Exhibit 10.4

 
EXECUTION VERSION
 
 
WARRANT INDENTURE
 
 
Providing for the Issue of Common Share Purchase Warrants
 
 
BETWEEN
 
 
TRIBUTE PHARMACEUTICALS CANADA INC.
 
 
- and -
 
 
EQUITY FINANCIAL TRUST COMPANY
 
 
Dated as of July 15, 2014
 
 
 

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TABLE OF CONTENTS
 
Article 1 INTERPRETATION
1
1.1
 
Definitions
1
1.2
 
Number and Gender
5
1.3
 
Interpretation Not Affected by Headings, Etc.
5
1.4
 
Day Not a Business Day
5
1.5
 
Governing Law
5
1.6
 
Currency
6
1.7
 
Meaning of "Outstanding"
6
1.8
 
Severability
6
1.9
 
Statutory References
6
Article 2 ISSUE OF WARRANTS
6
2.1
 
Issue of Warrants
6
2.2
 
Form and Terms of Warrants
6
2.3
 
Issue in Substitution for Lost Warrant Certificates
7
2.4
 
Book-Based System Warrants
7
2.5
 
Warrantholder not a Shareholder
9
2.6
 
Warrants to Rank Pari Passu
9
2.7
 
Signing of Warrant Certificates
9
2.8
 
Certification by the Warrant Agent
10
2.9
 
Legended Warrant Certificates
10
2.1
 
Copy of Indenture
12
Article 3 EXCHANGE AND OWNERSHIP OF WARRANTS; NOTICES
13
3.1
 
Exchange of Warrant Certificates
13
3.2
 
Registration of Warrants
13
3.3
 
Transfer of Warrants
13
3.4
 
Ownership of Certificates
14
3.5
 
Evidence of Ownership
15
3.6
 
Notices
15
Article 4 EXERCISE OF WARRANTS
15
4.1
 
Method of Exercise of Warrants
15
4.2
 
Effect of Exercise of Warrants
17
4.3
 
Subscription for Less than Entitlement
18
4.4
 
No Fractional Common Shares
18
4.5
 
Expiration of Warrants
18
4.6
 
Cancellation of Surrendered Warrants
18
4.7
 
Accounting and Recording
18
4.8
 
Restriction on Exercise by U.S. Persons and in the United States; Exception
19
Article 5 ADJUSTMENT OF SUBSCRIPTION RIGHTS AND EXERCISE PRICE
20
5.1
 
Adjustment of Exercise Price and Number of Common Shares Purchasable Upon
Exercise
20
5.2
 
Rules Regarding Calculation of Adjustment of Exercise Price and Number of Common
Shares Purchasable Upon Exercise
24
5.3
 
Postponement of Subscription
26
5.4
 
Notice of Adjustment of Exercise Price and Number of Common Shares Purchasable
Upon Exercise
26
Article 6 PURCHASES BY THE COMPANY
27
6.1
 
Purchases of Warrants for Cancellation
27
6.2
 
Optional Purchases by the Company
27

 
 
 

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Article 7 COVENANTS OF THE COMPANY
27
7.1
 
Covenants of the Company
27
7.2
 
Warrant Agent's Remuneration and Expenses
28
7.3
 
Performance of Covenants by Warrant Agent
28
7.4
 
Securities Filings
28
7.5
 
Certificates of No Default
29
Article 8 ENFORCEMENT
29
8.1
 
Suits by Warrantholders
29
8.2
 
Limitation of Liability
29
Article 9 MEETINGS OF WARRANTHOLDERS
30
9.1
 
Right to Convene Meetings
30
9.2
 
Notice
30
9.3
 
Chairman
30
9.4
 
Quorum
30
9.5
 
Power to Adjourn
31
9.6
 
Show of Hands
31
9.7
 
Poll and Voting
31
9.8
 
Regulations
31
9.9
 
Company, Warrant Agent and Warrantholders May be Represented
32
9.1
 
Powers Exercisable by Extraordinary Resolution
32
9.11
 
Meaning of Extraordinary Resolution
33
9.12
 
Powers Cumulative
34
9.13
 
Minutes
34
9.14
 
Instruments in Writing
34
9.15
 
Binding Effect of Resolutions
34
9.16
 
Holdings by Company Disregarded
34
Article 10 SUPPLEMENTAL INDENTURES
35
10.1
 
Provision for Supplemental Indentures for Certain Purposes
35
10.2
 
Successor Companies
36
Article 11 CONCERNING THE WARRANT AGENT
36
11.1
 
Indenture Legislation
36
11.2
 
Rights and Duties of Warrant Agent
36
11.3
 
Evidence, Experts and Advisers
37
11.4
 
Action by Warrant Agent to Protect Interest
38
11.5
 
Warrant Agent not Required to Give Security
38
11.6
 
Protection of Warrant Agent
38
11.7
 
Replacement of Warrant Agent; Successor by Merger
38
11.8
 
Conflict of Interest
39
11.9
 
Warrant Agent Not to be Appointed Receiver
40
11.1
 
Payments by Warrant Agent
40
11.11
 
Deposit of Securities
40
11.12
 
Act, Error, Omission etc.
40
11.13
 
Indemnification
40
11.14
 
Notice
41
11.15
 
Reliance by the Warrant Agent
41
11.16
 
Privacy
41
11.17
 
Anti-Money Laundering
42
11.18
 
Force Majeure
42
Article 12 ACCEPTANCE OF APPOINTMENT BY WARRANT AGENT
42
12.1
 
Appointment and Acceptance of Functions
42

 
 
 

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Article 13 GENERAL
43
13.1
 
Notice to the Company and the Warrant Agent
43
13.2
 
Time of the Essence
44
13.3
 
Counterparts and Formal Date
44
13.4
 
Discretion of Directors
44
13.5
 
Satisfaction and Discharge of Indenture
44
13.6
 
Provisions of Indenture and Warrant Certificates for the Sole Benefit of Parties
and Warrantholders
44
13.7
 
Warrants Owned by the Company or its Subsidiaries Certificates to be Provided
45

 
 

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THIS WARRANT INDENTURE dated as of the 15th day of July, 2014.
 
