0.50)	$             (2.64)
	Diluted	$             (2.44)	$                  (0.50)	$             (2.64)
	Weighted average shares outstanding - Basic and fully diluted	34,945,776	34,945,776	34,945,776

See accompanying notes to consolidated financial statements

HOLLINGER INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
		Year Ended	Three Months	Year Ended
		March 31,	Ended March 31,	December 31,
		2007	2006	2005
(expressed in thousands of dollars)
CASH FLOWS FROM
OPERATING ACTIVITIES
	Net loss for the period	$       (85,188)	$             (17,557)	$       (92,233)
Items not affecting cash
	Amortization	282	114	521
	Stock-based compensation	27	197	1,669
	Future income taxes	(12,271)	(2,461)	(24,934)
	Unrealized and realized losses on investments	64,938	10,468	132,035
	Unrealized and realized gains on Series II Preferred shares	(3,224)	(520)	(6,550)
	Gain on sale of assets held for sales	(18,589)	(69)	(1,651)
	Other	(1,040)	(22)	(2,219)
		(55,065)	(9,850)	6,638
Changes in non-cash items related to operating activities
	Accounts receivable	338	(8)	(141)
	Prepaid expenses and other	(588)	412	(903)
	Accounts payable and accrued liabilities	2,019	(3,700)	(20,360)
	Income taxes payable	(1,557)	(22)	(987)
	Deferred revenue	-	50	2,698
	Amounts due to/from related parties	15,166	1,929	53,452
	Post retirement benefits paid	(894)	(177)	(766)
		(40,581)	(11,366)	39,631
INVESTING ACTIVITIES
	Restricted cash	41,172	16,020	(44,578)
	Proceeds from sale of assets held for sale	12,052	548	6,550
	Assets held for sale	-	(750)	-
	Additions to property and equipment	-	-	(72)
		53,224	15,818	(38,100)
CHANGE IN CASH AND CASH EQUIVALENTS DURING THE PERIOD		12,643	4,452	1,531
CASH AND CASH EQUIVALENTS - Beginning of period		18,645	14,193	12,662
CASH AND CASH EQUIVALENTS - End of period		$         31,288	$               18,645	$         14,193
Supplemental cash flow disclosures
	Interest paid	$         14,372	$                 6,845	$         14,053
	Income taxes paid	$                  -	$                         -	$              125

See accompanying notes to consolidated financial statements

HOLLINGER INC.             

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted)   

OVERVIEW

Hollinger Inc. is an open-end investment holding company and a "mutual fund corporation" under the Income Tax Act (Canada).  Unless the context otherwise requires, when used in these notes, the term "Corporation" refers to Hollinger Inc. and its direct and indirect subsidiaries other than Sun-Times Media Group, Inc. ("Sun-Times", formerly Hollinger International Inc.) and its subsidiaries.  The Corporation's principal asset is its interest in Sun-Times, in which it held approximately 70.0% of the voting interest and 19.7% of the equity interest at March 31, 2007 (66.8%/17.4% at each of March 31, 2006 and December 31, 2005).  The change from March 31, 2006 resulted from the implementation by Sun-Times of a stock repurchase program.  Sun-Times is a newspaper publisher with assets that include the Chicago Sun-Times and a number of community newspapers in the Chicago area.  For the reporting periods, the Corporation also owned a portfolio of commercial real estate in Canada and a newspaper in Costa Rica.

The Corporation's Series II preference shares are retractable at the option of the holder for an amount based on the market trading value of Sun-Times Class A shares.  The Corporation's common shares (the "Common Shares") are retractable, at the option of the holder, for an amount based on the market value of the Corporation's net assets, determined on a non-consolidated basis.

Under applicable corporate law, the Corporation cannot redeem shares or declare or pay dividends in certain circumstances.  These circumstances include if there are reasonable grounds for believing that the Corporation is, or would after such payment be, unable to pay its liabilities as they become due. The Corporation is currently prevented from honouring retractions of Series II preference shares and Common Shares as a consequence of it being in default under the terms of the indentures governing the 11.875% senior secured notes due 2011 issued in March 2003 (the "Senior Notes") and the 11.875% senior secured notes due March 2011 issued in September 2004 (the "Second Priority Notes", and together with the Senior Notes, the "Notes" – see note 10).

As a result of the inability by the Corporation to file its financial statements on a timely basis, on June 1, 2004, the Ontario Securities Commission (the "OSC") issued a management and insider cease trade order (the "MCTO") prohibiting certain then current and former directors, officers and insiders of the Corporation from trading in securities of the Corporation until the MCTO is revoked.  On April 10, 2007, the OSC issued an order revoking the Management and Insider Cease Trade Order issued by the OSC on June 1, 2004, as amended. The revocation order stemmed from the remediation by the Corporation of its historical continuous disclosure record on March 7, 2007.

1.   SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and going concern

These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles using a basis of presentation which assumes that the Corporation will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.  The Corporation's ability to continue as a going concern is uncertain due to the Corporation's non-compliance with certain covenants under the indentures governing its Notes (collectively, the "Indentures" - see note 10), contingent liabilities related to various disputes, investigations, indemnities and legal proceedings (see notes 13, 14, and 15), the suspension of dividends by Sun-Times, the decline in the trading value of the Sun-Times Class A shares, the Corporation's limited cash resources, continuing excess of the Corporation’s cash outflows over its cash inflows and the depletion of the Corporation’s non-core assets.  As such, realization of assets and discharge of liabilities are subject to significant uncertainty.

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted)  

If the "going concern" assumption were not appropriate for these financial statements, then adjustments would be necessary in the carrying values of assets and liabilities, the reported expenses and the balance sheet classifications used.

The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below.

Principles of consolidation

The consolidated financial statements include the accounts of all subsidiaries of the Corporation,  excluding Sun-Times and its subsidiaries, but including the accounts of Editorial La Razon, S.A. ("ELR"), a company incorporated under the laws of Costa Rica, which, among other things, publishes the La Republica newspaper in Costa Rica.

All intercompany transactions and balances have been eliminated.

Change in year-end

In 2006, the Corporation changed its fiscal year-end from December 31 to March 31, effective for the three months ended March 31, 2006.  The change in year-end to March 31 was approved by Canada Revenue Agency.

Financial instruments

Effective prior to 2005, the Corporation adopted Canadian Institute of Chartered Accountants Handbook (“CICA Handbook”) Section 1530, Comprehensive Income, CICA Handbook Section 3855 ("Section 3855"), Financial Instruments—Recognition and Measurement, and CICA Handbook Section 3865, Hedges.  These standards contain comprehensive requirements for the recognition and measurement of financial instruments, the treatment of financing costs and the application of hedge accounting. CICA Handbook Section 1530 also introduces a new component of equity referred to as comprehensive income.

Use of estimates

The preparation of these consolidated financial statements requires the Corporation to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities.  The Corporation evaluates its estimates on an ongoing basis, including those related to bad debts, investments, income taxes, pensions and other post-retirement benefits, contingencies and litigation.  The Corporation relies on historical experience and various other assumptions that are believed to be reasonable under the circumstances in making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions.

Page 2

HOLLINGER INC.             

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted)  

Foreign currency translation

Monetary items denominated in foreign currency are translated into Canadian dollars at exchange rates in effect at the balance sheet date and non-monetary items are translated at exchange rates in effect when the assets were acquired or obligations incurred.  Revenues and expenses are translated into Canadian dollars at the rates of exchange prevailing when the underlying transactions occurred.  Foreign exchange gains and losses are included in income.

The financial statements of foreign subsidiaries, all of which are self-sustaining, are translated using the current rate method, whereby all assets and liabilities are translated at fiscal year-end exchange rates, with items in the consolidated statements of operations translated at the weighted average exchange rates for the fiscal year.  Exchange gains or losses arising from the translation of self-sustaining foreign subsidiaries are included in other comprehensive income.  These exchange gains or losses are reclassified to earnings when realized through a reduction of the Corporation's net investment in the foreign subsidiary.

Cash and cash equivalents

Cash and cash equivalents include cash on hand and short-term deposits with a maturity of 90 days or fewer.

Investments

Investments in which the Corporation exercises significant influence are accounted for by the equity method. Investments are written down when declines in value are considered to be anything other than temporary.

Other investments have been classified as held-for-trading and are accounted for at fair value, with changes in fair value recognized as income or loss. Pursuant to CICA Handbook Section 3855 relating to the recognition and measurement of financial instruments, investments in securities having quoted market values and which are publicly traded on a recognized securities exchange are recorded at values based on the current bid prices for financial reporting purposes.  Investments in securities that are not publicly traded but are freely convertible into securities having quoted market values and which are publicly traded on a recognized securities exchange are also recorded at values based on the last bid price of the publicly traded securities before the period end.  The Corporation's investments in equity securities that do not have a quoted market price in an active market are measured at cost.

Property and equipment

Property and equipment are stated at cost.  Cost represents the cost of acquisition.

Property and equipment of the Corporation, with the exception of the newspaper publishing assets of

Page 3

HOLLINGER INC.             

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted)  

ELR, are amortized over their estimated useful lives as follows:

Buildings	straight line over 25 to 40 years
Office equipment	straight line over 4 to 20 years
Leasehold interests	straight line over the term of the lease

Property and equipment of ELR are amortized over their useful lives ranging from three to five years.

The amortization rates of ELR have not been conformed to those of the Corporation, as management does not consider the effects of the differences to these financial statements to be material.

Artwork is not amortized.

Impairment of long-lived assets

Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable in accordance with Section 3063, Impairment of Long Lived Assets, of the CICA Handbook.  Pursuant to this standard, an impairment loss is recognized when the carrying amount of an asset exceeds the projected undiscounted future net cash flows expected from its use and disposal.  The impairment loss is measured as the amount by which the carrying amount of the asset exceeds its fair value, which is determined by discounted cash flows when quoted market prices are not available.  Future amortization will be charged based on the post-impairment carrying value.

Long-term debt

The Corporation's long-term debt is measured at amortized cost.

Preference shares

The Series II preference shares represent a financial liability and have been designated by the Corporation as held-for-trading, pursuant to CICA Handbook Section 3855.  They are recorded in the accounts at their fair value, being based on the fair value of the Sun-Times Class A shares for which they are exchangeable.

Page 4

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted)  

Amounts from related parties under the Support Agreement

Following the application of amounts to specific debts owing by related parties to the Corporation, amounts received from related parties under the terms of a support agreement, dated March 10, 2003 between the Corporation and RMI (the "Support Agreement") (see note 3(b)) are recorded as contributed surplus.

Revenue recognition

The Corporation's revenues are derived from dividends from its investment in Sun-Times, real estate income and other investment income and, in respect of ELR, newspaper publishing. Revenue is recognized when each of the following criteria is met: (a) persuasive evidence of an arrangement exists; (b) delivery has occurred and services have been rendered; (c) the price to the buyer is fixed or determinable; and (d) collectibility is reasonably assured or probable.

Advertising revenue, being amounts charged for space purchased in ELR's newspapers, is recognized upon publication of the advertisements. Circulation revenue from ELR's subscribers, billed to customers at the beginning of a subscription period, is recognized on a straight-line basis over the term of the related subscription.

Investment income includes dividend and interest income.  Dividend income is recognized as of the ex-dividend date and when collectibility is reasonably assured. Interest income on all securities and bank balances is recognized on an accrual basis. Real estate rental income is recognized over the terms of the leases.

Income taxes

Future income tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, some of which are recorded at fair value, and their respective tax bases.  Future income tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  A valuation allowance is recorded against any future income tax asset if it is more likely than not that the asset value will not be realized.

Employee future benefit plans

The Corporation accrues its obligations under employee benefit plans and the related costs, net of plan assets.  The following policies are applied in accounting for employee benefit plans:

(a)   the cost of pensions and other retirement benefits earned by employees is actuarially determined using the projected benefit method pro-rated on service and management's best estimate of expected plan investment performance, salary escalation, retirement ages of employees and expected health care costs;

(b)   for the purpose of calculating the expected return on plan assets, those assets are valued at fair value;

(c)   past service costs from plan amendments are amortized on a straight-line basis over the average remaining service period of employees active at the date of amendment; and

        (d) actuarial gains and losses are recognized in the period and not amortized over the average remaining service period of active employees.

Stock-based compensation and other stock-based payments

The Corporation accounts for grants under its employee stock option plan using the fair value-based method of accounting for stock-based compensation. Fair values are determined using the Black-Scholes option-pricing model. Compensation costs are recognized over the vesting period as an increase to stock-based compensation expense and contributed surplus.  If and when the stock options are ultimately exercised, the applicable amounts of additional paid-in capital and contributed surplus are transferred to share capital.

Page 5

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted)  

Loss per share

Basic loss per share is computed by dividing the net loss by the weighted average number of Common Shares outstanding during the year.  Diluted loss per share is computed using the treasury stock method whereby the weighted average number of Common Shares used in the basic loss per share calculation is increased to include the number of additional Common Shares that would have been outstanding if the potential Common Shares that are dilutive had been issued at the beginning of the period.  Potential Common Shares represent the Common Shares issuable upon the exercise of stock options or warrants.  Potential Common Shares are not included in the calculation if the effect of the exercise of the related stock options or warrants is anti-dilutive.

Transaction costs

The Corporation expenses transaction costs as incurred.

Legal proceedings, investigations and settlements

The Corporation is involved in various claims, legal proceedings, investigations and complaints, principally related to transactions between the Corporation, on the one hand, and certain of its affiliates and certain former executive officers and directors of the Corporation and its affiliates, on the other hand.  The potential impact of these claims, proceedings, investigations and complaints, including legal fees, cannot currently be estimated with accuracy.  Costs related thereto are reflected in these financial statements as incurred.  Future costs will be recorded in the periods such costs are incurred.  Future amounts recovered therefrom, if any, will be credited to earnings as realized.

2.   RESTRICTED CASH

Restricted cash is comprised as follows:

	March 31,				December 31,
	2007		2006		2005
SEC escrow arrangements (a)	$	-	$	33,007	$	48,402
Cash security held by trustee of Senior Notes (b)		-		-		675
Cash security for certain directors' indemnities (c)		-		8,197		8,145
Cash security for certain officers' indemnities (d)		524		509		505
Cash security for post-employment obligations (e)		1,227		1,210		1,216
	$	1,751	$	42,923	$	58,943

Page 6

HOLLINGER INC.             

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted)  

	March 31,				December 31,
	2007		2006		2005
Classified as current assets (a) and (b)	$	-	$	33,007	$	49,077
Classified as long-term assets (c), (d) and (e)		1,751		9,916		9,866
Restricted cash	$	1,751	$	42,923	$	58,943

(a)   The Corporation agreed with the United States Securities and Exchange Commission (the "SEC") to deposit certain past dividend income from Sun-Times and, subject to any overriding rights of the holders of Senior Notes, the amount of any similar subsequent distributions made by Sun-Times, net of applicable withholding taxes, into an escrow account with a licensed trust company.  Amounts held in the escrow account were in US dollars.  The escrow agreement provides that the Corporation has access to the escrowed funds for ordinary business and certain other enumerated purposes.  The escrow agreement terminates on the earliest of the date of conclusion of the SEC action as to all parties (see note 13(c)), the date of final disbursement of the entire amount of escrowed funds, or February 28, 2007. The final disbursement of escrowed funds occurred on February 27, 2007 and, as a result, the escrow agreement was not extended and has terminated in accordance with its terms.

(b)   In connection with the Second Priority Notes, the Corporation also entered into the first supplemental indenture as of September 30, 2004 (the "First Supplemental Indenture") in respect of the Senior Notes.  The First Supplemental Indenture, among other things, provided for the release of the Sun-Times Class A shares which had been held in escrow and the establishment of an interest-bearing cash collateral account in the amount of $14.1 million (US$10.4 million) which funds were directed to be applied against future payment of all or any portion of interest due and payable under the Senior Notes.  The balances disclosed above are the amounts remaining in the cash collateral account at the various reporting dates.

(c)   As discussed more fully in note 13(l), beginning in June 2004, the Corporation placed certain amounts in trust in support of the Corporation's indemnities in respect of certain former directors.  On June 30, 2004, $500,000 of cash was placed in trust. On February 7, 2005, an additional $1.5 million was placed in trust.  On March 30, 2005, a further $6.0 million was deposited into the same trust account.  As discussed in note 13(l) to these consolidated financial statements, these trusts were collapsed in conjunction with the settlement of all outstanding matters with these directors.

(d)   In March 2005, the Corporation established a trust similar to that described in (c) above in support of the Corporation's indemnities in respect of two of its officers, with a deposit of $500,000.

(e)   In April 1998, the Corporation paid to the Domgroup Ltd. Trust an amount of $1.2 million in support of group health benefits for specified retirees of the former Dominion Stores.  Based on a triennial actuarial valuation, if there is a deficit in the trust, the Corporation is required to immediately fund the deficit.  Alternatively, if there is a surplus, the Corporation is permitted to reduce the amount of funds held in the trust.  Based on the actuarial valuation as at December 31, 2005, the Corporation's obligations are fully funded by the funds held in the trust.

Page 7

HOLLINGER INC.             

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted)  

3.   RELATED PARTIES

Amounts due from and due to related parties are comprised as follows:

	March 31,			March 31,			December 31,
	2007			2006			2005
Amounts due from:
The Ravelston Corporation Limited ("RCL"), a parent company  (a) and (b)	$	25,705		$	23,923		$	23,545
Ravelston Management Inc. ("RMI") (b)		93,386			74,098			74,009
Sun-Times and its subsidiaries (c) and (d)		1,533			2,412			2,445
Former directors and other related parties		370			341			343
		120,994			100,774			100,342
Allowance for doubtful amounts		(120,994	)		(99,935	)		(99,466	)
	$	-		$	839		$	876
Amounts due to:
Former directors under share unit plan (f)	$	243		$	327		$	331
Disputed amount due to Conrad Black ("Black") (e)		24,405			21,921			21,259
Sun-Times and its subsidiaries (c) and (d)		42,570			37,618			36,368
Disputed amounts due to Sun-Times relating to indemnities of former directors and officers (d)		18,110			8,949			9,428
Disputed amounts accrued for severance and unpaid fees of former directors (g)		-			2,334			2,334
Amounts accrued for Catalyst Fund General Partner I Inc. ("Catalyst") claim (h)		3,975			3,975			3,475
Other related parties		641			493			493
	$	89,944		$	75,617		$	73,688

Amounts due to/from related parties have been included in current assets and current liabilities, respectively.  Transactions with related parties are measured at the exchange amount.

Page 8

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted)  

Related party interest expense amounts are comprised as follows:

	Year  ended March 31,		Three months ended March 31,		Year  ended December 31,
	2007		2006		2005
Interest expense – related parties
Black (f)	$	2,714	$	650	$	2,485
Sun-Times (c) (i)		5,258		1,220		4,714
	$	7,972	$	1,870	$	7,199

(a)   This balance relates primarily to the following:

(i)   three loans were made to RCL in the principal amounts of $4.7 million, $4.8 million and $5.2 million, by Domgroup Ltd. ("Domgroup"), a wholly-owned subsidiary of the Corporation, to assist RMI, a subsidiary of RCL, in meeting its obligations to the Corporation under the Support Agreement between the Corporation and RMI and thereby assist the Corporation in meeting its obligations under the Indentures, as described herein.  Each of the loans is evidenced by a demand promissory note bearing interest at the prime lending rate plus 4% per annum, calculated and payable monthly, and secured pursuant to a general security agreement of RCL; and

(ii)   costs of approximately $7.0 million incurred in connection with the going private transaction proposed by RCL in 2004 (the "Strategic Transaction"), which RCL agreed to reimburse to the Corporation pursuant to a reimbursement agreement.  The RCL obligation to reimburse the Corporation is secured by a general security agreement.

The principal amounts of these balances and any accrued interest thereon remain outstanding.  Demand has been made for repayment of these amounts.  Because collectibility of the amounts is uncertain, the amounts have been fully provided for in these consolidated financial statements and any interest income from related parties has been recorded on a cash basis.

(b)   The Corporation has claimed amounts due from RMI of $93.4 million at March 31, 2007 ($74.1 million at March 31, 2006 and $74.0 million at December 31, 2005) in connection with RMI's obligations under the Support Agreement.  Amounts owing by RMI under the Support Agreement do not accrue interest and are unsecured obligations of RMI.  Pursuant to the Contribution Agreement (see below), RCL unconditionally guaranteed RMI's obligations under the Support Agreement, with such guarantee supported by a pledge of the RCL investment in shares of RMI.  The increase of $19.3 million from April 1, 2006 to March 31, 2007 is due to an increase in accrued support receivable of $20.2 million (US$17.5 million) and a decrease of $0.9 million due to the effect of the depreciation in US currency.

On April 20, 2005, RCL and RMI were each granted protection (the "Ravelston CCAA and Receivership Order") under the Companies' Creditors Arrangement Act (Canada) ("CCAA") and the Courts of Justice Act (Ontario).  The monitor, receiver and manager (the "Ravelston Receiver") under these orders is RSM Richter Inc. (see note 15(e)).  As a result, the collectibility of the amounts described in (a) and (b) above is uncertain and full provision for doubtful amounts receivable and the reversal of amounts recorded in contributed surplus but not received have been recorded in these accounts.

Page 9

HOLLINGER INC.             

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

On March 10, 2003, the date the Corporation issued the Senior Notes, RMI entered into the Support Agreement with the Corporation under which RMI agreed to make annual support payments in cash to the Corporation on a periodic basis by way of contributions to the capital of the Corporation or subordinated debt.  The Corporation, RMI and RCL also entered into an agreement (the "Contribution Agreement") in this regard.  Under the terms of the Contribution Agreement and following the repayment of certain related party loans, any support payments received during 2003 and 2004 were treated as contributions of capital and included in contributed surplus.  The amount of the annual support payments is equal to the greater of (a) the non-consolidated negative net cash flow of the Corporation (which does not extend to outlays for retractions and redemptions in respect of the share capital of the Corporation), or (b) US$14 million per year (less any future payments of services agreement fees directly to the Corporation, and any excess in the net dividend amount received by the Corporation on the shares of Sun-Times that is over US$4.7 million per year), in either case, as reduced by any permanent repayment of debt owing by RCL to the Corporation.  The timing of payment of such support amount on a quarterly basis is defined in the Indentures to be within 45 days after each of the first three quarters of the year and within 90 days of the last quarter of the year. The Support Agreement terminates upon the repayment in full of the Notes.  The obligations under the Support Agreement and the Contribution Agreement are the subject of a dispute with RCL and RMI.

(c) This balance includes an amended promissory note of the Corporation in favour of Sun-Times dated March 10, 2003 in the principal amount of US$20.4 million.  The principal amount of this promissory note bears interest at a rate of 14.25% per annum if interest is paid in cash (and 16.50% per annum if paid in kind).  The aggregate outstanding principal and accrued interest was $40.5 (US$35.1 million) at March 31, 2007, $35.6 million (US$30.5 million) at March 31, 2006, and $34.3 million (US$29.4 million) at December 31, 2005.  Interest is calculated quarterly and all amounts owing under this promissory note are payable on demand after March 1, 2011.  The Corporation paid $0.8 million (US$0.7 million) through August 31, 2003 and no further interest payments have been made to Sun-Times.  Interest continues to accrue.  Certain covenants under the Senior Notes restrict payment of interest.  This promissory note is also secured by a pledge of the Corporation's Contribution Agreement with RCL and RMI.  The promissory note is guaranteed by RCL and secured by its receivables under RCL's management services agreement with CanWest Global Communications Corp. ("CanWest"). The Corporation understands that such RCL/CanWest management services agreement was terminated in May 2005.  All amounts owing under the note are subordinated to the Notes.

On March 10, 2003, Sun-Times repurchased for cancellation 2,000,000 Sun-Times Class A shares from the Corporation at US$8.25 per share for total proceeds of $24.2 million (US$16.5 million).  On January 1, 2003, the fair value of a Sun-Times Class A share was US$10.69.  Sun-Times also redeemed from the Corporation, pursuant to a redemption request, all of the 93,206 outstanding shares of its Series E redeemable convertible preferred stock at the fixed redemption price of $146.63 per share for total proceeds of $13.6 million (US$9.3 million). These transactions were completed in conjunction with the Corporation closing the private placement of the $120 million tranche of Senior Notes issued March 10, 2003.

Page 10

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

Proceeds from the repurchase and redemption were offset against debt due to Sun-Times by the Corporation, resulting in net outstanding debt due to Sun-Times of approximately $29.9 million (US$20.4 million) as of March 10, 2003.

The debt due to Sun-Times represented amounts loaned by Sun-Times to the Corporation in connection with the cash purchase by the Corporation of special shares of Hollinger Canadian Publishing Holdings Inc., a subsidiary of Sun-Times, in 1997.  In 2001, the special shares were exchanged for cash.

The Corporation and Sun-Times previously reported that a committee of independent directors of Sun-Times had agreed to a partial subsequent offset of the remaining US$20.4 million of debt against amounts owed by Sun-Times to RMI and further stated that the offset was effected April 30, 2003. Although the Corporation believed final approval had been given for the offset by the committee of independent directors of Sun-Times, the committee advised that final approval of any offset was subject to appropriate due diligence and receipt of an independent fairness opinion. Upon completion of its due diligence review, the committee decided to withhold approval of the subsequent partial offset.

As a result of its understanding that the subsequent partial offset had been completed on April 30, 2003, the Corporation did not pay interest on the principal amount of the debt due to Sun-Times that had been partially offset.  RCL did not make the payment due on June 30, 2003 into a cash collateral account of Sun-Times securing the debt. Since that time, the Corporation has not paid interest on the principal amount that remained after the subsequent partial offset and RCL has made no further payments to the cash collateral account.

(d) The Corporation has accrued approximately $18.1 million (US$15.7 million) at March 31, 2007, $8.9 million at March 31, 2006 and $9.4 million at December 31, 2005 relating to legal fees incurred by Black, the controlling shareholder of RCL and the Corporation's former Chairman and Chief Executive Officer, and F. David Radler ("Radler"), a shareholder of RCL and the Corporation's former President, and other former officers and directors, the reimbursement of which is being sought from the Corporation under the terms of the Corporation's alleged indemnity of these former directors and officers.  This amount reflects management's estimate of possible future claims for legal fees incurred up to March 31, 2007 under the terms of these indemnities.  The Corporation disputes its obligation to make any payments under the terms of these indemnities.

(e) Pursuant to an Order and Final Judgment of the Delaware Court of Chancery dated June 28, 2004, the Corporation and Black were ordered to jointly pay Sun-Times an aggregate of US$16.6 million on account of non-compete payments received by the Corporation in prior years, plus accrued interest of US$4.7 million.  On July 16, 2004, Sun-Times was paid US$21.3 million pursuant to this Order, of which US$15.3 million was advanced by Black and US$6.0 million was advanced by the Corporation.  Black has demanded repayment from the Corporation of the amount advanced by him plus interest.  The Corporation disputes any obligation to make restitution to Black (see note 15(g)).  Although the Corporation disputes Black's claim for these amounts and believes that, in any event, it has a valid basis for offsetting any such amount against various unrecorded amounts contingently owing to it by Black, the consolidated balance sheets include a liability to Black for such balance, plus interest accrued at the rate of 12% per annum, which the Corporation understands was the interest rate incurred by Black to finance the payment.  The amounts contingently owing to the Corporation by Black include amounts claimed in respect of the non-compete payments.

Page 11

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

(f) Effective February 24, 1999, directors of the Corporation were permitted to elect up to 100% of total fees to which they were entitled to be paid in the form of deferred share units under the Directors' Share Unit Plan, as amended (the "DSUP").  For a director that elected to participate, deferred share units equal to the number of Common Shares that could have been purchased in the open market were credited to an account maintained by the Corporation for that director under the DSUP.

Deferred share units are to be paid to the director no later then December 31 of the year following the calendar year in which the director ceased to serve, based on the market value of the Common Shares on the date of the payment.  All amounts outstanding relate to former directors.

(g) On October 18, 2005, the Corporation commenced an action against certain of its former directors to recover excessive remuneration and severance payments.  On February 26, 2007, these matters were settled (see note 13(l)).

(h) The Corporation has received a demand for $4.0 million from Catalyst for costs relating to professional fees and disbursements incurred by Catalyst in connection with the court-imposed inspection of the Corporation and litigation to which the Corporation and Catalyst were parties.  Catalyst is related to the Corporation by virtue of its shareholdings in the Corporation and because Newton Glassman is the President of The Catalyst Capital Group Inc. and a former director of the Corporation.  No such costs have been paid.  The Corporation has accrued the full amount of this demand in these consolidated financial statements.  At this time, the Corporation has not agreed to pay these costs and the Corporation's board of directors is considering this demand.

Other Related Party Transactions

(i) Effective December 23, 2003, the Corporation entered into a consulting agreement with Peter G. White Management Ltd. ("PGWML"), a corporation controlled by Peter G. White ("White"), a director and executive officer of the Corporation until June 8, 2005.  The consulting agreement, which provided that White render various services to the Corporation, was terminated effective May 31, 2005.  In connection with services provided under the consulting agreement, PGWML received $75,000 per month.  The following amounts were incurred in respect of such services and are included in general and administrative expenses:

Year ended March 31, 2007	Nil
Three months ended March 31, 2006	Nil
Year ended December 31, 2005	$397

(j) RCL and RMI used the Corporation's offices at 10 Toronto St., Toronto, Ontario until May 31, 2005 and paid no rent during the five months ended May 31, 2005.

(k) Certain employees of the Corporation provided services to RCL, RMI and Argus Corporation Limited ("Argus"), a parent company, until May 31, 2005.

Page 12

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

Certain employees of the Corporation are former employees of RMI.  Employment contracts for these employees were transferred to the Corporation effective January 1, 2004.  The employees retained all seniority, pension benefits and other entitlements earned while at RMI and remain beneficiaries under an existing pension plan. The pension plan is now under the control of Morneau Sobeco Limited Partnership ("Morneau Sobeco") as administrator appointed by the Financial Services Commission of Ontario.  The Corporation is unable to determine and no agreement has been made between RCL, RMI and the Corporation as to their respective legal obligations in respect of a defined benefit pension plan sponsored by RCL (the "RCL Plan") (see note 13(r) and 20(c)).

(l) On February 7, 2006, the Ontario Superior Court of Justice approved an agreement between 10 Toronto Street Inc. ("TSI"), a wholly-owned subsidiary of the Corporation, and the Ravelston Receiver.  The agreement amends an agreement entered into between TSI and Argus made as of June 30, 1986 granting Argus an option to purchase and a right of first refusal with respect to the real property located at 10 Toronto Street.  The agreement provided for the early expiration of the option and the termination of the right of first refusal in exchange for a commitment to pay a minimum of $750,000 and possible additional consideration upon the sale of the property (see note 20(e)).  All payments required under this agreement have been made.

(m) On January 16, 2007, the Corporation announced that Randall C. Benson ("Benson") would be stepping down as Chief Restructuring Officer ("CRO") of the Corporation after a short transition period, following which G. Wesley Voorheis ("Voorheis"), a director of the Corporation and chairman of the Litigation Committee, would be appointed Chief Executive Officer.  Pursuant to the Advisory Agreement Memorandum of Agreement ("Advisory Agreement MOA"), Benson ceased to serve as the CRO of the Corporation on March 7, 2007 and at such time the advisory agreement effective as of July 15, 2005 (the "Advisory Agreement") pursuant to which the CRO services were provided terminated.  The Advisory Agreement MOA also provided that in consideration of the services rendered and milestones achieved pursuant to the terms of the Advisory Agreement, the Corporation will pay to 1379074 Ontario Ltd. ("Benson Consulting") the amount of $1 million.  All payments required under the Advisory Agreement MOA have been made.  Effective as of April 16, 2007, Voorheis assumed the role of CEO as further described in note 20(i) below.

On January 15, 2007, the Corporation and VC & Co. Incorporated ("VC&Co."), a corporation controlled by Voorheis, entered into an engagement agreement (the "Voorheis Engagement Agreement"), pursuant to which Voorheis agreed to act as senior executive of the Corporation subject to the satisfaction of certain conditions (see note 20(i)).

During the year, the Corporation paid $180,000 to Voorheis & Co. LLP, an advisory firm founded by and related to Voorheis.

Page 13

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

4.   MORTGAGES RECEIVABLE

	March 31, 2007		March 31, 2006		December 31, 2005
Mortgages receivable	$	11,445	$	2,949	$	2,909

(a) In June 2002, the Corporation entered into an agreement for the sale of a property at 1050 The Queensway, Toronto, Ontario.  The transaction closed on August 27, 2004.  The sale price was $3.6 million, of which $0.9 million was received in cash on closing and $2.7 million was satisfied by a vendor take-back mortgage due on August 26, 2007.  Interest on the mortgage is calculated quarterly at the Bank of Nova Scotia prime rate, as set from time to time, and is payable in full on August 26, 2007.

The purchaser is developing a condominium project on the property.  The mortgage is secured by the property but is subordinated to financing obtained by the purchaser subsequent to the transaction for the development of the condominium project.  The Corporation is entitled to an additional payment on August 26, 2007 of $3,000 per condominium unit sold, which may result in a maximum additional payment of $0.9 million to the Corporation.  The Corporation has not recorded this contingent receipt in its accounts.

(b) On October 31, 2006, Domgroup sold real property located at 3087-3101 Dufferin Street and 770 Lawrence Avenue West, Toronto, Ontario for $19.6 million. Pursuant to the sale, Domgroup received proceeds consisting of cash of $9.8 million and a vendor take-back mortgage for the balance. The mortgage is interest-free for the period from October 31, 2006 to October 31, 2008, and thereafter earns interest at 4.95%, calculated and payable quarterly. The whole of the principal sum of $9.8 million is due on October 31, 2009 with interest receivable on the last day of each of January, April, July and October 2009, the first payment of which becomes due on January 31, 2009.  The carrying value of the mortgage is $8.3 million (see note 20(g)).

Page 14

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

5.           INVESTMENTS

		March 31, 2007				March 31, 2006				December 31, 2005
		No. of				No. of				No. of
		Shares/Units		Amount		Shares/Units		Amount		Shares/Units		Amount
Sun-Times (a)	Class A shares		782,923	$	4,423		782,923	$	7,647		782,923	$	8,168
	Class B shares		14,990,000		84,689		14,990,000		146,420		14,990,000		156,377
			15,772,923		89,112		15,772,923		154,067		15,772,923		164,545
Hollinger Canadian Newspapers LP			-		-		-		-		150,000		45
Cayman Free Press Ltd. (b)	Common shares – 39.99% interest				-				-				-
Other					62				45				35
				$	89,174			$	154,112			$	164,625

(a)   Sun-Times Class A and Class B shares

The Corporation's principal asset is its interest in Sun-Times. On March 31, 2007 the Corporation owned, directly or indirectly, approximately 19.7% of the equity interest and 70.0% of the voting interest in Sun-Times.  (17.4% and 66.8% at both March 31, 2006 and December 31, 2005.)

The Sun-Times Class A shares are listed on the New York Stock Exchange (symbol: SVN) and the Sun-Times Class B shares are not publicly listed. The two classes have identical rights with respect to cash dividends and in any sale or liquidation, but different voting rights.  On all matters where the two classes vote together as a single class, including the election of Sun-Times directors, each Sun-Times Class A share is entitled to one vote and each Sun-Times Class B share is entitled to ten votes.  Sun-Times Class B shares are convertible at any time at the option of the holder into Sun-Times Class A shares on a share-for-share basis.  If the Corporation transfers the Sun-Times Class B shares, other than by way of a Permitted Transaction as defined in the corporate articles of Sun-Times, the Sun-Times Class B shares are automatically converted on a share-for-share basis into Sun-Times Class A shares.

At each of the reporting dates, the investment in the Sun-Times Class A shares and Sun-Times Class B shares is stated at fair value based on the quoted market price of the Sun-Times Class A shares, without regard to any potential premiums associated with the Sun-Times Class B shares.

The Corporation has obtained a report from an independent third party with respect to actual premiums realized by private and public companies in sale transactions involving multiple voting rights in the past five calendar years and actual market premiums, if any, where both classes of shares were listed and traded over the past five calendar years. The report indicates that multiple voting right shares have realized an observed value of 0% to 26% above the trading value of non-multiple voting shares.

Page 15

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

For the purposes of its consolidated financial statements only, the Corporation has assigned no additional value to these multiple voting rights.  The amounts at which the investment in Sun-Times shares could be sold at any given time may differ from the fair value based on quoted market values.

