Provided always that no stock shall at any time be issued in excess of the statutory limitations for the time being existing respecting the amount of bonds, debentures, debenture stock or other securities which the Company may issue.

5. The stock certificates shall be in the form or to the effect set out in the first schedule hereto and shall have endorsed thereon the conditions set out in the said first schedule hereto or to the like effect, and such conditions shall be binding on the company and the stockholders and all persons claiming through or under them respectively.

6. All stock issued hereunder shall rank pari passu and be secured equally and ratably and without discrimination or preference whatever may be the date of issue of the same respectively.

7. No stock certificate shall be issued or if issued shall be obligatory or binding until it has been certified by one of the trustees in the form annexed to the form of stock certificate contained in the first schedule hereto.

8. The Canadian Northern Railway Company hereby guarantees unconditionally the payment of the principal and interest of the company's indebtedness in respect of stock certificates issued hereunder, as and when the same matures or may mature under the provisions hereof and there shall be appended to or endorsed upon this mortgage and executed by the Canadian Northern the following form of guarantee:

"The Canadian Northern Railway Company by virtue of the power conferred upon it by an Act of the Parliament of Canada, passed in the fourth year of the reign of His Majesty King Edward the Seventh and by virtue of an Order in Council approved by His Excellency the Governor General in Council dated the day of A.D. 1906, does hereby

guarantee unconditionally the payment of the principal and interest of the Canadian Northern Quebec Railway Company's indebtedness in respect of debenture stock certificates issued under the provisions of a trust deed of mortgage dated the day of , 1906, made by said company to British Empire Trust Company, Limited, and National Trust Company, Limited, as trustees, as and when the same becomes or may become payable under the provisions of said trust deed.

9. The Canadian Northern shall be entitled to the benefit of the lien of this indenture for all moneys which it may pay in pursuance of its said or any additional guarantee of the payment of the principal and interest of stock issued in pursuance of the terms hereof, but it shall not be entitled to any payment out of the trust estate on account of any moneys so paid by it, unless and until the entire principal and interest, with interest on past due instalments of interest, of such stock so guaranteed shall have been first paid in full. The Canadian Northern may for the purposes of this indenture from time to time waive the default of the company in respect of the moneys so paid by the Canadian Northern. In any event of default the trustees may from time to time be called upon by the Canadian Northern to exercise and upon being properly indemnified against costs, expenses and liabilities, the trustees shall then exercise all the powers and remedies herein provided in the event of default in payment on the part of the company, or such of them as the Canadian Northern may from time to time specify.

10. The stock shall not be issued except as follows:

(a) In exchange for bonds heretofore or hereafter issued and outstanding forming parts of the bond issues above-mentioned of the Great Northern or the Chateauguay Northern or the Quebec New Brunswick, such exchange to be made from time to time on such terms as may be agreed on by the company and the holders of said bonds. Provided that until the whole of the bonds forming any of said issues have been received in exchange or remain unissued to the satisfaction of the trustees or have been cancelled to their satisfaction, the security of the bonds of such issue which are actually received in exchange shall for the protection of the stockholders be maintained and preserved and said bonds shall be retained by the trustees and the rights and priorities thereof shall continue for the benefit of the stockholders and may be enforced for such benefit, but when all the bonds forming any of said issues have been received in exchange or remain unissued or have been cancelled as aforesaid they shall be cancelled.

(b) At the rate of £4,109, or $20,000 per mile of railway hereafter constructed or acquired by the company or under contract to be constructed and not included in the mileage in respect of which bonds forming part of any of the three issues above-mentioned may at the time have been issued or may be issuable.

Provided always that with respect to stock representing mileage of lines not constructed such stock shall be issued only with the written consent of the Canadian Northern and then only from time to time as the construction is proceeded with and in such proportions of £4,109 or $20,000 per mile from time to time as the chief engineer of the Company for the time being in charge of the works may decide, having regard to the proportion of work done and to be done, and the balance shall be issued on completion of such lines;

Provided also that such stock may with the consent of the Canadian Northern be issued and sold in advance of construction provided that the proceeds thereof be deposited to a special account in a bank approved by the trustees, such deposit to represent the stock so issued and to be paid out from time to time as construction is proceeded with in the same way as the stock it represents would be issued under the above provisions. The trustees may act upon the certificates of the Company's said engineer and such lines shall be deemed to have been completed within the meaning of the foregoing if the Board of Railway Commissioners for Canada has given leave that the same may be opened for the carriage of passenger and freight traffic under the provisions of the Railway Act, 1903, in that behalf.

(c) To the amount of the cost price to the Company of mortgage securities or shares in the capital stocks of corporations from time to time deposited with and specifically mortgaged to the trustees.

Provided always that the Company shall not be entitled to issue any stock under this sub-clause (c) without the consent in writing of the trustees, such consent not to be unreasonably withheld.