BETWEEN:
 
TRIBUTE PHARMACEUTICALS CANADA INC., a corporation amalgamated under the laws of
the Province of Ontario
 
(hereinafter called the "Company")
 
- and -
 
EQUITY FINANCIAL TRUST COMPANY, a company existing under the laws of Canada
 
(hereinafter called the "Warrant Agent")
 
WHEREAS the Company proposes to issue and sell up to 23,056,063 Warrants (as
hereinafter defined) pursuant to the Prospectus (as hereinafter defined) and
this Indenture;
 
AND WHEREAS pursuant to this Indenture, each Warrant shall entitle the
registered holder thereof to purchase one Common Share (as hereinafter defined)
(subject to adjustment as herein provided) at the price and upon the terms and
conditions herein set forth;
 
AND WHEREAS for such purpose the Company deems it necessary to create and issue
Warrants constituted and issued in the manner hereinafter appearing;
 
AND WHEREAS all things necessary have been done and performed to make the
Warrants and the Warrant Certificates (when certified and or Authenticated (as
defined herein) by the Warrant Agent and issued as provided for in this
Indenture) legal, valid and binding upon the Company with the benefits of and
subject to the terms of this Indenture;
 
AND WHEREAS the representations and statements of fact contained in the above
recitals are those of the Company and not of the Warrant Agent;
 
NOW THEREFORE THIS INDENTURE WITNESSES that for good and valuable consideration
mutually given and received, the receipt and sufficiency of which is hereby
acknowledged, it is hereby agreed and declared as follows:
 
ARTICLE 1
 
INTERPRETATION
 
1.1 Definitions
 
 
In this Indenture, 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) 
"1933 Act" means the United States Securities Act of 1933, as amended;

 
(b) 
"Affiliate" has the meaning ascribed thereto in the Securities Act (Ontario), as
amended or replaced from time to time;

 
 
 

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(c) 
"Agents" means Dundee Securities Limited and Mackie Research Capital
Corporation;

 
(d) 
"Authenticated" means (a) with respect to the issuance of a Warrant Certificate,
one which has been duly signed by the Corporation and authenticated by manual
signature of an authorized officer of the Warrant Agent, (b) with respect to the
issuance of an Uncertificated Warrant, one in respect of which the Warrant Agent
has completed all internal procedures such that the particulars of such
Uncertificated Warrant are entered in the register of holders of Warrants, and
"Authenticate", "Authenticating" and "Authentication" shall have the appropriate
correlative meanings;

 
(e)  
"Book Entry Only Warrants" means Warrants that are to be held only by or on
behalf of CDS;

 
(f) 
"Business Day" means a day which is not Saturday or Sunday or a statutory
holiday in the City of Toronto or a day on which the office of the Warrant Agent
is closed;

 
(g) 
"Capital Reorganization" has the meaning attributed thereto in subsection
5.1(d);

 
(h) 
"CDS" means CDS Clearing and Depository Services Inc. or its nominee;

 
(i)  
"CDS Global Warrants" means Warrants representing all or a portion of the
aggregate number of Warrants issued in the name of CDS represented by an
Uncertificated Warrant, or if requested by the Depository or the Company, by a
Warrant Certificate;

 
(j)  
"CDS Participant" means a broker, dealer, bank or other financial institution or
other person for whom, from time to time, CDS effects book entries for the
Warrants deposited with CDS;

 
(k)  
"Certificated Warrant" means a Warrant evidenced by a writing or writings
substantially in the form of Schedule "A" attached hereto;

 
(l) 
"Common Shares" means the common shares in the capital of the Company as such
shares exist at the close of business on the date hereof and, in the event that
there shall occur a change in respect of or affecting the Common Shares referred
to in Section 5.1 (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 a Warrantholder is entitled to purchase
resulting from such change;

 
(m)  
"Common Share Reorganization" has the meaning attributed thereto in subsection
5.1(a);

 
 
(n)  
"Company" means Tribute Pharmaceuticals Canada Inc., a corporation amalgamated
under the laws of the Province of Ontario, and its lawful successors from time
to time;

 
(o) 
"Company's Auditors" means the chartered accountant or firm of chartered
accountants duly appointed as auditor or auditors of the Company from time to
time;

 
(p) 
"Counsel" means a barrister or solicitor (who may be an employee of the Company)
or a firm of barristers and solicitors (who may be counsel to the Company), in
both cases acceptable to the Warrant Agent, acting reasonably;

 
(q) 
"Court" has the meaning attributed thereto in subsection 11.7(1);

 
(r) 
"Current Market Price" at any date, means the weighted average price per share
at which the Common Shares have traded:

 
 
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(i)  
on the TSXV;

 
(ii)  
if the Common Shares are not listed on the TSXV, on any stock exchange upon
which the Common Shares are listed as may be selected for this purpose by the
directors, acting reasonably; or

 
(iii)  
if the Common Shares are not listed on any stock exchange, on any
over-the-counter market;

 
during the thirty (30) consecutive trading days (on each of which at least 500
Common Shares are traded in board lots) ending the second trading day before
such date and the weighted average price shall be determined by dividing the
aggregate sale price of all Common Shares sold in board lots on the exchange or
market, as the case may be, during the twenty (20) consecutive trading days by
the number of Common Shares sold, or if not traded on any recognized market or
exchange, as determined by the directors of the Company acting reasonably;
 
(s) 
"Date of Issue" for a particular Warrant means the date on which the Warrant is
actually issued by or on behalf of the Company;

 
(t) 
"Director" means a director of the Company for the time being, and, unless
otherwise specified herein, reference to "action by the Directors" means action
by the Directors of the Company as a board, or whenever duly empowered, action
by any committee of such board;