As at March 31, 2007, March 31, 2006 and December 31, 2005, an escrow agent held 782,923 Sun-Times Class A shares owned by the Corporation (equivalent to 1,701,995 Series II preference shares exchangeable at 0.46 of a Sun-Times Class A share) in support of exchange requests made by holders of Series II preference shares.   The 14,990,000 Sun-Times Class B shares owned by the Corporation at these dates are pledged as security for the Notes which were held by U.S. Bank, National Association, formerly Wachovia Trust Company, National Association, as trustee.

The Corporation has recorded an unrealized loss of $65 million in the consolidated statement of operations for the year ended March 31, 2007 ($10 million and $132 million for the three months ended March 31, 2006 and the year ended December 31, 2005, respectively), relating to the decrease in the fair value of its investment in Sun-Times based on the last bid price of a Sun-Times Class A share at each reporting date.

On October 18, 2006, Sun-Times issued a press release titled "Sun-Times Media Group Provides Outlook For 2006 Third Quarter Performance". The release states that "[Sun-Times] expects that the weakness in the Chicago newspaper advertising market that [Sun-Times] experienced during the first two quarters of 2006 continued and accelerated through the third quarter". As a result, the release states, "... [Sun-Times'] Board of Directors and management are considering a range of options toaddress the resulting significant shortfall in performance and cash flow, including a review of [Sun-Times'] dividend policy". On December 13, 2006, Sun-Times announced that its board of directors had voted to suspend Sun-Times' quarterly dividend.  Dividends have not been re-instated.

On February 14, 2007, the Corporation filed a Schedule 13D with the United States Securities and Exchange Commission in respect of its shareholdings in Sun-Times.  The Schedule 13D filing states in part:

[The Corporation is] considering proposing changes to the Board of Directors of [Sun-Times] (other than with respect to the Special Committee of the Board of Directors), including nominating one or more members to the Board of Directors of [Sun-Times] and voting all of [its] shares of Class A Common Stock and Class B Common Stock in favour of such nominee or nominees.  As of the date hereof, none of the current members of the Board of Directors of [Sun-Times] were nominated by [the Corporation].

On an on-going basis, [the Corporation] expect[s] to consider and evaluate the alternatives available with respect to [its] investment in [Sun-Times] to enhance and maximize value for all shareholders and other stakeholders of [the Corporation] (which alternatives may include proposing changes to the Board of Directors of [Sun-Times] (other than with respect to the Special Committee of the Board of Directors) and seeking representation on the Board of Directors of [Sun-Times].  [The Corporation has]in the past engaged, and may from time-to-time in the future, engage in discussions with the management and other representatives of [Sun-Times], as well as other shareholders of [Sun-Times], regarding [Sun-Times'] business and operations, [Sun-Times'] strategic plan and other matters.

See note 20(h) for further information in this regard subsequent to the year end.

(b)   Investment in Cayman Free Press Limited

Page 16

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

The Corporation, through its wholly-owned subsidiary, Holcay Holdings Ltd, owns 39.99% of Cayman Free Press Ltd. ("CFP"), a corporation organized under the laws of the Cayman Islands. The Corporation recorded a provision for full impairment of $11.3 million as at January 1, 2003. The Corporation is pursuing efforts to sell this investment.  No definitive indication is yet available as to the potential results of such efforts.

6.            ASSETS HELD FOR SALE

	March 31, 2007		March 31, 2006		December 31, 2005
Assets held for sale	$	7,210	$	8,959	$	-

(a) During the three months ended March 31, 2006, the Corporation authorized the listing for sale of the majority of its real property holdings, including its premises at 10 Toronto Street, and entered into formal listing agreements with a commercial real estate agency.  The book value of such properties has been reclassified as "held-for-sale" and included as a current asset in the consolidated balance sheet as at March 31, 2007 and March 31, 2006.

(b) In December 2006, TSI entered into an agreement of purchase and sale under which the property at 10 Toronto Street, the Corporation's Toronto corporate office, was sold for $14 million on May 8, 2007 (see note 20(e)).

(c) On January 31, 2007, Domgroup sold its real property located at 280 Hurontario Street, Collingwood, Ontario for a sale price of $2.8 million to Charis Developments Ltd.

Page 17

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

7.           PROPERTY AND EQUIPMENT

	March 31, 2007		March 31, 2006		December 31, 2005
Cost     Land Buildings and leasehold interests Office equipment and other	$	352 206 5,132	$	463 138 5,027	$	6,044 5,842 5,152
		5,690		5,628		17,038
Accumulated amortization Buildings and leasehold interests     Office equipment and other		148 4,166		139 3,901		2,590 4,015
		4,314		4,040		6,605
Net book value	$	1,376	$	1,588	$	10,433

8.          INCOME TAXES

Income tax expense (recovery) consists of:

	Year ended March 31,			Three months ended March 31,			Year ended December 31,
	2007			2006			2005
Current	$	(1,176	)	$	(184	)	$	881
Future		(12,271	)		(2,461	)		(24,934	)
	$	(13,447	)	$	(2,645	)	$	(24,053	)

The income tax expense (recovery) in the consolidated statements of operations varies from the amount that would be computed by applying the basic federal and provincial income tax rates to loss before income taxes as shown in the following table:

Page 18

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

	Year ended March 31, 2007	Three months ended March 31, 2006	Year ended December 31, 2005
Loss before income taxes	$     (98,635)	$    (20,202)	$      (116,286)
Basic income tax rate	36.12 %	36.12 %	36.12 %
Computed income tax recovery Decrease (increase) in income tax recovery resulting from: Tax gain in excess of (less than) book gain Large corporations and withholding taxes Change in valuation allowance Permanent differences         Capital gains refund         Other	(35,627) (11,681) 465 21,122 16,377 (228)  (3,875)	(7,297)        1,898             46        3,306          (723)             -            125	(42,003)     23,792       3,207     11,323   (23,399)              -       3,027
Income tax recovery	$    (13,447)	$      (2,645)	$      (24,053)
Effective tax rate	13.63%	13.09%	20.68%

The Corporation and its subsidiaries have operating loss carry forwards for tax purposes of approximately $202.2 million as at March 31, 2007.  Of this amount, the Corporation has determined that it is more likely than not that it will utilize losses aggregating $5.8 million.  Accordingly, a future tax asset has been recorded relating to this amount.  A valuation allowance has been recorded for the remainder of the operating losses. The operating losses carried forward for that purpose expire as follows:

	Operating Loss For Which Tax Benefit Is
	Recorded		Not Recorded		Total
2008	$	-	$	9,746	$	9,746
2009		420		9,953		10,373
2010		-		34,989		34,989
2011		1,168		1,287		2,455
2012		3,792		63,611		67,403
Thereafter		454		76,757		77,211
	$	5,834	$	196,343	$	202,177

At March 31, 2007, the Corporation and its subsidiaries have capital losses available of $4.6 million, which have no expiry date.  The Corporation has recognized the $500,000 of the benefit relating to these losses as it considers that it is more likely than not that the benefit will be realized.

Page 19

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

The tax effects of temporary differences that give rise to significant portions of the future tax assets and future tax liabilities are presented below:

	Year ended March 31,			Three months ended March 31,			Year ended December 31,
	2007			2006			2005
Future income tax assets
Net operating loss carry forwards	$	72,441		$	39,090		$	34,740
Capital loss carry forwards		4,157			5,311			5,311
Compensation and post-retirement benefits		3,408			3,585			3,626
Investments		111			111			111
Other		8,603			4,839			4,846
Gross future income tax assets		88,720			52,936			48,634
Valuation allowance		(77,869	)		(41,925	)		(38,620	)
Future income tax assets, net of valuation allowance	$	10,851		$	11,011		$	10,014
Future income tax liabilities
Property and equipment	$	11		$	107		$	211
Investments		10,420			22,110			24,008
Other		3,158			3,803			3,265
Future income tax liabilities	$	13,589		$	26,020		$	27,484

9.          RETRACTABLE SERIES II PREFERENCE SHARES

The continuity of the shares is as follows:

	Number of shares		Amount
Balance, December 31, 2004		1,701,995	$	14,717
Unrealized gain		-		(6,550	)
Balance, December 31, 2005		1,701,995		8,167
Unrealized gain		-		(520	)
Balance, March 31, 2006		1,701,995		7,647
Unrealized gain		-		(3,224	)
Balance, March 31, 2007		1,701,995	$	4,423

The Series II preference shares, first issued in 1997 at $10 per share, are exchangeable, non-voting preference shares. On May 12, 1999, the Series II preference shares became redeemable at the holder's option for 0.46 of a Sun-Times Class A share held by the Corporation for each Series II preference share.  The Corporation has the option of making a cash payment of equivalent value on the redemption of the Series II preference shares.  Because the Series II preference shares were recorded as a financial liability when they became redeemable for Sun-Times Class A shares, the Corporation measures the obligation based on the fair value of the Sun-Times Class A shares until the financial liability is removed from the balance sheet.

Page 20

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

In certain circumstances, the Corporation may satisfy its obligation to deliver Sun-Times Class A shares on a retraction of Series II preference shares by delivering Sun-Times Class A shares that are subject to restrictions on resale in accordance with applicable securities laws.

As at March 31, 2007, March 31, 2006 and December 31, 2005, an escrow agent held 782,923 Sun-Times Class A shares owned by the Corporation (equivalent to 1,701,995 Series II preference shares exchangeable at 0.46 of a Sun-Times Class A share) in support of exchange requests made by holders of Series II preference shares from time to time.

Each Series II preference share entitles the holder to a dividend in the amount equal to the Canadian dollar equivalent of 0.46 multiplied by any dividend on a Sun-Times Class A share (less any U.S. withholding tax thereon payable by the Corporation or any subsidiary).  Such entitlements, net of 5% U.S. withholding tax, are accrued based on the ex-dividend date of the Sun-Times Class A share dividend and the amounts are included in accounts payable and accrued liabilities at each reporting date.

As at March 31, 2007, March 31, 2006 and December 31, 2005, the retraction of and the obligation to pay dividends on the Series II preference shares was restricted by the terms of the Indentures governing the Notes so long as certain events giving rise to a default have occurred and are continuing.  Events of default under the Indentures include the insolvency of RMI, failure to file certain financial statements by January 1, 2006 with the SEC and, in any quarter after January 1, 2006, the failure to receive cash of US$3.055 million from RMI or Sun-Times.

The Corporation has recorded an unrealized gain of $3.2 million in the consolidated statements of operations for the year ended March 31, 2007 ($520,000 for the three months ended March 31, 2006 and $6.6 million for the year ended December 31, 2005).

10.           SECURED NOTES

	March 31, 2007		March 31, 2006		December 31, 2005
Senior Notes
11-7/8% per annum, issued March 10, 2003, due March 1, 2011. (See below – 12-7/8% effective rate per annum)	$	89,934	$	91,026	$	90,917
Second Priority Notes
11-7/8% per annum, issued September 30, 2004, due March 1, 2011. (See below – 12-7/8% effective rate per annum)		17,295		17,505		17,484
	$	107,229	$	108,531	$	108,401

On March 10, 2003, the Corporation issued the Senior Notes with a principal value of US$120 million.  In June 2004, US$42 million principal amount of the Senior Notes was repaid with net proceeds from the offering of Subscription Receipts, reducing the outstanding principal amount of Senior Notes to US$78 million. In September 2004, the Corporation issued US$15 million aggregate principal amount of Second Priority Notes.

Page 21

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

The Senior Notes are secured by a first priority lien against 14,990,000 Sun-Times Class B shares owned by the Corporation.  The Senior Notes are fully and unconditionally guaranteed by RMI.  The Second Priority Notes are also guaranteed by RMI and are secured by a second priority lien on the collateral securing the Senior Notes (see note 5(a)).

Under the Indentures that govern both the Senior Notes and Second Priority Notes, the Corporation is subject to certain financial covenants and other restrictions.  Under the terms of the Indentures, the Corporation was required to cause an exchange offer registration statement to be declared effective with the SEC under the United States Securities Act of 1933, as amended, within a certain period of time.  As a result of this registration default, the annual interest rate on the Notes increased by ½% per year to 12⅜% from November 4, 2003.  The annual rate increased an additional ½% per year on February 2, 2004, resulting in the maximum additional interest rate of 1.0% per year over the 11⅞% interest rate on the Notes until such time as the registration default is cured, whereupon the interest rate will revert to the original level.  The registration of the securities has not been and is not being sought by the Corporation.  After March 31, 2005, the Corporation was not in compliance with certain covenants of the Notes and, as a result, the amount payable for the Notes has been classified as a current liability on the consolidated balance sheets.

As a result of the Corporation's lateness in filing its financial statements as at and for the year ended December 31, 2003 with Canadian securities regulatory authorities, and its inability to file its 2003 Form 20-F with the SEC within the required time period, subsequent to June 30, 2004, the Corporation was not in compliance with its obligations to deliver to relevant parties such documents as required under the Indentures.  This non-compliance led to a default under the Indentures.  However on September 30, 2004, the Corporation sought and obtained a waiver with respect to this Event of Default. At such time, the Corporation also sought and obtained consent for a temporary suspension of the Corporation's obligation under the Indentures to furnish relevant parties with periodic and other reports under applicable U.S. federal securities laws until January 1, 2006.  A consent fee equal to 3.5% of the US$78 million of the Senior Notes outstanding at that time or $3.5 million (US$2.7 million) was paid and expensed as financing fees in the 2004 fiscal year financial statements.  As a result of the Corporation's inability to file its financial statements by such date, the Corporation was required to pay a penalty in an amount equal to 0.50% of the principal amount of the Notes outstanding as of December 31, 2005 to the trustees under the Indentures.  This amount, being $0.5 million (US$0.4 million), was accrued at December 31, 2005 and expensed as financing fees in the 2005 fiscal year financial statements and subsequently paid in the three-month period ending March 31, 2006.

The commencement of insolvency proceedings by RMI (see note 15(e)) caused an Event of Default (as defined in the Indentures) under the terms of the Indentures governing the Notes.  As a consequence, the relevant trustee under the Indentures or the holders of at least 25% of the outstanding principal amount of the Notes have the right to accelerate the maturity of the Notes.  Until such Event of Default is remedied or a waiver is provided by holders of the Notes, the terms of each Indenture also prevent the Corporation from honouring retractions of its Common Shares and Series II preference shares submitted after April 19, 2005.

Page 22

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

On August 1, 2005, the Corporation commenced a Change of Control Offer (as defined in the Indentures) to purchase any and all of its outstanding Notes.  The offer was prompted by a filing made with applicable Canadian securities regulatory authorities by the Ravelston Receiver stating that the Ravelston Receiver had obtained possession and control of the shares of the Corporation directly or indirectly held by RCL (the "Ravelston Receiver Action").

Although it is the Corporation's position that the Ravelston Receiver Action did not result in a Change of Control, as defined by the Indentures, the Corporation decided to make the Change of Control Offer that would be required by the Indentures in that event.  At the expiry of the Change of Control offer on September 6, 2005, no Notes had been tendered pursuant to the Change of Control Offer.

The Corporation has not received the minimum aggregate cash payments from RMI, Sun-Times and its subsidiaries as required under the terms of the Indentures in the year ended March 31, 2007 nor in the three months ended March 31, 2006.  In the year ended December 31, 2005, the Corporation received $62.7 million from Sun-Times.   As a result, in addition to the continuing defaults and events of default of prior periods referred to above, an additional Event of Default under the Notes has occurred. During the year ended March 31, 2007, the Corporation paid $13.6 million (US$12.0 million) interest on the Senior Notes ($6.8 million (US$6.0 million) for the three months ended March 31, 2006 and $14.0 million (US$11.8 million) for the year ended December 31, 2005). While there are certain continuing defaults under the Senior Notes, there are no payment defaults.

11.           POST-RETIREMENT BENEFITS

Defined benefit pension plans

The Corporation sponsors two defined benefit pension plans for certain former employees related to the Corporation's prior ownership of Willett Foods.  Both plans are fully funded and no employer contributions are currently required to be made to these plans.  All participants are vested or are in receipt of pension payments and there are no participants currently accruing benefits.  While the plans are in fully funded status, the Corporation has not recorded an asset in these financial statements as the Corporation's right to use of any surplus on plan termination is unclear.

The weighted average discount rate used in determining these accumulated post-retirement benefit obligations for the Retirement Income Plan for Key Personnel and Other Non-Union Employees of Old WFL was 4.9% for 2007, 5.00% for 2006 and 4.75% for 2005.

Page 23

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

The following continuity schedules summarize the defined benefit plans’ activity for the periods presented:

(i)           The Retirement Income Plan for Key Personnel and Other Non-Union Employees of Old WFL

	Year ended March 31,			Three months ended March 31,			Year ended December 31,
	2007			2006			2005
Benefit obligation
Obligation, beginning of period	$	319		$	374		$	434
Interest cost		16			4			20
Actuarial (gains) losses		5			(12	)		35
Benefits paid		(41	)		(47	)		(115	)
Obligation, end of period	$	299		$	319		$	374
Plan assets
Fair value of plan assets, beginning of period	$	843		$	897		$	1,008
Actual return on plan assets		(18	)		(7	)		4
Benefits paid		(41	)		(47	)		(115	)
Fair value of plan assets, end of period	$	784		$	843		$	897
Funded Status
Benefit obligation, end of period	$	(299	)	$	(319	)	$	(374	)
Fair value of plan assets, end of period		784			843			897
Funded status - Surplus		485			524			523
Valuation allowance		(485	)		(524	)		(523	)
Accrued benefit asset, net of valuation allowance	$	-		$	-		$	-

Page 24

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

(ii)           The Retirement Pension Plan for Old WFL

	Year ended March 31,			Three months ended March 31,			Year ended December 31,
	2007			2006			2005
Benefit obligation
Obligation, beginning of period	$	783		$	828		$	833
Interest cost		37			9			43
Actuarial (gains) losses		7			(17	)		48
Benefits paid		(100	)		(37	)		(96	)
Obligation, end of period	$	727		$	783		$	828
Plan assets
Fair value of plan assets, beginning of period	$	865		$	909		$	1,007
Actual return on plan assets		(8	)		(7	)		(2	)
Benefits paid		(100	)		(37	)		(96	)
Fair value of plan assets, end of period	$	757		$	865		$	909
Funded Status
Benefit obligation, end of period	$	(727	)	$	(783	)	$	(828	)
Fair value of plan assets, end of period		757			865			909
Funded status - Surplus		30			82			81
Valuation allowance		(30	)		(82	)		(81	)
Accrued benefit asset, net of valuation allowance	$	-		$	-		$	-

Health and welfare benefits and supplementary retiree payments

Certain of the Corporation's subsidiaries provide post-retirement, health and welfare, and supplementary retirement benefits to certain employees and former employees, principally related to the Corporation's prior ownership of Dominion Stores Limited.

Page 25

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

The components of these (benefits) costs for the periods presented are as follows:

	Year ended March 31, 2007		Three months ended March 31, 2006			Year ended December 31, 2005
Interest cost	$	493	$	125		$	541
Amortization of (gains) losses		-		(193	)		461
Net period post-retirement cost (benefit)	$	493	$	(68	)	$	1,002

The table below sets forth the reconciliation of these obligations for the periods presented.

	Year ended March 31,			Three months  ended March 31,			Year ended December 31,
	2007			2006			2005
Obligations, beginning of period	$	9,837		$	10,082		$	9,846
Interest cost		493			125			541
Actuarial (gains) losses		-			(193	)		461
Benefits paid		(894	)		(177	)		(766	)
Obligations, end of period	$	9,436		$	9,837		$	10,082

There were no assets held in support of these obligations at the end of each reporting period.

The weighted average discount rate used in determining these accumulated post-retirement benefit obligations was 5.25% for 2007, 5.25% for 2006 and 5.00% for 2005.

Assumed health care cost trend rates have a significant effect on the amounts reported for health care plans. If the health care cost trend rate increased by 1%, the accumulated post-retirement benefit obligation in this regard as of March 31, 2007, March 31, 2006 and December 31, 2005 would have increased by $557,000, $577,000 and $590,000, respectively.  The effect of this change on the aggregate of service and interest cost for the 2007, 2006 and 2005 fiscal periods would have been an increase of $30,000, $8,000 and $34,000, respectively.  If the health care cost trend rate decreased by 1%, the accumulated post-retirement benefit obligation in this regard as of March 31, 2007, March 31, 2006 and December 31, 2005 would have decreased by $489,000, $507,000 and $519,000, respectively.  The effect of this change on the aggregate of service and interest cost for the 2007, 2006 and 2005 fiscal periods would have been a decrease of $27,000, $7,000 and $30,000, respectively.

Page 26

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

12.           CAPITAL STOCK

	March 31,			March 31,			December 31,
	2007			2006			2005
Authorized
Unlimited number of retractable common shares and an unlimited number of preference shares
Issued and fully paid
Series II preference shares (Classified as liability –  see note 10)
1,701,995 issued and outstanding	$	-		$	-		$	-
Retractable common shares
34,945,776 issued and outstanding		347,463			347,463			347,463
less: Common Shares submitted for retraction
153,949 (2006 and 2005 – 154,057 )		(1,531	)		(1,531	)		(1,531	)
	$	345,932		$	345,932		$	345,932

The Common Shares are retractable at any time by the holder for their retraction price, which is fixed from time to time, in exchange for Sun-Times Class A shares of equivalent value or, at the Corporation's option, cash.  The retraction price determined each quarter (or, in certain specific cases more frequently) is between 90% and 100% of the Corporation's current value, being the aggregate fair market value of all of its assets less the aggregate of (i) the maximum amount payable at such date by the Corporation on its liquidation, dissolution or winding-up in respect of any outstanding preference shares, and (ii) its liabilities, including any tax liabilities that would arise on a sale by Sun-Times of all or substantially all of its assets, which, in the opinion of the Corporation's board of directors, would not be refundable at such date, divided by the number of Common Shares outstanding on such date.

Dividends on the Series II preference shares are not paid until declared by the Corporation's board of directors. Under applicable corporate law, the Corporation cannot redeem shares or declare or pay dividends in certain circumstances, including if there are reasonable grounds for believing that the Corporation is, or would after such payment be, unable to pay its liabilities as they become due.  The Corporation is currently prevented from honouring retractions of its Common Shares and Series II preference shares as a consequence of the Corporation being in default under the terms of the Indentures governing the Notes. As of March 31, 2007, March 31, 2006 and December 31, 2005, there were retraction notices, net of subsequent withdrawals and cancellations, from holders of 153,738 Common Shares at a retraction price of $9.00 per share and 211 Common Shares at a retraction price of $7.25 per share, which cannot be completed at the present time.  The value of the retraction notices outstanding at each reporting date has been included in accounts payable and accrued liabilities in these consolidated balance sheets.

13.           CONTINGENCIES AND LEGAL MATTERS

The Corporation has been named as defendant, co-defendant or respondent in a number of legal proceedings and claims.  All claims made against the Corporation are being or will be defended.  Except as otherwise stated, no provisions have been made for any potential liability under these proceedings as management has determined that the likelihood and amount of loss are not determinable.  The following proceedings have been initiated against or by the Corporation (see also note 15 below):

Page 27

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

(a)   There are two outstanding claims by Burnac Leaseholds Limited ("Burnac") and its affiliate, Crystalline Investments Limited ("Crystalline"), against Domgroup for arrears of rent and continuing rent relating to two properties that Dominion Stores Limited leased from these companies. The plaintiffs seek to hold Domgroup responsible for rent in relation to time periods after the leases were assigned to a third party.

In 1997, lawsuits were commenced by Crystalline and Burnac claiming just over $500,000.  The plaintiffs filed pre-trial briefs with the Court in 2000, in which they claimed damages of $2.6 million plus interest and costs.  In 2001, the Ontario Superior Court of Justice dismissed the claims and in 2002 an appeal from this decision by the plaintiffs was allowed.  Domgroup sought leave to appeal to the Supreme Court of Canada, which dismissed the appeal, but did not make any determination in respect of Domgroup's contention that the leases were surrendered by the actions of the landlords.  There has been no activity during the current year in this litigation.

(b)   The Corporation is co-insured on an insurance policy against which Sun-Times has made a claim for defence of the cases arising out of the Chicago Sun-Times circulation inflation allegations. On October 5, 2004, Sun-Times announced the overstatement of circulation figures for the Chicago Sun-Times, as reported in the circulation reports issued by the Audit Bureau of Circulations commencing in 1998.  As a result, lawsuits have been commenced by various parties for alleged damages resulting from such overstatement against Sun-Times.  Sun-Times and the Corporation are named co-insured for such losses under an insurance policy with Employers Reinsurance Corp. ("ERC").  ERC has commenced a complaint for declaratory judgment against Sun-Times and the Corporation.  The Corporation has not yet been served with the complaint.

(c)   On January 16, 2004, the SEC filed a complaint for civil injunctive relief in the U.S. District Court for the Northern District of Illinois against Sun-Times, alleging, among other things, violations of securities laws for failure to disclose material information in required financial statements and altering books and records.  The Corporation was granted intervenor status on May 17, 2004.  A consent judgment was entered by the Court on January 16, 2004, which restricts the Corporation's voting rights by providing for the appointment of a special monitor (the "Special Monitor") if any Sun-Times director is either:  (a) not re-nominated or re-elected at the expiration of his or her term; (b) elected without the support of at least 80% of the incumbent directors; or (c) removed prior to the end of his or her term.  The consent judgment is still in effect.  The Special Monitor provision was triggered in January 2006, when two nominees of the Corporation were elected to Sun-Times' board of directors.  Those nominees are no longer on Sun-Times' board of directors, but the Special Monitor remains in place. Please refer to note 20(h) for a further update.

(d)   On February 10, 2004, Sun-Times commenced an action in the Ontario Superior Court of Justice against the Corporation, RCL and RMI for access to and possession of all of Sun-Times' property in possession of the Corporation, RCL and RMI maintained at 10 Toronto Street.  The parties negotiated and executed a protocol dated March 25, 2004 providing for access and possession by Sun-Times to the claimed property.  On March 5, 2004, a Statement of Defence and Counterclaim was issued by RCL and RMI against Sun-Times and two of its subsidiaries, seeking damages in the amount of approximately US$174.3 million for alleged breaches of the services agreements between the parties and for alleged unjust enrichment and tortious interference with economic relations.  On March 10, 2004, the Corporation filed a Statement of Defence and a Counterclaim against Sun-Times for $300 million, claiming that by refusing to pay its obligations under its services agreement with RCL, Sun-Times intended to cause RMI to default in its obligations to the Corporation under the March 10, 2003 Support Agreement between RMI and the Corporation, and intended to cause the Corporation to default on its obligations under its outstanding Notes.  On August 11, 2004, Mr. Justice Farley granted a motion by Sun-Times to stay the counter-claims pending the conclusion of Sun-Times' action against the Corporation and others in the United States. An appeal by RCL and RMI of Justice Farley's order was dismissed.

Page 28

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

(e)   Class actions have been initiated against the Corporation and others in the United States and Canada alleging, among other things, that the Corporation and others failed to disclose the transfer of millions of dollars of Sun-Times' funds to others, falsified Sun-Times' financial results and materially misrepresented Sun-Times' sales of assets and its dealings with related parties.  Specifically:

(i)   In February and April 2004, shareholders of Sun-Times initiated three separate class action suits in the United States District Court for the Northern District of Illinois against Black, various entities controlled directly or indirectly by Black, including the Corporation, Sun-Times, RCL and certain affiliated entities, and others.  On July 9, 2004, the District Court consolidated the three actions for pre-trial purposes.  The complainants assert claims under federal and Illinois securities laws, as well as various common law claims, including fraud, breach of fiduciary duty and aiding and abetting the breaches of fiduciary duty.  The complainants seek unspecified money damages, rescission, and an injunction against future breaches.  All defendants have brought motions to dismiss the actions and are awaiting a ruling.  In the meantime, discovery is stayed.

(ii)   On September 7, 2004, a group of Sun-Times shareholders initiated class proceedings in the Saskatchewan Court of Queen's Bench. The defendants include Black, Sun-Times, certain current and former directors and officers of Sun-Times, the Corporation, RCL and certain affiliated entities, and others.  The representative plaintiffs allege, among other things, deceit, breach of fiduciary duty, unjust enrichment, misrepresentation and negligence, and seek unspecified monetary damages.  The litigation in Saskatchewan has been stayed until September 15, 2007.  On September 7, 2004, the plaintiffs commenced similar class proceedings in the Ontario Superior Court of Justice.  On February 3, 2005, the plaintiffs initiated a similar class action in the Quebec Superior Court.  The plaintiffs allege, among other things, breaches of fiduciary duty and breaches of obligations under the Canada Business Corporations Act ("CBCA").

(f)   On September 3, 2004, upon the application of Catalyst, the Honourable Mr. Justice Campbell of the Ontario Superior Court of Justice ordered the appointment of an inspector over the affairs of the Corporation pursuant to section 229 of the CBCA.  By further Order dated October 27, 2004, Ernst & Young Inc. was named inspector (the "Inspector").  The Orders require the Inspector to conduct an investigation into the affairs of the Corporation and specifically into related party transactions and non-competition payments in the period from January 1, 1997 to and including December 2004 (the "Inspection").  The Inspector provided certain interim reports to the Court and filed a comprehensive report with the Ontario Superior Court of Justice on November 14, 2005.  This amount has been included in expenses in 2004.  While the Inspection has been largely inactive since November 2005, it has not been terminated.  Certain Orders were issued to facilitate the sale of the real property at 10 Toronto Street.

Page 29

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

(g)   On November 15, 2004, the SEC filed an action in the United States District Court for the Northern District of Illinois against Black, Radler and the Corporation seeking injunctive, monetary and other equitable relief (the "SEC Action").

The SEC's allegations against the Corporation include that: (i) the Corporation allegedly made material misstatements and omissions in its responses to Sun-Times' 1999 and 2000 proxy questionnaires and in the Corporation's 2001 and 2002 Form 20-F, Form 40-F and proxy statement filings with the SEC concerning US$16.55 million in payments it allegedly fraudulently received in connection with non-compete agreements associated with certain sales transactions; (ii) the Corporation allegedly failed to file its 2003 Form 20-F; (iii) the Corporation knew or was reckless in not knowing that Sun-Times' filings with the SEC were false and misleading because Sun-Times failed to disclose the non-compete payments made to the Corporation; (iv) the Corporation is liable for Sun-Times' alleged violations of certain federal securities laws during this period as a result of the Corporation's alleged failure to disclose properly the non-compete payments it received; and (v) the Corporation allegedly falsified or caused to be falsified books, records and accounts subject to federal securities laws and allegedly circumvented or failed to implement a system of internal accounting controls.

The SEC Action seeks the following relief as against the Corporation: (i) disgorgement of alleged ill-gotten gains by the Corporation and unspecified civil penalties; (ii) a voting trust upon the shares of Sun-Times held by the Corporation; and (iii) an order enjoining the Corporation from further violations of federal securities laws. A status hearing is scheduled for September 19, 2007.  The SEC Action is stayed until the conclusion of the criminal proceedings against Black and others in Illinois.

(h)   The Corporation is named as a co-defendant in a complaint filed in the U.S. District Court for the Northern District of Illinois by Sun-Times claiming damages and recovery for, among other things, alleged breaches of fiduciary duty relating to alleged improper management fees, sales and transfers of assets, non-competition payments and other payments (the "Second Amended Complaint").  Sun-Times is seeking damages from all defendants of US$542 million, including pre-judgment interest of US$117 million.  Repayment has previously been made of certain non-compete payments (see note 3(e) above).  On December 13, 2004, all defendants filed motions to dismiss the Second Amended Complaint.  These motions were denied, and all parties have answered the Second Amended Complaint.  In February 2006, the magistrate judge, to whom the case was assigned for discovery issues and all non-dispositive pretrial motions, granted the U.S. Attorney's Office's motion to stay discovery in the case until the conclusion of the criminal proceedings against Black and others.  On June 20, 2007, the magistrate judge partially lifted the discovery stay to allow Sun-Times and the Corporation to take discovery from each other and certain third parties on the Corporation's counterclaim.  In addition, on July 6, 2006, the Corporation filed a motion for leave to file a counterclaim against Sun-Times.  The motion was granted but Sun-Times has appealed the ruling and has separately moved to dismiss the counterclaim.  The parties are awaiting a ruling in respect of both of these matters.

Page 30

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

(i)   By Statement of Claim issued on January 14, 2005, Stockgroup Information Systems Inc. and Stockgroup Media Inc. (collectively, "Stockgroup") commenced an action in the Ontario Superior Court of Justice against the Corporation and others.  Stockgroup claims against the defendants, jointly and severally, damages in the amount of approximately $0.5 million for reimbursement of prepaid advertising expenses. The action against the Corporation was dismissed by order of the Court dated May 15, 2007.

(j)   On March 4, 2005, the Corporation commenced an application in the Ontario Superior Court of Justice against American Home Assurance Company ("American Home"), Chubb Insurance Company of Canada ("Chubb"), Royal & Sun Alliance Insurance Company of Canada, ACE INA Insurance Company, Zurich Insurance Company of Canada, AXA Canada, Temple Insurance Company, Continental Casualty Company, Lloyd's Underwriters and Gerling Global Canada (the "Insurers").  The relief sought included both an order requiring the Insurers to indemnify the Corporation under the insurance policies issued by them to the Corporation in respect of certain legal expenses incurred in the defence of various actions and an injunction to restrain American Home and Chubb from paying out the limits of their respective policies (collectively US$50 million) to fund a settlement of certain claims against the independent directors of Sun-Times advanced by Cardinal Value Equity Partners ("Cardinal") in a derivative action commenced by Cardinal in the Delaware Court of Chancery.

The settlement by the Insurers was approved by the Ontario Superior Court of Justice, following which it was approved by the Delaware Court of Chancery on or about November 13, 2006.  The Corporation then pursued its claims for indemnification in respect of legal expenses against the remaining excess insurers.  On or about March 22, 2007, Justice Campbell of the Ontario Superior Court of Justice ruled that the Corporation's application for payment of its legal expense was premature.  The Corporation is appealing this decision to the Court of Appeal for Ontario.  It is anticipated that the appeal will be heard in or around December 2007.

(k)   On March 18, 2005, the Corporation received a Notice of Hearing and Statement of Allegations issued by staff of the OSC in respect of an administrative proceeding against the Corporation and others.  The allegations in the Notice of Hearing relate to the period between 1998 and 2002, except for those that relate to the Corporation's inability to file financial statements. The Notice of Hearing states that the OSC will consider making an order requiring the Corporation and others to (i) pay an administrative penalty of not more than $1 million for each failure by the Corporation to comply with Ontario securities law, (ii) disgorge to the OSC any amounts obtained as a result of non-compliance with Ontario securities law, and (iii) pay the costs of the OSC's investigation and any proceeding.  The Corporation filed a reply with the Secretary of the OSC disputing the allegations made in the Notice of Hearing.  This hearing has been scheduled to commence mid-November 2007 and to continue into 2008.

(l)   By Notice of Motion filed October 18, 2005, the Corporation applied for directions from the Ontario Superior Court of Justice in order to commence an action against certain of its former directors of the Corporation to recover excessive remuneration.  In addition, the Corporation sought to recover $1.2 million in severance payments, to defend a further claim of $1.8 million made by the former directors for alleged unpaid compensation and to recover $6 million put in an indemnification trust for the benefit of the former directors (see note 2(c)).  One of the five former directors also commenced an action against the Corporation claiming $0.6 million in severance and indemnification of legal expenses.

Page 31

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

Certain former directors have delivered notices for payment of legal expenses incurred in proceedings with the Corporation but the Corporation has refused to indemnify the directors. The Ontario Superior Court of Justice accepted the Corporation's position that, until such time as the Corporation's proceedings against certain former directors have been finally determined, the Corporation was not required to indemnify directors against whom allegations have been made by the Corporation that they failed to act in accordance with their statutory duties.  If the Corporation was ultimately successful in its claim that certain former directors did not act in good faith with a view to the best interests of the Corporation, those directors would not be entitled to be reimbursed for the legal fees that they have incurred.

Four of the former directors (Walker, Carroll, Metcalfe and Wakefield) commenced an action against the Corporation in the Ontario Superior Court of Justice claiming $4.0 million of management and directors' fees, which were asserted to be unpaid and owing in respect of their tenure as directors and owing in respect of time spent defending the Corporation's motion to review their compensation as directors, a further $1.2 million in respect of departure bonuses for two of the former directors and punitive damages of $0.5 million.

On February 26, 2007, the Corporation announced that it had entered into an agreement to settle all of its disputes with five of its former directors (Walker, Carroll, Metcalfe, Wakefield and Vale). Under the terms of the settlement, two trusts that were established by the Corporation during the tenure of the former directors holding an aggregate of $8.2 million in cash were wound up.  An aggregate of $1.25 million was paid to the former directors in full satisfaction of all of their claims against the Corporation, including claims exceeding $6 million for unpaid directors’ fees.  An additional $700,000 was paid out of the trusts towards the legal fees and disbursements of the former directors.  The balance of approximately $6 million was returned to the Corporation.  All legal proceedings between the parties have been formally dismissed and the parties have released each other from all claims.

