Convertible Debenture Indenture

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CONVERTIBLE DEBENTURE INDENTUREDATED AS OF SEPTEMBER 7, 2012, AMONGLAKE SHORE GOLD CORP. ANDCOMPUTERSHARE TRUST COMPANY OF CANADA PROVIDING FOR THE ISSUE OF DEBENTURES

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  • CONVERTIBLE DEBENTURE INDENTURE

    DATED AS OF SEPTEMBER 7, 2012

    AMONG

    LAKE SHORE GOLD CORP.

    AND

    COMPUTERSHARE TRUST COMPANY OF CANADA

    PROVIDING FOR THE ISSUE OF DEBENTURES

  • ( i )

    TABLE OF CONTENTS

    Page

    ARTICLE 1 INTERPRETATION............................................................................................................................ 11.1 Definitions....................................................................................................................................... 1

    1.2 Meaning of "Outstanding"............................................................................................................ 7

    1.3 Interpretation.................................................................................................................................. 81.4 Headings, Etc.................................................................................................................................. 8

    1.5 Time of Essence .............................................................................................................................. 81.6 Monetary References ..................................................................................................................... 8

    1.7 Invalidity, Etc. ................................................................................................................................ 81.8 Language......................................................................................................................................... 8

    1.9 Successors and Assigns................................................................................................................. 81.10 Severability ..................................................................................................................................... 8

    1.11 Entire Agreement........................................................................................................................... 9

    1.12 Benefits of Indenture ..................................................................................................................... 91.13 Applicable Law and Attornment................................................................................................. 9

    1.14 Currency of Payment..................................................................................................................... 91.15 Non-Business Days........................................................................................................................ 9

    1.16 Accounting Terms.......................................................................................................................... 91.17 Calculations .................................................................................................................................... 9

    1.18 Schedules ...................................................................................................................................... 10

    ARTICLE 2 THE DEBENTURES.......................................................................................................................... 102.1 Limit of Debentures..................................................................................................................... 10

    2.2 Terms of Debentures of any Series ............................................................................................ 102.3 Form of Debentures ..................................................................................................................... 11

    2.4 Form and Terms of Initial Debentures...................................................................................... 122.5 Certification and Delivery of Additional Debentures ............................................................ 19

    2.6 Issue of Global Debentures......................................................................................................... 202.7 Execution of Debentures ............................................................................................................. 21

    2.8 Certification .................................................................................................................................. 212.9 Interim Debentures or Certificates ............................................................................................ 21

    2.10 Mutilation, Loss, Theft or Destruction ...................................................................................... 22

    2.11 Concerning Interest ..................................................................................................................... 222.12 Debentures to Rank Pari Passu .................................................................................................. 23

    2.13 Payments of Amounts Due on Maturity .................................................................................. 232.14 Payment of Interest...................................................................................................................... 23

    2.15 Withholding Tax .......................................................................................................................... 242.16 Right of Rescission....................................................................................................................... 24

    ARTICLE 3 REGISTRATION, TRANSFER, EXCHANGE AND OWNERSHIP ........................................ 253.1 Fully Registered Debentures ...................................................................................................... 25

    3.2 Global Debentures ....................................................................................................................... 253.3 Transferee Entitled to Registration............................................................................................ 27

    3.4 No Notice of Trusts...................................................................................................................... 28

    3.5 Registers Open for Inspection .................................................................................................... 283.6 Exchanges of Debentures............................................................................................................ 28

    3.7 Restrictions on Transfer of U.S. Debentures and U.S. Common Shares Under U.S. Securities Laws ........................................................................................................................................... 28

    3.8 Closing of Registers ..................................................................................................................... 303.9 Charges for Registration, Transfer and Exchange................................................................... 31

    3.10 Ownership of Debentures........................................................................................................... 31

  • ( ii )

    ARTICLE 4 REDEMPTION AND PURCHASE OF DEBENTURES AND CERTAIN PAYMENTS ON MATURITY .............................................................................................................................................................. 32

    4.1 Applicability of Article................................................................................................................ 324.2 Partial Redemption...................................................................................................................... 32

    4.3 Notice of Redemption ................................................................................................................. 33

    4.4 Debentures Due on Redemption Dates .................................................................................... 334.5 Deposit of Redemption Monies or Common Shares............................................................... 34

    4.6 Right to Repay Redemption Price in Common Shares ........................................................... 344.7 Failure to Surrender Debentures Called for Redemption ...................................................... 36

    4.8 Cancellation of Debentures Redeemed..................................................................................... 374.9 Purchase of Debentures by the Corporation............................................................................ 37

    4.10 Right to Repay Principal Amount in Common Shares........................................................... 374.11 Deposit of Maturity Monies ....................................................................................................... 40

    ARTICLE 5 CONVERSION OF DEBENTURES ............................................................................................... 405.1 Applicability of Article................................................................................................................ 405.2 Notice of Expiry of Conversion Privilege................................................................................. 40

    5.3 Revival of Right to Convert ........................................................................................................ 405.4 Manner of Exercise of Right to Convert.................................................................................... 41

    5.5 Adjustment of Conversion Price................................................................................................ 425.6 No Requirement to Issue Fractional Common Shares............................................................ 47

    5.7 Corporation to Reserve Common Shares ................................................................................. 485.8 Cancellation of Converted