factory evidence shall be given to the Trustees of such payment, it shall_nevertheless be the duty of such Trustees, at the expense of the Company, to execute, acknowledge and deliver to the Company, on demand, a full release, acquittance and discharge of all the liabilities aforesaid, and a full release and reconveyance of all and singular the mortgaged premises. Provided also that until default for the periods hereinafter specified in that behalf shall be made in the payment of the principal or interest of the said bonds hereby secured, or of some one or more of them, or in respect of something herein required to be done, or some condition or covenant to be performed by it, the Company and its assigns shall be suffered and permitted to possess, manage and enjoy the mortgaged premises, and to take and use the rents, incomes, profits, tolls and issues thereof in the same manner and with the same effect as if this deed had not been made, but subject or to be subject nevertheless to the lien of these presents and to the express provisions hereof.

8. In case any interest on any of the bonds secured hereby be not paid by the Company, or by the Government under its said guarantee, when such interest shall become payable according to the tenor of such bond, and such default shall continue for a period of six months, or in case default shall be made in the observance or performance of any other matter or thing in these presents mentioned and agreed or required to be observed and performed by the said Company, and such default shall continue for a period of six months after written notice thereof to the Company, then and from thenceforth, and in either of such cases, except as hereinafter mentioned, it shall be lawful for the Trustees, by their attorneys or agents, to enter into and upon all and singular the mortgaged premises, or any part thereof, and thenceforth to have, hold, possess and use the same, and each and every part and parcel thereof, then subject to the lien of these presents, with full power, until the sale and subsequent delivery of the mortgaged premises shall have been made as herein provided, to operate and conduct the business of the said mortgaged premises by their superintendents, managers and servants or attorneys or agents, and to make from time to time all repairs and replacements, and such needful alterations, additions and improvements thereto as may seem to them to be judicious and to collect and receive all tolls, fares, freights, incomes, rents, issues and profits of the same, and of every part thereof; or to lease to some other company the said mortgaged premises or parts thereof with full power to such other company to operate and conduct the business of the mortgaged premises, and after deducting the expenses of operating the same and conducting the business thereof, and of all the said repairs, replacements, alterations, additions and improvements, and also all payments which may be made or may be due for taxes, assessments, charges or liens, prior to the lien of these presents upon the said premises, or any part thereof, as well as just compensation for their own services and for the services of such attorneys or counsel and all other agents and persons as shall have been by them employed, and all other charges and expenses reasonably incurred in or about the execution of the trusts or powers by this indenture created. The Trustees shall apply the moneys arising from such collections and receipts as aforesaid to the payment of interest on the said bonds, but excluding all interest coupons which may have been paid by the Government of Manitoba under its guarantee, in the order in which such interest shall have become and shall become due, rateably to the persons entitled to such interest, and if, after paying in full the interest which shall have accrued on the said bonds, a surplus of the moneys arising as aforesaid shall remain, and the principal of the said bonds shall not be due, and such surplus or any part thereof shall not be required, in the judgment of the Trustees, for the protection of the property or provide for the instalment of interest next thereafter to fall due, the same shall be applied in the payment of the interest coupons which may have been paid by the Government of Manitoba, and in respect of the payment of which the Company is not entitled to be relieved as provided in the agreement of 11th February, 1901, and the mortgage of 30th September, 1901, hereinafter referred to, and any surplus which shall remain after such

payment shall be paid over to the Company or its assigns; but in case the principal of said bonds shall have become due or shall have been declared by the Trustees to be due under the provisions of this indenture, the surplus arising as aforesaid shall be reserved, to be applied to the payment of said bonds, upon the sale of the mortgaged premises as hereinafter provided.