(m)   On May 15, 2006, the Corporation signed a cooperation agreement with the United States Attorney for the Northern District of Illinois ("U.S. Attorney").  In this agreement, the Corporation acknowledges that the U.S. Attorney developed evidence that the Corporation "is criminally liable because one or more of [the Corporation's] former officers, directors or employees violated federal criminal law with the intent, in part, to benefit [the Corporation] in connection with the . . . fraudulent diversion of approximately [US]$16.55 million from [Sun-Times] to [the Corporation]".  The Corporation also acknowledged "that one or more of its officers, directors or employees acted illegally in connection with [the Corporation's] receipt of approximately [US] $16.55 million in non-compete payments and that it is responsible for repayment of such money".  These amounts have been repaid (see note 3(e)).  The Corporation has agreed to cooperate with the U.S. Attorney in its investigation and prosecution of certain matters relating to Sun-Times, in accordance with the terms of the cooperation agreement.  The U.S. Attorney has agreed not to prosecute the Corporation "for any crimes committed by its officers, directors or employees relating to the sale of various [Sun-Times] newspaper publishing groups in the United States between 1998 and 2000".  However, the Corporation can be prosecuted if it violates the cooperation agreement.

Page 32

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

(n)   By Amended Statement of Claim dated October 25, 2006, 783783 Alberta Ltd. c.o.b. as Vue Weekly ("Vue") commenced an action against several parties including the Corporation and Hollinger Canadian Publishing Holdings Co. ("HCPH"), in the Court of Queen’s Bench of Alberta.  The action centers on Vue's allegation that SEE Magazine ("SEE"), Vue's main competitor, was improperly deemed to be a "Canadian newspaper" for tax purposes and, therefore, obtained preferential tax treatment, when it should not have been considered to be a Canadian newspaper.  It is alleged in the action that SEE is published by Great West Newspaper Group Ltd. ("Great West"), through its wholly-owned operating subsidiary Gazette Press Ltd. and that Great West is jointly owned by Jamison Newspapers Inc. and HCPH.  According to the Statement of Claim, HCPH is wholly owned by Sun-Times.  In the action, Vue seeks a declaration that SEE was not a "Canadian newspaper" under the Income Tax Act (Canada) and seeks damages from the defendants, jointly and severally, in the sum of at least $5.0 million.

(o)   The Corporation has incurred significant legal expenses in the defence of various actions brought against it and others in both the United States and Canada.  As disclosed in note 13(j), the Corporation has, in turn, advanced a claim against its directors' and officers' liability insurers asserting that, under the terms and conditions of the relevant policies, these insurers are required to indemnify the Corporation in respect of the legal expenses incurred in connection with some of the actions brought against the Corporation.

(p)   Pursuant to certain indemnification provisions of Sun-Times' Certificate of Incorporation and bylaws, Black filed suit against Sun-Times in Delaware seeking an advancement of US$6.8 million for legal fees incurred by him in connection with lawsuits and investigations to which he was subject.  Although Black entered into a court-ordered stipulation in June 2004 limiting his advancement with respect to the fees of specific law firms in these legal actions to only 50% of his legal fees, he later demanded 100% advancement for fees and disbursements of firms that Black asserted were not covered by the stipulation and filed suits against Sun-Times on these issues. Sun-Times responded to Black's complaint and included a counterclaim against Black and a third-party equitable contribution claim against the Corporation for 50% of any advancement amounts that it has paid or will in the future be required to pay to Black, Barbara Amiel-Black ("Amiel-Black") (the spouse of Black and a former director of the Corporation), David Radler or John Boultbee ("Boultbee") (former officers of the Corporation).  Sun-Times argues that the Corporation should be required, as a matter of equity, to share Sun-Times' advancement costs because the Corporation is obligated to indemnify those same individuals.

In April 2006, Black and Sun-Times settled this dispute.  The settlement calls for Sun-Times to pay $4.4 million to Black for legal fees already incurred, 75% of future fees related to the criminal prosecution, and 50% of future fees related to certain other cases. In the settlement and dismissal of Black's claims against Sun-Times, Sun-Times explicitly reserved the right to pursue its third-party equitable contribution claim against the Corporation.  In June 2006, Sun-Times filed an amended third party complaint against the Corporation for equitable contribution toward the amounts of legal fees Sun-Times has advanced and will in the future advance to Black, Boultbee, Radler and Amiel-Black.  On November 6, 2006, the Delaware Court of Chancery denied the Corporation's motion to dismiss the third party complaint. The case is temporarily stayed pending settlement discussions between the parties.  The Corporation has accrued $18.1 million with respect to such indemnities ($8.9 million at March 31, 2006 and $9.4 million at December 31, 2005). (See note 3(d).)

Page 33

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

The following is a summary of other contingencies:

(q)   These consolidated financial statements include the accounts of ELR, an entity incorporated under the laws of Costa Rica, which, among other things, publishes the La Republica newspaper in Costa Rica.  For periods prior to January 1, 2003, ELR was not consolidated in the accounts of the Corporation, although it exercised majority control (as that term is defined in the CICA Handbook) over ELR in financial statements.  However, during this period, local management reported to personnel at Sun-Times. Although these financial statements include an accrual for contingent liabilities of approximately $1 million that the Corporation is aware of to date, principally relating to income and withholding tax matters and compliance with corporate legal requirements in Costa Rica as described in note 20(a), the shares of ELR have been sold subsequent to year end.  The purchaser has thereby assumed all contingent liabilities.

(r)   Certain of the employees of wholly-owned subsidiaries of the Corporation participated in the RCL Plan. Due to the status of RCL, the Superintendent of Financial Services of Ontario appointed Morneau Sobeco as the administrator of the RCL Plan.  It is expected that the pension plan will be wound up.  TSI employees ceased participating in the RCL Plan effective December 31, 2005.  As described in note 20(d), Morneau Sobeco has asserted a claim directly against TSI.

(s)   The March 31, 2007, March 31, 2006 and December 31, 2005 balance sheets include a liability for contingencies in the amount of approximately $4.0 million associated with issues under discussion with Canadian tax authorities.  The Corporation records liabilities for known tax contingencies when, in the judgment of management, it is probable that a liability has been incurred.  The Corporation's contingency reserves represent liabilities for estimated taxes, interest and penalties for the taxation years through March 31, 2007, and principally relate to certain related-party transactions that occurred prior to the 2004 taxation year.  The ultimate resolution of the tax contingencies is dependent on further submissions to and discussions with the tax authorities.  While management is of the view that the contingent liabilities recorded for these matters are adequate, it is not known what the financial implications of the ultimate resolution will be (see note 8).

(t)   In 2006, the Corporation received a demand for $4.0 million from Catalyst for costs relating to professional fees and disbursements incurred by Catalyst in connection with the Inspectorship and litigation in which the Corporation and Catalyst were parties.  No such costs have been paid.  At March 31, 2007, $4.0 million has been accrued ($4.0 million at March 31, 2006 and $3.5 million at December 31, 2005).  At this time, the Corporation has not agreed to pay these costs and the Corporation's board of directors is considering this demand.

(u)   There was no directors' and officers' liability insurance from July 2004 to the end of June 2005.  Notwithstanding the settlement described in note 13(p), the Corporation's indemnity obligations to directors and officers serving during this period continue in full force and effect.

(v)   The Corporation is also currently subject to litigation in the ordinary course of business.  In the opinion of management, any liability in respect of such litigation will not have a material adverse effect on the Corporation's financial condition.  In the opinion of management, there can be no certainty that additional, potentially material, new litigation will not arise.

Page 34

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

(w)   Although the Corporation has accrued or disclosed, where appropriate, all contingent liabilities that the Corporation is aware of to date, there could be claims or counterclaims asserted in the future based on the past actions of the Corporation or its former directors or officers.  As a result, additional, potentially material, claims may still arise.

14.   GUARANTEES AND COMMITMENTS

 Secured Notes

In connection with the issuance of the Notes, the Corporation has agreed to indemnify the initial purchaser of the Notes against any losses or damages resulting from inaccuracy of financial statements, taxes and compliance with securities legislation. The Corporation also agreed to indemnify the initial purchasers of the Notes against any related tax liabilities arising from payments made with respect to the Notes, except taxes on a Noteholder's income. These indemnities generally extend for the term of the Notes and do not provide for any limit on the maximum potential liability.

The Corporation is unable to estimate the maximum potential liability for these types of indemnities, as the amounts are dependent upon future contingent events, the nature and likelihood of which cannot be determined at this time. No amount has been accrued in these consolidated financial statements with respect to these indemnifications.

Property Leases

A subsidiary of the Corporation has agreed to indemnify landlords under its operating leases against liabilities, damages, costs, claims and actions resulting from damaged property, violations of lease covenants and accidents or injuries occurring on the leased property.

No claims have been made to date.  The Corporation is unable to estimate the maximum potential exposure for these types of indemnities as the operating leases do not specify a maximum amount and the amounts are dependent upon future contingent events, the nature and likelihood of which cannot be determined at this time.

The Corporation has operating leases relating primarily to real property leased for former Dominion Store locations.  Future minimum operating lease payments are $328,000 in 2008, $195,000 in 2009, $55,000 in 2010 and $15,000 in 2011.

Dispositions

In connection with certain dispositions of assets and/or businesses, the Corporation has provided customary representations and warranties whose terms range in duration and may not be explicitly defined. The Corporation has also retained certain liabilities for events occurring prior to sale relating to tax, environmental, litigation and other matters. Generally, the Corporation has indemnified the purchasers in circumstances where a third party has asserted a claim against the purchaser that relates to a liability retained by the Corporation. These types of indemnities typically extend for a number of years or, in some cases, indefinitely.

Page 35

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

No claims have been made to date.  The Corporation is unable to estimate the maximum potential liability for these indemnities, as the underlying agreements do not always specify a maximum amount and the amounts are dependent upon the outcome of future contingent events, the nature and likelihood of which cannot be determined at this time.  Historically, the Corporation has not made any significant indemnification payments under such agreements and no amounts have been accrued in these consolidated financial statements with respect to these indemnification agreements.

The Corporation continues to monitor the conditions that are subject to indemnities to identify whether it is probable that a loss has occurred.  The Corporation would recognize any such losses under any guarantees or indemnifications when those losses are probable and estimable.

Claims for Indemnities and Indemnification Agreements

(a)   With respect to certain former directors, the Corporation has entered into trust and contribution agreements with a third party trustee and deposited in trust the amount of $nil at March 31, 2007 (March 31, 2006 - $8.2 million, December 31, 2005 - $8.1 million) to defend such directors from any claims made for which they would be entitled to indemnity pursuant to their indemnification agreements.  As more particularly described in note 13(l), although these trusts have been wound up, there is a continuing indemnity obligation to the trustee.

(b)   On January 27, 2006, Black, Amiel-Black, Moffatt Management Inc. and Black-Amiel Management Inc. issued a Notice of Action against the Corporation, Sun-Times, Argus, RCL, RMI, Radler, Torys LLP and KPMG LLP seeking contribution and indemnity in respect of claims made against them (among others) in various proceedings in Canada and the United States.  On February 27, 2006, the plaintiffs issued a Statement of Claim against the defendants in respect of this contribution and indemnity claim.  As against the Corporation, the plaintiffs claim that they are entitled to contribution to the extent of the Corporation's own liability in the event that the plaintiffs are found jointly liable for any of the claims in the proceedings.  Black and Amiel-Black further claim indemnification from the Corporation for any and all liability, costs, charges and expenses incurred by them in connection with the proceedings by reason of their having been officers or directors of the Corporation.  This Statement of Claim was amended on November 8, 2006.  No steps have been taken to move this action forward.

(c)   In addition to the indemnities discussed at (a) and (b) above, the Corporation has from time to time entered into customary indemnification agreements and arrangements with its directors and officers, consistent with its by-laws and governing statutes.

15.           OTHER LEGAL MATTERS

(a) In September 2004, Catalyst applied to the Ontario Superior Court of Justice for an order removing a majority of the Corporation's Board of Directors (including Black, Radler, Boultbee, Amiel-Black and White) on the basis that they had acted in a manner oppressive to the Corporation's minority shareholders.  Black resigned as a director and officer of the Corporation on November 2, 2004, immediately prior to the commencement of the hearing of the application.  On November 18, 2004, Mr. Justice Campbell ordered the removal of three of the Corporation's directors, namely Amiel-Black, Boultbee and Radler.  White was permitted to continue to act as a director at the pleasure of the Board.  White was subsequently removed from the Corporation's board of directors by further Order dated June 8, 2005 (the "Removal Order").  Black, Amiel-Black and Boultbee appealed the November 18, 2004 order, however, these appeals were ultimately abandoned.  White appealed the November 18 order and the Removal Order.  White's appeals were dismissed by the Ontario Court of Appeal in March 2006.

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HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

(b) On November 3, 2004, Wells Fargo Bank Northwest, N.A. and Key Corporate Capital Inc. commenced an action in the State of New York against Sugra (Bermuda) Limited ("Sugra Bermuda"), a subsidiary of Sun-Times, and the Corporation.  The action alleged that Sugra Bermuda defaulted under the terms of a 1995 aircraft lease agreement and that the Corporation is a guarantor of Sugra Bermuda's obligations under the lease.  The plaintiffs sought US$5.1 million in damages, plus interest at the rate of 18% per annum and attorneys' fees.  On December 22, 2005, the Corporation settled the litigation with Wells Fargo Bank Northwest, N.A. and Key Corporate Capital Inc. and paid US$0.8 million as its share of the settlement.  The settlement and legal costs related thereto, aggregating $1.1 million, were expensed in 2004.

(c) On March 29, 2005, the Corporation and Domgroup issued a Statement of Claim in the Ontario Superior Court of Justice against RCL, RMI, Moffatt Management Inc. and Black-Amiel Management Inc., as well as Black, Radler, Boultbee and Peter Atkinson ("Atkinson") (a former officer of the Corporation).  The claims made are for monetary damages from all defendants jointly and severally in the amount of $550 million, as well as reimbursement of certain amounts owing to the Corporation in the amount of approximately $86 million, plus accrued interest and costs.  The monetary damages include management fees and non-competition payments paid during the period since 1998, as well as reimbursement of fees and costs related to the Inspection and the Strategic Transaction.  The claim alleges diversion of corporate opportunities, breach of fiduciary duties and oppression.  Certain defendants have instituted motions to stay the action and strike some parts of the Statement of Claim.

(d) On February 27, 2006, the Corporation and certain subsidiaries issued a Statement of Claim in the Ontario Superior Court of Justice against RCL, RMI, 509643 N.B. Inc., 509644 N.B. Inc., 509645 N.B. Inc., 509646 N.B. Inc., 509647 N.B. Inc., Moffatt Management Inc., Black-Amiel Management Inc., Argus, Conrad Black Capital Corporation, Hollinger Aviation Inc., Mowitza Holdings, Inc., 364817 Ontario Limited, F.D. Radler Ltd., 1269940 Ontario Limited, 2753421 Canada Limited, Black, Amiel-Black, Radler, Boultbee, 1406684 Ontario Limited and Atkinson.  In total, the Corporation has claimed damages and other monetary relief against Black and the other defendants in excess of $750 million.  Minor amendments were made to the Statement of Claim on August 10, 2006.  The Statement of Claim alleges that the defendants harmed the plaintiffs by, among other things, causing or engaging in:

·   a series of transactions pursuant to which the Corporation's operating assets were sold to Sun-Times for below market value;

·   the diversion of significant management fees to RCL (and others), which had been previously paid to the Corporation;

·   a series of stock transactions conducted by the Corporation that enabled RCL to increase its ownership of the Corporation at no cost to RCL, but at significant cost to the Corporation;

Page 37

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

·   a series of improper and unfair public market debt financings wherein Black and certain of his associates caused the Corporation to loan money to RCL and to themselves personally at interest rates highly unfavourable to the Corporation and highly favourable to Black, RCL and other individual defendants;

·   a pattern of improper conduct designed to enrich Black and the other defendants at the expense of the Corporation by misappropriating corporate opportunities of the Corporation;

·   the diversion to the Corporation from Sun-Times of so-called "non-compete payments" arising from the sale by Sun-Times of certain of its U.S.-based community newspapers, which caused the Corporation significant damage; and

·   the active concealment of wrongdoing from the Corporation's board of directors.

On August 18, 2006, pursuant to an Application by the Corporation brought without notice, the Ontario Superior Court of Justice granted a Mareva injunction against Black and Amiel-Black freezing their assets and those of entities controlled by them.  On September 29, 2006, the Court replaced the Mareva injunction with a Consent Order continuing the freezing of the assets of Black, Amiel-Black and entities controlled by them, subject to the terms of a confidential settlement agreement, pending resolution of the claims which have been filed against them by the Corporation.

(e) On April 20, 2005, the Ontario Superior Court of Justice issued the Ravelston CCAA and Receivership Order (see note 3(k)).  At that time, the Ravelston Receiver was appointed as receiver and manager of all of the assets of RCL and RMI, except for the shares of Sun-Times owned directly or indirectly by RCL (the "Excluded Shares").  The Ravelston CCAA and Receivership Order also provided, among other things, that until May 20, 2005 or such later date as the Court may order, no proceeding or enforcement process in any court or tribunal may be commenced or continued against or in respect of either or both of RCL and RMI, and any such proceedings then underway (including the Corporation's lawsuit) pertaining to RCL and RMI were temporarily stayed.  On June 7, 2007, the stay of proceedings was extended to November 2, 2007.

On May 18, 2005, the Ravelston CCAA and Receivership Order was extended to Argus and five of its subsidiaries, which collectively own, directly or indirectly, 61.8% of the outstanding Common Shares. Further, the Court approved the agreement between Sun-Times and the Ravelston Receiver pursuant to which Sun-Times altered its shareholders rights plan to exempt the Ravelston Receiver from its provisions by making it an "exempt stockholder", the effect of which was to allow the Ravelston Receiver to take control of the Excluded Shares.  The agreement further provided that Sun-Times would not object to the sale by the Ravelston Receiver of a number of Common Shares in order to pay for the costs of the receivership.  On June 12, 2006, the Court appointed the Ravelston Receiver as manager and interim receiver of all the property, assets and undertaking of Argent News Inc., a wholly-owned subsidiary of RCL.

Page 38

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

The Corporation and its subsidiaries have submitted proofs of claim in the insolvency proceeding of the receivership of RCL and RMI and their subsidiaries (the "Ravelston Entities").

On January 22, 2007, the Corporation served a motion in the insolvency proceedings regarding RCL and others.  In the motion, the Corporation seeks an order confirming the secured obligations owed by RCL to the Corporation and declaring that the applicable security agreements are valid, perfected and enforceable in accordance with their terms.  In the motion, the Corporation claims that the secured obligations owing by RCL total more than $25 million.

On January 25, 2007, the Ontario Superior Court of Justice heard a motion brought by the Ravelston Receiver seeking, among other things, approval of a plea agreement negotiated with the U.S. Attorney's Office in respect of indictments laid in the United States against RCL.  The motion was supported by the Corporation and Sun-Times and was opposed by Black, Conrad Black Capital Corporation, White and PGWML.

On February 7, 2007, the Ontario Superior Court of Justice released its decision in respect of the motion brought by the Ravelston Receiver.  In this decision, the Ontario Superior Court of Justice granted the Ravelston Receiver's motion and authorized the Ravelston Receiver to enter into the plea agreement.  Black, Conrad Black Capital Corporation, White and PGWML filed a notice of appeal with the Court of Appeal for Ontario appealing the decision.  That appeal was heard on February 26, 2007 and on March 1, 2007, the Court of Appeal for Ontario issued a decision denying the appeal and upholding the decision of the Superior Court.  On March 5, 2007, the U.S. Court accepted RCL's guilty plea in accordance with the plea agreement.

On February 15, 2007, the Ontario Court issued a decision permitting Richter to file a "payments report" once it is finalized. The payments report would report on and analyze the monies received by and distributions made by RCL during the period of January 3, 2002 to April 20, 2005, by RMI during the period of July 3, 2002 to April 20, 2005 and by Argus during the period of January 1, 1999 to April 30, 2005.  On February 26, 2007, the Ontario Court of Appeal heard an appeal of this decision by Black and on March 1, 2007 it issued a decision denying the appeal and upholding the decision of the Ontario Court.  The payments report was filed on April 5, 2007 and a supplemental report was filed on May 2, 2007.

(f) On May 19, 2005, White commenced proceedings against the Corporation for an order that the Corporation indemnify him for all costs, charges and expenses that he reasonably incurred in responding to the applications for his removal from the Corporation's board of directors.  By order dated June 8, 2005, the Honourable Mr. Justice Campbell dismissed White's application (the "Dismissal Order").  White's appeal of the Dismissal Order was dismissed by the Ontario Court of Appeal in March 2006.

(g) On July 6, 2006, counsel for Black served a demand letter on the Corporation demanding repayment of the sum of approximately $20.4 million advanced by Black to Sun-Times on July 16, 2004 in satisfaction of the Delaware Chancery Court judgment dated June 28, 2004 (in respect of non-compete payments).  Black also demanded associated costs in the amount of $192,000, plus interest.  On December 13, 2006, Black served a Notice of Action and Statement of Claim on the Corporation pursuant to which Black seeks damages in the amount of these demanded repayments.  (See note 3(e).)

Page 39

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

(h) On October 25, 2006, pursuant to a motion brought by the Corporation without notice, the British Columbia Supreme Court granted a temporary Mareva injunction against Radler and F.D. Radler Ltd. freezing their assets.  On November 14, 2006, Madam Justice Wedge of the British Columbia Supreme Court refused an Application by the Corporation to extend this Mareva injunction.  The Corporation's motion for leave to appeal was dismissed.

(i) On February 7, 2007, the Corporation filed a notice of action against a former director, Ralph Barford, for damages arising from inadequate oversight of management and other breaches of duty.  Tolling agreements have been entered into with other former directors in respect of alleged claims.

16.   STOCK-BASED COMPENSATION

Share Option Plan

The Corporation has an Executive Share Option Plan (the "Option Plan") pursuant to which the Corporation can grant options to certain key executives for up to 5,560,000 Common Shares.  Unless amended, the options are exercisable to the extent of 25% thereof at the end of each of the first through fourth years following granting, on a cumulative basis, and options expire six years after the date of grant.  Unexercised options expire one month following the date of termination of the executive's employment, except in the case of retirement at normal retirement age, death or certain offers made to all or substantially all of the holders of Common Shares, in which events all unexercised options become exercisable in full.

In 2005, under the Advisory Agreement, the Corporation granted options to Benson Consulting to purchase an aggregate of 1,000,000 Common Shares under the Option Plan at an exercise price of $5.50.  These options contain accelerated vesting provisions and, as at April 15, 2006, all such options had vested (as at March 31, 2006, 750,000 of these options had vested and as at December 31, 2005, 500,000 of these options had vested).  The options granted under the Advisory Agreement expire on the date immediately following the date that is three years after the Advisory Agreement is terminated, provided that if any of the Common Shares is subject to any cease trade order or any similar restraint on trading during the last 18 months of such three-year period, the exercise period of the options is extended by a period equal to the number of days any such trading restraint is in effect.  If, due to applicable law, including orders of securities authorities, Benson Consulting is unable to exercise such options or sell the Common Shares issuable on exercise of such options, the Corporation must provide alternate compensation to Benson Consulting having an equivalent total after-tax value.

Details of compensation expense recognized pursuant to the above are set out below.

Year ended December 31, 2005

During 2005, a total of 1,000,000 options were granted, of which 500,000 had vested, as of December 31, 2005 having an exercise price of $5.50 per share.

Using the Black-Scholes option pricing model, the aggregate fair value of all options granted during the year ended December 31, 2005 was estimated to be $1.9 million, of which an expense in the amount of $1.7 million has been recognized for the year ended December 31, 2005.  A corresponding amount has been recorded in contributed surplus.

Page 40

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

Three months ended March 31, 2006

There were no options granted in the three-month period ended March 31, 2006.  At March 31, 2006, there were 1,000,000 options outstanding, of which 750,000 had vested, having an exercise price of $5.50 per share.

An expense in the amount of $197,000 has been recognized for the year ended March 31, 2006 relating to the options granted in 2005.  A corresponding amount has been recorded in contributed surplus.

Year ended March 31, 2007

There were no options granted in the year ended March 31, 2007, however, and an expense of $27,000 was recorded relating to the vesting of options granted during the year ended December 31, 2005.

The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions.  Such models require the use of subjective assumptions, including expected stock price volatility.  The principal assumptions used in applying the Black-Scholes option-pricing model for the options issued in 2005 were a risk-free interest rate of 3.78%, a volatility factor of 63.31%, no dividend yield and an expected life of four years.

A summary of the status of the outstanding options is as follows:

	Number of stock options	Weighted average exercise price
Outstanding – December 31, 2004	Nil	Nil
Granted in 2005	1,000,000	$5.50
Outstanding – March 31, 2007 and 2006, December 31, 2005	1,000,000	$5.50
Exercisable – December 31, 2005	500,000	$5.50
Exercisable – March 31, 2006	750,000	$5.50
Exercisable – March 31, 2007	1,000,000	$5.50

Directors Share Unit Plan

Effective February 24, 1999, directors were permitted to elect up to 100% of total fees to which they were entitled be paid in the form of deferred share units under the DSUP, as amended.  For a director that elected to participate, deferred share units equal to the number of Common Shares that could have been purchased in the open market for a dollar amount equal to the percentage of that director's fee was credited to an account maintained by the Corporation for that director under the DSUP.

Deferred share units are to be paid to the director no later than December 31 of the year following the calendar year in which the director ceased to serve, based on the market value of the Common Shares on the date of the payment.

The value of the units outstanding, all of which relate to former directors, at each of March 31, 2007, March 31, 2006 and December 31, 2005 is $243,000, $327,000 and $331,000, respectively.  These amounts are included in the due to related parties in these financial statements.

Page 41

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

17.   CONTRIBUTED SURPLUS

A continuity of the Corporation's contributed surplus is as follows:
Balance at December 31, 2004	$	20,840
Stock-based compensation (see note 16)		1,669
Balance at December 31, 2005		22,509
Stock-based compensation (see note 16)		197
Balance at March 31, 2006		22,706
Stock-based compensation (see note 16)		27
Balance at March 31, 2007	$	22,733

Contributed surplus includes $1.9 million as at March 31, 2007 and March 31, 2006, and $1.7 million as at December 31, 2005 relating to the recording of stock-based compensation (see note 16).

18.   FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Derivative Financial Instruments

Other than stock options (see note 16), the Corporation does not currently hold or issue derivative financial instruments.

Credit Risk

The Corporation's principal credit risks relate to amounts due from related parties which are the subject of litigation.

The Corporation has assessed collectibility and has taken an allowance where necessary.

Interest Rate and Currency Risk

All of the Corporation's third-party debt is at a fixed rate of interest and denominated in US dollars.

The Corporation’s investment in Sun-Times is denominated in US dollars.

Amounts held in the SEC escrow account (see note 2(a)) were in US dollars.

Market Risk

The Corporation's investment in Sun-Times represents substantially all of its investments in publicly traded securities and is subject to the risk of fluctuations in the market price of those shares.

The Corporation's Series II preference shares are exchangeable for a fixed number of Sun-Times Class A shares. As a result, such shares are valued at an amount equivalent to the market price of the underlying Sun-Times Class A shares for which they are exchangeable. While the carrying value of these exchangeable shares will fluctuate with the market price of Sun-Times Class A shares, this market risk is mitigated by the Corporation's holding of such Sun-Times Class A shares.

Page 42

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

19.   SEGMENT INFORMATION

The Corporation has two reportable segments: (i) publishing, printing and distribution of newspapers; and (ii) holding of income-producing real estate properties. The Corporation's newspaper segment is held through its Costa Rican subsidiary, ELR.  The Corporation's real estate properties are held through its subsidiary, Domgroup, and are located in Canada.  The Corporation's dividend income is principally derived from its investment in Sun-Times located in the United States.  Segment data not specifically attributable to the Corporation's reportable segments is presented in the table below.  Except as described in note 1, the accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Corporation evaluates performance based on profit or loss from operations before income taxes, not including non-recurring gains and losses and foreign exchange gains and losses. The Corporation's reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different management and operating strategies.

	March 31, 2007
	For the year Revenues		Property and Equipment		Total Assets
Canada	$	3,917	$	694	$	64,313
United States		1,694		-		89,112
Costa Rica		4,117		682		1,866
	$	9,728	$	1,376	$	155,291

Page 43

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

	March 31, 2006
	For the three- month period Revenues		Property and Equipment		Total Assets
Canada	$	945	$	826	$	87,303
United States		926		-		154,067
Costa Rica		719		762		1,602
	$	2,590	$	1,588	$	42,972

	December 31, 2005
	For the year Revenues		Property and Equipment		Total Assets
Canada	$	4,155	$	9,591	$	97,974
United States		62,749		-		164,545
Costa Rica		3,992		842		1,824
	$	70,896	$	10,433	$	264,343

	Year ended March 31, 2007
	Newspaper		Real Estate		Corporate			Totals
Revenues	$	4,129	$	763	$	-		$	4,892
Dividend income		-		-		2,407			2,407
Interest income - third party		-		747		1,682			2,429
Total Revenue		4,129		1,510		4,089			9,728
Interest expense - third party		-		31		15,227			15,258
Interest expense - related party		-		-		7,972			7,972
Amortization		167		28		87			282
Income taxes (recovery)		11		2,032		(15,490	)		(13,447	)
Segment net profit (loss)	$	46	$	15,604	$	(100,838	)	$	(85,188	)
Segment property and equipment	$	682	$	-	$	694		$	1,376
Additions to property and equipment	$	-	$	-	$	-		$	-
Total assets	$	1,866	$	101,605	$	51,820		$	155,291

Page 44

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

	Three months ended March 31, 2006
	Newspaper		Real Estate			Corporate			Totals
Revenues	$	719	$	257		$	-		$	976
Dividend income		-		-			926			926
Interest income - third party		-		107			581			688
Total Revenue		719		364			1,507			2,590
Interest expense - third party		-		-			3,644			3,644
Interest expense - related party		-		-			1,870			1,870
Amortization		38		9			67			114
Income taxes (recovery)		20		(166	)		(2,499	)		(2,645	)
Segment net profit (loss)	$	47	$	552		$	(18,156	)	$	(17,557	)
Segment property and equipment	$	762	$	45		$	781		$	1,588
Additions to property and equipment	$	-	$	-		$	-		$	-
Total assets	$	1,602	$	78,855		$	162,515		$	242,972

	Year ended December 31, 2005
	Newspaper			Real Estate			Corporate			Totals
Revenues	$	3,992		$	1,508		$	-		$	5,500
Dividend income		-			-			62,766			62,766
Interest income - third party		-			310			2,320			2,630
Total Revenue		3,992			1,818			65,086			70,896
Interest expense - third party		-			5			17,985			17,990
Interest expense - related party		-			-			7,199			7,199
Amortization		170			98			253			521
Income taxes (recovery)		24			284			(24,361	)		(24,053	)
Segment net profit (loss)	$	(90	)	$	(197	)	$	(91,946	)	$	(92,233	)
Segment property and equipment	$	842		$	3,040		$	6,551		$	10,433
Additions to property and equipment	$	-		$	8		$	64		$	72
Total assets	$	1,824		$	77,377		$	185,142		$	264,343

20.           SUBSEQUENT EVENTS

(a) On May 30, 2007, the Corporation sold all of the shares of its Costa Rican subsidiary, ELR that controls La Republica, a newspaper published in Costa Rica for US$2 million in cash.

Page 45

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

(b) On April 10, 2007, as a result of the remediation by the Corporation of its historical continuous disclosure record on March 7, 2007, the OSC issued an order revoking the Management and Insider Cease Trade Order issued by the OSC on June 1, 2004, as amended.

(c) On April 20, 2007, the Corporation filed a statement of claim in the Ontario Superior Court of Justice against Black, Amiel-Black, Radler, Boultbee and Atkinson seeking a declaration that it is not liable to indemnify those parties under certain indemnity agreements to which the Corporation is a party and that the agreements are void and unenforceable.  The action also seeks recovery of any payments made by the Corporation to the defendants pursuant to the agreements.

(d) By Statement of Claim issued April 12, 2007, Morneau Sobeco asserted a claim against TSI in the Ontario Superior Court of Justice (File No. 07-CV-331025 PD3) for an order that TSI pay the amount of $2.9 million, plus costs and interest, with respect to alleged payments owing in respect of the RCL plan.  TSI has filed a defence but examinations for discovery have not yet been held.  Morneau Sobeco amended its claim to assert a lien under s. 57 of the Pension Benefits Act for all amounts claimed to be owing by TSI.  Morneau Sobeco also registered a lien on title to the 10 Toronto Street property and filed a financing statement under the Personal Property Security Act (Ontario).  In order to allow the sale of the property to close, $2.9 million from the sale proceeds of the property was paid into an interest bearing trust account as a condition to Morneau Sobeco lifting its lien.  These funds remain in trust pending motions, currently scheduled to be heard on July 23, 2007, to determine if the funds should continue to be held in trust pending a determination of Morneau Sobeco’s claims or if the funds should be released to TSI.

(e) On May 8, 2007, TSI sold the real property located at 10 Toronto Street, Toronto, Ontario to an affiliate of Morgan Meighen & Associates Limited for $14 million.  Pursuant to the Option Amending Agreement, a payment of $1.0 million was made to the Ravelston Receiver out of the proceeds.

(f) On May 31, 2007, the Corporation commenced proceedings in the Ontario Superior Court of Justice against its former banking syndicate members, Canadian Imperial Bank of Commerce, Toronto-Dominion Bank and the Bank of Nova Scotia seeking recovery of, among other things, $65.2 million which those banks received from the Corporation in March 2003.

(g) On June 7, 2007, Domgroup sold the vendor take-back mortgage referred to in note 4(b) for $8.3 million.

(h) On June 11, 2007, the Corporation filed Amendment No. 1 ("Amendment") to the Schedule 13D referred to in Note 5 with the SEC in respect of its shareholdings in Sun-Times.  The Amendment states in part:  

[The Corporation] has submitted to [Sun-Times] a letter, dated June 11, 2007 (the "Letter"), indicating, among other things, that [the Corporation] will nominate two members to the Board of Directors of [Sun-Times] and furnish to [Sun-Times] the names of its nominees shortly.  As of the date hereof, none of the current members of the Board of Directors of [Sun-Times] were nominated by [the Corporation or its subsidiaries]. 

Page 46

HOLLINGER INC.

Notes to Consolidated Financial Statements      

Year ended March 31, 2007, 3 months ended March 31, 2006 and Year ended December 31, 2005

(Tabular amounts are in thousands of dollars except where noted) 

(i) On June 20, 2007, the Corporation announced that Voorheis was appointed to serve as Chief Executive Officer of the Corporation. Under the terms of a consulting services agreement effective as of April 16, 2007, VC & Co., a corporation controlled by Voorheis, will be paid a base fee of $75,000 per month and will be eligible for additional milestone fees based on substantial completion of certain milestone achievements. These include a milestone fee of $1.2 million upon substantial completion of a refinancing of the Corporation's outstanding Senior Notes or a resolution of the outstanding issues with the Noteholders and, provided this milestone has been achieved, an additional milestone fee of $1.4 million upon the completion of (i) the sale or other disposition by the Corporation of substantially all of its shares of Sun-Times, (ii) the sale or other disposition of a majority of the outstanding Common Shares of the Corporation in a transaction that is supported by the Corporation’s board of directors, or (iii) the sale or other disposition of all or substantially all the assets of the Corporation or Sun-Times. VC & Co. will also be paid $169,500 in respect of accomplishments of Voorheis since he began rendering executive services on January 15, 2007 and Voorheis has been issued, effective May 7, 2007, options to acquire 1,000,000 Common Shares at the then current market price.  In the event that, during the 12 months following January 15, 2007, the Corporation issues additional Common Shares or securities which are convertible into, or carry the right to receive or provide the Corporation with the right to issue, additional Common Shares (or other equity-like securities), VC & Co. will be entitled, upon Voorheis exercising any such options, to an additional cash payment in certain circumstances.   The agreement also provides for certain payments to VC & Co. in specified circumstances where the agreement is terminated in connection with a change of control of the Corporation occurring on or after August 15, 2007.  These circumstances include where VC & Co. terminates the agreement for Good Reason, which includes any termination by VC & Co. during the three-month period commencing on the date which is 90 days following such a change of control.

21.           COMPARATIVE AMOUNTS

Certain amounts have been reclassified to conform to the presentation adopted in the current year.