 
(u) 
"Dividend Paid in the Ordinary Course" means a dividend paid on the Common
Shares in any fiscal year of the Company in cash, provided that the aggregate
amount of such dividends does not in such fiscal year exceed 5% of the Exercise
Price, and for such purpose the amount of any dividend paid in shares shall be
the aggregate stated capital of such shares, and the amount of any dividend paid
in other than cash or shares shall be the fair market value of such dividend as
determined by a resolution passed by the Board of Directors of the Company,
subject, if applicable, to the prior consent of any stock exchange or any other
over-the-counter market on which the Common Shares are traded;

 
(v) 
"Exercise Date" means, in relation to a Warrant, the Business Day on which such
Warrant is validly exercised or deemed to be validly exercised in accordance
with Article 4 hereof;

 
(w) 
"Exercise Period" means the period commencing on the time of issue on the Date
of Issue and ending at the Time of Expiry;

 
(x) 
"Exercise Price" means a price per Common Share of C$0.90 unless such price
shall have been adjusted in accordance with the provisions of Section 5.1, in
which case it shall mean the adjusted price in effect at such time;

 
(y) 
"Extraordinary Resolution" has the meaning attributed thereto in Section 9.11;

 
(z) 
"Institutional Accredited Investor" means an institution meeting one or more of
the criteria set forth in Rule 501(a)(1), (2), (3) or (7) of Regulation D;

 
(aa)  
"Offering" has the meaning ascribed to such term in the Prospectus;

 
(bb)  
"Offshore Transaction" means "offshore transaction" as that term is defined in
Regulation S;

 
 
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(cc)  
"Person" means an individual, a corporation, a partnership, a syndicate, a
trustee or any unincorporated organization and words importing persons are
intended to have a similarly extended meaning;

 
(dd)  
"Prospectus" means the final short form prospectus of the Company dated July 3,
2014;

 
(ee)  
"Regulation D" means Regulation D adopted by the SEC under the 1933 Act;

 
(ff)  
"Regulation S" means Regulation S adopted by the SEC under the 1933 Act;

 
(gg)  
"Rights Offering" has the meaning attributed thereto in subsection (b)(i)(2)(a);

 
(hh)  
"Rights Period" has the meaning attributed thereto in subsection (b)(i)(2)(a);

 
(ii)  
"SEC" means the United States Securities and Exchange Commission;

 
(jj)  
"Shareholder" means a holder of record of one or more Common Shares;

 
(kk)  
"Special Distribution" has the meaning attributed thereto in subsection (b);

 
(ll)  
"Subscription Notice" has the meaning attributed thereto in subsection 4.1(2);

 
(mm)  
"Subsidiary of the Company" means a corporation of which voting securities
carrying a majority of the votes attached to all voting securities are held,
directly or indirectly other than by way of security only, by or for the benefit
of the Company, the Company and one or more subsidiaries thereof, or one or more
subsidiaries of the Company; and, as used in this definition, voting securities
means securities of a class or series or classes or series carrying a voting
right to elect directors under all circumstances provided that, for the purposes
hereof; securities which only carry the right to vote conditionally on the
happening of an event shall not be considered voting securities whether or not
such event shall have happened nor shall any securities be deemed to cease to be
voting securities solely by reason of a right to vote accruing to securities of
another class or series or classes or series by reason of the happening of such
event;

 
(nn)  
"this Warrant Indenture", "this Indenture", "herein", "hereby", and similar
expressions mean and refer to this Indenture 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;

 
(oo)  
"Time of Expiry" means 4:00 p.m. (Toronto time) on July 15, 2016;

 
(pp) 
"TSXV" means The TSX Venture Exchange;

 
(qq)  
"Uncertificated Warrant" means any Warrant which is not a Certificated Warrant;

 
(rr)  
"Unit" has the meaning ascribed to such term in the Prospectus;

 
(ss)  
"United States" means the United States of America its territories and
possessions, any state of the United States and the District of Columbia;

 
(tt)  
"U.S. Exchange Act" means the United States Securities Exchange Act of 1934, as
amended;

 
(uu)  
"U.S. Person" means a "U.S. person" as that term is defined in Regulation S;

 
 
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(vv)  
"Warrant" means each whole common share purchase warrant of the Company to be
issued hereunder entitling the holder thereof to purchase one Common Share for
each whole Warrant upon payment of the Exercise Price; provided that in each
case the number and/or class of shares or securities receivable on the exercise
of the Warrant may be subject to increase or decrease or change in accordance
with the terms and provisions hereof, and, where the context so requires, also
means the warrants issued and Authenticated hereunder, whether by way of Warrant
Certificate or Uncertificated Warrant;

 
(ww) 
"Warrant Agent" means Equity Financial Trust Company, or its successors
hereunder;

 
(xx)  
"Warrant Certificate" means a certificate representing one or more Warrants
substantially in the form set forth in Schedule "A" hereto or such other form as
may be approved by the Company, the Agents and the Warrant Agent;

 
(yy) 
"Warrantholders" or "holders" without reference to Common Shares means the
Persons whose names are entered for the time being on the register maintained
pursuant to Section 3.2(1);

 
(zz)  
"Warrantholders' Request" means an instrument signed in one or more counterparts
by Warrantholders holding not less than 10% of the aggregate number of Warrants
then unexercised and outstanding, which requests the Warrant Agent to take some
action or proceeding specified therein; and

 
(aaa) 
"written order of the Company", "written request of the Company", "written
consent of the Company" and "certificate of the Company" and any other document
required to be signed by the Company, means, respectively, a written order,
request, consent, certificate or other document signed in the name of the
Company by any officer or director and may consist of one or more instruments so
executed.

 
1.2 Number and Gender
 
Unless the context otherwise requires, words importing the singular include the
plural and vice versa and words importing gender include all genders.
 
1.3 Interpretation Not Affected by Headings, Etc.
 
The division of this Indenture into Articles, Sections and subsections, the
provision of a table of contents and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Indenture or the Warrant Certificates.
 