9. In case default shall be made in the payment of interest on the said bonds, or any of them, as aforesaid, and shall continue, as aforesaid, for the period of six months thereafter, or in case default shall be made in the payment of the principal of the said bonds, or any of them, or any part thereof, when the same shall respectively become due and payable, and shall continue for a period of six months thereafter, it shall be lawful for the Trustees, after such entry as aforesaid, or after other entry, or without entry, personally or by their attorneys or agents, to sell and dispose of the said mortgaged premises, or any part or parts thereof, at public auction in the City of Winnipeg, in the Province of Manitoba, and at such time as the Trustees shall appoint, having first given notice of the time and place of such sale by advertisement, published not less than three times a week for three successive months, in one or more daily newspapers published in the cities of Winnipeg, London (England), Toronto, Montreal, and New York, and such other places, if any, as the Trustees may deem expedient. And after such notice it shall be lawful for the Trustees to make such sale with or under any special conditions as to upset price, reserve bid or otherwise, or as to receiving the price or consideration of such sale in whole or in part in bonds or interest coupons secured hereunder which may be prescribed or authorized by the bondholders in the manner hereinafter provided, also with power to rescind or vary any contract of sale that may have been entered into thereat, and resell with or under any of the powers herein. The Trustees may stop, suspend or adjourn such sale from time to time in their discretion. After any such suspension or adjournment any such sale may be continued by the Trustees upon notice of such suspension or adjournment and continuation being given and published not less than three times a week for one month in the daily newspaper or newspapers aforesaid; such notice to contain the time and place of such continuation. And if the Trustees make such sale with or under any of the powers herein, and make and deliver to the purchaser or purchasers of the said mortgaged premises or any part thereof good and sufficient deeds in the law for the same, such sale shall be a perpetual bar both in law and equity against the Company and its assigns, and all other persons claiming the said premises or any part or parcel thereof, by, from, or under the said Company or its assigns. And after deducting from the proceeds of such sale just allowances for all expenses thereof, including attorneys' and counsel fees, and all other expenses, advances or liabilities which may have been made or incurred by the Trustees in operating or maintaining the mortgaged premises or in managing the business thereof and all payments by them made for taxes and assessments and for charges and liens prior to the lien of these presents, on the same or any part thereof, as well as reasonable compensation for their own services, and any other lawful expenses or charges, it shall be lawful for the Trustees and it shall be their duty to apply the residue of the moneys arising from such sale to the payment of the principal and accrued and unpaid interest on all the said bonds which shall then be outstanding without discrimination or preference as between principal and accrued and unpaid interest or as between the holders of the said bonds or of any coupons issued therewith, but equally and rateably and to all such bond and coupon holders, excluding, however, any coupons paid by the Government of Manitoba, and if, after the payment and satisfaction of said bonds. principal and interest, a surplus of the said proceeds shall remain the same shall be applied in payment of the coupons which may have been paid by the Government of Manitoba and in respect of the payment to which the Company is not entitled to be relieved as provided in said agreement of 11th February, 1901, and mortgage of 30th September, 1901. and if any surplus remains thereafter, such surplus shall be paid to the Company or its assigns. And it is hereby

declared and agreed that the receipts of the Trustees shall be sufficient discharge to the purchaser or purchasers at such sale for his or their purchase money, and that after payment of such purchase money, such purchaser or purchasers shall not be obliged to enquire into the application of such purchase money upon or for the trusts or purposes of these presents or be in any manner whatsoever answerable for any loss, mis-application or non-application of such purchase money, or of any part thereof, nor shall he or they at any time be obliged to enquire into the necessity, expediency or authority of or for any such sale.

10. In case any interest on any of the said bonds be not paid by the Company or by the Government under its said guarantee when such interest shall become payable according to the tenor of such bond, and such default shall continue for a period of six months after payment of said interest shall have been demanded, then and from thenceforth the principal sum of each of the bonds aforesaid shall, upon the declaration of the Trustees to that effect made upon the request hereinafter provided for, become and be immediately due and payable, notwithstanding that the time limit in the said bonds for the pavment thereof may not then have elapsed, but such declaration shall not be made by the Trustees unless a majority in interest of the holders of all the bonds aforesaid, which shall then be outstanding and upon which such default in the payment of interest shall have been made and shall be continuing, shall have requested the trustees so to do by an instrument in writing under their hands or by a vote at a meeting duly convened and held as hereinafter provided, at any time before the actual payment and acceptance of the interest in arrears, and a majority in interest of the bondholders as aforesaid shall have the power to cancel any declaration already made to that effect, or waive the right so to declare on such terms and conditions as may be prescribed; provided always that no act or omission either of the Trustees or of the bondholders in the premises shall extend to or be taken in any manner whatsoever to affect any subsequent default or the rights resulting therefrom.