Page 47

EX-99.18

Exhibit 99.18

HOLLINGER INC.

ANNUAL INFORMATION FORM

June 29, 2007

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS	1
GLOSSARY OF TERMS	2
CORPORATE STRUCTURE	8
GENERAL DEVELOPMENT OF THE CORPORATION AND ITS BUSINESS	11
DESCRIPTION OF THE BUSINESS	21
RISK FACTORS	23
Dividends	33
Capital Structure	33
MARKET FOR SECURITIES	35
DIRECTORS AND OFFICERS	37
LEGAL PROCEEDINGS	42
Interest of Management and Others in Material Transactions	55
Material Contracts	57
TRANSFER AND REGISTRAR AGENT	58
AUDIT COMMITTEE	59
AUDITORS	59
INTERESTS OF EXPERTS	60
ADDITIONAL INFORMATION	60
EXHIBITS
EXHIBIT A – CHARTER OF THE AUDIT COMMITTEE OF HOLLINGER INC.	A-1

- i -

Unless otherwise indicated or the context otherwise indicates, in this document "Hollinger" and the "Corporation" refer to Hollinger Inc.

Unless otherwise stated, all amounts are expressed in Canadian dollars.

The information contained in this Annual Information Form is given as of March 31, 2007 except where otherwise indicated.  The information contained herein concerning Sun-Times Media Group, Inc. and its subsidiaries has been taken from, or is based on, publicly available documents or records on file with Canadian securities regulatory authorities and other public sources and has not been independently verified by Hollinger.  Hollinger has no nominees on the Sun-Times board of directors.

FORWARD-LOOKING STATEMENTS

This Annual Information Form contains certain forward-looking statements.  Words such as "will", "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates" and variations of such words and similar expressions are intended to identify these forward-looking statements.  Specifically, and without limiting the generality of the foregoing, all statements included in this Annual Information Form that address activities, events or developments that the Corporation expects or anticipates will or may occur in the future, including such items as business strategies and measures to implement such strategies, competitive strengths, goals, expansion and growth, or references to the litigation or future success of the Corporation, its subsidiaries and the companies or partnerships in which the Corporation has equity investments are forward-looking statements.  Actual results could differ materially from those reflected in the forward-looking statements as a result of:  (i) general economic market or business conditions; (ii) the opportunities (or lack thereof) that may be presented to and pursued by the Corporation; (iii) competitive actions by other entities; (iv) changes in laws; (v) the outcome of litigation or regulatory proceedings; and (vi) other factors, many of which are beyond the control of the Corporation.

All written forward-looking statements attributable to the Corporation, or persons acting on its behalf, are expressly qualified in their entirety by the cautionary statements set forth above.  Readers of this Annual Information Form are cautioned not to place undue reliance on forward-looking statements contained in this Annual Information Form, which reflect the analysis of management only as of the date of this Annual Information Form, or such date as is otherwise indicated.  The Corporation undertakes no obligation to release publicly the results of any revision to these forward-looking statements which may be made to reflect events or circumstances after the date of this Annual Information Form or to reflect the occurrence of unanticipated events.

1

GLOSSARY OF TERMS

Capitalized terms used but not otherwise defined in this Annual Information Form have the following meanings:

"2006/2007 Financial Year" means the Corporation's financial year as at and for the 12-month period ended March 31, 2007;

"Advisory Agreement" means the advisory agreement dated November 11, 2005 and effective as of July 15, 2005, between the Corporation, Benson Consulting and Benson;

"Advisory Agreement MOA" means the memorandum of agreement dated January 15, 2007 between Benson Consulting, Benson and the Corporation providing for, among other things, the termination of the Advisory Agreement;

"AIF" means this Annual Information Form;

"Amiel-Black" means Barbara Amiel-Black;

"Argus" means Argus Corporation Limited;

"Atkinson" means Peter Y. Atkinson;

"Audit Committee" means the audit committee of the Corporation;

"Beck" means Stanley M. Beck, Q.C.;

"Benson" means Randall C. Benson;

"Benson Consulting" means RC Benson Consulting Inc., formerly called 1379074 Ontario Ltd.;

"Black" means Conrad Black;

"Board" or "Board of Directors" means the board of directors of the Corporation;

"Boultbee" means John A. Boultbee;

"Carroll" means Paul A. Carroll, Q.C.;

"Catalyst" means Catalyst Fund General Partner I Inc., a private equity fund managed by Catalyst Capital Group Inc., in respect of which Glassman is the Managing Partner;

"CBCA" means the Canada Business Corporations Act, as amended, and all regulations promulgated thereunder;

"CCAA" means the Companies' Creditors Arrangement Act (Canada), as amended, and all regulations promulgated thereunder;

"CICA Handbook" means the Canadian Institute of Chartered Accountants Handbook;

2

"Colson" means Daniel W. Colson;

"Common Shares" means the retractable common shares of the Corporation;

"Contribution Agreement" means the contribution agreement entered into in March 2003 between the Corporation, RMI and RCL under which RCL agreed, among other things, to guarantee RMI's obligations under the Support Agreement;

"Co-operation Agreement" means the co-operation agreement entered into between the Corporation and the United States Attorney's Office for the Northern District of Illinois on May 15, 2006 wherein the Corporation agreed to co-operate with the United States Attorney's Office's ongoing investigation and prosecution of Black, Boultbee, Atkinson, Kipnis and RCL;

"Delaware Order" means the Order and Judgment entered by the Court of Chancery of the State of Delaware on June 28, 2004;

"Domgroup" means Domgroup Ltd., a wholly-owned subsidiary of the Corporation existing under the laws of Canada;

"Drinkwater" means David W. Drinkwater;

"ELR" means Editorial La Razon, S.A., a wholly-owned subsidiary of the Corporation;

"First Indenture" means the indenture governing the First Senior Secured Notes dated as of March 10, 2003 between the Corporation, as issuer, Delaware Trust Company, National Association (formerly Wachovia Trust Company, National Association), as trustee, RMI and 4322525 Canada Inc. (formerly 504468 N.B. Inc.), as guarantors, and RCL and Sugra Limited, as amended by the supplemental indenture dated as of September 30, 2004 and as otherwise amended, amended and restated, supplemented or otherwise modified from time to time;

"First Senior Secured Notes" means the Corporation's 11.875% senior secured notes due March 1, 2011 issued pursuant to the First Indenture on March 10, 2003;

"GAAP" means Canadian generally accepted accounting principles in effect from time to time;

"Gillespie" means Robert Gillespie;

"Glassman" means Newton G.Z. Glassman;

"HCPH Co." means Hollinger Canadian Publishing Holdings Co.;

"Hodgson" means Patrick W.E. Hodgson;

"Hollinger Consent Order" means the Consent Order approved on July 8, 2005 by Justice Colin L. Campbell of the Ontario Court reconstituting the Board of Directors;

"Indentures" means, collectively, the First Indenture and the Second Indenture;

3

"Inspection" means the investigation conducted by the Inspector of the affairs of the Corporation as ordered by Justice Colin L. Campbell of the Ontario Court on September 3, 2004;

"Inspector" means Ernst & Young Inc.;

"Interim Directors" means the following five former directors of the Corporation who served on the Board for a period during 2004 and 2005:  Carroll, Metcalfe, Vale, Walker and Wakefield;

"Kipnis" means Mark Kipnis;

"Loss of Control" means ceasing to control or exercise significant influence over a corporation, as those terms are defined in the CICA Handbook;

"Mareva Injunction" means injunctive relief granted by a court to prevent a defendant from disposing of its assets;

"MCTO" means the final cease trade order issued by the OSC on June 1, 2004, as amended, prohibiting certain then current and former directors, officers and insiders of the Corporation from trading in securities of the Corporation, subject to certain exceptions;

"MD&A" means management's discussion and analysis;

"Metcalfe" means Robert J. Metcalfe;

"Mitchell" means Ronald B. Mitchell;

"Morneau Sobeco" means Morneau Sobeco Limited Partnership;

"Ontario Court" means the Ontario Superior Court of Justice;

"OSC" means the Ontario Securities Commission;

"PGWML" means Peter G. White Management Ltd., a corporation controlled by White;

"Preference Shares" means the preference shares of the Corporation, of which as at March 31, 2007, only Series II Preference Shares are outstanding;

"Radler" means F. David Radler;

"Rattee" means David A. Rattee;

"Ravelston Entities" means RCL and associated parties other than the Corporation and its subsidiaries;

"RCL" means The Ravelston Corporation Limited, a corporation existing under the laws of the Province of Ontario;

"RCL Plan" means the defined benefit pension plan sponsored by RCL;

4

"Receivership and CCAA Orders" means the orders issued by Justice James Farley of the Ontario Court on April 20, 2005 whereby RCL and RMI were (i) placed in receivership pursuant to the Courts of Justice Act (Ontario) and (ii) granted protection pursuant to the CCAA and the Bankruptcy and Insolvency Act (Canada);

"Restructuring Agreement" means the agreement between Sun-Times and Black dated November 15, 2003 providing for, among other things, restitution by the Corporation, Black, Radler, Boultbee and Atkinson to Sun-Times of the full amount of the unauthorized "non-competition" payments, plus interest and termination of the Services Agreements;

"Richter" means RSM Richter Inc., in its capacity as receiver and manager of RCL and RMI under the Receivership and CCAA Orders;

"RMI" means Ravelston Management Inc., a corporation existing under the laws of the Province of Ontario and a wholly-owned subsidiary of RCL;

"SEC" means the United States Securities and Exchange Commission;

"SEC Action" means the action filed on November 15, 2004 by the SEC in the United States District for the Northern District of Illinois against Black, Radler and the Corporation;

"Second Indenture" means the indenture governing the Second Senior Secured Notes dated as of September 30, 2004 between the Corporation, as issuer, HSBC Bank USA, National Association, as trustee, RMI and 4322525 Canada Inc. (formerly 504468 N.B. Inc.), as guarantors, and RCL and Sugra Limited, as amended, amended and restated, supplemented or otherwise modified from time to time;

"Second Senior Secured Notes" means the Corporation's 11.875% senior secured notes due March 1, 2011 issued pursuant to the Second Indenture on September 30, 2004;

"Secured Notes" means, collectively, the First Senior Secured Notes and the Second Senior Secured Notes;

"SEDAR" means the System for Electronic Document Analysis and Retrieval;

"Series I Preference Shares" means the exchangeable non-voting preference shares series I of the Corporation, none of which is outstanding as of the date hereof;

"Series II Preference Shares" means the exchangeable non-voting preference shares series II of the Corporation;

"Series III Preference Shares" means the non-voting preference shares series III of the Corporation, none of which is outstanding as of the date hereof;

"Services Agreements" means the management services agreements entered into between RCL and Sun-Times and its subsidiaries that were transferred to RMI in July 2002 and terminated pursuant to the Restructuring Agreement as of June 1, 2004;

5

"SpecialMonitor" means Richard C. Breeden, the special monitor of the Sun-Times Board appointed in certain circumstances pursuant to the Sun-Times Consent Order;

"Sun-Times" means Sun-Times Media Group, Inc. (formerly Hollinger International Inc.), a corporation existing under the laws of the State of Delaware;

"Sun-Times 2004 SEC Action" means the matter of the United States Securities and Exchange Commission v. Hollinger International Inc. brought in the U.S. District Court for the Northern District of Illinois;

"Sun-Times A Shares" means the Class A Common Stock of Sun-Times;

"Sun-Times Audit Committee" means the audit committee of Sun-Times;

"Sun-Times B Shares" means the Class B Common Stock of Sun-Times;

"Sun-Times Board" means the board of directors of Sun-Times;

"Sun-Times Consent Order" means the Court Order issued January 16, 2004 by the United States District Court for the Northern District of Illinois in the Sun-Times 2004 SEC Action;

"Sun-Times News Group" means the Sun-Times News Group operating segment of Sun-Times, consisting of more than 100 newspapers and associated websites and news products in the greater Chicago metropolitan area;

"Sun-Times Special Committee" means the special committee established by the Sun-Times Board in June 2003;

"Sun-Times SRP" means the shareholders' rights plan adopted by Sun-Times on January 25, 2004;

"Sun-Times SRP Right" means a preferred share purchase right issued pursuant to the Sun-Times SRP;

"Support Agreement" means the support agreement entered into on March 10, 2003 between RMI and the Corporation in connection with the Corporation's issuance of the First Senior Secured Notes;

"Tax Act" means the Income Tax Act (Canada), including all regulations made thereunder, and all amendments to such statute and regulations from time to time;

"Telegraph Group" means the Telegraph Group Limited, which consisted of The Daily Telegraph, The Sunday Telegraph, The Weekly Telegraph, telegraph.co.uk and The Spectator and Apollo magazines;

"TSI" means 10 Toronto Street Inc., a wholly-owned indirect subsidiary of the Corporation;

"TSX" means the Toronto Stock Exchange;

6

"US$" means United States dollars;

"Vale" means Donald M.J. Vale;

"VC&Co." means VC&Co. Incorporated, a corporation controlled by Voorheis;

"Voorheis" means G. Wesley Voorheis;

"Voorheis Consulting Services Agreement" means the consulting services agreement dated June 20, 2007 and effective as of April 16, 2007, between the Corporation, VC&Co. and Voorheis, pursuant to which the Corporation appointed Voorheis to serve as Chief Executive Officer of the Corporation and which replaces and supersedes the Voorheis Engagement Agreement;

"Voorheis Engagement Agreement" means the agreement dated January 15, 2007 between the Corporation, VC&Co. and Voorheis, pursuant to which Voorheis agreed to act as a senior executive of the Corporation subject to the satisfaction of certain conditions;

"Wakefield" means Allan Wakefield;

"Walker" means Gordon W. Walker, Q.C.;

"White" means Peter G. White;

"Wright" means Joseph H. Wright; and

"Zeifman" or the "Auditors" means Zeifman & Company, LLP, the auditors of the Corporation.

7

CORPORATE STRUCTURE

Name and Incorporation

Hollinger is the continuing corporation, under the CBCA, resulting from the 1985 amalgamation of Argcen Holdings Inc., Hollinger Argus Limited (incorporated June 28, 1910) and Labmin Resources Limited.  The head and registered office of the Corporation is 120 Adelaide Street West, Suite 512, Toronto, Ontario M5H 1T1.  The Corporation is a "mutual fund corporation" under the Tax Act.

Intercorporate Relationships

The following simplified chart shows the basic corporate structure of the Corporation and its subsidiaries and operating segments, their jurisdictions of incorporation and the percentage of voting securities beneficially owned, or over which control or direction is exercised, by the Corporation as at March 31, 2007.

Notes:

(a)           4322525 Canada Inc. was formerly 504468 N.B. Inc.

(b) The Corporation owns in the aggregate, directly and indirectly, shares of Sun-Times that represent an approximate equity interest of 19.7% and a voting interest of 70.0%.

8

Capital Structure

The authorized capital of the Corporation consists of an unlimited number of Common Shares and an unlimited number of Preference Shares, issuable in series.  As of March 31, 2007, 34,945,776 Common Shares and 1,701,995 Series II Preference Shares were issued and outstanding.

Each of the outstanding shares of the Corporation is retractable at the option of the holder.  The outstanding Common Shares and Series II Preference Shares are listed on the TSX under the symbols "HLG.C" and "HLG.PR.B", respectively.

The Common Shares are retractable, at the option of the holder, for an amount based on the market value of the Corporation's net assets, determined on a non-consolidated basis.  The Corporation's Series II Preference Shares are retractable at the option of the holder, for an amount based on the market trading value of Sun-Times A Shares.

On retraction, each Series II Preference Share is exchangeable into 0.46 of a Sun-Times A Share held by the Corporation or, at the Corporation's option, cash of equivalent value.  In certain circumstances, the Corporation may also satisfy its obligation to deliver Sun-Times A Shares on a retraction of Series II Preference Shares by delivering Sun-Times A Shares that are subject to restrictions on resale in accordance with applicable securities laws.

Until certain events of default under the Indentures are remedied or waived, the terms of the Indentures prevent the Corporation from honouring retractions of the Common Shares and the Series II Preference Shares.  See "General Development of the Corporation and Its Business".

Secured Notes

The Corporation has outstanding US$78 million principal amount of the First Senior Secured Notes and US$15 million principal amount of the Second Senior Secured Notes.  The Secured Notes are fully and unconditionally guaranteed by RMI and certain wholly-owned subsidiaries of the Corporation.  The First Senior Secured Notes are secured by, among other things, a first priority lien on the 14,990,000 Sun-Times B Shares owned, directly or indirectly, by the Corporation.  The Second Senior Secured Notes are secured by a second priority lien on the same 14,990,000 Sun-Times B Shares.  Under the terms of the Indentures, the Corporation is subject to certain financial covenants and other restrictions.

Certain events of default have occurred and are continuing under the terms of the Secured Notes, although there have been no payment defaults.  As a result of such events of default, the Corporation is unable to honour retractions of its Common Shares and Series II Preference Shares submitted after April 19, 2005.  See "General Development of the Corporation and Its Business".

Sun-Times' Shareholders' Rights Plan

On January 25, 2004, Sun-Times adopted the Sun-Times SRP.  The Sun-Times SRP is an anti-takeover device designed to deter direct or indirect acquisitions of Sun-Times stock beyond a specified percentage voting interest (in this case, 20%) without the approval of the Sun-Times Board.  See "General Development of the Corporation and Its Business".

9

Under the Sun-Times SRP, each Sun-Times shareholder holds a right, initially stapled to the Sun-Times A Shares and Sun-Times B Shares, that becomes exercisable only in certain circumstances.  If a person becomes the "Beneficial Owner" of a 20% voting interest, that person becomes an "Acquiring Person" and the rights cease to be stapled and become exercisable.  Every shareholder, other than the Acquiring Person and its "Affiliates" and "Associates", then becomes entitled to purchase, for each right, $50 worth of Sun-Times A Shares at 50% of the then prevailing market value.  The Acquiring Person's rights, together with those held by any Affiliate or Associate of the Acquiring Person, are voided so it cannot purchase discount stock with the result that it suffers significant dilution.

When the Sun-Times SRP was adopted, the Corporation, as the holder of more than a 20% voting interest, was excluded from the definition of "Acquiring Person" so that it would not immediately trigger the Sun-Times SRP and suffer dilution.  When Richter became the receiver for RCL and RMI, the Sun-Times SRP was amended to exclude Richter from the definition of "Acquiring Person" as well, subject to certain conditions.  See "General Development of the Corporation and Its Business".

Although it is currently exempt from the definition of an "Acquiring Person", the Corporation will become an "Acquiring Person" if:

(a)           the Corporation ceases to be a subsidiary of RCL;

(b) Richter or the Corporation purchases or otherwise becomes the beneficial owner of any additional shares of Sun-Times; or

(c)           Richter ceases to be the receiver for RCL.

If, as a result of the sale by Richter, as receiver for RCL, of the Common Shares or the issuance of additional shares by the Corporation, RCL were to cease to own a majority of the voting power of the Corporation, the Corporation would become an Acquiring Person, thereby triggering the Sun-Times SRP and its dilutive effect.

Under the Sun-Times SRP, ownership of shares of the Corporation can constitute deemed beneficial ownership of Sun-Times shares and thereby trigger the Sun-Times SRP.  This occurs in circumstances in which the Corporation becomes an Affiliate or Associate of one of its shareholders.  Determining whether someone has become an Acquiring Person requires the aggregation of the holdings of that person with its Affiliates and Associates.  By virtue of the size of the Corporation's holdings in Sun-Times, if anyone became an Affiliate or Associate of the Corporation, that person would automatically become an Acquiring Person under the Sun-Times SRP.  However, the Sun-Times SRP has a proviso to the definition of "Beneficial Ownership" that effectively limits deemed beneficial ownership in the case of "non-controlled" Affiliates and Associates.

10

GENERAL DEVELOPMENT OF THE CORPORATION AND ITS BUSINESS

The Corporation is a holding company whose principal asset is its equity and voting interest in Sun-Times, a newspaper publisher formerly known as Hollinger International Inc., the assets of which include the Chicago Sun-Times, a large number of community newspapers in the Chicago area and a portfolio of news media investments.  The Corporation also owns a portfolio of commercial real estate in Canada, from which property sales have contributed to the Corporation's earnings and cash flow.  As of March 31, 2007, the Corporation had sold, or had entered into agreements to sell, properties comprising a significant portion of this commercial real estate portfolio.  As of March 31, 2007, the Corporation owned, directly or indirectly, 782,923 Sun-Times A Shares and 14,990,000 Sun-Times B Shares, being approximately 19.7% of the equity and 70.0% of the voting interest in Sun-Times.

All of the Corporation's Sun-Times A Shares are held in escrow in support of future retractions of its Series II Preference Shares.  All of the Corporation's Sun-Times B Shares are pledged as security in connection with the Secured Notes.

In its financial statements in respect of periods ending on or before September 30, 2003, the Corporation accounted for its investment in Sun-Times using the consolidation method, as it exercised "control" over Sun-Times, as that term is defined in the CICA Handbook.  The business and affairs of the Corporation, Sun-Times and their respective subsidiaries were predicated on the fact that, as the majority shareholder of Sun-Times, the Corporation controlled Sun-Times in that it managed, or supervised the management of, the business and affairs of Sun-Times.  However, during and following November 2003, certain events occurred that caused the Corporation to experience a Loss of Control over Sun-Times.

In October 1995, the Corporation transferred to Sun-Times (which was then called American Publishing Company) its ownership interest in certain assets, including its majority interest in the Telegraph Group.  In connection with and subsequent to that transaction, the Corporation increased its ownership in Sun-Times to an approximate 85% equity interest and an approximate 96% voting interest.

In 1997, the Corporation completed certain transactions that included the sale of virtually all of its operating newspaper assets to Sun-Times and other subsidiaries, the payment of a stock dividend of retractable shares and an issuer bid permitting shareholders to exchange their common shares for preferred shares.  Following these transactions, the Corporation became a "mutual fund corporation" for the purposes of the Tax Act.

As a result of changes in the Corporation's share structure during 1997 and 1998, a rights offering by the Corporation in 1999 and the cancellation of Common Shares in 2001 due to retractions, the ownership interest of RCL, a corporation controlled by Black, in the Corporation, increased from 37% as at January 1, 1997 to 78% by December 31, 2001.

Management fees that had historically been paid by Sun-Times and its subsidiaries to the Corporation were restructured in 1998 such that thereafter the bulk of the management fees from Sun-Times and its subsidiaries were paid to RCL.

11

In 2003, shareholders of Sun-Times publicly raised concerns regarding, among other things, the propriety of the management fees paid by Sun-Times to RCL and various non-competition payments made to Black, the Corporation and others by parties that had purchased assets from Sun-Times.  The Sun-Times Board established the Sun-Times Special Committee to investigate various related party transactions, including an investigation of Black and others concerning certain non-compete payments made to individual directors and officers of RCL and to the Corporation in connection with sales by Sun-Times of certain of its newspapers.

On March 10, 2003, the Corporation issued US$120 million aggregate principal amount of First Senior Secured Notes, which were secured by, among other things, a first priority lien on the Sun-Times B Shares owned, directly or indirectly, by the Corporation.  The net proceeds totalled approximately US$114 million, before expenses.  The Corporation used US$94.3 million of the net proceeds to repay indebtedness owed to a syndicate of banks and US$11.5 million of the net proceeds to advance a subordinated loan to RCL.  See "Legal Proceedings – Action by the Corporation Against Former Banking Syndicate Members".

On the same date, RMI entered into the Support Agreement under which RMI agreed to make annual support payments in cash to the Corporation on a periodic basis by way of contributions to the capital of the Corporation or subordinated debt.  The Corporation, RMI and RCL also entered into the Contribution Agreement.  Under the Contribution Agreement, RCL unconditionally guaranteed RMI's obligations under the Support Agreement, with such guarantee supported by a pledge of RCL's shares of RMI.  The amount of the annual support payments is equal to the greater of (a) the non-consolidated negative net cash flow of the Corporation (which does not extend to outlays for retractions and redemptions in respect of the share capital of the Corporation), or (b) US$14 million per year (less any future payments of services agreement fees directly to the Corporation, and any excess in the net dividend amount received by the Corporation on the shares of Sun-Times that is over $4.7 million per year), in either case, as reduced by any permanent repayment of debt owing by RCL to the Corporation.  The Support Agreement terminates upon the repayment in full of the Secured Notes.

RCL and RMI have defaulted on their obligations under the Support Agreement.  No payments have been made by RCL or RMI under the Support Agreement since August 2004.

In June 2003, the Sun-Times Board established the Sun-Times Special Committee to examine shareholders' allegations regarding related party transactions.  In early November 2003, the Sun-Times Special Committee reported the preliminary results of its investigation to the Sun-Times Board.  The Sun-Times Special Committee determined that approximately US$32.15 million in unauthorized payments had been made by Sun-Times to related parties who included Black, Radler, Atkinson and Boultbee.

On November 17, 2003, Black resigned as Sun-Times' Chief Executive Officer.  At the same time, Radler resigned as President and Chief Operating Officer and as a director of Sun-Times and Atkinson resigned as a director of Sun-Times.  In addition, Kipnis resigned as Sun-Times' Vice-President and Corporate Counsel and Boultbee was terminated from his position as Executive Vice-President of Sun-Times.  Black, Radler, Atkinson and Boultbee were all nominees of the Corporation at that time.

12

On the same date, Sun-Times announced the Restructuring Agreement pursuant to which it terminated each of the Services Agreements, effective June 1, 2004.  Subsequent to December 2003, Sun-Times ceased to make any payment to RMI under the Services Agreements.  This termination had an impact on RMI's ability to make its required payments to the Corporation under the Support Agreement.  Among other things, the failure of RMI to make the cash payments to the Corporation as required under the Support Agreement resulted in the Corporation being in default under the terms governing the Secured Notes.

During the first quarter of 2004, Sun-Times commenced the process of providing for its own corporate accounting and reporting functions, including computerized consolidation systems, making such systems distinct and separate from those of the Corporation, RMI and RCL.  This included hiring its own staff, leasing its own premises and making offers of employment to certain RMI employees.  Sun-Times also commenced the process of discontinuing its previous practice of storing detailed financial information on systems shared with the Corporation and ceased sharing any financial information with the Corporation.  During 2004, Sun-Times restricted direct access by the Corporation to the Corporation's systems, historical data and servers, a situation that was partially, but not satisfactorily, remedied in June 2005.

On January 16, 2004, the Sun-Times Consent Order was issued in connection with the Sun-Times 2004 SEC Action.  The Sun-Times Consent Order provided that, among other things, the Special Monitor would be appointed to oversee the activities of the Sun-Times Board in certain circumstances, including in the event that any of the Corporation's nominees was elected to the Sun-Times Board without its endorsement.  The Special Monitor's mandate would be to, among other things, protect the interests of the non-controlling shareholders of Sun-Times to the extent permitted by law.  See "Legal Proceedings – United States Securities and Exchange Commission v. Hollinger International Inc."

On or about January 16, 2004, Sun-Times filed a civil complaint in the United States District Court for the Northern District of Illinois asserting breach of fiduciary duty and other claims against the Corporation, RCL, RMI, Black, Radler and Boultbee, which complaint was amended on May 7, 2004, and again on October 29, 2004.  The second amended complaint, in which Amiel-Black, Colson and Richard N. Perle were also named as defendants, seeks to recover approximately US$542 million in damages, including prejudgment interest of approximately US$117 million, and punitive damages.  See "Legal Proceedings – Hollinger International Inc. v. Hollinger Inc. et al."

Black resigned as Chairman of the Sun-Times Board on January 17, 2004.

Under the Sun-Times SRP, on February 27, 2004, Sun-Times paid a dividend of one Sun-Times SRP Right for each Sun-Times A Share and Sun-Times B Share held of record at the close of business on February 5, 2004.  See "Corporate Structure – Sun-Times' Shareholders' Rights Plan".

On March 10, 2004, the Corporation filed a statement of defence and a counterclaim against Sun-Times for $300 million, claiming that by refusing to pay its obligations under its services agreement with RCL, Sun-Times intended to cause RMI to default in its obligations to the Corporation under the Support Agreement between RMI and the Corporation, and intended to cause the Corporation to default on its obligations under its outstanding Secured Notes, with the resulting loss of its majority voting control of Sun-Times.  See "Legal Proceedings – Hollinger International Inc. v. RCL, RMI and Hollinger Inc."

13

On March 23, 2004, in order to assist the Corporation in complying with the terms of the First Indenture and avoiding the potential acceleration of the First Senior Secured Notes upon the occurrence of an event of default under the First Indenture, Domgroup lent to RCL approximately $4.7 million, evidenced by a demand promissory note bearing interest at prime plus 4% per annum.  As security therefor, RCL entered into a general security agreement in favour of Domgroup.  All of the proceeds of the loan were immediately contributed by RCL to RMI as a capital contribution, and RMI immediately paid such proceeds to the Corporation as a contribution to the capital of the Corporation pursuant to the terms of the Support Agreement.  On June 29, 2004 and August 27, 2004, similar loans were made by Domgroup to RCL in the principal amount of approximately $4.8 million and $5.2 million, respectively, for the same reason and used by RCL and RMI in the manner set forth above.  The principal amount of those loans and accrued interest thereon remain outstanding.  See "Interest of Management and Others in Material Transactions".

On March 24, 2004, Colson resigned as deputy chairman and chief executive officer of the Telegraph Group and as chief operating officer of Sun-Times, leaving no associates of Black remaining in the management of Sun-Times.

As a result of events related to the Loss of Control of Sun-Times, the Corporation was unable to file, among other things, financial statements and MD&A in compliance with its reporting obligations following the filing of its interim financial statements for the nine months ended September 30, 2003 until March 7, 2007.

On June 11, 2004, using net proceeds from an offering of subscription receipts, the Corporation redeemed US$42 million aggregate principal amount of the First Senior Secured Notes and redeemed all of the Corporation's previously outstanding Series III Preference Shares.

A loan in the principal amount of $1.1 million was made to RCL by Domgroup on June 30, 2004.  This loan was made without board approval.  The loan, together with interest at the prime rate plus 8% per annum, was repaid in full by RCL on September 29, 2004.

On July 1, 2004, the Corporation filed a complaint in the Delaware Chancery Court seeking to have the court require that Sun-Times submit the sale of its U.K. assets (principally the Telegraph Group) to ratification by its shareholders.  On July 29, 2004, the Delaware Chancery Court denied the Corporation's complaint.  Sun-Times completed the sale of the Telegraph Group on July 30, 2004.

On August 27, 2004, the Corporation completed the sale of a property at 1050 The Queensway, Toronto, Ontario.  The sale price was $3.6 million, of which $2.7 million was satisfied by a vendor take-back mortgage due on August 26, 2007.  Interest on the mortgage is calculated quarterly at the Bank of Nova Scotia prime rate, as set from time to time, and is payable in full on August 26, 2007.

14

On September 3, 2004, Justice Campbell of the Ontario Court ordered that an inspector conduct an investigation of the Corporation.  On October 27, 2004, the Inspector was appointed pursuant to section 229(1) of the CBCA at the request of Catalyst.  In making the appointment, Justice Campbell noted that the efforts of the Corporation had been neither sufficient nor timely in addressing the legitimate concerns raised by the public shareholders of the Corporation regarding related party transactions involving the Corporation, which at that time remained under the indirect control and direction of Black.  The Inspector's mandate was to investigate and report to the Ontario Court upon the facts in relation to any "related party transaction" (as defined in the Ontario Court order granting the Inspection) between the Corporation (including any of its subsidiaries, other than Sun-Times or its subsidiaries), and a "related party" for the period from January 1, 1997 to the date of the order (October 14, 2004).

On November 2, 2004, Black resigned as a director and officer of the Corporation.

In connection with an application commenced by Catalyst, on November 18, 2004, Justice Campbell ordered the removal of three directors, being Amiel-Black, Boultbee and Radler.  Justice Campbell also ruled that there was no need at the time for any additional directors to be appointed.  As a result, the Board of Directors was subsequently comprised of the following six persons:  Metcalfe, Walker, Wakefield, Carroll, Vale and White.

On September 30, 2004, the Corporation received consents from holders of a majority in aggregate principal amount of the outstanding First Senior Secured Notes approving a number of amendments to the First Indenture and the related security agreement.  The amendments included a provision permitting the Corporation to incur indebtedness in an aggregate amount outstanding not to exceed US$15 million (and to grant a second priority security interest in the collateral supporting the First Senior Secured Notes in connection therewith) through the issuance of notes substantially similar to the First Senior Secured Notes pursuant to an indenture substantially similar to the First Indenture.  The amendments further permitted the Corporation to direct the trustee of the First Senior Secured Notes to apply up to approximately US$10.5 million, held at that time as cash collateral under the First Indenture, to satisfy future interest payment obligations on the outstanding First Senior Secured Notes.

On September 30, 2004, the Corporation also obtained a waiver from holders of a majority in aggregate principal amount of the outstanding First Senior Secured Notes in respect of any and all defaults or events of default under, and non-compliance with, certain covenants of the First Indenture.  On such date, the Corporation entered into the Second Indenture and completed the closing of a private placement of US$15 million in aggregate principal amount of Second Senior Secured Notes at 100% of the face amount.  The Second Senior Secured Notes are guaranteed by RMI and certain wholly-owned subsidiaries of the Corporation.

Under the terms of the Indentures, the Corporation was required to cause an exchange offer registration statement to be declared effective with the SEC under the United States Securities Act of 1933, as amended, within a certain period of time.  The registration of the securities has not been and is not being sought by the Corporation.  As a result of this default, the annual interest rate on the Secured Notes increased by 0.5% to 12⅜% from November 4, 2003.  The annual interest rate increased by an additional 0.5% to 12⅞% from February 2, 2004, resulting in the maximum additional interest rate of 1.0% per year over the 11⅞% interest rate on the Secured Notes, which higher rate will remain in effect until such time as the registration default is cured, whereupon the interest rate would revert to the original level.

15

As a result of the Corporation's inability to file its financial statements as at and for the year ended December 31, 2003 with Canadian securities regulatory authorities, and its inability to file its 2003 Form 20-F with the SEC within the required time period, subsequent to June 30, 2004, the Corporation was not in compliance with its obligations to deliver to relevant parties such documents as required under the Indentures.  This non-compliance led to a default under the Indentures.  However on September 30, 2004, the Corporation sought and obtained a waiver with respect to this event of default.  At such time, the Corporation also sought and obtained consent for a temporary suspension of the Corporation's obligation under the Indentures to furnish relevant parties with periodic and other reports under applicable U.S. federal securities laws until January 1, 2006.  A consent fee equal to 3.5% of the US$78 million of the First Senior Secured Notes outstanding at that time or $3.5 million (US$2.7 million) was paid.  As a result of the Corporation's inability to file its financial statements by such date, the Corporation was required to pay a penalty in an amount equal to 0.50% of the principal amount of the Secured Notes outstanding as of December 31, 2005 to the trustees under the Indentures.

As a result of the commencement of insolvency proceedings by RMI, a guarantor of the Secured Notes, another event of default occurred under the terms of the Indentures.  As a result, the relevant trustee under the Indentures or the holders of at least 25% of the outstanding principal amount of the Secured Notes have the right to accelerate the maturity of the Secured Notes.  Until such event of default is remedied or a waiver is provided by holders of the Secured Notes, the terms of each Indenture also prevent the Corporation from honouring retractions of its Common Shares and Series II Preference Shares submitted after April 19, 2005.  As of March 31, 2007, there were retraction notices, net of subsequent withdrawals and cancellations, from holders of 153,738 Common Shares at a retraction price of $9.00 per share and 211 Common Shares at a retraction price of $7.25 per share, which are unable to be completed at the present time.

On January 27, 2005, the Sun-Times Special Committee reaffirmed the Sun-Times SRP and it remains in effect.  Unless earlier redeemed, the Sun-Times SRP will expire on January 25, 2014.

On March 29, 2005, the Corporation and Domgroup issued a statement of claim in the Ontario Court against RCL, RMI, Moffatt Management Inc. and Black-Amiel Management Inc., as well as Black, Radler, Boultbee and Atkinson for, among other things, monetary damages in the amount of $550 million.  The monetary damages include management fees and non-competition payments paid during the period since 1998, as well as reimbursement of fees and costs related to the Inspection and the process adopted by the Sun-Times Board in November 2003 involving the consideration and assessment of a range of strategic transactions.  The claim alleges diversion of corporate opportunities, breach of fiduciary duties and oppression.  See "Legal Proceedings – Action by the Corporation Against RCL, RMI, Moffat Management Inc. et al."