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.
 
1.5 Governing Law
 
This Indenture and the Warrant Certificates (including the CDS Global Warrants)
shall be governed by and construed in accordance with the laws of the Province
of Ontario and the federal laws of Canada applicable therein and shall be
treated in all respects as Ontario contracts.
 
 
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1.6 Currency
 
Except as otherwise specified herein, all dollar amounts herein are expressed in
lawful money of Canada.
 
1.7 Meaning of "Outstanding"
 
Every Warrant Authenticated in accordance with the terms hereof shall be deemed
to be outstanding until it shall be cancelled or exercised pursuant to
Article 4, provided that where a new Warrant Certificate has been issued
pursuant to Section 2.3 hereof to replace one which has been mutilated, lost,
destroyed or stolen, the Warrants represented by only one of such Warrant
Certificates shall be counted for the purpose of determining the aggregate
number of Warrants outstanding.
 
1.8 Severability
 
In the event that any provision hereof shall be determined to be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remainder of such provision and any other provision hereof
shall not be affected or impaired thereby.
 
1.9 Statutory References
 
In this Indenture, unless something in the subject matter or context is
inconsistent therewith or unless otherwise herein provided, a reference to any
statute is to that statute as now enacted or as the same may from time to time
be amended, re-enacted or replaced and includes any regulation made thereunder.
 
 
ARTICLE 2
 
 
ISSUE OF WARRANTS
 
2.1 Issue of Warrants
 
 
Up to 23,056,063 Warrants are hereby created and authorized to be issued and
certificates evidencing such Warrants as have been issued shall be executed by
the Company, Authenticated by or on behalf of the Warrant Agent upon the written
order of the Company and delivered in accordance with this Article.
 
2.2 Form and Terms of Warrants
 
(1)  
Subject to subsection 2.2(2), each Warrant authorized to be issued hereunder
shall entitle the holder thereof to purchase upon due exercise and upon due
execution and endorsement of the subscription form on the Warrant Certificate or
other instrument of subscription in such form as the Warrant Agent and/or the
Company may from time to time prescribe and upon payment of the Exercise Price
in effect on the Exercise Date, one Common Share at any time during the Exercise
Period, in accordance with the provisions of this Indenture.

 
(2)  
The number of Common Shares which may be purchased pursuant to the Warrants and
the Exercise Price shall be adjusted in the events and in the manner specified
in Section 5.1.

 
 
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(3)  
The Warrants may be issued in both certificated and uncertificated form. Each
Warrant originally issued to a U.S. warrantholder will be evidenced in
certificated form only and bear the applicable legends as set forth in Schedule
"A" hereto. All Warrants issued in certificated form shall be evidenced by a
Warrant Certificate (including all replacements issued in accordance with this
Indenture), substantially in the form set out in Schedule "A" hereto, which
shall bear such distinguishing letters and numbers as the Company may, with the
approval of the Warrant Agent, prescribe, and shall be issuable in any
denomination excluding fractions. All Warrants issued to CDS may be in either a
certificated or uncertificated form, such uncertificated form being evidenced by
a book position on the register of Warrantholders to be maintained by the
Warrant Agent in accordance with this Warrant Indenture

 
(4)  
Subject to subsection 2.2(5), Warrant Certificates shall be issuable in whole
denominations only and holders shall not be entitled to any cash or other
consideration in lieu of any interest in or claim to any fraction of a Warrant.
If a Warrantholder is entitled to a fraction of a Warrant the number of Warrants
issued to that Warrantholder shall be rounded down to the nearest whole Warrant.

 
(5)  
The Warrant Certificates may be engraved, lithographed or printed (the
expression "printed" including for purposes hereof both original typewritten
material as well as mimeographed, mechanically, photographically,
photostatically or electronically reproduced, typewritten or other written
material), or partly in one form and partly in another, as the Company, with the
approval of the Warrant Agent, may determine. No change in the form of the
Warrant Certificate shall be required by reason of any adjustment made pursuant
to Section 5.1 in the number and/or class of securities or type of securities
that may be acquired pursuant to the Warrants.

 
2.3 Issue in Substitution for Lost Warrant Certificates
 
(1)  
In the event that any Warrant Certificates issued and certified under this
Indenture shall be mutilated, lost, destroyed or stolen, the Company, subject to
applicable law, shall issue and thereupon the Warrant Agent shall certify and
deliver, a new certificate of like tenor, and bearing the same legends, as the
one mutilated, lost, destroyed or stolen in exchange for and in place of and
upon cancellation of such mutilated certificate, or in lieu of and in
substitution for such lost, destroyed or stolen certificate, and the substituted
certificate shall be in a form approved by the Warrant Agent and shall be
entitled to the benefits hereof and shall rank equally in accordance with its
terms with all other Warrant Certificates issued or to be issued hereunder.

 
(2)  
The applicant for the issue of a new certificate pursuant to this Section 2.3
shall bear the reasonable cost of the issue thereof and in case of loss,
destruction or theft shall, as a condition precedent to the issue thereof,
furnish to the Company and to the Warrant Agent such evidence of ownership and
of the loss, destruction or theft of the certificate so lost, destroyed or
stolen as shall be satisfactory to the Company and to the Warrant Agent in their
sole discretion, acting reasonably, and such applicant shall also be required to
furnish an indemnity and surety bond in amount and form satisfactory to the
Company and the Warrant Agent to save each of them harmless, and shall pay the
reasonable expenses, charges and any taxes applicable thereto to the Company and
the Warrant Agent in connection therewith.

 
2.4 Book-Based System Warrants
 
 
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(1)  
Registration of interests in and transfers of Warrants, other than those issued
to a U.S. Person, a person in the United States or a person for the account or
benefit of a U.S. Person or a person in the United States, shall be made through
the book-based system operated by CDS.