11. It shall be the duty of the Trustees, but subject always to the provisions herein contained, to exercise the power of entry hereby granted, or the power of sale hereby granted, or both, or to proceed by suit or suits in equity or at law, to enforce the rights of bondholders in the several cases of default herein specified in the manner and subject to the qualifications herein expressed upon the requisition of bondholders as herein prescribed, as follows:

(a) In case any interest on any of the said bonds be not paid by the Company or by the Government under the said guarantee when such interest shall become payable according to the tenor of said bonds, and such default shall continue as aforesaid for a period of six months, then and in every such case upon a requisition in writing signed by the holder or holders of said bonds to an aggregate amount of not less than one-fifth of the amount of said bonds then outstanding, and adequate and proper indemnification of the Trustees against costs, expenses and liabilities to be by them incurred, it shall be the duty of the Trustees to proceed to enforce the rights of the bondholders under these presents by such proceeding authorized by these presents or by law as they shall be in such requisition requested to take by the said proportion of bondholders, or if such requisition contains no such direction, then by entry, sale or suit or suits in equity or at law as they, being advised by counsel learned in the law, shall deem most expedient for the interest of the holders of such bonds, the rights of entry and sale hereinbefore granted being intended as cumulative remedies additional to all other remedies allowed by law for the execution and enforcement of the trusts thereof; provided nevertheless that it shall be lawful for a majority in interest of the holders of said bonds for the time being by an instrument under their hands, or by a vote at a meeting duly convened and held as hereinafter provided. to direct the Trustees to waive such default upon such terms as may be prescribed in such instrument or by such vote, if a vote be required

under the conditions hereof. And it is hereby provided and expressly agreed that no holder of bonds or coupons secured to be paid hereby shall have the right to institute any suit or proceedings for the foreclosure of this indenture, or the execution of the trusts thereof, except upon and after the refusal or neglect of the Trustees hereunder to proceed to act in the premises, upon requisition and indemnification as aforesaid, but it shall nevertheless be lawful for a majority in interest of the holders of said bonds for the time being to direct the party or parties bringing any such suit or proceedings, to waive the default or defaults on which it is founded, in like manner as is hereinbefore provided for a direction to the Trustees to waive default. And it is hereby further declared and provided that no action taken by the Trustees or by the bondholders under this clause shall prejudice or in any manner affect the powers or rights of the Trustees, or of the bondholders in the event of any subsequent default or breach of condition or covenant herein.

(b) If the Company shall make default or breach in the performance or observance of any other condition, obligation or requirement by the said bonds or by this present deed imposed upon it, and such default shall continue for a period of six months after written notice thereof to the Company, then and in such case the Trustees shall, upon a requisition in the manner aforesaid, of not less than one-fifth in interest of the bondholders for the time being, and upon adequate and proper indemnification of the Trustees against the costs, expenses and liabilities to be by them incurred, proceed to enforce the rights of the bondholders under these presents in the manner by the first paragraph of this clause provided, subject to the power of a majority at any time to direct in manner aforesaid the Trustees to waive such default or breach upon due reparation therefor to the satisfaction of such majority being made. And it is hereby provided that no action taken by the Trustees or by the bondholders under this clause shall prejudice or in any manner affect the powers or rights of the Trustees or of the bondholders in the event of any subsequent default or breach of condition or covenant herein.

12. The Trustees shall at all times during the continuance of the trust hereby created have power and authority, after receiving the consent of the Government, to be exercised at their own discretion and not otherwise, to convey or release from the lien and operation of these presents, to any party who may be designated in writing by the Company to receive the same, any portion of the mortgaged premises which in the judgment of the Trustees it shall be unnecessary longer to retain for use in connection therewith. And the Trustees shall also have power and authority to allow the Company or its assigns from time to time to dispose of, in its discretion, any of the engines, cars, and other rolling stock and equipment, plant, machinery, tools and implements, supplies and materials acquired or held for the use of the mortgaged premises, as shall become unfit or unnecessary for such use.