On April 13, 2005 the Corporation took steps to seize shares held by RCL in the Corporation, Argus and other RCL-related companies.  These shares are part of the collateral for debt in the amount of approximately $15 million owing by RCL to the Corporation, which debt was, and continues to be, in default.  The collateral represents part of the direct and indirect control position held by RCL in the Corporation.

16

This action was stayed as a result of the Receivership and CCAA Orders issued by the Ontario Court on April 20, 2005.  At that time, Richter was appointed as receiver and manager of all of the assets of RCL and RMI, except for certain shares of Sun-Times owned directly or indirectly by RCL that were excluded.  The Receivership and CCAA Orders also provided, among other things, that until May 20, 2005 or such later date as the Ontario Court may order, no proceeding or enforcement process in any court or tribunal may be commenced or continued against or in respect of either or both of RCL and RMI, and any such proceedings then underway (including the Corporation's lawsuit) pertaining to RCL and RMI were temporarily stayed.  On June 7, 2007, the stay of proceedings was extended to November 2, 2007.

As a result of the Receivership and CCAA Orders, on May 10, 2005, the corporate review committee of the Sun-Times Board amended the Sun-Times SRP to include Richter, as receiver for RCL, as an "exempt stockholder" for purposes of the Sun-Times SRP.  The effect was to allow Richter to take control of the Sun-Times shares that had been excluded under the Receivership and CCAA Orders.  The agreement further provided that Sun-Times would not object to the sale by Richter of a number of Common Shares in order to pay for the costs of the receivership.  On May 18, 2005, the Ontario Court approved this agreement between Sun-Times and Richter.  On the same date, the Receivership and CCAA Orders were extended to Argus and five of its subsidiaries, which collectively own, directly or indirectly, 61.8% of the outstanding Common Shares.  On June 12, 2006, the Ontario Court appointed Richter as manager and interim receiver of all the property, assets and undertaking of Argent News Inc., a wholly-owned subsidiary of RCL.

On June 8, 2005, Justice Campbell of the Ontario Court ordered that White be removed as a director and officer of the Corporation effective immediately and that the Corporation was not required to indemnify White for his legal expenses with respect to the removal motion.  The removal had been requested by the Interim Directors.  See "Legal Proceedings – Application for Removal of Board Members".

On June 29, 2005, Vale retired as a director of the Corporation.  From November 24, 2004 until May 16, 2005, Vale had the title of President of the Corporation.

On July 8, 2005, Justice Campbell approved the Hollinger Consent Order reconstituting the Board of Directors.  The Hollinger Consent Order confirmed an agreement between the Corporation and its then remaining four Interim Directors (Carroll, Metcalfe, Wakefield and Walker), among others, pursuant to which five new independent directors would be appointed, provided that each such proposed director accepted his appointment, and two of the then four Interim Directors would resign as directors, as determined by the then four Interim Directors.  Carroll and Walker opted to resign from the Board at that time.

In October 2005, the Corporation sought to vary the Hollinger Consent Order due to concerns about both the levels of compensation provided to the Interim Directors and the governance process used to approve such compensation.

17

The Inspector delivered ten reports to Justice Campbell and the Corporation, with the final report delivered on November 14, 2005.  Through March 31, 2006, the cost to the Corporation of the Inspection (including the costs associated with the Inspector and its legal counsel, as well as the Corporation's legal counsel) was in excess of $20.9 million.  Additional costs to March 31, 2007 total $60,000.  See "Legal Proceedings – Inspection Order".

At the Sun-Times shareholders' meeting held on January 24, 2006, the Corporation nominated two representatives, Beck and Benson, who were elected to the Sun-Times Board of nine directors.  The Corporation's representatives were not endorsed by the Sun-Times Board and, as a result, in accordance with the Sun-Times Consent Order, the Special Monitor was appointed in January 2006.  Beck and Benson were not appointed to any committees of the Sun-Times Board.

On March 31, 2006, the Corporation submitted a request to the Canada Revenue Agency to approve the change of its financial year-end from December 31 to March 31, which approval was subsequently granted.  On April 18, 2006, the Corporation filed a notice dated March 31, 2006 on SEDAR, pursuant to section 4.8 of National Instrument 51-102 – Continuous Disclosure Obligations, announcing its decision to make this change to the Corporation's financial year-end.  The Corporation filed an amended and restated notice on February 7, 2007.

As set out in the notice, the Corporation sought to change its financial year-end as it proposed to cease reporting its financial results on a consolidated basis with Sun-Times and instead present its investment in Sun-Times on a fair value basis.  As a result of this change, it would no longer be necessary for the Corporation to have the same year-end as Sun-Times.

On April 17, 2006, Wright resigned from the Board of Directors and Beck was named Chairman of the Corporation.

At the Sun-Times shareholders' meeting held on June 13, 2006, Beck and Benson were re-elected as directors of Sun-Times.  The Special Monitor remained in place.  On July 13, 2006, Beck and Benson resigned from the Sun-Times Board.  The Corporation currently has no nominees serving as directors on the Sun-Times Board.

By order made August 14, 2006, the Ontario Court extended the time for calling an Annual Meeting of Shareholders of the Corporation to December 31, 2006.  On December 14, 2006, the Ontario Court extended the deadline for calling an Annual Meeting of Shareholders to January 31, 2007.

In October 2006, Domgroup completed the sale of the real property located at 3087-3101 Dufferin Street and 770 Lawrence Avenue West, Toronto, Ontario for $19.6 million.  Domgroup received cash proceeds of approximately $9.8 million as well as a vendor take-back mortgage in the principal amount of $9.8 million.  The mortgage is interest-free from October 31, 2006 until October 31, 2008, bearing interest at a rate of 4.95% per annum thereafter.  The principal amount of the mortgage is due on October 31, 2009.  On June 7, 2007, Domgroup sold the vendor take-back mortgage for proceeds of $8.3 million.

The Corporation did not receive the minimum aggregate cash payments from RMI, Sun-Times and its subsidiaries as required under the terms of the Indentures in the financial years ended March 31, 2006 or March 31, 2007.  As a result, in addition to the continuing defaults and events of default referred to above, another event of default under the Secured Notes has occurred.

18

On each of September 1, 2006 and March 1, 2007, the Corporation paid US$6.0 million to holders of Secured Notes in respect of its semi-annual interest payment obligations.  While there are certain continuing defaults under the Secured Notes, there are no payment defaults.

On January 16, 2007, the Corporation announced that Benson would be stepping down as Chief Restructuring Officer of the Corporation, a position that he held since July 19, 2005.  The Corporation also announced that, following a transition period, Voorheis, a director of the Corporation and Chairman of the Litigation Committee, would be appointed Chief Executive Officer.  In accordance with the terms of the Advisory Agreement MOA, Benson ceased to serve as the Chief Restructuring Officer of the Corporation on March 7, 2007 and the Advisory Agreement terminated on that date.  Pursuant to the Advisory Agreement MOA, the Corporation paid to Benson Consulting $1.0 million in consideration of the services rendered and milestones achieved pursuant to the terms of the Advisory Agreement.

On January 22, 2007, the Corporation and Domgroup served a motion in the insolvency proceedings regarding RCL and others.  In the motion, the Corporation and Domgroup seek an order confirming the secured obligations owed by RCL to the Corporation and Domgroup and declaring that the applicable security agreements are valid, perfected and enforceable in accordance with their terms.  In the motion, the Corporation and Domgroup claim that the secured obligations owing by RCL total more than $25 million.  See "Legal Proceedings – RCL Receivership and CCAA Proceedings".

On January 31, 2007, Domgroup completed the sale of the real property located at 280 Hurontario Street, Collingwood, Ontario for $2.81 million.

On February 14, 2007, the Corporation filed a Schedule 13D with the SEC in respect of its shareholdings in Sun-Times.  The Schedule 13D filing states in part:

[The Corporation is] considering proposing changes to the [Sun-Times Board] (other than with respect to the Special Committee of the [Sun-Times Board]), including nominating one or more members to the [Sun-Times Board] and voting all of [its Sun-Times A Shares and Sun-Times B Shares] in favour of such nominee or nominees.  As of the date hereof, none of the current members of the [Sun-Times Board] was nominated by [the Corporation].

On an on-going basis, [the Corporation] expect[s] to consider and evaluate the alternatives available with respect to [its] investment in [Sun-Times] to enhance and maximize value for all shareholders and other stakeholders of [the Corporation] (which alternatives may include proposing changes to the [Sun-Times Board] (other than with respect to the Special Committee of the [Sun-Times Board]) and seeking representation on the [Sun-Times Board]).  [The Corporation has] in the past engaged, and may from time-to-time in the future engage, in discussions with the management and other representatives of [Sun-Times], as well as other shareholders of [Sun-Times], regarding [Sun-Times]'s business and operations, [Sun-Times]'s strategic plan and other matters.

19

On February 26, 2007, the Corporation announced it had entered into an agreement to settle all of its disputes with the Interim Directors.  Under the terms of the settlement, certain trusts established in 2004 and 2005 were collapsed and an aggregate of $1.25 million was paid to the Interim Directors in full satisfaction of all of their claims against the Corporation.  See "Legal Proceedings – Action Against Former Interim Directors".

On March 7, 2007, the Corporation remediated its continuous disclosure record by filing, among other things, audited financial statements and related MD&A for the financial years ended December 31, 2003, December 31, 2004, December 31, 2005 and March 31, 2006, unaudited interim financial statements and related MD&A for the interim periods ended June 30, 2006, September 30, 2006 and December 31, 2006 and its annual information form for the financial years ended December 31, 2005 and March 31, 2006.  These filings were made pursuant to an exemptive relief order granted on December 7, 2006 by the OSC and other Canadian securities regulators.

On April 10, 2007, the MCTO was revoked by the OSC.  The MCTO had been issued by the OSC on June 1, 2004 as a result of the inability of the Corporation to file financial statements on a timely basis as required under Ontario securities laws.  The MCTO prohibited certain then current and former directors, officers and insiders of the Corporation from trading in securities of the Corporation, subject to certain exceptions.  The MCTO was subsequently varied on March 8, 2005, August 10, 2005 and April 28, 2006.  The April 28, 2006 variation added the then current directors and officers of the Corporation to the list of persons subject to the MCTO.  Management cease trade orders issued in 2004 against certain then insiders of the Corporation by securities regulatory authorities in Alberta and British Columbia were also revoked subsequent to the revocation of the MCTO.

On May 8, 2007, TSI completed the sale of the property at 10 Toronto Street, the Corporation's Toronto corporate office, to Morgan Meighen & Associates for a cash purchase price of $14 million.  A payment of $1.0 million was made to the Richter out of the proceeds, pursuant to an agreement between TSI and Richter.  See "Interest of Management and Others in Material Transactions".

On May 30, 2007, the Corporation sold of all of the shares of its Costa Rican subsidiary, ELR, which controls La Republica, a newspaper published in Costa Rica, for US$2 million in cash.

On June 11, 2007, the Corporation filed Amendment No. 1 to the Schedule 13D with the SEC in respect of its shareholdings in Sun-Times.  The amendment states, in part:

[The Corporation] has submitted to [Sun-Times] a letter, dated June 11, 2007 (the "Letter"), indicating, among other things, that [the Corporation] will nominate two members to the [Sun-Times Board] and furnish to [Sun-Times] the names of its nominees shortly.  As of the date hereof, none of the current members of the [Sun-Times Board] were nominated by [the Corporation or its subsidiaries].

20

On June 20, 2007, the Corporation, VC&Co. and Voorheis entered into the Voorheis Consulting Services Agreement pursuant to which Voorheis was appointed to act as the Chief Executive Officer of the Corporation, effective April 16, 2007.  The Voorheis Consulting Services Agreement replaced and superseded the Voorheis Engagement Agreement.

Currently, the Corporation's principal assets are its equity and voting ownership interests in Sun-Times, its litigation claims and cash on hand.  The Corporation also owns, through its wholly-owned subsidiary, Holcay Holdings Ltd, an approximate 40% interest in Cayman Free Press Ltd. and, through Domgroup, real property located in:  Woodstock, Ontario; Taber, Alberta; Port Alberni, British Columbia; and Hamilton, Ontario.

DESCRIPTION OF THE BUSINESS

Business Overview

As of March 31, 2007, the Corporation's principal asset is its interest in Sun-Times, a newspaper publisher with assets which include the Chicago Sun-Times and a large number of community newspapers in the Chicago area.  The Corporation holds, directly and indirectly, an approximate 70.0% voting and 19.7% equity interest in Sun-Times.  The Corporation also owns a portfolio of commercial real estate in Canada, from which property sales have contributed to the Corporation's earnings.  As of March 31, 2007, the Corporation had sold, or entered into agreements to sell, properties comprising a significant portion of this commercial real estate portfolio.

Business Strategy

The Corporation is faced with a unique set of challenges in the short and medium term.  These challenges include the recent decline in the price of the Sun-Times A Shares, complex litigation matters, defaults under Secured Notes and Canadian and U.S. regulatory compliance issues.  The Corporation's revenue, performance and valuation is largely dependent upon the financial performance and valuation of its underlying assets, principally Sun-Times.  See "Risk Factors − Risks Related to Sun-Times' Business and the Industry".  The Board is reviewing strategies intended to maximize shareholder value and recovery in the context of these circumstances, including appropriate strategies to manage and simplify the myriad litigation, securities and regulatory issues facing the Corporation.

Sun-Times

Sun-Times completed the sale of The Telegraph Group for approximately US$1.21 billion and the Palestine Post Limited (publisher of The Jerusalem Post and related publications) for approximately US$13.2 million in 2004.  On December 30, 2005, Sun-Times completed the sale of its 70% interest in Great West Newspaper Group Ltd. and its 50% interest in Fundata Canada Inc. for approximately US$40.5 million.

21

On February 6, 2006, Sun-Times completed the sale of substantially all of its remaining Canadian operating assets consisting of, among other things, approximately 87% of the outstanding units of Hollinger Canadian Newspapers, Limited Partnership and all of the shares of Hollinger Canadian Newspapers GP Inc., Eco Log Environmental Risk Information Services Ltd. and KCN Capital News Corporation, for an aggregate sale price of US$106 million, of which approximately US$17.5 million was placed in escrow (US$18.4 million including interest and currency translation adjustments as of September 30, 2006).

Following the disposition of non-U.S. newspaper operations, the Sun-Times News Group provides all of Sun-Times' operating revenue.  The Sun-Times News Group consists of more than 100 newspapers and associated websites and news products in the greater Chicago metropolitan area.  The Sun-Times News Group's primary newspaper is the Chicago Sun-Times.

On October 18, 2006, Sun-Times issued a press release titled "Sun-Times Media Group Provides Outlook For 2006 Third Quarter Performance".  The release states that "[Sun-Times] expects that the weakness in the Chicago newspaper advertising market that [Sun-Times] experienced during the first two quarters of 2006 continued and accelerated through the third quarter".  As a result, the release states, "...[Sun-Times'] Board of Directors and management are considering a range of options to address the resulting significant shortfall in performance and cash flow, including a review of [Sun-Times'] dividend policy".  On December 13, 2006, Sun-Times announced that the Sun-Times Board had suspended Sun-Times' quarterly dividend of five cents (US$0.05) per share.  Sun-Times has not subsequently declared or paid any dividends.  See "Risk Factors – Risks Related to the Corporation's Cash Flows and Capital Structure".

On March 1, 2007, Sun-Times announced that the grant dates on some of its stock option awards between 1999 and 2002 were backdated and that its prior year financial statements would be restated as a result.  Sun-Times also announced that its financial statements in respect of reporting periods from January 1, 1999 to September 30, 2006, and all related financial information issued by Sun-Times in respect of such periods, should no longer be relied upon.

On May 8, 2007, Sun-Times issued a press release titled "Sun-Media Group Announces 2007 First Quarter Results".  The release reports a net loss of US$4.8 million versus a restated net loss of US$7.8 million in the first quarter of 2006.  On May 16, 2007, Sun-Times issued a press release entitled "Sun-Media Group Unveils Business Strategy in Webcast".  The release states that "[w]hile 2007 is expected to be a difficult year for [Sun-Times] and the newspaper industry, management… expects that new initiatives [will] begin to stem circulation and revenue declines later this year".

Domgroup

Domgroup, a wholly-owned subsidiary of the Corporation, holds a small portfolio of commercial real estate in Canada, principally related to the Corporation's prior ownership of Dominion Stores Limited.  The portfolio is located in Ontario, Alberta and British Columbia.  Domgroup derives rental income from leases or sub-leases of its properties and receives proceeds from sales of properties when opportunities are favourable.  Since March 31, 2006, Domgroup has sold three commercial properties.  Domgroup currently owns four commercial properties, each of which has been listed for sale.

22

On June 7, 2007, Domgroup sold for $8.3 million the vendor take-back mortgage in respect of property sold by Domgroup to Duflaw Realty Ltd. in October 2006.

Editorial La Razon

As at March 31, 2007, the Corporation owned a 99.9% interest in ELR, a Costa Rican company, which owns and publishes the La Republica newspaper in San Jose, Costa Rica.  La Republica is a small circulation daily newspaper focused on the broader business community in Costa Rica.  Its principal revenue sources are advertising (representing over 80% of its aggregate revenues), circulation and commercial printing.  As at March 31, 2007, the assets of ELR represented less than 2% of the consolidated assets of the Corporation.

On May 30, 2007, the Corporation completed the sale of all of the shares of ELR to SRB CR Limitada, a Costa Rican corporation, for US$2 million in cash.

RISK FACTORS

Litigation and Related Risks

The Corporation is party to significant litigation proceedings, both as plaintiff and as defendant.  Any such litigation, if decided against the Corporation or settled, could require the Corporation to pay substantial judgments, settlements, fines or other penalties.

The Corporation is currently, and may in the future be, subject to litigation and other proceedings arising in relation to various matters, including the alleged activities of certain individuals associated with the former controlling shareholder of the Corporation.  Such litigation includes (i) the civil complaint filed by Sun-Times in January 2004 in the United States District Court for the Northern District of Illinois asserting breach of fiduciary duty and unauthorized "non-competition" payments, (ii) the class action suits initiated in February and March of 2004 in the United States District Court for the Northern District of Illinois asserting claims under securities laws, fraud, breach of fiduciary duty and aiding and abetting the breaches of fiduciary duty, (iii) the class action law suits initiated in Saskatchewan and Ontario in September 2004 and in Québec in February 2005 alleging deceit, breach of fiduciary duty, unjust enrichment, misrepresentation, negligence and breaches of obligations under the CBCA, and (iv) the administrative proceeding commenced by the OSC on March 18, 2005. See "Legal Proceedings".  Such litigation currently consumes a significant amount of the time and resources of the Corporation and its management.

Further, the Corporation may not have sufficient cash resources to commence and/or prosecute some or all of the legal claims that the Corporation may have against third parties.

23

The adverse resolution of any specific lawsuit could have a material adverse effect on the Corporation's ability to favourably resolve other lawsuits and on the Corporation's financial condition and liquidity.  Management is unable at this time to estimate what the Corporation's ultimate liability in these matters may be, and it is possible that the Corporation will be required to pay substantial judgments, settlements or other penalties and incur expenses that could have a material adverse effect on the Corporation's business, financial condition and liquidity, and such effects could be significant.  Although the Corporation maintains certain insurance coverage, a substantial amount of any such payments may not be covered by insurance.  Expenses incurred in connection with these matters (which include substantial fees of lawyers and other professional advisors and potential obligations to indemnify officers and directors who may be parties to such actions) could adversely affect the Corporation's cash position.

Risks Related to the Corporation's Cash Flows and Capital Structure

The Corporation is in default under the Indentures governing the Secured Notes and the Noteholders may attempt to enforce their security at any time.

Defaults have occurred and are continuing under the Indentures governing the Secured Notes.  Despite such defaults, the Corporation has continued to satisfy its interest payment obligations on the Secured Notes through March 1, 2007.  Holders of the Secured Notes are in a position to accelerate the maturity of the Notes at any time should they collectively choose to do so.  The Corporation would be unable to satisfy its repayment obligations following such an acceleration, which may lead to an enforcement action by the trustee under the Indentures with respect to its security interest in the Corporation's 14,990,000 Sun-Times B Shares and the Corporation may be deprived of its ownership interest in Sun-Times B Shares.  See "General Development of the Corporation and Its Business".

Certain events beyond the control of the Corporation may cause the Corporation to become an Acquiring Person under Sun-Times' Shareholder Rights Plan, causing the Corporation to suffer significant dilution of its ownership position in Sun-Times.

The Corporation's significant ownership interest in Sun-Times is its principal asset.  However, the Corporation's ownership interest in Sun-Times A Shares and Sun-Times B Shares would be significantly diluted in the event that an event occurred that caused the Corporation to be deemed an "Acquiring Person" under the Sun-Times SRP.  Although it is currently exempt from the definition of "Acquiring Person" under the Sun-Times SRP, the Corporation will become an "Acquiring Person" in certain circumstances, including the following circumstances which the Corporation may not be in a position to control:  (a) if the Corporation ceases to be a subsidiary of RCL; (b) if Richter purchases or otherwise becomes the beneficial owner of any additional shares of Sun-Times; or (c) if Richter ceases to be the receiver for RCL.  See "Corporate Structure – Sun-Times' Shareholder Rights Plan".

The Corporation has very limited sources of fundsand in the absence of establishing additional sources of funds will eventually have insufficient funds to satisfy its obligations.

The Corporation's only source of funds has been the discretionary dividends it historically received from Sun-Times and the proceeds the Corporation receives from the sale of real property from its real estate portfolio.  Funds from these sources will not be sufficient to indefinitely permit the Corporation to satisfy its obligations as they become due.  In the event that the Corporation is unable to develop new sources of funds, or raise funds through financing or capital markets transactions, the Corporation is at risk of eventually being unable to satisfy its obligations as they become due.  Sun-Times' ability to pay dividends on its common shares may be limited as a result of its dependence upon the distribution of earnings of its subsidiaries and affiliated companies.  Neither Sun-Times nor its subsidiaries and affiliated companies are under any obligation to pay dividends.  Sun-Times reduced its regular quarterly dividend from US$0.11 per share to US$0.05 per share in September 2002.  On October 19, 2006, Sun-Times announced it was considering a review of its dividend policy as part of an initiative pursuant to which the Sun-Times Board and Sun-Times' management would consider a range of options to address a significant shortfall in performance and cash flow.  On December 13, 2006, Sun-Times announced that it was suspending the payment of quarterly dividends.  Sun-Times has not subsequently declared or paid any dividends.

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All of the shares of the Corporation are exchangeable, redeemable or retractable.  If holders of the Corporation's shares elect to exchange, redeem or retract those shares, as the case may be, this would have a material impact on the financial condition of the Corporation and the Corporation is not currently able to satisfy such exchanges, redemptions or retractions.

As a result of steps taken during 1997 and 1998 to qualify the Corporation as a "mutual fund corporation" for purposes of the Tax Act, all of the issued shares of the Corporation are exchangeable, redeemable or retractable for Sun-Times A Shares (or equivalent value if the Corporation exercises its option to redeem for cash).  In the event that holders of the Corporation's shares elect to exchange, redeem or retract their shares for Sun-Times A Shares, this may have a material impact on the financial condition of the Corporation.

The Corporation pledged all of its Sun-Times B Shares as security for its obligations under the Secured Notes.  The Corporation is currently in default under the terms of the Indentures governing the Secured Notes and, until such defaults are remedied or waived, is prevented from honouring retractions of the Common Shares and the Series II Preference Shares.  As of March 31, 2007, there were retraction notices, net of subsequent withdrawals and cancellations, from holders of 153,738 Common Shares at a retraction price of $9.00 per share and 211 Common Shares at a retraction price of $7.25 per share, which the Corporation is unable to complete at the present time.  Shareholders who have delivered retraction notices are not creditors of the Corporation but will remain shareholders until such time as the Corporation is able to complete the retractions.  See "Corporate Structure – Secured Notes".

RMI's failure to provide financial support to the Corporation has caused it to breach certain of its obligations and there is no expectation that RMI will provide financial support to the Corporation in the future.

In the past, the Corporation has borrowed or otherwise received funds from RCL, its controlling stockholder, to partially fund operating costs, including interest and Preference Share dividend obligations.  When RMI, which is a subsidiary of RCL, failed to provide the Corporation with the financial support contemplated in the Support Agreement, the Corporation breached a number of covenants in the Indentures governing the Secured Notes, causing an event of default.  Each of RCL and RMI is currently in receivership and is the subject of numerous litigation claims (including litigation initiated by the Corporation), and there is no expectation that RMI will comply with the terms of the Support Agreement in the future or that RMI or RCL will otherwise provide the Corporation with any financial support.  See "General Development of the Corporation and Its Business".

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If the Sun-Times B Shares are subject to any foreclosure, realization or other similar action, such shares may be automatically converted into Sun-Times A Shares and, as a result, lose their multiple voting rights.

Under Sun-Times' certificate of incorporation, each Sun-Times B Share is entitled to certain multiple voting rights.  However, in the event that the Sun-Times B Shares pledged as collateral security for indebtedness become subject to any foreclosure, realization or other similar action by a third party pledgee, unless such shares are transferred to a third party purchaser who purchases or obtains the Sun-Times B Shares in a "Permitted Transaction", they will be automatically converted into fully paid and non-assessable Sun-Times A Shares on a share-for-share basis.  A Permitted Transaction, as defined in Sun-Times' certificate of incorporation, is a transaction with respect to the Sun-Times B Shares between a third party and the Corporation, its subsidiaries or affiliates, in which, or as part of which, the third party makes a bona fide tender offer, in compliance with the applicable securities and other laws, to purchase all of the outstanding Sun-Times A Shares from the holders for an amount in cash or other consideration equal to the amount per share to be received by the record holder of Sun-Times B Shares, and such tender offer is successfully consummated.  Accordingly, it is unlikely that upon a foreclosure or realization on the pledged Sun-Times B Shares by the holders of the Secured Notes the acquiror would be able to exercise the same degree of control over Sun-Times that the Corporation currently does.

Any decrease in the value of Sun-Times will negatively impact upon the Corporation due to the Corporation's investment in Sun-Times representing a high percentage of the Corporation's assets.

The Corporation's investment in Sun-Times reflects a significant percentage of the total value of the Corporation's assets.  Accordingly, the value of the Corporation's assets is highly dependent upon the value of its investment in the shares of Sun-Times.  Any adverse development in the business, operations, financial condition or prospects of Sun-Times can be expected to have a direct and immediate negative impact on the Corporation.

Risks Related to Control by a Single Shareholder

RCL is the Corporation's controlling shareholder and there may be a conflict between its interests and the interests of other shareholders or holders of Secured Notes.

RCL currently controls a majority of the voting power of the Corporation.  Other shareholders will be unable to affect the outcome of shareholder voting as long as RCL retains its controlling interest.

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RCL is currently in receivership pursuant to the Receivership and CCAA Orders.  Richter has been appointed by the Ontario Court to be receiver and manager of RCL, RMI and other related subsidiaries, thereby controlling approximately 78.3% of the outstanding Common Shares and approximately 3.9% of the Series II Preference Shares of the Corporation.  As a result of this controlling interest, Richter may be able to determine the outcome of all matters that require shareholder approval, including the election of directors, amendment of the Corporation's articles and approval of significant corporate transactions.  See "General Development of the Corporation and Its Business".

Conrad Black Capital Corporation and PGWML filed a motion seeking advice and direction of the Ontario Court concerning RCL's participation in the U.S. criminal proceeding against RCL, Black and others.  In their motion, the moving parties allege that RCL and the Corporation are unnecessarily spending money and ask the Ontario Court to direct Richter to maintain RCL's assets and to exercise its control over the Corporation to cause the Corporation to maintain its assets.  The moving parties also state that Black and his group will seek control of the Board at a later date after the end of the U.S. criminal proceeding.

Risks Related to Sun-Times' Business and the Industry

The following disclosure relating to Sun-Times and its subsidiaries is based in its entirety on publicly available documents filed by Sun-Times with securities regulatory authorities and other public sources.  Unless otherwise stated, such information is accurate as of December 31, 2006.  None of the following disclosure relating to Sun-Times has been independently verified by the Corporation.  The Corporation has no nominees on the Sun-Times Board.

The results of ongoing SEC investigations may have a material adverse effect on Sun-Times' business and results of operations.

Sun-Times has received various subpoenas and requests from the SEC and other government agencies in the United States and Canada seeking the production of documentation in connection with various investigations into Sun-Times' governance, management and operations.  Sun-Times is co-operating fully with these investigations and is complying with these requests.  On January 16, 2004, Sun-Times consented to the entry of a partial judgment and order of permanent injunction against it pursuant to the Sun-Times 2004 SEC Action.  The Sun-Times Consent Order, among other things, enjoins Sun-Times from violating certain provisions of the U.S. Securities Exchange Act of 1934, including the requirements to file accurate annual reports on Form 10-K and quarterly reports on Form 10-Q and keep accurate books and records.  As part of the Sun-Times Consent Order, Sun-Times agreed that the SEC has the right to amend its complaint in the Sun-Times 2004 SEC Action to assert that the conduct alleged in such action also violated other federal securities laws, including the anti-fraud provisions of the U.S. Securities Exchange Act of 1934, and to add allegations of other conduct the SEC believes to have violated federal securities laws.  Sun-Times cannot predict when these government investigations will be completed, nor can Sun-Times predict what the outcome of these investigations may be.  It is possible that Sun-Times will be required to pay material amounts in disgorgement, interest and/or fines, or that it will consent to or be subject to additional court orders or injunctions, or suffer other sanctions, each of which could have a material adverse effect on Sun-Times' business and results of operations.

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Pending litigation could have a material adverse effect on Sun-Times.

Sun-Times is currently involved, either as plaintiff or as defendant, in several lawsuits, including: purported class actions brought by stockholders against it, certain former executive officers and certain of its former directors, the Corporation, RCL and other affiliated entities, and several suits and counterclaims brought by Black and/or the Corporation.  In addition, Black has commenced libel actions against certain of Sun-Times' current and former directors, officers and advisors to whom Sun-Times has indemnification obligations.

On March 16, 2007, Sun-Times entered into settlement agreements with former President and Chief Operating Officer Radler and his wholly-owned company, North American Newspapers Ltd. (formerly known as FD Radler Ltd.), and the publishing companies Horizon Publishing Company and Bradford Publishing Company.  Under the settlements, Sun-Times has received $63.4 million in cash (i) to settle Sun-Times' claims against Radler, Horizon Publishing Company, and Bradford Publishing Company; (ii) to settle potential additional claims against Radler related to Sun-Times Special Committee's recent findings regarding backdated stock options; and (iii) to satisfy Horizon Publishing Company's and Bradford Publishing Company's debts to Sun-Times.  On April 16, 2007, Sun-Times moved to dismiss the claims in Sun-Times Special Committee's action against Radler.

Several of these actions remain in preliminary stages and it is not yet possible to determine their ultimate outcome.  There can be no assurance that the legal and other costs associated with the defense of all of these actions, the amount of time required to be spent by Sun-Times' management and the Sun-Times Board in these matters and the ultimate outcome of these actions will not have a material adverse effect on Sun-Times' business, financial condition or results of operations.

Sun-Times senior management team is required to devote significant attention to matters arising from the actions of prior management.

The efforts of the current Sun-Times senior management team and the Sun-Times Board to manage Sun-Times' business have been hindered at times by their need to spend significant time and effort to resolve issues inherited from and arising from the conduct of the prior Sun-Times senior management team and the direct and indirect controlling shareholders.  To the extent the Sun-Times senior management team and the Sun-Times Board will be required to devote significant attention to these matters in the future, this may have, at least in the near term, an adverse effect on operations.

Sun-Times' revenues are seasonal and dependent upon general economic conditions in its newspapers' target markets.

Advertising and circulation are Sun-Times' two primary sources of revenue.  Historically, increases in advertising revenues have corresponded with economic recoveries while decreases have corresponded with general economic downturns and regional and local economic recessions.  Advertising revenue is also dependent upon the condition of specific industries that contribute significantly to Sun-Times' revenue, such as the automobile industry, whose recent downturn has negatively impacted advertising revenue.  If general economic conditions or economic conditions in these industries deteriorate significantly, it could have a material adverse effect on Sun-Times' revenue and results of operations.

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Sun-Times' advertising revenue also experiences seasonality, with the first quarter typically being the lowest.  However, due to the decreasing revenue trend in 2006, advertising revenue for the third quarter of 2006 was slightly lower than the advertising revenue for the first quarter of 2006.  In 2006, based on information accumulated by a third party from data submitted by Chicago area newspaper organizations, print advertising in the greater Chicago market declined approximately 5%, while the Sun-Times print advertising revenue declined approximately 10% for the comparable period.  Sun-Times' dependency on advertising sales, which generally have a short lead-time, means that Sun-Times has only a limited ability to accurately predict future revenue and operating results.

Sun-Times' advertising revenue decreased by US$8.9 million, or 11%, for the three months ended March 31, 2007, compared to the same period in 2006.  The decrease was largely a result of lower retail advertising revenue of US$2.6 million, lower classified advertising of US$5.7 million and lower national advertising revenue of US$1.7 million, partially offset by increased internet advertising revenue of US$1.1 million.

Sun-Times has substantial potential tax liabilities.

Sun-Times' consolidated balance sheet as of December 31, 2006 includes US$990.8 million of accruals intended to cover contingent liabilities related to additional taxes and interest it may be required to pay in various tax jurisdictions.  A substantial portion of these accruals relate to the tax treatment of gains on the sale of a portion of Sun-Times' non-U.S. operations in prior years.  The accruals to cover contingent tax liabilities also relate to management fees, "non-competition" payments and other items that have been deducted in arriving at taxable income, which deductions may be disallowed by taxing authorities.  If the tax treatment of the gains was to be revised or if those deductions were to be disallowed, Sun-Times would be required to pay those accrued contingent taxes and interest and it may be subject to penalties.  Sun-Times has stated that it will continue to record accruals for interest that it may be required to pay with respect to its contingent tax liabilities.

Although Sun-Times has stated that it believes it has defensible positions with respect to significant portions of these tax liabilities, there is a risk that Sun-Times may be required to make payment of the full amount of such tax liabilities.  Significant cash outflows are expected to occur in the future regarding the income tax contingent liabilities.  Although Sun-Times is attempting to resolve a significant portion of the contingent liabilities with the relevant taxing authorities, the timing and amounts of any payments Sun-Times may be required to make remain uncertain.  Although these accruals for contingent tax liabilities are reflected in Sun-Times' consolidated balance sheet, if Sun-Times were required to make payment of the full amount, this could result in significant cash payment obligations.  The actual payment of such cash amount could have a material adverse effect on Sun-Times' liquidity and on Sun-Times' ability to borrow funds.

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Efforts to resolve or settle certain of these tax issues, for amounts that are substantially less than the related accrual, were successful in 2007.  Efforts to resolve or settle certain other tax issues are ongoing and may or may not be successful in 2007.  However, a substantial portion of Sun-Times' cash and cash equivalent balances as at March 31, 2007 could be utilized to fund any such resolution or settlement.  On April 26, 2007, Sun-Times entered into a written agreement with the Canada Revenue Agency settling certain tax issues resulting from the disposition of certain Canadian operations in 2000.  As a result, Sun-Times expects to pay aggregate Canadian federal and provincial taxes and interest of approximately US$40 million in respect of these certain issues.  Sun-Times is in the process of assessing the impact of this settlement on its financial statements and expects to record the effects in the second quarter of 2007.  Sun-Times estimates that this settlement will result in an income tax benefit and reduction of its other tax liabilities of approximately US$560 million to US$575 million.

Sun-Times has substantial accruals for tax contingencies in a foreign jurisdiction; if payments are required, a portion may be paid with funds denominated in U.S. dollars.

Sun-Times' consolidated balance sheet at December 31, 2006 includes US$605.3 million of accruals for tax contingencies in a foreign jurisdiction.  The accruals are denominated in a foreign currency and translated into U.S. dollars at the period-end currency exchange rate effective as of each balance sheet date.  If Sun-Times was required to make payments with respect to such tax contingencies, it may be necessary for Sun-Times to transfer U.S. dollar-denominated funds to its foreign subsidiaries to fund such payments.  The amount of U.S. dollar-denominated funds that may need to be transferred will also depend upon the ultimate amount that is payable to the foreign jurisdiction and the currency exchange rate between the U.S. dollar and the foreign currency at the time or times such funds might be transferred.  Future currency rates cannot be predicted.  Changes in the exchange rate could have a material effect on Sun-Times' financial position, results of operations and cash flows particularly as it relates to the extent and timing of any transfers of funds.

Newsprint represents Sun-Times' single largest raw material expense and changes in the price of newsprint could affect its net income.