 
(2)  
Re-registration of beneficial interests in and transfers of Warrants held by CDS
shall be made only through the book entry registration system and no Warrant
Certificates shall be issued in respect of such Warrants except where physical
certificates evidencing ownership in such securities are required or as set out
herein or as may be requested by CDS, as determined by the Company, from time to
time. Except as provided in this Section 2.4, owners of beneficial interests in
any Book Entry Only Warrants or CDS Global Warrants shall not be entitled to
have Warrants registered in their names and shall not receive or be entitled to
receive Warrants in definitive form or to have their names appear in the
register referred to in Section 3.2 herein. Notwithstanding any terms set out
herein, Warrants having any legend set forth in Section 2.9(2) herein and held
in the name of CDS may only be held in the form of Uncertificated Warrants with
the prior consent of the Warrant Agent and in accordance with the internal
procedures of the Warrant Agent.

 
(3)  
Transfers of beneficial ownership in any Warrant represented by CDS Global
Warrants will be effected only (i) with respect to the interest of a CDS
Participant, through records maintained by CDS or its nominee for such CDS
Global Warrant, and (ii) with respect to the interest of any person other than a
CDS Participant, through records maintained by CDS Participants.

 
(4)  
The rights of beneficial owners of Warrants represented by the CDS Global
Warrants shall be limited to those established by applicable law and agreements
between CDS and CDS Participants and between such CDS Participants and
beneficial owners of Warrants and must be exercised through a CDS Participant in
accordance with the rules and procedures of CDS.

 
(5)  
Notwithstanding anything in this Warrant Indenture in terms of any CDS Global
Warrant, neither the Company nor the Warrant Agent nor any agent thereof shall
have any responsibility or liability for:

 
(A)  
any aspect of the records maintained by CDS relating to the beneficial ownership
interests in the Warrants or the depository system maintained by CDS, or
payments made on account of any ownership interest or any other interest of any
person in any Warrant represented by the CDS Global Warrants (other than CDS or
its nominee);

 
(B)  
maintaining, supervising or reviewing any records of CDS or any CDS Participant
relating to any such beneficial ownership interests; or

 
(C)  
any advice or representation made by or given by or with respect to CDS or those
contained in this Indenture or made or given with respect to the rules and
regulations of CDS or any action taken by CDS on its own direction or at the
direction of any CDS Participant.

 
(6)  
If any Warrant represented by a CDS Global Warrant and any of the following
events occur:

 
 
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(a)  
CDS or the Company notifies the Warrant Agent that (i) CDS is unwilling or
unable to continue as depository, or (ii) CDS ceases to be a clearing agency in
good standing under applicable laws and, in either case, the Company is unable
to locate a qualified successor depository within 90 days of delivery of such
notice;

 
(b)  
the Company determines, in its sole discretion, with the consent of the Warrant
Agent, to terminate the book-based system in respect of such CDS Global Warrants
and communicates such determination to the Warrant Agent in writing;

 
(c)  
the Company or CDS is required by applicable law to take the action contemplated
in subsection 2.4(6)(b); or

 
(d)  
the book-based system administered by CDS ceases to exist;

 
then one or more definitive fully registered Warrant Certificates shall be
executed by the Company and certified and delivered by the Warrant Agent to CDS
in exchange for the CDS Global Warrants held by CDS.
 
(7)  
Fully registered Warrant Certificates issued and exchanged pursuant to
subsection 2.4(6) shall be registered in such names and in such denominations as
CDS shall instruct the Warrant Agent, provided that the aggregate number of
Warrant represented by such Warrant Certificates shall be equal to the aggregate
number of Warrants represented by the CDS Global Warrants so exchanged. Upon
exchange of the CDS Global Warrants for one or more Warrant Certificates in
definitive form, such CDS Global Warrants shall be cancelled by the Warrant
Agent.

 
(8)  
The Company may terminate the application of this Section 2.4 in its sole
discretion in which case all Warrants shall be evidenced by Warrant Certificates
registered in the name of a Person other than CDS..

 
(9)  
Notwithstanding anything to the contrary in this Warrant Indenture, the Company
may use the non-certificated issue system or any other system administered by
CDS.

 
2.5 Warrantholder not a Shareholder
 
Nothing in this Indenture or in the holding of a Warrant evidenced by a Warrant
Certificate or otherwise, shall be construed as conferring upon a Warrantholder
any right or interest whatsoever as a Shareholder of the Company, including, but
not limited to, the right to vote at, to receive notice of, or to attend,
meetings of shareholders or any other proceedings of the Company, nor entitle
the holder to any right or interest in respect thereof except as herein and in
the Warrants expressly provided.
 
2.6 Warrants to Rank Pari Passu
 
All Warrants shall rank pari passu, whatever may be the respective Dates of
Issue of the same.
 
2.7 Signing of Warrant Certificates
 
The Warrant Certificates shall be signed by any one of the directors or officers
of the Company and may, but need not, be under the corporate seal of the Company
or a reproduction thereof. The signature of any such director or officer may be
mechanically reproduced and Warrant Certificates bearing such mechanically
reproduced signatures shall be binding upon the Company as if they had been
manually signed by such director or officer. Notwithstanding that the person
whose manual or mechanically reproduced signature appears on any Warrant
Certificate as a director or officer may no longer hold office at the date of
issue of the Warrant Certificate or at the date of certification or delivery
thereof, any Warrant Certificate signed as aforesaid shall, subject to Section
2.8, be valid and binding upon the Company and the registered holder thereof
will be entitled to the benefits of this Indenture.
 
 
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2.8 Certification by the Warrant Agent
 
(1)  
No Warrant shall be issued or, if issued, shall be valid for any purpose or
entitle the registered holder to the benefit hereof or thereof until it has been
Authenticated or certified by manual signature by or on behalf of the Warrant
Agent, and such Authentication or certification by the Warrant Agent shall be
conclusive evidence as against the Company that the Warrant so Authenticated or
certified has been duly issued hereunder and that the holder is entitled to the
benefit hereof.