13. In the event at any time of the interest upon the said bonds remaining unpaid and owing then at the next ensuing annual general meeting of the Company the holders of such bonds shall have and possess the same rights and privileges and qualifications for directors and voting as are attached to shareholders; provided that such bonds and any transfers thereof shall have been first registered in the same manner as is provided for the registration of shares, and it shall be the duty of the secretary of the Company to register the same on being required to do so by any holder thereof.

14. All bonds hereby secured shall be payable to bearer and shall be negotiable and pass by delivery unless registered for the time being in the name of the holder thereof in the manner hereinafter provided; and the Company shall keep at its head office in Toronto, and also at the office of the Canadian Bank of Commerce in the City of London, England, and at the office of the said Bank in New York City, a bond register in which every holder of a bond shall, on payment of the proper charge therefor, be entitled to have his name and address and the

number of the bond held by him entered, upon presenting at any of the said places a written statement of the said particulars and upon the production of the bond, and every registration of ownership shall be certified to on the bond. After such registration of ownership of any such bond, so certified thereon, no transfer thereof shall be made or shall be valid except in writing, in a transfer book to be kept by the Company at the place where such registration was made, signed by the registered holder thereof for the time being, or his legal representatives or his or their agent or attorney thereunto duly authorized. And the fact of every such transfer shall be entered upon the said last mentioned transfer book so as to show the number of the bond transferred, the name and address of the transferee, unless any such transfer shall be to bearer, in which case it shall be so entered, and every such transfer shall be noted on the bond, and if a transfer be to bearer it shall restore to the bond negotiability by delivery, but every bond shall be subject to successive registrations and transfers to bearer as aforesaid at the option of the holder and on payment of the proper charge therefor. Notwithstanding registration the interest coupons on the bond shall continue payable to bearer. The registration or transfer of any bond by the holder or registered holder, as the case may be, may be made as above provided, notwithstanding such holder be or be described as trustee or be alleged to be a trustee, and the Company shall not be bound to enquire into or take notice of or recognize any trust or alleged trust expressed, implied or constructive to which any bond or its proceeds may be or be alleged to be subject, nor to see to the execution or carrying out thereof.

15. The Company hereby covenants from time to time to do and perform all such acts and things and to execute and deliver to the Trustees such further and separate assignments, transfers and conveyances of the mortgaged premises or any part thereof as may reasonably be required for vesting the same in the Trustees and for fully carrying into effect the objects of this mortgage, and that this mortgage forms a first charge upon the mortgaged premises save as above stated.

16. The Trustees may take such legal advice and employ such assistance as may be necessary in their judgment to the proper discharge of their duties, and shall be entitled to reasonable compensation for any and all services which may hereafter be rendered by them, or either of them, in said trust, which compensation the Company hereby promises and agrees to pay, but in case the Company should make default in such payment the same shall be retained by the Trustees out of any trust moneys coming into their hands.

17. It is declared and agreed that the Trustees are not to be held liable for any failure or defect of title to or encumbrance upon the mortgaged premises or for the non-registration or filing or defective registration or filing of this mortgage, or for the statements of facts or recitals in this mortgage or said bonds contained, or to verify the same. All such statements and recitals shall be deemed not to have been made by the Trustees.

18. Meetings of the bondholders under this mortgage may be called in such mode as may be fixed by regulations prescribed or established by the bondholders, and the bondholders may vote at such meetings personally or by proxy; and the quorum may be defined, and such other regulations or by-laws in respect of such meetings may be from time to time established, altered or repealed by the bondholders, acting by the majority in interest, as to them shall seem expedient, and until the bondholders shall define the quorum, and make such regulations or by-laws, such powers may be exercised by the Trustees. And the Trustees shall have the right to require that any resolution of the bondholders affecting the duties of the Trustees shall be authenticated by the signatures of all those assenting thereto, or their duly authorized agents, as well as by a minute of the proceedings of the meeting