Newsprint represents Sun-Times' single largest raw material expense and is its most significant operating cost, other than employee costs.  In 2006, newsprint costs represented approximately 15% of Sun-Times' revenue.  Newsprint prices vary widely from time to time and increased approximately 12% during 2006.  If newsprint prices remain at current levels or increase in the future and Sun-Times is unable to pass these costs on to its customers, such increases may have a material adverse effect on its results of operations.  Although Sun-Times has, in the past, implemented measures in an attempt to offset a rise in newsprint prices, such as reducing page width where practical and managing waste through technology enhancements, newsprint price increases have in the past had a material adverse effect on Sun-Times and may do so again in the future.

Newsprint and ink expense was US$13.7 million in the first three months of 2007, compared with US$16.9 million during the same period in 2006, a decrease of US$3.2 million or approximately 19%.  Total newsprint consumption in the first three months of 2007 decreased approximately 18% compared with the same period in 2006, and the average cost per metric ton of newsprint in the first three months of 2007 was approximately 1% lower than during the same period in 2006.

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Competition in the newspaper industry originates from many sources.  The advent of new technologies and industry practices, such as the provision of newspaper content on free Internet sites, may continue to result in decreased advertising and circulation revenue.

Revenue in the newspaper industry is dependent primarily upon advertising revenue and paid circulation.  Competition for advertising and circulation revenue comes from local and regional newspapers, radio, broadcast and cable television, direct mail and other communications and advertising media that operate in Sun-Times' markets.  The extent and nature of such competition is, in large part, determined by the location and demographics of the markets and the number of media alternatives in those markets.  Some of Sun-Times' competitors are larger and have greater financial resources than Sun-Times.  Sun-Times may experience price competition from newspapers and other media sources in the future.  In addition, one of Sun-Times' competitors publishes a free publication that targets similar demographics to those that are particularly strong for some of Sun-Times' newspapers.  In addition, the use of alternative means of delivery, such as free Internet sites, for news and other content has increased significantly in the past few years.  Should significant numbers of Sun-Times' customers choose to receive content using these alternative delivery sources rather than Sun-Times' newspapers, Sun-Times may suffer decreases in advertising revenue and may be forced to decrease the prices charged for its newspapers, make other changes in the way it operates, or face a long-term decline in circulation, any or all of which may harm Sun-Times' results of operations and financial condition.

Sun-Times publications have experienced declines in circulation in the past and may do so in the future.

Certain of Sun-Times' publications have experienced declines in circulation.  Any significant declines in circulation that Sun-Times may experience at its publications could have a material adverse impact on its business and results of operations, particularly on advertising revenue.  Significant declines in circulation could result in an impairment of the value of Sun-Times' intangible assets, which could have a material adverse effect on its results of operations and financial position.

Circulation revenue for Sun-Times was US$19.6 million for the three months ended March 31, 2007 compared with US$21.0 million for the same period in 2006, a decrease of US$1.4 million.  The decline in circulation revenue was attributable to declines in volume, primarily in the daily single copy category.

Sun-Times may experience labour disputes, which could slow down or halt production or distribution of its newspapers or other publications.

Approximately 37% of Sun-Times' employees are represented by labour unions.  These employees are mostly covered by collective bargaining or similar agreements which are regularly renewable, including agreements covering approximately 59% of union employees that are renewable in 2007.  A work stoppage or strike may occur prior to the expiration of the current labour agreements or during negotiations of new labour agreements or extensions of existing labour agreements.  Work stoppages or other labour-related developments could slow down or halt production or distribution of the newspapers, which would adversely affect Sun-Times' results of operations.

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A substantial portion of Sun-Times' operations are concentrated in one geographic area.

With the sale of the Telegraph Group in July 2004, The Jerusalem Post in December 2004, and the Canadian newspapers in late 2005 and early 2006, Sun-Times' revenue and business activities are concentrated principally in the greater Chicago metropolitan area.  As a result, Sun-Times' revenue is dependent on economic and competitive factors affecting the greater Chicago metropolitan area.

Sun-Times has implemented a reorganization and centralization that may have an adverse effect on operations and sales.

Sun-Times has implemented a reorganization of its operations in the Chicago market designed to centralize and streamline its sales, production and distribution processes. The implementation of this reorganization has required the dedication of significant resources and management time. While the reorganization is intended to have long-term benefits for Sun-Times, in the shorter term Sun-Times may experience disruption in its operations and loss of sales and market share as a result of the implementation of the reorganization.

Sun-Times is a holding company and relies on its subsidiaries to meet its financial obligations.

Sun-Times is a holding company and its assets consist primarily of investments in subsidiaries and affiliated companies. Sun-Times relies on distributions from subsidiaries to meet its financial obligations or pay dividends on its common stock. Sun-Times' ability to meet its future financial obligations is dependent upon the availability of cash flows from its subsidiaries through dividends and intercompany advances. Sun-Times' subsidiaries and affiliated companies are under no obligation to pay dividends and, in the case of Hollinger International Publishing Inc. and its principal domestic and foreign subsidiaries, are subject to certain statutory restrictions and may become subject to restrictions in future debt agreements that limit their ability to pay dividends.

Sun-Times' internal control over financial reporting is not effective as of December 31, 2006 and weaknesses in Sun-Times' internal controls and procedures could have a material adverse effect on Sun-Times.

Sun-Times' management concluded that material weaknesses existed in Sun-Times' internal control over financial reporting as of December 31, 2006.  The SEC Action alleges that Black, Radler and the Corporation were liable for Sun-Times' failure to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurance that transactions were recorded as necessary to permit preparation of financial statements in conformity with U.S. generally accepted accounting principles from at least 1999 through at least 2003. The SEC Action also alleges that Black, Radler and the Corporation, directly and indirectly, falsified or caused to be falsified, books, records, and accounts of Sun-Times in order to conceal their self-dealing from Sun-Times' public stockholders.

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Current management has taken steps to correct internal control deficiencies and weaknesses during and subsequent to 2006 and believes that Sun-Times' internal controls and procedures have strengthened. However, it is possible that Sun-Times may not be able to remediate all deficiencies and material weaknesses by December 31, 2007.

Overstatement of circulation figures in the past may result in the loss of advertisers in the future.

In 2004, the Sun-Times Audit Committee announced the results of an internal review into circulation at certain of its newspapers. The internal review revealed that circulation figures for the Chicago Sun-Times, Daily Southtown and Star newspapers had been overstated. Following the release of this information by the Sun-Times Audit Committee, the Audit Bureau of Circulations announced sanctions against the affected publications, including the withdrawal by the Audit Bureau of Circulations of previously published circulation audits and unofficial "publisher's statements" of circulation. In addition, the Audit Bureau of Circulations imposed on the affected publications a schedule of semi-annual circulation audits for a two-year period in lieu of a standard annual audit cycle. As a result of the overstatement of circulation, lawsuits were filed against Sun-Times, which were settled in 2006.  A significant portion of Sun-Times' revenue is derived from the sale of advertising in the Chicago Sun-Times and its sister publications. Should certain advertisers decide not to advertise with the Chicago Sun-Times in the future as a result of past circulation overstatements, Sun-Times' business, results of operations and financial condition could be materially adversely affected.

DIVIDENDS

The Corporation is a holding corporation and its assets consist primarily of investments in its subsidiaries and affiliated companies.  As a result, the Corporation's ability to meet its future financial obligations and to pay dividends is dependent in part upon the availability of cash flows principally from Sun-Times through dividends.  Sun-Times is under no obligation to pay dividends and, on December 13, 2006, announced that it was suspending the payment of its quarterly dividends.  Sun-Times has not subsequently declared or paid any dividends.  Sun-Times' ability to pay dividends on its shares may be limited as a result of its dependence on the receipt of dividends and other receipts from Hollinger International Publishing Inc.  Hollinger International Publishing Inc. and its principal subsidiaries are subject to statutory restrictions and restrictions in debt agreements that limit their ability to pay dividends.

Under corporate law, the Corporation is not permitted to pay any dividends or redeem any of its shares in certain circumstances, including if the Corporation's liquidity would be unduly impaired as a consequence.  In addition, there are restrictions under the Indentures governing the Secured Notes on the Corporation's ability to pay dividends on its outstanding shares.

The Corporation has not paid any dividends during the past four financial years and currently has no intention of doing so in the foreseeable future.

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CAPITAL STRUCTURE

The authorized capital of the Corporation consists of an unlimited number of Common Shares and an unlimited number of Preference Shares, issuable in series.

As of March 31, 2007, 34,945,776 Common Shares and 1,701,995 Series II Preference Shares were issued and outstanding and no Series I Preference Shares or Series III Preference Shares were outstanding.  In 1998, the Corporation converted or redeemed all outstanding Series I Preference Shares and in 2004 the Corporation redeemed all outstanding Series III Preference Shares.

Until certain events of default under the Indentures are remedied or waived, the terms of the Indentures prevent the Corporation from honouring retractions of the Common Shares and the Series II Preference Shares.  See "Corporate Structure – Secured Notes".

Common Shares

Holders of Common Shares are entitled to receive notice of and to attend all meetings of the shareholders of the Corporation, other than separate meetings of the holders of another class or series of shares, and to vote at any such meeting on the basis of one vote for each Common Share held.

Holders of Common Shares are, subject to the prior rights of the holders of the Preference Shares and any other shares ranking senior to the Common Shares with respect to priority in payment of dividends and to the insolvency provisions of applicable law, entitled to receive such dividends as may be declared by the Board of Directors and paid in equal or equivalent amounts per share on all Common Shares at the time outstanding without preference or priority.

The Common Shares are retractable at any time by the holder for their retraction price, which is fixed from time to time, in exchange for Sun-Times A Shares of equivalent value or, at the Corporation's option, cash.  The retraction price determined each quarter (or, in certain specific cases more frequently) is between 90% and 100% of the Corporation's current value, being the aggregate fair market value of all of its assets less the aggregate of (i) the maximum amount payable at such date by the Corporation on its liquidation, dissolution or winding-up in respect of any outstanding Preference Shares, and (ii) its liabilities, including any tax liabilities that would arise on a sale by Sun-Times of all or substantially all of its assets, which, in the opinion of the Board of Directors, would not be refundable at such date, divided by the number of Common Shares outstanding on such date.

In the event of the liquidation, dissolution or winding-up of the Corporation, the holders of Common Shares shall be entitled, subject to the prior rights of the holders of the Preference Shares and any other shares ranking senior to the Common Shares, to the remaining property and assets of the Corporation.

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Series II Preference Shares

Holders of Series II Preference Shares are not entitled to receive notice of, to attend or to vote at any meeting of the shareholders of the Corporation, except as otherwise provided for in the articles of the Corporation, or as required by law.

Each Series II Preference Share entitles the holder to a dividend in the amount equal to the Canadian dollar equivalent of 0.46 multiplied by any dividend on a Sun-Times A Share (less any U.S. withholding tax thereon payable by the Corporation or any subsidiary).  Such entitlements, net of 5% U.S. withholding tax, are accrued based on the ex-dividend date of the Sun-Times A Share dividend and the amounts are included in accounts payable and accrued liabilities at each reporting date.

On May 12, 1999, the Series II Preference Shares became redeemable at the holder's option for 0.46 of a Sun-Times A Share for each Series II Preference Share.  The Corporation has the option of making a cash payment of equivalent value on the redemption of the Series II Preference Shares.  In certain circumstances, the Corporation may also satisfy its obligation to deliver Sun-Times A Shares on a retraction of Series II Preference Shares by delivering Sun-Times A Shares that are subject to restrictions on resale in accordance with applicable securities laws.

In the event of the liquidation, dissolution or winding-up of the Corporation, the holders of Series II Preference Shares are entitled to receive from the Corporation an amount per share equal to (i) 0.46 of the market price of a Sun-Times A Share on the date of the liquidation event which shall be satisfied in full by the Corporation through delivery of 0.46 of a Sun-Times A Share for each Series II Preference Share or a cash payment of equivalent value, plus (ii) all dividends and distributions declared and unpaid on each Series II Preference Share and all dividends and distributions declared on a Sun-Times A Share in respect of which a dividend has not been declared on each Series II Preference Share.

MARKET FOR SECURITIES

The Common Shares and Series II Preference Shares of the Corporation are listed on the TSX under the symbols "HLG.C" and "HLG.PR.B", respectively.  The following table sets forth the reported high and low prices and the volume traded for the Common Shares and Series II Preference Shares on the TSX for the periods indicated:

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Common Shares (HLG.C)
Month	High		Low		Volume Traded
	($)		($)
April 2006		2.45		1.85		205,238
May 2006		2.25		1.85		447,466
June 2006		2.15		2.00		29,780
July 2006		2.50		2.10		106,000
August 2006		3.25		2.15		150,409
September 2006		2.15		1.80		28,118
October 2006		2.00		1.25		693,288
November 2006		1.60		1.15		63,841
December 2006		1.50		1.17		77,283
January 2007		1.20		1.00		39,395
February 2007		1.00		0.71		33,032
March 2007		1.26		0.43		1,019,909

Series II Preference Shares (HLG.PR.B)
Month	High		Low		Volume Traded
	($)		($)
April 2006		4.01		4.00		1,587
May 2006		4.00		3.75		1,254
June 2006		3.50		3.50		604
July 2006	­­-		-­­		-­­
August 2006	­­-		­­-			17	(1)
September 2006	­­-		­­-		-­­
October 2006	­­-		-­­		-­­
November 2006		3.50		1.70		2,384
December 2006		2.70		1.75		4,712
January 2007		3.25		3.25		500
February 2007		3.25		3.25		300
March 2007		3.15		2.05		1,468

Note:

(1)           Insufficient volume of trading for the TSX to generate high and low prices.

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DIRECTORS AND OFFICERS

The names, municipalities of residence, positions with the Corporation and principal occupations of the directors and executive officers of the Corporation are as shown below, current as of March 31, 2007.  The term of each director will expire at the next annual meeting of the Corporation's shareholders, except for Mr. Glassman who ceased to be a director of the Corporation during May 2007.

Directors and Officers as at March 31, 2007
Name and Municipality of Residence	Office	Period(s) Serving as Director or Officer	Principal Occupation
William E. Aziz Oakville, Ontario	Chief Financial Officer	March 8, 2007 -	Chief Financial Officer, Hollinger Inc.
Stanley M. Beck, QC(1)(2)(4) Toronto, Ontario	Chairman of the Board, Director	July 19, 2005 -	President, Granville Arbitrations Limited
David W. Drinkwater(2)(3) Toronto, Ontario	Director	August 25, 2005 -	Chief Financial Officer, on an Interim Basis, Nortel Networks Corporation
Newton G. Z. Glassman(2)(3)(4) Toronto, Ontario	Director	July 19, 2005 – May 2007	Managing Partner, Catalyst Capital Group Inc.
Patrick W.E. Hodgson(2)(3) Toronto, Ontario	Director	May 12, 2006 -	President, Cinnamon Investments Ltd.
David A. Rattee(2)(3)(4) Toronto, Ontario	Director	August 25, 2005 -	Chairman, President and Chief Executive Officer, CIGL Holdings Ltd.
G. Wesley Voorheis(2) Toronto, Ontario	Director	May 12, 2006 -	Partner, Voorheis & Co. LLP

Notes:

(1)           Mr. Beck has served as Chairman of the Board since April 17, 2006.

(2) Served as a member of the Litigation Committee until it was disbanded on March 27, 2007.  The Chairman of the Litigation Committee was Mr. Voorheis from May 12, 2006 to March 27, 2007 and was Mr. Drinkwater from October 28, 2005 to May 12, 2006.

(3) Member of the Audit Committee.  Mr. Rattee is the Chairman of the Audit Committee.  Mr. Glassman ceased to serve on the Audit Committee in May 2007  Mr. Drinkwater was appointed to the Audit Committee on June 26, 2007.

(4) Member of the Compensation Committee.  Mr. Glassman ceased to serve on the Compensation Committee in May 2007.

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During the last five years, all of the directors and officers named in the table above have been associated with the Corporation or with the companies or organizations (or affiliates of those companies or organizations) indicated opposite their names, except as follows:

(a)   William E. Aziz– Mr. Aziz is currently Managing Partner at BlueTree Advisors, an investment banking and management advisory firm.  He has been a director for Canada Bread Company Ltd. since 2005.  Mr. Aziz was appointed Chief Restructuring Officer of SR Telecom Inc. on April 28, 2005 and served as Interim President and Chief Executive Officer of SR Telecom Inc. from July 2005 to July 2006.  He has also served as a director for Algoma Steel Inc., and as Interim Chief Financial Officer for Atlas Cold Storage Income Trust.  Mr. Aziz is a Chartered Accountant and holds an Honours B.A. in Business Administration from the Richard Ivey School of Business at the University of Western Ontario.

(b)   Stanley M. Beck– Mr. Beck currently serves as director for Altamira Inc. (Chairman, Advisory Council), GMP Capital Corp. (Chairman), NewGrowth Corp., Utility Corp., First Financial GP Corp., Canadian Tire Bank Inc. and 407 International Inc. (Chairman).  Mr. Beck is a former Chairman of the OSC and former Dean of Osgoode Hall Law School.

(c)   David W. Drinkwater– Mr. Drinkwater has been employed by Nortel Networks Corporation as the Chief Financial Officer, acting on an Interim Basis, since May 1, 2007, and as the Chief Legal Officer from December 19, 2005 to May 1, 2007.  From August 2004 to December 2005 he acted as an independent consultant and corporate director.  From April 2003 to July 2004 he was Executive Vice President and Chief Financial Officer at Ontario Power Generation Inc.  From December 1998 to March 2003, Mr. Drinkwater was Executive Vice President, Corporate Development and Legal Affairs at Ontario Power Generation Inc.  Mr. Drinkwater holds an LL.M. from the London School of Economics, U.K., an LL.B. from Dalhousie University and a B.A. in Business Administration from Richard Ivey School of Business at the University of Western Ontario.

(d)   Newton G. Z. Glassman– Mr. Glassman is the Managing Partner at Catalyst Capital Group Inc.  Prior thereto, Mr. Glassman was Vice President of Canadian Corporate Funding Limited, Chief Executive Officer and President of FigCorp Inc., director at Bear Stearns & Co. Inc., Principal at Berenson Minella & Co. and Managing Director of Cerberus Capital Management LP. He holds a B.A. in Economics and an LL.B. from the University of Toronto and an M.B.A. from the Wharton School of the University of Pennsylvania.

(e)   Patrick W.E. Hodgson– Mr. Hodgson is President of Cinnamon Investments Ltd., a Toronto-based investment manager.  Mr. Hodgson was President of London Machinery Co. Ltd. for 25 years, and subsequently was Chairman of the board at Todd Shipyards Corporation and Scotts Hospitality Inc. He is currently serving as a director of M & T Bank, First Carolina Investors, Inc. and Todd Shipyards Corporation.  Mr. Hodgson holds a B.S. in Economics from the Wharton School of the University of Pennsylvania.

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(f)   David A. Rattee– Mr. Rattee has been President and Chief Executive Officer of MICC Investments Ltd. since 1987.  He is also currently Chairman, President and Chief Executive Officer of CIGL Holdings Ltd.  Prior to this, Mr. Rattee held the positions of Executive Vice President and Chief Financial Officer of Central Capital Corporation, President and Chief Operating Officer of Lloyds Bank Canada and various senior executive positions with Continental Bank of Canada and IAC Limited.  He serves as a director on a number of boards, including MICC Investments Ltd., Bank of New York Trust Co. of Canada, Northstar Aerospace Inc. (where he is also Chairman of the audit committee), Open Access Ltd., Loring Ward International Ltd. (where he is also Chairman of the board), Reliable Life Insurance Company and Old Republic Insurance Co. of Canada.  Mr. Rattee holds a B.Comm. from McGill University and an M.B.A. from the University of Western Ontario.  Mr. Rattee is a Chartered Accountant.

(g)   G. Wesley Voorheis– Mr. Voorheis is Managing Director of VC&Co. and a Partner of Voorheis & Co. LLP, which acts as an advisor to institutional and other shareholders with respect to their investments in Canadian public and private companies.  Prior to the establishment of Voorheis & Co. LLP, Mr. Voorheis was a partner in a major Toronto law firm specializing in securities law and mergers and acquisitions.

Recent Developments

The following changes to the Corporation's Board or Management occurred subsequent to the completion of the 2006/2007 Financial Year:

(a)   Newton G. Z. Glassman– Mr. Glassman ceased to be director of the Corporation in May 2007 and, accordingly, ceased at such time to serve as a member of the Audit Committee and the Compensation Committee.

(b)   G. Wesley Voorheis– On June 20, 2007 the Corporation appointed Mr. Voorheis to serve as Chief Executive Officer of the Corporation.

2006/2007 Financial Year

The following individuals served as directors of the Corporation during the 2006/2007 Financial Year but ceased doing so prior to March 31, 2007:

(a)   Randall C. Benson– Mr. Benson served as a director from July 19, 2005 to March 7, 2007 and as Chief Restructuring Officer of the Corporation from July 15, 2005 to March 7, 2007.

(b)   Robert Gillespie– Mr. Gillespie served as a director of the Corporation from May 12, 2006 to October 26, 2006.  He was a member of the Compensation Committee from June 7, 2006 to October 26, 2006.

(c)   Joseph H. Wright– Mr. Wright served as a director of the Corporation from July 19, 2005 to April 17, 2006.  He was Chairman of the Board from September 22, 2005 until April 17, 2006, and a member of the Audit Committee until April 17, 2006.

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The following individual served as an officer of the Corporation during the 2006/2007 Financial Year but ceased doing so prior to March 31, 2007:

(a)   Ronald B. Mitchell– Mr. Mitchell served as the Acting Chief Financial Officer of the Corporation from November 29, 2005 to March 7, 2007.  He continues to act as a consultant to the Corporation.

Voting Securities Controlled by Directors and Officers

As of March 31, 2007, the directors and executive officers of the Corporation as a group beneficially owned, directly or indirectly, or exercised control or direction over, 1,001,423 Common Shares (representing 2.9% of the outstanding Common Shares), 1,398,000 Series II Preference Shares (representing 80% of the outstanding Series II Preference Shares) and 4,110.67 Sun-Times A Shares (representing less than 0.1% of the outstanding Sun-Times A Shares).  These amounts and percentages include securities controlled by Mr. Glassman, who subsequently ceased to be a director of the Corporation.

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

On May 18, 2004, as a result of the inability of the Corporation to file financial statements on a timely basis as required under the Ontario securities laws, the OSC issued a temporary cease trade order that prohibited certain then current and former directors, officers and insiders of the Corporation from trading in securities of the Corporation, subject to certain exceptions.  On June 1, 2004, the OSC issued the MCTO.  The MCTO was subsequently varied on March 8, 2005, August 10, 2005 and April 28, 2006.  The April 28, 2006 variation added the then current directors and officers of the Corporation to the list of persons subject to the MCTO.  On April 10, 2007, the MCTO was revoked pursuant to an order issued by the OSC.  The order stemmed from the remediation by the Corporation of its historical continuous disclosure record on March 7, 2007.

Related orders were also issued by securities regulatory authorities in British Columbia on May 31, 2007 and Alberta on June 10, 2004 but were revoked, or expired, following the revocation of the MCTO by the OSC.

Mr. Drinkwater has been a senior officer of Nortel Networks Corporation since December 19, 2005.  On April 10, 2006, the OSC issued a management cease trade order applicable to senior officers of Nortel Networks Corporation that was in effect until June 8, 2006.  The order was issued in connection with the failure of Nortel Networks Corporation to file its annual financial statements for the year ended December 31, 2005 by the date required under applicable securities laws.

From on or about September 18, 2003 until June 24, 2004, Mr. Voorheis was a director of Atlas Cold Storage Holdings Inc. ("ACSHI"), the entity through which Atlas Cold Storage Income Trust ("Atlas") carried on its business. As a result of Atlas not having filed its 2003 third quarter financial statements by the required deadline, the OSC issued a management cease trade order relating to any trading in securities of Atlas, against the trustees of Atlas, certain members of the board of directors of ACSHI and certain other then current and former officers of ACSHI. The cease trade order remained in effect until May 11, 2004, following the remediation of the filing default.

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On February 20, 2002, Call-Net Enterprises Inc. ("Call-Net") announced a recapitalization proposal to reduce its debt. The terms of the recapitalization proposal included the exchange of Call-Net's existing $2.6 billion senior unsecured notes for US$377 million in new secured debt due in 2008, a payment of US$81.9 million in cash to existing debtholders and the granting of shares amounting to 80% of the equity of the recapitalized company to existing debtholders. On April 3, 2002, Call-Net's debtholders and shareholders voted in favour of the recapitalization proposal, and on April 5, 2002 a final order of the Ontario Court under the CBCA was received to implement the recapitalization proposal effective April 10, 2002. Mr. Benson was Senior Vice President and Chief Financial Officer and Mr. Wright was a director of Call-Net at the time.  Mr. Rattee became a director of Call-Net on April 10, 2002.

Mr. Rattee was a director of TDZ Holdings Inc. from April 1999 to August 2001. On July 21, 2001, certain provincial securities commissions issued orders ceasing the trade of TDZ Holdings Inc.'s shares as a result of a failure to file its financial statements within the prescribed filing periods. Such financial statements were subsequently filed and the order was revoked.

On November 15, 2000, Mr. Hodgson resigned as director of Queensway Financial Holdings Limited. On May 18, 2001, Queensway Financial Holdings Limited and its wholly-owned U.S. subsidiary Queensway Holdings, Inc. obtained an order from the Ontario Court appointing Ernst & Young Inc. as an interim receiver pursuant to the Bankruptcy and Insolvency Act (Canada).

Mr. Voorheis became a director and Chairman of the board of YBM Magnex International, Inc. ("YBM") in September 1998 pursuant to a reconstitution of YBM's board of directors undertaken at the instigation of its Canadian institutional shareholders. YBM had previously been the subject of cease trade orders relating to, among other things, its failure to file financial statements, which cease trade orders were ultimately made permanent. On December 8, 1998, at the instigation of its board of directors, YBM applied and received an order from the Alberta Court of Queen's Bench appointing Ernst & Young YBM Inc. as receiver and manager of YBM. The board of directors, including Mr. Voorheis, resigned immediately after the appointment.

On February 26, 1997, CIGL Holdings Ltd., a company of which Mr. Rattee was a director and officer, obtained court approval in respect of a proposal filed in January 1997 under the Bankruptcy and Insolvency Act (Canada).

Mr. Aziz acted as an officer of Omega Digital Data Inc., a private company which consented to the appointment of a receiver by its bank creditor in 1998.  Mr. Aziz was an officer of White Rose Crafts and Nursery Sales Limited, a public company which operated under CCAA protection and filed a sanctioned plan of compromise and arrangement in 1999.  Mr. Aziz was a director of Doman Industries Limited in 2003 when the company was operating under CCAA protection as granted in 2002, and in 2004 when the company filed a sanctioned plan of compromise and arrangement.  Mr. Aziz was appointed an officer of Atlas in 2003 when certain officers and directors (not including Mr. Aziz) were the subject of a cease trade order.

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Conflicts of Interest

During the 2006/2007 Financial Year, Mr. Glassman was a director of the Corporation and the Managing Partner of Catalyst Capital Group Inc. which, through Catalyst, exercised control or direction over approximately 2.5% of the outstanding Common Shares and approximately 80% of the outstanding Series II Preference Shares.  Legal counsel to the Corporation received correspondence from Catalyst's legal counsel dated September 1, 2006 and September 11, 2006 (collectively, the "Catalyst Letters").  The Catalyst Letters requested the reimbursement of an aggregate amount of approximately $4.0 million in legal fees incurred by Catalyst in its capacity as a shareholder of the Corporation from June 11, 2004 to August 31, 2006 in connection with the Inspection and other matters relating to the Corporation.  No such costs have been paid. The Board of Directors has not agreed to pay these costs and is considering Catalyst's request for reimbursement.

The Catalyst Letters indicate that approximately $1.6 million of the total aggregate fees described therein were paid by Catalyst to Voorheis & Co. LLP.  During the 2006/2007 Financial Year, Mr. Voorheis was a director of the Corporation and the Managing Partner of Voorheis & Co. LLP (Mr. Voorheis continues to act in those capacities and on June 20, 2007 was appointed to serve as the Chief Executive Officer of the Corporation).  Voorheis & Co. LLP entered into an agreement with Catalyst dated May 8, 2006 (effective as of April 3, 2006).  The agreement provided, among other things, that:  (a) Mr. Voorheis would serve as a director of the Corporation and Chairman of the Litigation Committee of the Board; (b) Catalyst acknowledged that Mr. Voorheis was subject to fiduciary and other duties to the Corporation and, as a consequence thereof, Mr. Voorheis would under no circumstances prefer the interests of Catalyst over the interests of the Corporation; (c) Catalyst acknowledged that to the extent Mr. Voorheis perceived any conflict of interest between Catalyst and the Corporation, Mr. Voorheis would not participate as a director of the Corporation in any discussion or vote with respect to the matter; (d) nothing in the engagement letter would prevent Mr. Voorheis from resigning as a director or Chairman of the Litigation Committee of the Corporation, or Catalyst from terminating the engagement of Voorheis & Co. LLP; and (e) Catalyst would be charged a fair and reasonable fee based upon all relevant factors.  This agreement terminated on April 15, 2007.

LEGAL PROCEEDINGS

The Corporation has been named as defendant, co-defendant or respondent in a number of legal proceedings and claims.  All claims made against the Corporation are being or will be defended.  Set out below is a summary of potentially material legal proceedings to which the Corporation is a party and certain circumstances in which legal proceedings involving the Corporation may be contemplated.

United States Securities and Exchange Commission v. Hollinger International Inc.

On January 16, 2004, the SEC filed a complaint for civil injunctive relief in the U.S. District Court for the Northern District of Illinois against Sun-Times, alleging, among other things, violations of securities laws for failure to disclose material information in required financial statements and altering books and records.  The Corporation was granted intervenor status on May 17, 2004.  A consent judgment was entered by the court on January 16, 2004 restricting the Corporation's voting rights by providing for the appointment of the Special Monitor if any Sun-Times director is either:  (a) not re-nominated or re-elected at the expiration of his or her term; (b) elected without the support of at least 80% of the incumbent directors; or (c) removed prior to the end of his or her term.  The consent judgment is still in effect.  The Special Monitor provision was triggered in January 2006, when two nominees of the Corporation were elected to the Sun-Times Board.  Those nominees are no longer on the Sun-Times Board, but the Special Monitor remains in place.

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Hollinger International Inc. v. Hollinger Inc. et al.

The Corporation is a co-defendant in a complaint filed on or about January 16, 2004 in the U.S. District Court for the Northern District of Illinois by Sun-Times claiming damages and recovery for, among other things, alleged breaches of fiduciary duty relating to alleged improper management fees, sales and transfers of assets, non-competition payments and other payments.  Sun-Times is seeking damages from all defendants of US$542 million, including pre-judgment interest of US$117 million.  Repayment has previously been made of certain non-compete payments.  On December 13, 2004, all defendants filed motions to dismiss the complaint.  These motions were denied, and all parties have answered the complaint.  In February 2006, the magistrate judge, to whom the case was assigned for discovery issues and all non-dispositive pretrial motions, granted the U.S. Attorney's Office's motion to stay discovery in the case until the conclusion of the criminal proceedings against Black and others.  On June 20, 2007, the magistrate judge partially lifted the discovery stay to allow Sun-Times and the Corporation to take discovery from each other and certain third parties on the Corporation's counterclaim.  In addition, on July 6, 2006, the Corporation filed a motion for leave to file a counterclaim against Sun-Times.  The motion was granted but Sun-Times has appealed the ruling and has separately moved to dismiss the counterclaim.  The parties are awaiting a ruling in respect of both the appeal and the motion to dismiss.

Co-operation Agreement between the Corporation and the United States Attorney

On May 15, 2006, the Corporation signed the Co-operation Agreement.  In this agreement, the Corporation acknowledges that the United States Attorney for the Northern District of Illinois has developed evidence that the Corporation "is criminally liable because one or more of [the Corporation's] former officers, directors or employees violated federal criminal law with the intent, in part, to benefit [the Corporation] in connection with the . . . fraudulent diversion of approximately [US]$16.55 million from [Sun-Times] to [the Corporation]".  The Corporation also acknowledged "that one or more of its officers, directors or employees acted illegally in connection with [the Corporation's] receipt of approximately [US]$16.55 million in non-compete payments and that it is responsible for repayment of such money".  These amounts have been repaid.  The Corporation has agreed to co-operate with the United States Attorney for the Northern District of Illinois in its investigation and prosecution of matters relating to Sun-Times, in accordance with the terms of the Co-operation Agreement.  The U.S. Attorney has agreed not to prosecute the Corporation "for any crimes committed by its officers, directors or employees relating to the sale of various [Sun-Times] newspaper publishing groups in the United States between 1998 and 2000".  However, the Corporation can be prosecuted if it violates the Co-operation Agreement.

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Class Actions Initiated Against the Corporation

Class actions have been initiated against the Corporation and others in the United States and Canada alleging, among other things, that the Corporation and others failed to disclose the transfer of millions of dollars of Sun-Times' funds to others, falsified Sun-Times' financial results and materially misrepresented Sun-Times' sales of assets and its dealings with related parties.  Specifically:

(a)   In February and April 2004, shareholders of Sun-Times initiated three separate class action suits in the United States District Court for the Northern District of Illinois against Black, various entities controlled directly or indirectly by Black, including the Corporation, Sun-Times, RCL and certain affiliated entities, and others.  On July 9, 2004, the District Court consolidated the three actions for pre-trial purposes.  The complainants assert claims under federal and Illinois securities laws, as well as various common law claims, including fraud, breach of fiduciary duty and aiding and abetting the breaches of fiduciary duty.  The complainants seek unspecified money damages, rescission, and an injunction against future breaches.  All defendants have brought motions to dismiss the actions and are awaiting ruling.  In the meantime, discovery is stayed.

(b)   On September 7, 2004, a group of Sun-Times shareholders initiated class proceedings in the Saskatchewan Court of Queen's Bench.  The defendants include Black, Sun-Times, certain current and former directors and officers of Sun-Times, the Corporation, RCL and certain affiliated entities, and others.  The representative plaintiffs allege, among other things, deceit, breach of fiduciary duty, unjust enrichment, misrepresentation and negligence, and seek unspecified monetary damages.  The litigation in Saskatchewan has been stayed until September 15, 2007.  On September 7, 2004, the representative plaintiffs commenced similar class proceedings in the Ontario Court.  On February 3, 2005, the representative plaintiffs initiated a similar class action in the Québec Superior Court.  The representative plaintiffs allege, among other things, breaches of fiduciary duty and breaches of obligations under the CBCA.

Inspection Order

On September 3, 2004, upon the application of Catalyst, Justice Campbell of the Ontario Court ordered the appointment of an inspector over the affairs of the Corporation pursuant to section 229 of the CBCA.  By further order dated October 27, 2004, Ernst & Young Inc. was named Inspector.  The orders require the Inspector to conduct an investigation into the affairs of the Corporation and specifically into related party transactions and non-competition payments in the period from January 1, 1997 to and including December 2004.  The Inspector provided certain interim reports to the Ontario Court and filed a comprehensive report with the Ontario Court on November 14, 2005.  While the Inspection has been largely inactive since November 2005, it has not been terminated.  Certain orders were issued to facilitate the sale of the real property at 10 Toronto Street.

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Demand by Catalyst for Costs Relating to Professional Fees

In 2006, the Corporation received a demand for $4.0 million from Catalyst for costs relating to professional fees and disbursements incurred by Catalyst in connection with the Inspection and litigation in which the Corporation and Catalyst were parties.  No such costs have been paid.  As at March 31, 2007, $4.0 million had been accrued ($4.0 million at March 31, 2006 and $3.5 million at December 31, 2005).  At this time, the Corporation has not agreed to pay these costs and the Board of Directors is considering this demand.

United States Securities and Exchange Commission v. Conrad M. Black et al.

On November 15, 2004, the SEC filed an action in the United States District Court for the Northern District of Illinois against Black, Radler and the Corporation seeking injunctive, monetary and other equitable relief.

The SEC's allegations against the Corporation include that: (i) the Corporation made material misstatements and omissions in its responses to Sun-Times' 1999 and 2000 proxy questionnaires and in the Corporation's 2001 and 2002 Form 20-F, Form 40-F and proxy statement filings with the SEC concerning US$16.55 million in payments it received in connection with non-compete agreements associated with certain sales transactions; (ii) the Corporation allegedly failed to file its 2003 Form 20-F; (iii) the Corporation knew or was reckless in not knowing that Sun-Times' filings with the SEC were false and misleading because Sun-Times failed to disclose the non-compete payments made to the Corporation; (iv) the Corporation is liable for Sun-Times' alleged violations of certain federal securities laws during this period as a result of the Corporation's alleged failure to disclose properly the non-compete payments it received; and (v) the Corporation falsified or caused to be falsified its books, records and accounts contrary to federal securities laws and circumvented or failed to implement a system of internal accounting controls.