 
(2)  
The Warrant Agent shall Authenticate Uncertificated Warrants (whether upon
original issuance, exchange, registration of transfer, partial payment, or
otherwise) by completing its internal procedures and the Company shall, and
hereby acknowledges that it shall, thereupon be deemed to have duly and validly
issued such Uncertificated Warrants under this Indenture. Such Authentication
shall be conclusive evidence that such Uncertificated Warrant has been duly
issued hereunder and that the holder or holders are entitled to the benefits of
this Indenture. The register shall be final and conclusive evidence as to all
matters relating to Uncertificated Warrants with respect to which this Indenture
requires the Warrant Agent to maintain records or accounts. In case of
differences between the register at any time and any other time the register at
the later time shall be controlling, absent manifest error and such
Uncertificated Warrants are binding on the Company.

 
(3)  
The Authentication and/or certification of the Warrant Agent on Warrants issued
hereunder shall not be construed as a representation or warranty by the Warrant
Agent as to the validity of this Indenture or the Warrants (except the due
Authentication and certification thereof) and the Warrant Agent shall in no
respect be liable or answerable for the use made of the Warrants or any of them
or of the consideration therefor nor for any breach by the Company of its
covenants herein, except as otherwise specified therein.

 
2.9 Legended Warrant Certificates
 
(1)  
The Warrant Agent understands and acknowledges that the Warrants and Common
Shares issuable upon exercise of the Warrants have not been, and will not be,
registered under the 1933 Act or the securities laws of any state of the United
States.

 
(2)  
Each CDS Global Warrant originally issued in Canada and held by CDS, and each
CDS Global Warrant issued in exchange therefor or in substitution thereof shall
bear or be deemed to bear the following legend or such variations thereof as the
Company may prescribe from time to time:

 
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF CDS
CLEARING AND DEPOSITORY SERVICES INC. ("CDS") TO TRIBUTE PHARMACEUTICALS CANADA
INC. (THE "ISSUER") OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IN RESPECT THEREOF IS REGISTERED IN THE NAME
OF CDS & CO., OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF CDS (AND ANY PAYMENT IS MADE TO CDS & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED HOLDER HEREOF, CDS & CO., HAS A PROPERTY INTEREST
IN THE SECURITIES REPRESENTED BY THIS CERTIFICATE HEREIN AND IT IS A VIOLATION
OF ITS RIGHTS FOR ANOTHER PERSON TO HOLD, TRANSFER OR DEAL WITH THIS
CERTIFICATE.
 
 
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(3)  
Each Warrant Certificate originally issued to a U.S. Person, a person in the
United States or a person for the account or benefit of a U.S. Person or a
person in the United States, all certificates representing Common Shares issued
upon exercise of such Warrants, as well as all certificates issued in exchange
thereof or in substitution thereof, shall, until such time as the same is no
longer required under applicable requirements of the 1933 Act and applicable
state securities laws, bear a legend substantially to the following effect:

 
THE SECURITIES REPRESENTED HEREBY [for Warrants, the following will be added:
AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF] HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S.
SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE
HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF TRIBUTE
PHARMACEUTICALS CANADA INC. (THE "CORPORATION") THAT SUCH SECURITIES MAY BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B)
OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE
U.S. SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND
REGULATIONS, (C) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE
U.S. SECURITIES ACT PROVIDED BY (1) RULE 144 THEREUNDER, IF AVAILABLE, OR (2)
RULE 144A THEREUNDER, IF AVAILABLE, AND, IN BOTH CASES, IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS, (D) IN ANOTHER TRANSACTION THAT DOES NOT
REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE
SECURITIES LAWS, OR (E) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN
DECLARED EFFECTIVE UNDER THE U.S. SECURITIES ACT, AND, IN THE CASE OF (C)(1) AND
(D) ABOVE, AFTER THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL
OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO
SUCH EFFECT.  DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN
SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.
 
 
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provided that if, at any time the Company is a "foreign issuer" as defined in
Regulation S under the U.S. Securities Act, the securities are being sold in an
off-shore transaction and in compliance with the requirements of Rule 904 of
Regulation S under the U.S. Securities Act and in compliance with Canadian local
laws and regulations, the legend may be removed by providing a declaration to
Equity Financial Trust Company as registrar and transfer agent for the
securities to the effect substantially as provided in the form attached as
Schedule B together with such other evidence as the Company or the registrar and
transfer agent for the securities may require, which may include an opinion of
counsel in form and substance satisfactory to the Company, to the effect that
the transfer may be completed and the legend removed without registration under
the U.S. Securities Act and any applicable state securities laws; and provided
further, that, if any of the securities are being sold pursuant to clause (C)(I)
or (D) in the legend above, under the U.S. Securities Act, the legend may be
removed by delivery to Equity Financial Trust Company of an opinion of counsel
of recognized standing in form and substance satisfactory to the Company, to the
effect that the legend is no longer required under applicable requirements of
the U.S. Securities Act or state securities laws
 
(ii)  
If a Warrant Certificate is tendered for transfer and bears the legend set forth
in subsection 2.9(3) hereof and the holder thereof has not obtained the prior
written consent of the Company, the Warrant Agent or the registrar and transfer
agent, as the case may be, shall not register such transfer unless the holder
complies with the requirements of the said subsection 2.9(3) hereof.

 
(3)  
All Warrant Certificates shall bear a legend to the following effect:

 
THESE WARRANTS AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S.
SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES.  THESE WARRANTS MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR ON
BEHALF OF, OR FOR THE ACCOUNT OR BENEFIT OF, A PERSON IN THE UNITED STATES OR A
U.S. PERSON UNLESS THESE WARRANTS AND THE SECURITIES ISSUABLE UPON EXERCISE OF
THESE WARRANTS HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND THE
APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE OR AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS IS AVAILABLE.  "UNITED STATES" AND "U.S. PERSON" ARE
AS DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT.
 