Provided also that no stock shall be issued under this subclause (c) without the written consent of the Canadian Northern. 11. The Company shall whenever it purchases or acquires any such securities or shares as aforesaid forthwith transfer or procure the transfer of the same to the trustees or their nominees free from encumbrances to be held by the trustees or their nominees as part of the specifically mortgaged premises, upon the trusts herein declared concerning the specifically mortgaged premises, and before the issue of any stock under sub-clause (c) of the preceding clause the Company shall execute sign and do all deeds, documents and things which the trustees shall reasonably require for vesting the said securities or shares in the trustees as part of the specifically mortgaged premises and until the Company shall have executed, signed and done all such deeds, documents and things as aforesaid, no refusal on the part of the trustees to consent to the issue hereunder of further stock or bonds against such securities shall under any circumstances be deemed to be unreasonable. The trustees shall until the security hereby constituted becomes enforceable as hereinafter provided, pay over to the Company or allow the Company to receive and retain all interest and dividends payable in respect of the said securities and shares as and when the same shall have been transferred to them or their nominees, and shall exercise all voting rights in respect of the same in such manner as the Company shall direct.

12. The Company for securing payment of all principal moneys and interest for the time being owing on the security of these presents and of all other moneys intended to be hereby secured, hereby grants and conveys to the trustees a specific

charge upon and over the whole of the undertakings and railways of the Company present and future including rights of way, station grounds, and all other real estate and interests therein, buildings and other structures and improvements, rolling stock and equipment, plant, machinery supplies, materials and other property, present and future acquired for the purposes of the said railways and in connection with operating, repairing and maintaining the same and the tolls, incomes and revenues of the Company arising and to arise from the said railways and the rights, privileges, franchises and powers of the Company now or hereafter held in respect to and in connection with the said railways and the operation, maintenance thereof (except as hereinafter expressly declared) such charge to rank next after the existing charges thereon as hereinbefore recited: Provided always that with respect to properties hereafter acquired by the Company and for the expenditure on or for which bonds may be hereafter issued under clause 13 of the above recited mortgage from Great Northern to Central Trust Company it is declared and agreed that such properties shall form part of the mortgaged premises under said mortgage and the priority of such mortgage over the charge hereby created shall take effect and continue as if such properties had been acquired and as if bonds for such expenditure had been issued before the making hereof.

13. There is hereby expressly excepted from the charge hereby created and from the operation of these presents all the lands which have heretofore been or may hereafter be granted or agreed to be granted to the Company, its predecessors or successors, by the Government of Quebec or any other Government as a land subsidy or bonus in aid of the construction of lines of railway and all present and future subsidies and bonuses in money or otherwise from the Government of Canada or any other Government or municipality and also all moneys and proceeds arising and to arise from any sale, pledge, mortgage or other disposition of any of such present and future subsidies and bonuses in land and money. Provided always and the Company hereby expressly covenants with the trustees that all subsidies and bonuses in money received by the Company from any Government or municipality and also all moneys and proceeds arising and to arise from any sale, pledge, mortgage or other disposition of any of such present and future subsidies and bonuses in money shall be employed and expended by the Company in the construction, extension and improvement of its lines of railway, terminals or other works, and shall not be employed or expended in any other manner whatsoever without the previous consent in writing of the trustees; provided that such consent shall not be unreasonably withheld.

14. It is also hereby declared that the last day of any. term of years reserved by any lease, verbal or written, or any agreement therefor, now held or hereafter acquired by the Company

and whether falling within a general or specific description of property hereunder, is hereby excepted out of the charge hereby created and does not and shall not form any portion of the mortgaged premises, and it is further and hereby declared and agreed that after any lease or sale made under the powers herein contained of any leasehold interest forming part of the mortgaged premises, the Company shall stand possessed of the premises sold for the last day of the term granted by the lease thereof or agreement therefor in trust for the purchaser or purchasers, their executors, administrators and assigns, to be assigned and disposed of as he or they may direct.

15. The trustees shall permit the Company to hold, manage and enjoy the mortgaged premises and to carry on its business thereon and therewith until the happening of some or one of the events upon which the security hereby constituted becomes enforceable and upon the happening of any such event the trustees may (but subject to the provisions hereinafter contained as to notice when such provisions are applicable) in their discretion and shall upon the request in writing of the holder or holders of one-fifth part in value of the stock for the time being outstanding or upon the request of the stockholders by a resolution passed in accordance with the provisions contained in the second schedule hereto (but in any case without any further consent on the part of the Company) and with or without taking possession of the mortgaged premises or any of them proceed to sell by one sale or successively through several sales and generally to realize, dispose of, collect and get in the mortgaged premises or such portion thereof as the trustees may deem necessary on such terms as to credits, partial credits and security for payment and otherwise as the trustees may think proper. In the case of a sale of the railway mortgaged the premises or any part thereof such sale shall in the first place be by public auction and notice of the time and place of such sale or sales shall be publicly given by advertisement appearing once a week for at least four consecutive weeks in some newspaper of good circulation, published in the cities of London in England, Toronto and Montreal in Canada and New York in the United States of America and other places in the discretion of the trustees and no further notice or demand whatsoever to or upon the Company prior to such sale or sales shall be necessary and the trustees are authorized to adjourn such sale or sales from time to time in their discretion giving what they shall deem reasonable notice of the time and place of adjournment. In the case of a sale of any of the mortgaged premises other than the railway mortgaged premises or in the case of a sale of the railway mortgaged premises or any part thereof of which the public advertised sale hereinbefore required shall have proved abortive the sale shall be either by public auction with or without advertisement as to the trustees shall seem VOL. II-61