The SEC Action seeks the following relief as against the Corporation: (i) disgorgement of alleged ill-gotten gains by the Corporation and unspecified civil penalties; (ii) a voting trust upon the shares of Sun-Times held by the Corporation; and (iii) an order enjoining the Corporation from further violations of federal securities laws.  A status hearing is scheduled for September 19, 2007.  The SEC Action is stayed until the conclusion of the criminal proceedings against Black and others in Illinois.

Hollinger Inc. v. American Home Assurance Corporation et al.

On March 4, 2005, the Corporation commenced an application in the Ontario Court against American Home Assurance Company, Chubb Insurance Company of Canada, Royal & Sun Alliance Insurance Company of Canada, ACE INA Insurance Company, Zurich Insurance Company of Canada, AXA Canada, Temple Insurance Company, Continental Casualty Company, Lloyd's Underwriters and Gerling Global Canada (the "Insurers").  The relief sought included both an order requiring the Insurers to indemnify the Corporation under the insurance policies issued by them to the Corporation in respect of certain legal expenses incurred in the defence of various actions and an injunction to restrain American Home Assurance Company and Chubb Insurance Company of Canada from paying out the limits of their respective policies (collectively US$50 million) to fund a settlement of certain claims against the independent directors of Sun-Times advanced by Cardinal Value Equity Partners in a derivative action commenced by Cardinal Value Equity Partners in the Delaware Court of Chancery.

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The Ontario Court approved the settlement by the Insurers on behalf of the independent directors, following which it was approved by the Delaware Court of Chancery on or about November 13, 2006.  The Corporation then pursued its claims for indemnification in respect of legal expenses against the remaining excess Insurers.  On or about March 22, 2007, Justice Campbell of the Ontario Court ruled that the Corporation's application for payment of its legal expense was premature.  The Corporation is appealing this decision to the Court of Appeal for Ontario.  It is anticipated that this appeal will be heard in or around December 2007.

Ontario Securities Commission Administrative Proceedings

On March 18, 2005, the Corporation received a notice of hearing and statement of allegations issued by staff of the OSC in respect of an administrative proceeding against the Corporation and others.  The allegations in the notice of hearing relate to the period between 1998 and 2002, except for those that relate to the Corporation's inability to file financial statements.  The Notice of Hearing states that the OSC will consider making an order requiring the Corporation and others (i) to pay an administrative penalty of not more than $1.0 million for each failure by the Corporation to comply with Ontario securities law, (ii) to disgorge to the OSC any amounts obtained as a result of non-compliance with Ontario securities law, and (iii) to pay the costs of the OSC's investigation and any proceeding.  The Corporation filed a reply with the Secretary of the OSC disputing the allegations made in the notice of hearing.  This hearing has been scheduled to commence mid-November 2007 and to continue into 2008.

Burnac Leaseholds v. Domgroup Ltd.

There are two outstanding claims by Burnac Leaseholds Limited and its affiliate, Crystalline Investments Limited, against Domgroup for arrears of rent and continuing rent relating to two properties that Dominion Stores Limited leased from these companies.  The plaintiffs seek to hold Domgroup responsible for rent in relation to time periods after the leases were assigned to a third party.

In 1997, lawsuits were commenced by Crystalline Investments Limited and Burnac Leaseholds Limited claiming just over $500,000.  The plaintiffs filed pre-trial briefs with the Ontario Court in 2000, in which they claimed damages of $2.6 million plus interest and costs.  In 2001, the Ontario Court dismissed the claims and in 2002 an appeal from this decision by the plaintiffs was allowed.  Domgroup sought leave to appeal to the Supreme Court of Canada, which dismissed the appeal, but did not make any determination in respect of Domgroup's contention that the leases were surrendered by the actions of the landlords.  There has been no recent activity in this litigation.

Directors' and Officers' Liability Insurance

The Corporation has incurred significant legal expenses in the defence of various actions brought against it and others in both the United States and Canada.  The Corporation has, in turn, advanced a claim against its directors' and officers' liability insurers asserting that, under the terms and conditions of the relevant policies, these insurers are required to indemnify the Corporation in respect of the legal expenses incurred in connection with some of the actions brought against the Corporation.

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Hollinger International Inc. v. RCL, RMI and Hollinger Inc.

On February 10, 2004, Sun-Times commenced an action in the Ontario Court against the Corporation, RCL and RMI for access to and possession of all of Sun-Times' property in possession of the Corporation, RCL and RMI maintained at 10 Toronto Street.  The parties negotiated and executed a protocol dated March 25, 2004 providing for access and possession by Sun-Times to the claimed property.  On March 5, 2004, a statement of defence and counterclaim was issued by RCL and RMI against Sun-Times and two of its subsidiaries, seeking damages in the amount of approximately US$174.3 million for alleged breaches of the services agreements between the parties and for alleged unjust enrichment and tortious interference with economic relations.  On March 10, 2004, the Corporation filed a statement of defence and a counterclaim against Sun-Times for $300 million, claiming that by refusing to pay its obligations under its services agreement with RCL, Sun-Times intended to cause RMI to default in its obligations to the Corporation under the Support Agreement between RMI and the Corporation, and intended to cause the Corporation to default on its obligations under its outstanding Secured Notes.  On August 11, 2004, Justice Farley granted a motion by Sun-Times to stay the counterclaims pending the conclusion of Sun-Times' action against the Corporation and others in the United States.  RCL and RMI's appeal of Justice Farley's order was dismissed.

Stockgroup Media Inc. et al. v. Hollinger Inc.

By statement of claim issued on January 14, 2005, Stockgroup Information Systems Inc. and Stockgroup Media Inc. commenced an action in the Ontario Court against the Corporation and others.  The plaintiffs claimed against the defendants, jointly and severally, damages in the amount of approximately $0.5 million for reimbursement of prepaid advertising expenses.  The action against the Corporation was dismissed by order of the Ontario Court dated May 15, 2007.

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Action Against Former Interim Directors

By notice of motion filed October 18, 2005, the Corporation applied for directions from the Ontario Court in order to commence an action against the Interim Directors to recover excessive remuneration.  In addition, the Corporation sought to recover $1.2 million in severance payments, to defend a further claim of $1.8 million made by the Interim Directors for alleged unpaid compensation and to recover $6.0 million put in an indemnification trust for the benefit of the Interim Directors.  One of the Interim Directors commenced an action against the Corporation claiming $0.6 million in severance and indemnification of legal expenses.

The Interim Directors delivered notices for payment of legal expenses incurred in proceedings with the Corporation but the Corporation has refused to indemnify the Interim Directors.  The Ontario Court accepted the Corporation's position that, until such time as the Corporation's proceedings against the Interim Directors had been finally determined, the Corporation was not required to indemnify the Interim Directors.  If the Corporation was ultimately successful in its claim that the Interim Directors failed to act in accordance with their statutory duties, by not acting in good faith with a view to the best interests of the Corporation, the Interim Directors would not be entitled to be reimbursed for the legal fees that they have incurred.

Four of the Interim Directors (Walker, Carroll, Metcalfe and Wakefield) commenced an action against the Corporation in the Ontario Court claiming $4.0 million of management and directors' fees, which were asserted to be unpaid and owing in respect of their tenure as directors and owing in respect of time spent in defending the Corporation's motion to review their compensation as directors, a further $1.2 million in respect of departure bonuses for two of the Interim Directors and punitive damages of $0.5 million.  The entitlement of the former directors to these amounts (other than punitive damages) was already before the Ontario Court as part of the Corporation's motion to review the compensation of the former directors.

On February 26, 2007, the Corporation and certain subsidiaries announced that it had entered into an agreement to settle all of its disputes with all five of the Interim Directors (Walker, Carroll, Metcalfe, Wakefield and Vale).  Under the terms of the settlement, two trusts that were established by the Corporation during the tenure of the former directors holding an aggregate of $8.2 million in cash were collapsed.  An aggregate of $1.25 million was paid to the Interim Directors in full satisfaction of all of their claims against the Corporation, including claims exceeding $6.0 million for unpaid directors' fees.  An additional $0.7 million was paid out of the trusts towards the legal fees and disbursements of the Interim Directors.  The balance of approximately $6.0 million plus interest was returned to the Corporation.  All legal proceedings between the parties have been formally dismissed and the parties have released each other from all claims.

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Action Against Former Director

On February 7, 2007, the Corporation filed a notice of action against a former director, Ralph Barford, for damages arising from inadequate oversight of management and breaches of duty.  Tolling agreements have been entered into with other former directors in respect of alleged claims.

Actions Against Sun-Times and the Corporation in Respect of Legal Fees

Pursuant to certain indemnification provisions of Sun-Times' Certificate of Incorporation and bylaws, in May 2005, Black filed suit against Sun-Times in Delaware seeking an advancement of US$6.8 million in legal fees incurred by him in connection with lawsuits and investigations to which he was subject.  Although Black entered into a court-ordered stipulation in June 2004 limiting his advancement with respect to the fees of specific law firms in these legal actions to only 50% of his legal fees, Black later demanded 100% advancement for  fees and disbursements of firms that Black asserted were not covered by the stipulation and filed suits against Sun-Times on these issues.  Sun-Times responded to Black's complaint and included a counterclaim against Black and a third-party claim against the Corporation for 50% of any advancement amounts that it has paid or will in the future be required to pay to Black, Amiel-Black, Radler or Boultbee.  Sun-Times argues that the Corporation should be required, as a matter of equity, to share Sun-Times' advancement costs because the Corporation is obligated to indemnify those same individuals under separate indemnity agreements.

In April 2006, Black and Sun-Times settled this dispute.  The settlement calls for Sun-Times to pay $4.4 million to Black for certain legal fees already incurred, 75% of future fees related to his criminal prosecution and 50% of future fees related to certain other cases.  In the settlement and dismissal of Black's claims against Sun-Times, Sun-Times explicitly reserved the right to pursue its third-party claim against the Corporation.  In June 2006, Sun-Times filed an amended third-party complaint against the Corporation for equitable contribution toward the legal fees Sun-Times has advanced and will in the future advance to Black, Boultbee, Radler and Amiel-Black.  On November 6, 2006, the Delaware Court of Chancery denied the Corporation's motion to discuss the third-party complaint.  The case is temporarily stayed pending settlement discussions between the parties.

Actions Against the Corporation in Respect of Contribution and Indemnity

On January 27, 2006, Black, Amiel-Black, Moffatt Management Inc. and Black-Amiel Management Inc. issued a notice of action against the Corporation, Sun-Times, Argus, RCL, RMI, Radler, Torys LLP and KPMG LLP seeking contribution and indemnity in respect of claims made against them (among others) in various proceedings in Canada and the United States.  On February 27, 2006, the plaintiffs issued a statement of claim against the defendants in respect of this contribution and indemnity claim.  As against the Corporation, the plaintiffs claim that they are entitled to contribution to the extent of the Corporation's own liability in the event that the plaintiffs are found jointly liable for any of the claims in the proceedings.  Black and Amiel-Black further claim indemnification from the Corporation for any and all liability, costs, charges and expenses incurred by them in connection with the proceedings by reason of their having been officers or directors of the Corporation.  This statement of claim was amended on November 8, 2006.  No steps have been taken to move this action forward.

Action by the Corporation Against RCL, RMI, Moffat Management Inc. et al.

On March 29, 2005, the Corporation issued a statement of claim in the Ontario Court against RCL, RMI, Moffatt Management Inc. and Black-Amiel Management Inc., as well as Black, Radler, Boultbee and Atkinson.  The claims made are for monetary damages from all defendants jointly and severally in the amount of $550 million, as well as reimbursement of certain amounts owing to the Corporation in the amount of approximately $86 million, plus accrued interest and costs.  The monetary damages include management fees and non-competition payments paid during the period since 1998, as well as reimbursement of fees and costs related to the Inspection and the process adopted by the Sun-Times Board in November 2003 involving the consideration and assessment of a range of strategic transactions.  The claim alleges diversion of corporate opportunities, breach of fiduciary duties and oppression.  Certain defendants have instituted motions to stay the action and strike some parts of the statement of claim.

On February 27, 2006, the Corporation issued a statement of claim in the Ontario Court against RCL, RMI, 509643 N.B. Inc., 509644 N.B. Inc., 509645 N.B. Inc., 509646 N.B. Inc., 509647 N.B. Inc., Moffatt Management Inc., Black-Amiel Management Inc., Argus, Conrad Black Capital Corporation, Hollinger Aviation Inc., Mowitza Holdings, Inc., 364817 Ontario Limited, F.D. Radler Ltd., 1269940 Ontario Limited, 2753421 Canada Limited, Black, Amiel-Black, Radler, Boultbee, 1406684 Ontario Limited and Atkinson.  In total, the Corporation has claimed damages and other monetary relief against Black and the other defendants in excess of $750 million.  Minor amendments were made to the statement of claim on August 10, 2006.  The statement of claim alleges that the defendants harmed the plaintiffs by, among other things, causing or engaging in:

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(a)   a series of transactions pursuant to which the Corporation's operating assets were sold to Sun-Times for below market value;

(b)   the diversion of significant management fees to RCL (and others), which had been previously paid to the Corporation;

(c)   a series of stock transactions conducted by the Corporation that enabled RCL to increase its ownership of the Corporation at no cost to RCL, but at significant cost to the Corporation;

(d)   a series of improper and unfair public market debt financings wherein Black and certain of his associates caused the Corporation to loan money to RCL and to themselves personally at interest rates highly unfavourable to the Corporation and highly favourable to Black, RCL and other individual defendants;

(e)   a pattern of improper conduct designed to enrich Black and the other defendants at the expense of the Corporation by misappropriating corporate opportunities of the Corporation;

(f)   the diversion to the Corporation from Sun-Times of so-called "non-compete payments" arising from the sale by Sun-Times of certain of its U.S.-based community newspapers, which caused the Corporation significant damage; and

(g)   the active concealment of wrongdoing from the Board of Directors.

Mareva Injunction Against Black and Amiel-Black

On August 18, 2006, pursuant to an application by the Corporation brought without notice, the Ontario Court granted a Mareva Injunction against Black and Amiel-Black freezing their assets and those of entities controlled by them.  On September 29, 2006, the Ontario Court replaced the Mareva Injunction with a consent order continuing the freezing of the assets of Black, Amiel-Black and entities controlled by them, subject to the terms of a confidential settlement agreement, pending resolution of the claims which have been filed against them by the Corporation.

Action by the Corporation Against Black, Amiel-Black, Radler, Boultbee and Atkinson

On April 20, 2007, the Corporation filed a statement of claim in the Ontario Court of against Black, Amiel-Black, Radler, Boultbee and Atkinson seeking a declaration that it is not liable to indemnify those parties under certain indemnity agreements to which the Corporation is a party and that the agreements are void and unenforceable.  The action also seeks recovery of any payments made by the Corporation to the defendants pursuant to the agreements.

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RCL Receivership and CCAA Proceedings

On April 20, 2005, the Ontario Court issued the Receivership and CCAA Orders.  At that time, Richter was appointed as receiver and manager of all of the assets of RCL and RMI, except for certain shares of Sun-Times owned directly or indirectly by RCL that were excluded.  The Receivership and CCAA Orders also provided, among other things, that until May 20, 2005 or such later date as the Ontario Court may order, no proceeding or enforcement process in any court or tribunal may be commenced or continued against or in respect of either or both of RCL and RMI, and any such proceedings then underway (including the Corporation's lawsuit) pertaining to RCL and RMI were temporarily stayed.  On June 7, 2007, the stay of proceedings was extended to November 2, 2007.

On May 18, 2005, the Receivership and CCAA Orders were extended to Argus and five of its subsidiaries, which collectively own, directly or indirectly, 61.8% of the outstanding Common Shares.  Further, the Ontario Court approved the agreement between Sun-Times and Richter pursuant to which Sun-Times altered the Sun-Times SRP to exempt Richter from its provisions by making it an "exempt stockholder", the effect of which was to allow Richter to take control of the Sun-Times shares that had been excluded under the Receivership and CCAA Orders.  The agreement further provided that Sun-Times would not object to the sale by Richter of a number of Common Shares in order to pay for the costs of the receivership.  On June 12, 2006, the Ontario Court appointed Richter as manager and interim receiver of all the property, assets and undertaking of Argent News Inc., a wholly-owned subsidiary of RCL.

The Corporation and its subsidiaries have submitted a proof of claim in the receivership of RCL and RMI.

On January 22, 2007, the Corporation and Domgroup served a motion in the insolvency proceedings regarding RCL and others.  In the motion, the Corporation and Domgroup seek an order confirming the secured obligations owed by RCL to the Corporation and Domgroup and declaring that the applicable security agreements are valid, perfected and enforceable in accordance with their terms.  In the motion, the Corporation and Domgroup claim that the secured obligations owing by RCL total more than $25 million.

On January 25, 2007, the Ontario Court heard a motion brought by Richter in its capacity as receiver of the Ravelston Entities whereby Richter sought, among other things, approval of a plea agreement negotiated with the U.S. Attorney's Office in respect of indictments laid in the United States against RCL.  The motion was supported by the Corporation and Sun-Times and was opposed by Black, Conrad Black Capital Corporation, White and PGWML.

On February 7, 2007, the Ontario Court released its decision in respect of the motion brought by Richter.  In this decision, the Ontario Court granted Richter's motion and authorized Richter to enter into the plea agreement.  Black, Conrad Black Capital Corporation, White and PGWML filed a notice of appeal with the Court of Appeal for Ontario appealing the decision.  That appeal was heard on February 26, 2007 and on March 1, 2007, the Court of Appeal for Ontario issued a decision denying the appeal and upholding the decision of the Ontario Court.  On March 5, 2007, the U.S. court accepted RCL's guilty plea in accordance with the plea agreement.

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On February 15, 2007, the Ontario Court issued a decision permitting Richter to file a "payments report" once it is finalized. The payments report would report on and analyze the monies received by and distributions made by RCL during the period of January 3, 2002 to April 20, 2005, by RMI during the period of July 3, 2002 to April 20, 2005 and by Argus during the period of January 1, 1999 to April 30, 2005.  On February 26, 2007, the Ontario Court of Appeal heard an appeal of this decision by Black and on March 1, 2007 it issued a decision denying the appeal and upholding the decision of the Ontario Court.  The payments report was filed on April 5, 2007 and a supplemental report was filed on May 2, 2007.

Application for Removal of Board Members

In September 2004, Catalyst applied to the Ontario Court for an order removing a majority of the Board of Directors (including Black, Radler, Boultbee, Amiel-Black and White) on the basis that they had acted in a manner oppressive to the Corporation's minority shareholders.  Black resigned as a director and officer of the Corporation on November 2, 2004, immediately prior to the commencement of the hearing of the application.  On November 18, 2004, Justice Campbell ordered the removal of three of the Corporation's directors, namely, Amiel-Black, Boultbee and Radler.  White was permitted to continue to act as a director at the pleasure of the Board.  White was subsequently removed from the Board of Directors by further order dated June 8, 2005.  Black, Amiel-Black and Boultbee appealed the November 18, 2004 order, however, these appeals were ultimately abandoned.  White appealed the November 18, 2004 order and the June 8, 2005 removal order, and his appeals were dismissed by the Ontario Court of Appeal in March 2006.

On May 19, 2005, White commenced proceedings against the Corporation for an order that the Corporation indemnify him for all costs, charges and expenses that he reasonably incurred in responding to the applications for his removal from the Board of Directors.  By order dated June 8, 2005, Justice Campbell dismissed White's application.  White's appeal of the June 8, 2005 dismissal order was dismissed by the Ontario Court of Appeal in March 2006.

Mareva Injunction Against Radler and F.D. Radler Ltd.

On October 25, 2006, pursuant to a motion brought by the Corporation without notice, the British Columbia Supreme Court granted a temporary Mareva Injunction against Radler and F.D. Radler Ltd. freezing their assets.  On November 14, 2006, Justice Wedge of the British Columbia Supreme Court refused an application by the Corporation to extend this Mareva Injunction.  The Corporation's motion for leave to appeal was dismissed.

Action by Black for Repayment of Funds

On July 6, 2006, counsel for Black served a demand letter on the Corporation demanding repayment of the sum of approximately $20.4 million advanced by Black to Sun-Times on July 16, 2004 in satisfaction of the Delaware Order (in respect of the non-compete payments that were diverted from Sun-Times to the Corporation).  Black also demanded associated costs in the amount of $192,000, plus interest.  On December 13, 2006, Black served a notice of action and statement of claim on the Corporation pursuant to which Black seeks damages in the amount of these demanded repayments.

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Wells Fargo Bank Northwest, N.A. v. Sugra (Bermuda) Limited

On November 3, 2004, Wells Fargo Bank Northwest, N.A. and Key Corporate Capital Inc. commenced an action in the State of New York against Sugra (Bermuda) Limited, a subsidiary of Sun-Times, and the Corporation.  The action alleged that Sugra (Bermuda) Limited defaulted under the terms of a 1995 aircraft lease agreement and that the Corporation is a guarantor of Sugra (Bermuda) Limited's obligations under the lease.  The plaintiffs sought US$5.1 million in damages, plus interest at the rate of 18% per annum and attorney's fees.  On December 22, 2005, the Corporation settled the litigation with Wells Fargo Bank Northwest, N.A. and Key Corporate Capital Inc. and paid US$0.8 million as its share of the settlement.  The settlement and legal costs related thereto, aggregating $1.1 million, were expensed in 2004.

Action by 783783 Alberta Ltd.

By amended statement of claim dated October 25, 2006, 783783 Alberta Ltd., carrying on business as Vue Weekly, commenced an action against several parties including the Corporation and HCPH Co. in the Court of Queen's Bench of Alberta.  The action centres on Vue Weekly's allegation that SEE Magazine, Vue Weekly's main competitor, was improperly deemed to be a "Canadian newspaper" for tax purposes and, as a result, obtained preferential tax treatment, when it should not have been considered to be a Canadian newspaper.  It is alleged in the action that SEE Magazine is published by Great West Newspaper Group Ltd. through its wholly-owned operating subsidiary Gazette Press Ltd. and that Great West Newspaper Group Ltd. is jointly owned by Jamison Newspapers Inc. and HCPH Co.  According to the statement of claim, HCPH Co. is wholly owned by Sun-Times.  In the action, Vue Weekly seeks a declaration that SEE Magazine was not a "Canadian newspaper" under the Tax Act and further seeks damages from the defendants, jointly and severally, in the sum of at least $5.0 million.

Editorial La Razon

The consolidated financial statements of the Corporation include the accounts of ELR (see "Description of the Business − Editorial La Razon").  ELR was not consolidated in the accounts of the Corporation, although it exercised majority control (as that term is defined in the CICA Handbook) over ELR in financial statements for periods prior to January 1, 2003.  However, during these periods, local management reported to personnel at Sun-Times.  Although the financial statements of the Corporation include an accrual for contingent liabilities of approximately $1.0 million that the Corporation is aware of to date, principally relating to income and withholding tax matters and compliance with corporate legal requirements in Costa Rica, the shares of ELR in Costa Rica have been sold subsequent to year end.  The purchaser has thereby assumed all contingent liabilities.

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Insurer's Complaint Against Sun-Times and the Corporation

The Corporation is co-insured on an insurance policy against which Sun-Times has made a claim for defence of the cases arising out of the Chicago Sun-Times circulation inflation allegations. On October 5, 2004, Sun-Times announced the overstatement of circulation figures for the Chicago Sun-Times, as reported in the circulation reports issued by the Audit Bureau of Circulations commencing in 1998.  As a result, lawsuits have been commenced by various parties for alleged damages resulting from such overstatement against Sun-Times.  Sun-Times and the Corporation are named as co-insured for such losses under an insurance policy with the Employers Reinsurance Corp.  The Employers Reinsurance Corp. has commenced a complaint for declaratory judgment against Sun-Times and the Corporation.  The Corporation has not yet been served with the complaint.

Action by Morneau Sobeco Against TSI

Certain of the employees of wholly-owned subsidiaries of the Corporation participated in the RCL Plan. Due to the status of RCL, the Superintendent of Financial Services of Ontario appointed Morneau Sobeco as the administrator of the RCL Plan.  It is expected that the RCL Plan will be wound up.  TSI employees ceased participating in the RCL Plan effective December 31, 2005.

By statement of claim issued April 12, 2007, Morneau Sobeco asserted a claim against TSI in the Ontario Court for an order that TSI pay the amount of $2.9 million, plus costs and interest, with respect to alleged payments owing in respect of the RCL Plan.  TSI has filed a defence but examinations for discovery have not yet been held.  Morneau Sobeco amended its claim to assert a lien under section 57 of the Pension Benefits Act for all amounts claimed to be owing by TSI.  Morneau Sobeco also registered a lien on title to the 10 Toronto Street property and filed a financing statement under the Personal Property Security Act (Ontario).  In order to allow the sale of the property to close, $2.9 million from the sale proceeds of the property was paid into an interest bearing trust account as a condition to Morneau Sobeco lifting its lien.  These funds remain in trust pending motions, currently scheduled to be heard on July 23, 2007, to determine if the funds should continue to be held in trust pending a determination of Morneau Sobeco’s claims or if the funds should be released to TSI.

Contingent Tax Liabilities Under Discussion with Canadian Authorities

The March 31, 2007, March 31, 2006 and December 31, 2005 balance sheets include a liability for contingencies in the amount of approximately $4.0 million associated with issues under discussion with Canadian tax authorities.  The Corporation records liabilities for known tax contingencies when, in the judgment of management, it is probable that a liability has been incurred.  The Corporation's contingency reserves represent liabilities for estimated taxes, interest and penalties for the taxation years through March 31, 2007, and principally relate to certain related-party transactions that occurred prior to the 2004 taxation year.  The ultimate resolution of the tax contingencies is dependent on further submissions to and discussions with the tax authorities.  While management is of the view that the contingent liabilities recorded for these matters are adequate, it is not known what the financial implications of the ultimate resolution will be.

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Action by the Corporation Against Former Banking Syndicate Members

On May 31, 2007, the Corporation commenced proceedings in the Ontario Court against its former banking syndicate members, Canadian Imperial Bank of Commerce, Toronto-Dominion Bank and the Bank of Nova Scotia seeking recovery of, among other things, $65.2 million which those banks received from the Corporation in March 2003.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

Except as otherwise disclosed herein, no (a) director or executive officer of the Corporation, (b) person or company that is the direct or indirect beneficial owner of, or who exercises control or direction over, more than 10% of any class or series of the Corporation's outstanding securities, and (c) an associate or affiliate of any of the persons or companies referred to in (a) or (b), since January 1, 2005, has had any material interest, direct or indirect, in any transaction which has materially affected or would materially affect the Corporation.

Three loans were made by Domgroup to RCL in the principal amounts of $4.7 million, $4.8 million and $5.2 million to assist RMI in meeting its obligations to the Corporation under the Support Agreement and thereby assist the Corporation in meeting its obligations under the Indentures.  Each of the loans is evidenced by a demand promissory note bearing interest at the prime lending rate plus 4% per annum, calculated and payable monthly, and secured pursuant to a general security agreement of RCL.  The principal amounts of these loans and accrued interest thereon remain outstanding.

Expenses of approximately $7.0 million were incurred by the Corporation in connection with the going private transaction proposed by RCL in 2004, which RCL agreed to reimburse to the Corporation pursuant to a reimbursement agreement.  RCL's obligation to reimburse the Corporation is secured by a general security agreement.

The Corporation has claimed amounts due from RMI of $93.4 million at March 31, 2007 in connection with RMI's obligations under the Support Agreement.  Amounts owing by RMI under the Support Agreement do not accrue interest and are unsecured obligations of RMI.  Pursuant to the Contribution Agreement, RCL unconditionally guaranteed RMI's obligations under the Support Agreement, with such guarantee supported by a pledge of RCL's shares of RMI.

An amended promissory note dated March 10, 2003 was issued by the Corporation in favour of Sun-Times in the principal amount of US$20.4 million.  The principal amount of this promissory note bears interest at a rate of 14.25% per annum if interest is paid in cash (and 16.50% per annum if paid in kind) for an aggregate outstanding principal and accrued interest of $40.5 million (US$35.1 million) at March 31, 2007.  Interest is calculated quarterly and all amounts owing under this promissory note are payable on demand after March 2, 2011.  The Corporation paid $0.8 million (US$0.7 million) through August 31, 2003 and no further interest payments have been made to Sun-Times.  Interest continues to be accrued.  Certain covenants under the Secured Notes restrict payment of interest.  This promissory note is also secured by a pledge of the Contribution Agreement.  The promissory note is guaranteed by RCL and secured by its receivables under RCL's management services agreement with CanWest Global Communications Corp.  The Corporation understands that the management services agreement between RCL and CanWest Global Communications Corp. was terminated in May 2005.  All amounts owing under the amended promissory note are subordinated to the Secured Notes.

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On March 10, 2003, Sun-Times repurchased for cancellation 2,000,000 Sun-Times A Shares from the Corporation at US$8.25 per share for total proceeds of $24.2 million (US$16.5 million).  On January 1, 2003, the fair value of a Sun-Times A Share was US$10.69.  Sun-Times also redeemed from the Corporation, pursuant to a redemption request, all of the 93,206 outstanding shares of its Series E redeemable convertible preferred stock at the fixed redemption price of $146.63 per share for total proceeds of $13.6 million (US$9.3 million).  These transactions were completed in conjunction with the Corporation closing the private placement of the $120 million tranche of Secured Notes issued March 10, 2003.

Proceeds from the repurchase and redemption were offset against debt due to Sun-Times from the Corporation, resulting in net outstanding debt due to Sun-Times of approximately $29.9 million (US$20.4 million) as of March 10, 2003.

The debt due to Sun-Times represented amounts loaned by Sun-Times to the Corporation in connection with the cash purchase by the Corporation of special shares of HCPH Co., a subsidiary of Sun-Times, in 1997.  In 2001, the special shares were exchanged for cash.

The Corporation and Sun-Times previously reported that a committee of independent directors of Sun-Times had agreed to a partial subsequent offset of the remaining US$20.4 million of debt against amounts owed by Sun-Times to RMI and further stated that the offset was effected April 30, 2003.  Although the Corporation believed final approval had been given for the offset by the committee of independent directors of Sun-Times, the committee advised that final approval of any offset was subject to appropriate due diligence and receipt of an independent fairness opinion.  Upon completion of its due diligence review, the committee decided to withhold approval of the subsequent partial offset.

As a result of an understanding that the subsequent partial offset had been completed on April 30, 2003, the Corporation did not pay interest on the principal amount of the debt due to Sun-Times that had been partially offset.  RCL did not make the payment due on June 30, 2003 into a cash collateral account of Sun-Times securing the debt.  Since that time, the Corporation has not paid interest on the principal amount that remained after the subsequent partial offset and RCL has made no further payments to the cash collateral account.

Effective December 23, 2003, the Corporation entered into a consulting agreement with PGWML, a corporation controlled by White.  The consulting agreement, which provided that White render various services to the Corporation, was terminated effective May 31, 2005.  In connection with services provided under the consulting agreement, PGWML received $75,000 per month.  The following amounts were incurred in respect of such services:

(a)           2006/2007 Financial Year:  nil;

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(b)           financial year (three months) ended March 31, 2006:  nil; and

(c)           financial year ended December 31, 2005:  $397,000.

RCL and RMI used the Corporation's offices at 10 Toronto St., Toronto, Ontario until May 31, 2005 and paid no rent in respect of the five months ended May 31, 2005.

Certain employees of the Corporation provided services to RCL, RMI and Argus until May 31, 2005.

Certain employees of the Corporation are former employees of RMI.  Employment contracts for these employees were transferred to the Corporation effective January 1, 2004.  The employees retained all seniority, pension benefits and other entitlements earned while at RMI and remain beneficiaries under an existing pension plan.  The pension plan is now under the control of  Morneau Sobeco, as an administrator, appointed by the Financial Services Commission of Ontario.  The Corporation is unable to determine and no agreement has been made between RCL, RMI and the Corporation as to their respective legal obligations in respect of the RCL Plan.

On February 7, 2006, the Ontario Court approved an agreement between TSI and Richter.  The agreement amends an agreement entered into between TSI and Argus made as of June 30, 1986 granting Argus an option to purchase and a right of first refusal with respect to the real property located at 10 Toronto Street.  The agreement provided for the early expiration of the option and the termination of the right of first refusal in exchange for a commitment to pay a minimum of $750,000 and possible additional consideration upon the sale of the real property located at 10 Toronto Street.  Pursuant to and in satisfaction of all payments required under this agreement, a payment of $1.0 million was made to Richter out of the proceeds of the May 8, 2007 sale of the real property located at 10 Toronto Street.

On January 16, 2007, the Corporation announced that Benson would be stepping down as Chief Restructuring Officer of the Corporation after a transition period, following which Voorheis, a director of the Corporation and chairman of the Litigation Committee, would be appointed Chief Executive Officer.  Pursuant to the Advisory Agreement MOA, Benson ceased to serve as the CRO of the Corporation on March 7, 2007 and at such time the Advisory Agreement terminated.  Pursuant to the terms of the Advisory Agreement MOA, Benson Consulting was paid $1 million in consideration of the services rendered and milestones achieved.  All payouts required under the Advisory Agreement MOA have been made.

On January 15, 2007, the Corporation and VC&Co. entered into the Voorheis Engagement Agreement, pursuant to which Voorheis agreed to act as senior executive of the Corporation subject to the satisfaction of certain conditions.  On June 20, 2007, the Corporation, VC&Co. and Voorheis entered into the Voorheis Consulting Services Agreement, effective April 16, 2007, pursuant to which the Corporation appointed Voorheis to serve as Chief Executive Officer of the Corporation.

During the year, the Corporation paid $180,000 to Voorheis & Co. LLP, an advisory firm founded by and related to Mr. Voorheis.

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MATERIAL CONTRACTS

The following material contracts, other than contracts entered into in the ordinary course of business, were entered into by the Corporation: (i) during and following the 2006/2007 Financial Year; or (ii) before the 2006/2007 Financial Year and subsequent to January 1, 2002 but are still in effect:

(a)   The Indentures. See "General Development of the Corporation and Its Business";

(b)   The Support Agreement. See "General Development of the Corporation and Its Business";

(c)   The Contribution Agreement. See "General Development of the Corporation and Its Business";

(d)   The Co-operation Agreement. See "Legal Proceedings – Co-operation Agreement between the Corporation and the United States Attorney";

(e)   The Advisory Agreement, as modified by the Advisory Agreement MOA.  See "General Development of the Corporation and Its Business";

(f)   An agreement of purchase and sale dated October 31, 2006 between Domgroup and Lanterra Realty Inc. in respect of the real property located at 3087-3101 Dufferin Street and 770 Lawrence Avenue West, Toronto, Ontario for a sale price of $19.6 million.  See "General Development of the Corporation and Its Business";

(g)   An agreement of purchase and sale dated November 7, 2006 between Domgroup and Charis Developments Ltd. in respect of the real property located at 280 Hurontario Street, Collingwood, Ontario for a sale price of $2.81 million.  See "General Development of the Corporation and Its Business";

(h)   An agreement of purchase and sale dated December 8, 2006 between TSI and Morgan Meighen & Associates in respect of the real property at 10 Toronto Street, the Corporation's Toronto corporate office, for a sale price of $14 million.  See "General Development of the Corporation and Its Business";

(i)   The Voorheis Consulting Services Agreement;

(j)   A settlement agreement announced on February 26, 2007 between the Corporation and the Interim Directors (Walker, Carroll, Metcalfe, Wakefield and Vale).  See "Legal Proceedings – Action Against Former Interim Directors";

(k)   An agreement of purchase and sale dated May 30, 2007 between the Corporation and SRB CR Limitada in respect of all the shares of ELR for a sale price of US$2 million.  See "Description of the Business – Editorial La Razon"; and

(l)   An agreement of purchase and sale dated June 7, 2007 between Domgroup and BREOF VTB G.P. Limited, in its capacity as General Partner of BREOF VTB L.P., in respect of a vendor take-back mortgage for proceeds of $8.3 million.  See "General Development of the Corporation and Its Business".

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TRANSFER AND REGISTRAR AGENT

The Corporation's transfer and registrar agent for the Common Shares and Series II Preference Shares is Computershare Trust Company of Canada, 100 University Avenue, 9^th Floor, North Tower, Toronto, Ontario M5J 2Y1.

AUDIT COMMITTEE

Audit Committee Charter

The text of the charter of the Audit Committee is attached hereto as Exhibit A.