2.10 Copy of Indenture
 
 
The Company shall, on the written request of the Warrantholder and without
charge, provide the Warrantholder with a copy of this Indenture. A copy of this
Indenture will also be available on the Company's profile on www.sedar.com.
 
 
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ARTICLE 3
 
EXCHANGE AND OWNERSHIP OF WARRANTS; NOTICES
 
3.1 Exchange of Warrant Certificates
 
(1)  
Warrant Certificates entitling Warrantholders to purchase any specified number
of Common Shares may, upon compliance with the reasonable requirements of the
Warrant Agent, be exchanged in any other authorized denomination bearing the
same legends representing in the aggregate an equal number of Warrants as the
number of Warrants represented by the Warrant Certificates being exchanged. The
Company shall sign all Warrant Certificates necessary to carry out exchanges as
aforesaid and such Warrant Certificates shall be certified by or on behalf of
the Warrant Agent.

 
(2)  
Warrant Certificates may be exchanged only at the principal transfer office of
the Warrant Agent in the City of Toronto, Ontario or at any other place that is
designated by the Company with the approval of the Warrant Agent. Any Warrant
Certificates tendered for exchange shall be surrendered to the Warrant Agent or
its agents and cancelled.

 
(3)  
Except as otherwise herein provided, any Warrant Agent may charge the holder
requesting an exchange a reasonable sum for each new Warrant Certificate issued
in exchange for Warrant Certificate(s); and payment of such charges and
reimbursement of the Warrant Agent or the Company for any and all stamp taxes or
governmental or other charges required to be paid shall be made by such holder
as a condition precedent to such exchange.

 
3.2 Registration of Warrants
 
(1)  
The Company shall, at all times while any Warrants are outstanding, cause the
Warrant Agent and its agents to maintain a register in which will be entered in
alphabetical order the names, latest known addresses of the Warrantholders and
particulars of the Warrants held by them, and a register of transfers in which
shall be entered the particulars of all transfers of Warrants, such registers to
be kept by and at the principal transfer office of the Warrant Agent in the City
of Toronto.

 
(2)  
At the office of the Warrant Agent during normal business hours, the holder of a
Warrant may have such Warrant transferred in accordance with such reasonable
requirements as the Warrant Agent may prescribe. The costs of any such transfer
registration shall be borne by the transferee or presenter.

 
(3)  
The registers referred to in this Section 3.2 shall at all reasonable times be
open for inspection by the Company and by any Warrantholder. The Warrant Agent,
when requested in writing so to do by the Company, shall furnish the Company
with a list of names and addresses of the Warrantholders showing the number of
Warrants held by each Warrantholder.

 
3.3 Transfer of Warrants
 
(1)  
No transfer of a Warrant will be valid unless entered on the register of
transfers referred to in subsection 3.2(1) upon surrender to the Warrant Agent
of the Warrant Certificate evidencing such Warrant, and a duly completed and
executed transfer form as attached to the Warrant Certificate executed by the
registered holder or his executors, administrators or other legal
representatives or his or their attorney duly appointed by an instrument in
writing in form and execution satisfactory to the Warrant Agent, and, upon
compliance with the conditions herein and such reasonable requirements as the
Warrant Agent may prescribe, including compliance with all applicable securities
legislation, such transfer will be recorded on the register of transfers by the
Warrant Agent. Notwithstanding the foregoing, if the Warrants are represented by
CDS Global Warrants, the provisions of Section 2.4 shall apply.

 
 
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(2)  
The transferee of any Warrant will, after surrender to the Warrant Agent of the
Warrant Certificate evidencing such Warrant as required by subsection (1) and
upon compliance with all other conditions in respect thereof required by this
Indenture or by applicable law, be entitled to be entered on the register of
holders referred to in subsection 3.2(1) as the owner of such Warrant free from
all equities or rights of set-off or counterclaim between the Company and the
transferor or any previous holder of such Warrant, except in respect of equities
of which the Company is required to take notice by statute or by order of a
court of competent jurisdiction.

 
(3)  
The Company will be entitled, and may direct the Warrant Agent, to refuse to
recognize any transfer, or enter the name of any transferee, of any Warrant on
the registers referred to in subsection 3.2(1), if such transfer would
constitute a violation of the securities laws of any applicable jurisdiction or
the rules, regulations or policies of any regulatory authority having
jurisdiction. The Warrant Agent is entitled to assume compliance with all
applicable securities legislation unless otherwise notified in writing by the
Company. The Warrant Agent shall have no obligation to ensure or verify
compliance with any applicable laws or regulatory requirements on the issue,
exercise or transfer of any Warrants or any Common Shares issuable upon the
exercise thereof provided such issue, exercise or transfer is effected in
accordance with the terms of this Warrant Indenture.

 
(4)  
If a Warrant Certificate tendered for transfer bears the legend set forth in
subsection 2.9(3), the Warrant Agent shall not register such transfer unless the
transferor has provided the Warrant Agent with the Warrant Certificate and
complies with the requirements of the said subsection 2.9(3).

 
(5)  
If the Warrant Certificate tendered for transfer does not bear the legend set
forth in subsection 2.9(3), the Warrant Agent shall not register such transfer
unless the transferor has provided the Warrant Agent with the Warrant
Certificate and a completed and executed transfer form in the form included in
the Warrant Certificate. Notwithstanding the foregoing, the Warrant Agent shall
not register such transfer if the Warrant Agent has reason to believe that the
transferee is a person in the United States or a U.S. Person or is acquiring the
Warrants evidenced thereby for the account or benefit of a person in the United
States or a U.S. Person.  The Warrant Agent is entitled to rely exclusively on
the information provided in the transfer form in making any such determination.

 
3.4 Ownership of Certificates
 
(1)  
The Company and the Warrant Agent and their respective agents may deem and treat
the holder of any Warrant as the absolute holder and owner of the Warrants
evidenced thereby for all purposes, and the Company and the Warrant Agent shall
not be affected by any notice or knowledge to the contrary and, without limiting
the foregoing, shall not be bound by notice of any trust or be required to see
to the execution thereof.