Composition of the Audit Committee

The Audit Committee as at March 31, 2007 was composed of three independent directors.  Rattee was and continues to be the Chairman of the Audit Committee.  Hodgson and Glassman were the other members of the Audit Committee.  Glassman ceased to be a member in May 2007.  Drinkwater was named to the Audit Committee on June 26, 2007.  Hodgson was named to the Audit Committee following the resignation by Wright on April 17, 2006.  Each member of the Audit Committee is financially literate (as defined under Multilateral Instrument 52-110 – Audit Committees).

Relevant Education and Experience

For a description of the relevant education and experience of Drinkwater, Hodgson, Glassman and Rattee, see "Directors and Officers".

AUDITORS

The Corporation's auditors are Zeifman & Company, LLP, located at 201 Bridgeland Avenue, Toronto, Ontario M6A 1Y7.  Zeifman was appointed auditors for the Corporation on March 5, 2004.

Audit Fees

The aggregate fees billed by Zeifman in the financial years ended March 31, 2006 and March 31, 2007 for audit services were $651,400 and $926,800, respectively.

Audit-Related Fees

The aggregate fees billed by Zeifman in the financial years ended March 31, 2006 and March 31, 2007 for assurance and related services that were reasonably related to the performance of the audit of the Corporation's financial statements (and not reported under "− Audit Fees") were $108,500 and $81,400, respectively.

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Tax Fees

The aggregate fees billed by Zeifman in the financial years ended March 31, 2006 and March 31, 2007 for professional services rendered in connection with tax compliance, tax advice and tax planning were $220,650 and $177,800, respectively.

All Other Fees

There were no other fees billed by Zeifman in the financial years ended March 31, 2006 and March 31, 2007 for products and services other than those reported under "− Audit Fees", "− Audit-Related Fees" and "− Tax Fees".

INTERESTS OF EXPERTS

As at March 31, 2007, the partners and associates of Zeifman & Company, LLP did not own, beneficially, directly or indirectly, any securities of the Corporation.

ADDITIONAL INFORMATION

Additional information relating to the Corporation may be found on SEDAR which can be accessed through the Internet at www.sedar.com.  Additional financial information is provided in the Corporation's annual audited financial statements and related MD&A for the financial year ended March 31, 2007.  A copy of such documents and this AIF may be obtained upon request from the Office of the Chief Financial Officer of the Corporation.  The Corporation may require the payment of a reasonable charge if the request is made by a person who is not a holder of securities of the Corporation.

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EXHIBIT A

CHARTER OF THE AUDIT COMMITTEE

OF

HOLLINGER INC.

GENERAL

1.   Purpose and Responsibilities Of The Committee

1.1   Purpose

The primary purpose of the Committee is to assist Board oversight of:

(a)   the integrity of Hollinger's financial statements;

(b)   Hollinger's compliance with legal and regulatory requirements;

(c)   the External Auditor's qualifications and independence; and

(d)   the performance of Hollinger's External Auditor.

2.   Definitions and Interpretation

2.1   Definitions

In this Charter:

(a)   "Board" means the board of directors of Hollinger;

(b)   "Chairman" means the chairman of the Committee;

(c)   "Committee" means the audit committee of the Board;

(d)   "Director" means a member of the Board;

(e)   "External Auditor" means Hollinger's independent auditor;

(f)   "Hollinger" means Hollinger Inc.; and

(g)   "Subsidiaries" means Hollinger's subsidiaries excluding Sun-Times Media Group, Inc.

2.2   Interpretation

The provisions of this Charter are subject to the provisions of Hollinger's by-laws and to the applicable provisions of the Canada Business Corporations Act (the "Act"), and any other applicable legislation.

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CONSTITUTION AND FUNCTIONING OF THE COMMITTEE

3.   Establishment and Composition of the Committee

3.1   Establishment of the Audit Committee

The Committee is hereby continued with the constitution, function and responsibilities herein set forth.

3.2   Appointment and Removal of Members of the Committee

(a)Board Appoints Members.  The members of the Committee shall be appointed by the Board.

(b)Vacancies.  The Board may appoint a member to fill a vacancy which occurs in the Committee.

(c)Removal of Member.  Any member of the Committee may be removed from the Committee by a resolution of the Board.

3.3   Number of Members

The Committee shall consist of three or more Directors.

3.4   Independence of Members

Each member of the Committee shall be independent for the purposes of all applicable regulatory and stock exchange requirements (unless such member is exempt from such requirement).

3.5   Financial Literacy

(a)Financial Literacy Requirement.  Each member of the Committee shall be financially literate or must become financially literate within a reasonable period of time after his or her appointment to the Committee.

(b)Definition of Financial Literacy.  "Financially literate" means the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by Hollinger's financial statements.

3.6   Audit Committee Financial Expert

(a)Attributes of an Audit Committee Financial Expert.  To the extent possible, the Board will appoint to the Committee at least one Director who has the following attributes:

(i)   an understanding of generally accepted accounting principles and financial statements;

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(ii)   ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves;

(iii)   experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by Hollinger's financial statements, or experience actively supervising one or more persons engaged in such activities;

(iv)   an understanding of internal controls and procedures for financial reporting; and

(v)   an understanding of audit committee functions.

(b)Experience of the Audit Committee Financial Expert.  To the extent possible, the Board will appoint to the Committee at least one Director who acquired the attributes in (a) above through:

(i)   education and experience as a principal financial officer, principal accounting officer, controller, public accountant or auditor or experience in one or more positions that involve the performance of similar functions (or such other qualification as the Board interprets such qualification in its business judgment);

(ii)   experience actively supervising a principal financial officer, principal accounting officer, controller, public accountant, auditor or person performing similar functions;

(iii)   experience overseeing or assessing the performance of companies or public accountants with respect to the preparation, auditing or evaluation of financial statements; or

(iv)   other relevant experience.

3.7   Board Approval Required

No member of the Committee shall serve on more than three public company audit committees without the approval of the Board.

4.   Committee Chairman

4.1   Board to Appoint Chairman

The Board shall appoint the Chairman from the members of the Committee who are unrelated directors (or, if it fails to do so, the members of the Committee shall appoint the Chairman of the Committee from among its members).

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4.2   Chairman to be Appointed Annually

The designation of the Committee's Chairman shall take place annually at the first meeting of the Board after a meeting of the members at which Directors are elected, provided that if the designation of Chairman is not so made, the Director who is then serving as Chairman shall continue as Chairman until his or her successor is appointed.

5.   Committee Meetings

5.1   Quorum

A quorum of the Committee shall be two members.

5.2   Secretary

The Chairman shall designate from time to time a person who may, but need not, be a member of the Committee, to be Secretary of the Committee.

5.3   Time and Place of Meetings

The time and place of the meetings of the Committee and the calling of meetings and the procedure in all things at such meetings shall be determined by the Committee; provided, however, the Committee shall meet at least quarterly.

5.4   In Camera Meetings

As part of each meeting of the Committee at which the Committee recommends that the Board approve the annual audited financial statements or at which the Committee approves  the quarterly financial statements, the Committee shall meet separately with each of:

(a)   management;

(b)   the External Auditor; and

(c)   the internal auditor if one exists.

5.5   Right to Vote

Each member of the Committee shall have the right to vote on matters that come before the Committee.

5.6   Invitees

The Committee may invite Directors, officers and employees of Hollinger or any other person to attend meetings of the Committee to assist in the discussion and examination of the matters under consideration by the Committee.  The External Auditor shall receive notice of each meeting of the Committee and shall be entitled to attend any such meeting at Hollinger's expense.

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5.7   Regular Reporting

The Committee shall report to the Board at the Board's next meeting the proceedings at the meetings of the Committee and all recommendations made by the Committee at such meetings.

6.   Authority of Committee

6.1   Retaining and Compensating Advisors

The Committee shall have the authority to engage independent counsel and other advisors as the Committee may deem appropriate in its sole discretion and to set and pay the compensation for any advisors employed by the Audit Committee.  The Committee shall not be required to obtain the approval of the Board in order to retain or compensate such consultants or advisors.

6.2   Recommendations to the Board

The Committee shall have the authority to make recommendations to the Board, but shall have no decision-making authority other than as specifically contemplated in this Charter.

7.   Remuneration of Committee Members

7.1   Remuneration of Committee Members

Members of the Committee and the Chairman shall receive such remuneration for their service on the Committee as the Board may determine from time to time.

7.2   Directors' Fees

No member of the Committee may earn fees from Hollinger or any of its subsidiaries other than Directors' fees (which fees may include cash and/or shares or options or other in-kind consideration ordinarily available to directors, as well as all of the regular benefits that other directors receive).  For greater certainty, no member of the Committee shall accept, directly or indirectly, any consulting, advisory or other compensatory fee from Hollinger.

SPECIFIC DUTIES AND RESPONSIBILITIES

8.   Integrity of Financial Statements

8.1   Review and Approval of Financial Information

(a)Annual Financial Statements.  The Committee shall review and discuss with management and the External Auditor, Hollinger's audited annual financial statements and related MD&A together with the report of the External Auditor thereon and, if appropriate, recommend to the Board that it approve the audited annual financial statements.

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(b)Interim Financial Statements.  The Committee shall review and discuss with management and, if requested by the Committee, the External Auditor and, if appropriate, approve, Hollinger's interim unaudited financial statements and related MD&A.

(c)Material Public Financial Disclosure.  The Committee shall discuss with management and the External Auditor, as appropriate:

(i)   the types of information to be disclosed and the type of presentation to be made in connection with earnings press releases;

(ii)   financial information and earnings guidance (if any) provided to analysts and rating agencies; and

(iii)   press releases containing financial information (paying particular attention to any use of "pro forma" or "adjusted" non-GAAP information).

(d)Procedures for Review.  The Committee shall be satisfied that adequate procedures are in place for the review of Hollinger's disclosure of financial information extracted or derived from Hollinger's financial statements (other than financial statements, MD&A and earnings press releases, which are dealt with elsewhere in this Charter) and shall periodically assess the adequacy of those procedures.

(e)General.  The Committee shall review and discuss with management and the External Auditor:

(i)   the scope of the external audit;

(ii)   major issues regarding accounting principles and financial statement presentations, including any significant changes in Hollinger's selection or application of accounting principles;

(iii)   major issues as to the adequacy of Hollinger's internal controls over financial reporting and any special audit steps adopted in light of material control deficiencies;

(iv)   analyses prepared by management and/or the External Auditor setting forth significant financial reporting issues and judgments and estimates made in connection with the preparation of the financial statements, including analyses of the effects of alternative GAAP methods on the financial statements;

(v)   the effect on Hollinger's financial statements of regulatory initiatives, as well as off-balance sheet transactions structures, obligations (including contingent obligations) and other relationships of Hollinger with unconsolidated entities or other persons that have a material current or future effect on the financial condition, changes in financial condition, results of operations, liquidity, capital resources, capital reserves or significant components of revenues or expenses of Hollinger;

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(vi)   the extent to which changes or improvements in financial or accounting practices, as approved by the Committee, have been implemented;

(vii)   any financial information or financial statements in prospectuses and other offering documents;

(viii)   the management certifications of the financial statements as required, under applicable securities laws in Canada or otherwise;

(ix)   any other relevant reports or financial information submitted by the Corporation to any governmental body, or the public;

(x)   funding and pension plan financial statements of Hollinger's pension plans, if any; and

(xi)   emerging accounting issues and their potential impact on Hollinger's financial reporting.

9.   External Auditor

9.1   External Auditor

(a)Authority with Respect to External Auditor.  As a representative of Hollinger's shareholders, the Committee shall be directly responsible for the appointment, compensation and oversight of the work of the External Auditor engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for Hollinger.  In the discharge of this responsibility, the Committee shall:

(i)   have sole responsibility for recommending to the Board the person to be proposed to Hollinger's shareholders for appointment as External Auditor for the above-described purposes as well as the responsibility for recommending such External Auditor's compensation and determining at any time whether the Board should recommend to Hollinger's shareholders whether the incumbent External Auditor should be removed from office;

(ii)   review the terms of the External Auditor's engagement, discuss the audit fees with the External Auditor and be solely responsible for approving such audit fees; and

(iii)   require the External Auditor to confirm in its engagement letter each year that the External Auditor is accountable to the Board and the Committee as representatives of shareholders.

(b)Independence.  The Committee shall satisfy itself as to the independence of the External Auditor.  As part of this process the Committee shall:

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(i)   consider whether, in order to ensure continuing independence of the External Auditor, Hollinger should rotate periodically, the audit firm that serves as External Auditor;

(ii)   require the External Auditor to submit on a periodic basis to the Committee, a formal written statement delineating all relationships between the External Auditor and Hollinger and that the Committee is responsible for actively engaging in a dialogue with the External Auditor with respect to any disclosed relationships or services that may impact the objectivity and independence of the External Auditor and for recommending that the Board take appropriate action in response to the External Auditor's report to satisfy itself of the External Auditor's independence; and

(iii)   review and approve the policy setting out the restrictions on Hollinger hiring partners, employees and former partners and employees of Hollinger's current or former External Auditor.

(c)Issues Between External Auditor and Management.  The Committee shall:

(i)   review any problems experienced by the External Auditor in conducting the audit, including any restrictions on the scope of the External Auditor's activities or on access to requested information;

(ii)   review any significant disagreements with management and, to the extent possible, resolve any disagreements between management and the External Auditor; and

(iii)   review with the External Auditor:

(A)   any accounting adjustments that were proposed by the External Auditor, but were not made by management;

(B)   any communications between the audit team and audit firm's national office respecting auditing or accounting issues presented by the engagement; and

(C)   any management or internal control letter issued, or proposed to be issued by the External Auditor to Hollinger.

(d)Non-Audit Services.

(i)   The Committee shall either:

(A)   pre-approve any non-audit services provided by the External Auditor or the external auditor of any subsidiary of Hollinger to Hollinger (including its subsidiaries); or

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(B)   adopt specific policies and procedures for the engagement of non-audit services, provided that such pre-approval policies and procedures are detailed as to the particular service, the audit committee is informed of each non-audit service and the procedures do not include delegation of the audit committee's responsibilities to management.

(ii)   The Committee may delegate to one or more independent members of the Committee the authority to pre-approve non-audit services in satisfaction of the requirement in the previous section, provided that such member or members must present any non-audit services so approved to the full audit committee promptly following such pre-approval.

(iii)   The Committee shall instruct management to promptly bring to its attention any services performed by the External Auditor which were not recognized by Hollinger at the time of the engagement as being non-audit services.

(e)Evaluation of External Auditor.  The Committee shall evaluate the External Auditor each year, and present its conclusions to the Board.  In connection with this evaluation, the Committee shall:

(i)   review and evaluate the performance of the lead partner of the External Auditor; and

(ii)   obtain and review a report by the External Auditor describing:

(A)   the External Auditor's internal quality-control procedures;

(B)   any material issues raised by the most recent internal quality-control review, or peer review, of the External Auditor's firm or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the External Auditor's firm, and any steps taken to deal with any such issues; and

(C)   all relationships between the External Auditor and Hollinger (for the purposes of assessing the External Auditor's independence).

(f)Review of Management's Evaluation and Response.  The Committee shall:

(i)   review management's evaluation of the External Auditor's audit performance;

(ii)   review the External Auditor's recommendations, and review management's response to and subsequent follow-up on any identified weaknesses;

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(iii)   receive regular reports from management and receive comments from the External Auditor, if any, on:

(A)   Hollinger's principal financial risks;

(B)   the systems implemented to monitor those risks; and

(C)   the strategies (including hedging strategies) in place to manage those risks; and

(iv)   recommend to the Board whether any new material strategies presented by management should be considered appropriate and approved.

10.   Other

10.1   Risk Assessment and Risk Management

The Committee shall discuss Hollinger's major financial risk exposures and the steps management has taken to monitor and control such exposures.

10.2   Related Party Transactions

The Committee shall review and approve all related party transactions in which Hollinger is involved or which Hollinger proposes to enter into.

11.   Charter Review

The Committee shall review and assess the adequacy of this Charter annually and recommend to the Board any changes it deems appropriate.

January 2007

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EX-99.19

Exhibit 99.19

EX-99.20

Exhibit 99.20

FORM 13-502F1

CLASS 1 REPORTING ISSUERS - PARTICIPATION FEE

Reporting Issuer Name:	HOLLINGER INC.
Fiscal year end date used to calculate capitalization:	March 31, 2007  (fee for year ending March 31, 2008)

Market value of listed or quoted securities:
	Total number of securities of a class or series outstanding as at the issuer's most recent fiscal year end				34,945,776(i)
	Simple average of the closing price of that class or series as of the last trading day of each month of the fiscal year (See clauses 2.11(a)(ii)(A) and (B) of the Rule)				$1.53  (ii)
	Market value of class or series				(i) x (ii) =	$53,467,037  (A)
	(Repeat the above calculation for each class or series of securities of the reporting issuer that was listed or quoted on a marketplace in Canada or the United States of America at the end of the fiscal year) See Schedule "A" for Series II Preference Share					$5,208,105   (B)
Market value of other securities;
	(See paragraph 2.11(b) of the Rule) (Provide details of how value was determined)					Nil  (C)
	(Repeat for each class or series of securities)					Nil   (D)
Capitalization
	(Add market value of all classes and series of securities)	(A) + (B) + (C) + (D) =				$58,675,142
Participation Fee
	(From Appendix A of the Rule, select the participation fee beside the capitalization calculated above)					$3,200
New reporting issuer's reduced participation fee, if applicable
	(See section 2.6 of the Rule)
	Participation fee	X	Number of entire months remaining in the issuer's fiscal year	=		N/A
		12
Late Fee, if applicable
	(As determined under section 2.5 of the Rule)					N/A

SCHEDULE A

HOLLINGER INC.

Calculation of Market Value of Series II Preference Shares

Series II Preference Shares

Hollinger's Series II preference Shares (TSX:  HLG.PR.B)

Total number of shares outstanding at March 31, 2007	1,701,995(A)
Simple Average of the closing price as at the last trading day of each of the months for the fiscal year ended March 2007	$3.06 (B)
Market value (A x B)	$5,208,105

APPENDIX A – CORPORATE FINANCE PARTICIPATION FEES

Capitalization	Participation Fee
under $25 million	$600
$25 million to under $50 million	$1,300
$50 million to under $100 million	$3,200
$100 million to under $250 million	$6,700
$250 million to under $500 million	$14,700
$500 million to under $1 billion	$20,500
$1 billion to under $5 billion	$29,700
$5 billion to under $10 billion	$38,300
$10 billion to under $25 billion	$44,700
$25 billion and over	$50,300

EX-99.21

Exhibit 99.21

FORM 52-109F1 – CERTIFICATION OF ANNUAL FILINGS

I, G. Wesley Voorheis, Chief Executive Officer of Hollinger Inc. (the "Corporation"), certify that:

1.   I have reviewed the annual filings (as this term is defined in Multilateral Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings) of the Corporation for the year ending March 31, 2007;

2.   Based on my knowledge, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the annual filings;

3.   Based on my knowledge, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, results of operations and cash flows of the Corporation, as of the date and for the periods presented in the annual filings;

4.   The Corporation's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures and internal control over financial reporting for the Corporation, and we have:

(a)   designed such disclosure controls and procedures, or caused them to be designed under our supervision, to provide reasonable assurance that material information relating to the Corporation, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the annual filings are being prepared;

(b)   designed such internal control over financial reporting, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the Corporation's GAAP;  and

(c)   evaluated the effectiveness of the Corporation's disclosure controls and procedures as of the end of the period covered by the annual filings and have caused the Corporation to disclose in the annual MD&A our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by the annual filings based on such evaluation.

5.   I have caused the Corporation to disclose in the annual MD&A any change in the Corporation's internal control over financial reporting that occurred during the Corporation's most recent interim period that has materially affected, or is reasonably likely to materially affect, the Corporation's internal control over financial reporting.

Date: June 29th, 2007

/s/ G. Wesley Voorheis

G. Wesley Voorheis

Chief Executive Officer

Hollinger Inc.

EX-99.22

Exhibit 99.22

FORM 52-109F1 – CERTIFICATION OF ANNUAL FILINGS

I, William E. Aziz, Chief Financial Officer of Hollinger Inc. (the "Corporation"), certify that:

1.   I have reviewed the annual filings (as this term is defined in Multilateral Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings) of the Corporation for the year ending March 31, 2007;

2.   Based on my knowledge, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the annual filings;

3.   Based on my knowledge, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, results of operations and cash flows of the Corporation, as of the date and for the periods presented in the annual filings;

4.   The Corporation's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures and internal control over financial reporting for the Corporation, and we have:

(a)   designed such disclosure controls and procedures, or caused them to be designed under our supervision, to provide reasonable assurance that material information relating to the Corporation, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the annual filings are being prepared;

(b)   designed such internal control over financial reporting, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the Corporation's GAAP; and

(c)   evaluated the effectiveness of the Corporation's disclosure controls and procedures as of the end of the period covered by the annual filings and have caused the Corporation to disclose in the annual MD&A our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by the annual filings based on such evaluation.

5.   I have caused the Corporation to disclose in the annual MD&A any change in the Corporation's internal control over financial reporting that occurred during the Corporation's most recent interim period that has materially affected, or is reasonably likely to materially affect, the Corporation's internal control over financial reporting.

Date: June 29th, 2007

/s/ William E. Aziz

William E. Aziz

Chief Financial Officer

Hollinger Inc.

EX-99.23

Exhibit 99.23

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is made as of the 7^th day of June, 2007

BETWEEN

DOMGROUP LTD. (the "Seller")

  OF THE FIRST PART

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BREOF VTB L. P. (the "Buyer")

  OF THE SECOND PART

WHEREAS:

A.   The Seller is the sole beneficial and registered owner of the Loan; and

B.   The Buyer desires to purchase the Loan from the Seller and the Seller desires to sell the Loan to the Buyer upon the terms and conditions set forth herein.

NOW THEREFORE in consideration of the sum of TEN ($10.00) DOLLARS paid by the Buyer to the Seller, the mutual promises and agreements hereinafter contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the Seller and the Buyer hereby agree as follows:

1.   Definitions. In this Agreement, the following capitalized words have the following meanings:

(a)   "Agreement" means this Assignment and Assumption Agreement, including all attached schedules and as it may be amended in writing from time to time;

(b)   "Borrower" means Duflaw Realty Ltd., in its capacity as general partner for and on behalf of Duflaw Limited Partnership;

(c)   "Business Day" means any day which is not a Saturday, Sunday or a day observed as a holiday under the laws of Ontario;

(d)   "Charge" means the mortgage in respect of the Charged Property, made as of October 31, 2006; by the Borrower, as chargor, in favour of the Seller, as chargee, registered in the Land Titles Division of the Toronto Registration Office as Instrument No. AT1296206;

(e)   "Charged Property" means, the real property mortgaged, pursuant to the Charge, as security for repayment of the Loan as more particularly described in Schedule "A" hereto;

(f)   "Closing Date" means June 7, 2007;

(g)   "Goldman/Glazer Charge" means the mortgage registered in the Land Titles Office for the Toronto Registration Office against the Charged Property as Instrument No. AT419668;

(h)   "Loan" means the._:loan described in Schedule "B" hereto;

(i)   "Postponement of Interest" means the postponement of the Charge to the Golan/Glazer Charge, by the Seller in favour of Goldman Investments Limited and The Estate of Max Glazer, registered m the Land Titles Division of the Toronto Registration Office as Instrument No. AT1419670;

(j)   "Purchase and Sale Agreement" means the. agreement of purchase and sale made as of June 28, 2006 between the Seller and Lanterra Realty Inc., as amended by an amending letter agreement dated August 31, 2006, made between the Seller and Lanterra Realty: Inc., and by an agreement re VTB mortgage dated August 31, 2006 made between the Seller and Lanterra Realty Inc., and as assigned by Lanterra Realty Inc. to the Borrower;

(k)   "Purchase Price" means the purchase price for the Loan being the sum of $8,433,300.00; and

(l)   "Side Agreement re: VTB" means the agreement dated October 31, 2006 pursuant to which the Seller agreed to execute and deliver the Postponement of Interest.

2.   Representations and Warranties of the Seller. Each of the following representations and warranties by the Seller is true and correct as of the Closing Date:

(a)   The Seller is a company incorporated in accordance with the Iaws of Canada, is_.in good standing thereunder and has the necessary power and authority to hold the Loan and enter this Agreement. The Seller has taken all necessary action to authorize the execution, delivery and performance of this Agreement and has the power and authority to execute, deliver and perform its obligations under this Agreement and all related documents and all the transactions contemplated hereby, including, but not limited to the authority to sell and assign the Loan and the Charge in accordance_. with this Agreement. This Agreement and all the obligations of the Seller hereunder and all agreements, instruments and documents executed by the Seller in connection with the assignment of the Loan and the Charge to the Buyer have been duly authorized, executed and delivered and constitute legal, valid and binding obligations of the Seller, enforceable in accordance with the terms of this Agreement;

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(b)   the Charge constitutes a good and valid second charge on the Charged Property subject to the Goldman/Glazer Charge;

(c)   the execution and delivery of this Agreement and the performance of its obligations hereunder by the Seller will not result in the creation or imposition of any lien or encumbrance on any of its assets or property which would materially and adversely affect the ability of the Seller to carry out the terms of this Agreement; and the Seller has obtained all consents, approvals, authorizations and orders, if any, of any court or governmental agency or body required for the execution and delivery of this Agreement by the Seller and performance by the Seller of its obligations hereunder and under the documents to be delivered by the Seller in connection with the assignment of the Loan and Charge to the Buyer;

(d)   the Loan is the only loan and indebtedness outstanding between the Seller and the Borrower and the Charge, the Side Agreement re:VTB and the Postponement of Interest contain all of the terms and conditions relating to the Loan and there are no other agreements between the Borrower and the Seller in connection with the Loan or the Charged Property, other than the Purchase and Sale Agreement;

(e)   the Borrower has not made any claim, defence, set-off or counterclaim against the Seller as Chargee under the Charge or otherwise (including, without limiting the generality of the foregoing, under the Purchase and Sale Agreement and/or any documents delivered in connection with the consummation of the transaction described therein), and the Borrower has no present or future right to set-off under the Charge, the Loan or otherwise and the Seller is not aware of any present facts that would give rise to any such claim, defence, set-off or counterclaim or otherwise (including, without limiting the generality of the foregoing, under the Charge, the Purchase and Sale Agreement and/or any documents delivered in connection with the consummation of the transaction described therein);

(f)   as at the Execution Date, the outstanding Principal owing in respect of the Loan is $9,800,000.00 and the particulars of the Loan set out in Schedule "B" are true and correct;

(g)   the Seller has not compromised or settled any claim it has in respect of the Loan and has not modified the Charge;

(h)   the Borrower is not entitled to the disbursement ,of additional proceeds of the Loan or future advances under the Loan;

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(i)   at the time the Charge was granted the Borrower obtained the insurance coverage set out on insurance certificate from Aon Reed Stenhouse Inc., dated October 31, 2006 and bearing reference number 320005588758, and to the best of the Seller's knowledge such insurance coverage is still in effect, a copy of which certificate has been delivered to the Buyer;

(j)   neither the Loan nor the Charge is subject to my sale, assignment or security interest and/or any lien, claim or encumbrance;

(k)   the Seller is the sole beneficial and registered owner and holder of all beneficial right, title and interest in the Loan and the Charge; and

(l)   there is no action, suit or proceeding pending, or to the Seller's knowledge, threatened, against the Seller by the Borrower relating to the Loan and/or the Charge in any court or before any other governmental agency.

3.   Representations and Warranties of the Buyer. Each of following representations and warranties by the Buyer is true and correct and shall be deemed restated as true and correct at Closing:

(a)   the Buyer has taken all necessary action to authorize its execution, delivery and performance of this Agreement and has the power and authority to execute, deliver and perform its -obligations under this Agreement and all related documents and all the transactions contemplated hereby, including, but not limited to the authority to purchase and acquire the Loan in accordance with this Agreement. This Agreement and all the obligations of the Buyer hereunder are legal, valid and binding obligations of the Buyer, enforceable in accordance with the terms of this Agreement;

(b)   the execution and delivery of this Agreement and the performance of its obligations hereunder by the Buyer will not result in the creation or imposition of any lien or encumbrance on any of its assets or property which would materially and adversely affect the ability of the Buyer to carry out the terms of this Agreement; and the Buyer has obtained all consents, approvals, authorizations and orders, if any, of any court or governmental agency or body required for the execution and delivery of this Agreement by the Buyer and performance by the Buyer of its obligations hereunder and under the documents to be delivered by the Buyer hereunder; and

(c)   the Buyer has not dealt with any person, firm or corporation that is or may be entitled to seek from the Seller any finder's fee, brokerage commission, loan commission or other sum in connection with the execution of this Agreement or the consummation of the transactions contemplated hereby.

4.   Assignment

(a)   The Seller does hereby sell, convey, assign and transfer unto the Buyer, its successors and assigns, all of the Seller's right, title and interest in and to the Loan and the Charge, including, without limitation, all amounts owing to the Seller in connection with the Loan; and

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(b)   the Seller does hereby assign and transfer unto the Buyer, its successors and assigns, all of the Seller's right, title and interest in and to any insurance policies covering the Charged Property and the proceeds thereof

5.   Absolute Assignment. The sale, conveyance, assignment and transfer by the Seller to the Buyer as set forth in Section 4. of this Agreement (collectively, the "Transfer") is an absolute conveyance, transfer and assignment of the Loan and the Charge, and not a collateral assignment, pledge or other hypothecation for security purposes.

6.   Assumption by the Buyer. To the extent originating after the Closing Date, the Buyer hereby accepts the Transfer upon the terms set out herein and assumes, agrees to observe, perform, fulfill and be bound by, all terms, covenants, conditions, obligations relating to the Loan and the Charge which are to be observed, performed and fulfilled by the owner and holder of the Loan and the Charge in the same manner and to the same extent as if the Buyer were the lender named in the Charge.

7.   Miscellaneous.

(a)   Notices. Except as otherwise specified herein, all written notices or demands of any kind that either party hereto may be required or may desire to deliver to the other party in connection with this Agreement shall be delivered by pre-paid courier such as Purolator or Federal Express, or other internationally recognized delivery service, or by facsimile transmission ("Fax"). All notices or demands to the Seller shall be addressed as follows:

Domgroup Ltd

c/o Hollinger Inc.

10 Toronto Street

Toronto, Ontario  M5C 2B7

Attention: William E. Aziz

Fax:  (416) 363-4187

with a copy to:

Davies Ward _:Phillips & Vineberg LLP

1 First Canadian Place.

Toronto, Ontario

M5X IB1

Attention: Kent F. Beattie_.

Fax:  (416) 8:63-0871

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All notices or demands to the Buyer shall be addressed as follows:

BREOF VTB L. P.

c/o Brookfield Real Estate Opportunity Fund

BCE Place, Suite 300

181 Bay Street, P.O. Box 762

Toronto, Ontario

M5J 2T3

Attention:            Seamus P. Foran

Fax: (416) 359-0880

With a copy to:

Goodman LLP

Barristers & Solicitors

Suite 2400

250 Yonge Street

Toronto, Ontario

M5B 2M6

Attention:            Thomas M. Macdonald

Fax: (416) 979-1234

Delivery of any such notice or demand so made shall be deemed complete on the date of actual delivery provided that, if delivered on a day which is not a Business Day or on a Business Day after 5:00 p.m. Toronto time, then delivery shall be deemed complete on the next following Business Day. In the event of delivery by Fax, the sender agrees to deliver to the recipient original copies of such notice or demand as soon as possible thereafter. Any party hereto may, from time to time, by notice in writing delivered to the other party hereto as aforesaid, designate a different mailing address to which all future notices or demands are to be addressed.

(b)   Waivers. No delay or omission by either party hereto in exercising any right or power arising from any default by the other party hereto shall be construed as a waiver of such default or as an acquiescence there, nor shall any single or partial exercise thereof preclude any further exercise thereof or the exercise of any other right or power arising from any default by the other patty hereto. No waiver of any breach of any of the covenants or conditions contained in this Agreement shall be construed to be a waiver of or an acquiescence in or a consent to any previous or subsequent breach of the same or of any other any other condition or covenant.

(c)   Survival of Representations. The representations, warranties and certifications contained in this Agreement or in any closing documents shall not merge on closing but shall survive until the date which is three months after the Closing Date (the "Survival Date") except that the representations and warranties contained in Sections 2(a), (b), (c), (d) and (e) shall survive the Closing, indefinitely (the "Surviving Representations and Warranties"). The party which has received a representation, warranty or certification, whether in this Agreement or in any closing document, shall give written notice to the other parry of each breach of the representation, warranty or certification, together with details thereof, promptly after becoming aware of the breach and no later than the Survival Date other than m connection with the Surviving Representations and Warranties. Notwithstanding any other provision of this Agreement or of any closing document, no, claim may be asserted or pursued against either parry hereto, of any action, suit or other proceedings commenced or pursued, for or in respect of any breach of any representation, warranty or certification made by any party in this Agreement or in any closing document unless written notice of such claim is received by the other party describing in detail the facts and circumstances with respect to the subject matter of such claim on or prior to the Survival Date, other than in connection with the Surviving Representations and Warranties, irrespective of whether the subject matter of such claim shall have occurred before or after the Survival Date, other than in connection with the Surviving Representations and Warranties; and following the Survival Date, other than in connection with the Surviving Representations and Warranties, all such representations, warranties and certifications shall cease to have any effect except to the extent a written notice of claim has been previously given in respect thereof in accordance with this paragraph.

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(d)   Limitation of Liability. No past, present or future officer, director, agent or employee of the Seller or the Buyer shall have any personal liability, direct or indirect, under or in connection with this Agreement including, without limitation, all documents and matters contemplated by this Agreement, and the Buyer and the Seller hereby respectively waives any and all such personal liability.

(e)   Further Agreements and Assurances. The Seller and the Buyer each agrees to use reasonable efforts to execute, acknowledge and deliver to the other or otherwise facilitate such further acts or assurances or additional documents, instruments or agreements and to take such other steps or actions to confirm or better or more fully evidence or. effect the transaction described in this Agreement as may reasonably be necessary, desirable or appropriate and within its power.

(f)   Intention of the Parties. It is the intention of the parties that the Buyer is purchasing, and the Seller is selling, the Loan, rather than entering into a loan by the Buyer to the Seller secured by the Loan. Accordingly, the parties hereto each intend to treat the transaction contemplated herein for income tax purposes as a sale by the Seller, and a purchase by the Buyer, of the Loan.

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(g)   Successors and Assigns. This Agreement shall be binding upon, enure to the benefit of, and be enforceable by, the Seller and the Buyer and their respective successors and permitted assigns.

(h)   No Partnership. This Agreement is not intended to constitute, and shall not be construed to establish, a partnership, joint venture or any other relationship between, the Seller and the Buyer other than seller and buyer.  Each party shall pay its own costs and expenses in connection with the transaction contemplated by this Agreement except to the extent specified herein.

b   Context. When the context and construction so require, all words used in the singular herein shall be deemed to have been used in the plural, and the masculine shall include the feminine and the neuter and vice versa. References in this Agreement to "Sections" and "Schedules" shall be references to sections and schedules of this Agreement.

(j)   Time of the Essence. Time is of the essence of this Agreement and all matters contained herein.

(k)   Governing Law. This. Agreement is to be governed by and construed in accordance with the laws of the Province of Ontario:

(l)   Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same document.

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

Per:	DOMGROUP LTD.
	Per:	/s/ William E. Aziz
		Name:  William E. Aziz
		Title:  Chief Financial Officer
	I have authority to bind the Corporation.

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BREOF VTB L.P. by its sole general partner, BREOF VTB G.P. LIMITED
Per:	/s/ Seamus Foran
	Name:  Seamus Foran
	Title:  Vice President
I have authority to bind the Partnership.

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SCHEDULE "A"

LEGAL DESCRIPTION

PIN 10230-0106 (LT)

Part of Lot 6, Concession-2, WYS Township of York as in Instrument No. NY246263 except NY569785, Toronto (North York), City of Toronto

PIN 10230-0108 (LT)

Part of Lot 6, Concession 2, WYS Township of York as in Instrument No. NY277333, NY358876, except NY267089 subject to NY358876, Toronto (North York), City of Toronto

SCHEDULE "B"

LOAN

Loan amount and Balance Outstanding as of Execution and Closing Date:  $9,800,000.00

Interest Rate:	0% October 31, 2006 – October 31, 2008 4.95% per annum November 1, 2008 – October 31, 2009 calculated semi-annually
Payment:	Interest only, quarterly
Charged Property:	3087 Dufferin Street, Toronto, Ontario, legally described in Schedule "A"
Priority:	Second in priority to a first mortgage in favour of Goldman Investments Limited and The Estate of Max Glazer in the original amount of $3,750,000