 
 
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(2)  
Subject to the provisions of this Indenture and applicable law, a Warrantholder
shall be entitled to the rights evidenced by such Warrant free from all equities
or rights of set-off or counterclaim between the Company and the original or any
intermediate holder thereof and all persons may act accordingly and the receipt
by any such holder of the Common Shares obtainable pursuant thereto shall be a
good discharge to the Company and the Warrant Agent for the same and neither the
Company nor the Warrant Agent shall be bound to inquire into the title of any
such holder, except where the Company or the Warrant Agent is required to take
notice by statute or by order of a court of competent jurisdiction.

 
3.5 Evidence of Ownership
 
(1)  
Upon receipt of a certificate of any bank, trust company or other depositary
satisfactory to the Warrant Agent stating that the Warrants specified therein
have been deposited by a named person with such bank, trust company or other
depositary and will remain so deposited until the expiry of the period specified
therein, the Company and the Warrant Agent may treat the person so named as the
owner, and such certificate as sufficient evidence of the ownership by such
person of such Warrants during such period, for the purpose of any requisition,
direction, consent, instrument or other document to be made, signed or given by
the holder of the Warrants so deposited.

 
(2)  
The Company and the Warrant Agent may accept as sufficient evidence of the fact
and date of the signing of any requisition, direction, consent, instrument or
other document by any person, the signature, as witness, of any officer of any
trust company, bank or depositary satisfactory to the Warrant Agent, the
certificate of any notary public or other officer authorized to take
acknowledgements of deeds to be recorded at the place where such certificate is
made, that the person signing acknowledged to him the execution thereof, or a
statutory declaration of a witness of such execution.

 
3.6 Notices
 
Unless herein otherwise expressly provided, any notice to be given hereunder to
the Warrantholders shall be deemed to be validly given if such notice is given
by personal delivery or first class mail to the attention of the holder at the
registered address of the holder recorded in the registers maintained by the
Warrant Agent; provided that in the case of notice convening a meeting of the
Warrantholders, the Warrant Agent may require such publication of such notice,
in such city or cities, as it may deem necessary for the reasonable protection
of the Warrantholders or to comply with any applicable requirement of law or any
stock exchange. Any notice so given shall be deemed to have been given on the
day of delivery or three (3) Business Days after mailing. In determining under
any provision hereof the date when notice of any meeting or other event must be
given, the date of giving notice shall be included and the date of the meeting
or other event shall be excluded. For greater certainty, all costs in connection
with the giving of notices contemplated by this Section 3.6 shall be borne by
the Company.  Accidental error or omission in giving notice or accidental
failure to mail notice to any Warrantholder will not invalidate any action or
proceeding founded thereon.
 
ARTICLE 4
 
EXERCISE OF WARRANTS
 
4.1 Method of Exercise of Warrants
 
 
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(1)  
Subject to Section 4.8, upon and subject to the provisions hereof, the
registered holder of any Warrant may exercise the rights thereby conferred on
him to purchase all or any part of the Common Shares to which such Warrant
entitles the holder, by surrendering the Warrant Certificate representing such
Warrants to the Warrant Agent during the Exercise Period at its principal
transfer office in Toronto, Ontario (or at any other place or places that may be
designated by the Company from time to time with the approval of the Warrant
Agent), with a duly completed and executed subscription form of the registered
holder or his executors, administrators or other legal representative or his
attorney duly appointed by an instrument in writing in the form and manner
satisfactory to the Warrant Agent, substantially in the form attached to the
Warrant Certificate specifying the number of Common Shares subscribed for
together with a certified cheque, money order or bank draft in lawful money of
Canada payable to or to the order of the Company at par in Toronto, Ontario in
an amount equal to the Exercise Price applicable at the time of such surrender
in respect of each Common Share subscribed for. A Warrant Certificate with the
duly completed and executed subscription form together with the payment of the
Exercise Price shall be deemed to be surrendered only upon personal delivery
thereof to or, if sent by mail or other means of transmission, upon actual
receipt thereof by the Warrant Agent.

 
(2)  
Upon and subject to the provisions hereof, any beneficial owner of Warrants
represented by the CDS Global Warrants may exercise the rights thereby conferred
on him to purchase all or any part of the Common Shares to which such Warrant
entitles the holder, by causing a CDS Participant to deliver to CDS, on behalf
of the beneficial owner, a written notice or an electronic notice through the
CDS system of the owner's intention to exercise Warrants (the "Subscription
Notice"). Forthwith upon receipt by CDS of such notice, as well as payment for
the Exercise Price, CDS shall deliver to the Warrant Agent confirmation of its
intention to exercise Warrants (the "Confirmation") in a manner acceptable to
the Warrant Agent, including by electronic means through the book-entry only
system. CDS will initiate the exercise by way of the Confirmation and forward
the aggregate Exercise Price electronically to the Warrant Agent and the Warrant
Agent will execute the exercise by issuing to CDS through the book-entry only
system the Common Shares to which the exercising beneficial holder is entitled
pursuant to the exercise. Any expense associated with the preparation and
delivery of Subscription Notice will be for the account of the beneficial owner
exercising the Warrants.  By causing a CDS Participant to deliver to CDS a
Subscription Notice, a beneficial owner shall be deemed to have irrevocably
surrendered his, her or its Warrants so exercised and appointed such CDS
Participant to act as his, her or its exclusive settlement agent with respect to
the exercise and the receipt of Common Shares in connection with the obligations
arising from such exercise. Any Subscription Notice which CDS determines to be
incomplete, not in proper form or not duly executed shall for all purposes be
void and of no effect and the exercise to which it relates shall be considered
for all purposes not to have been exercised thereby. A failure by a CDS
Participant to exercise or to give effect to the settlement thereof in
accordance with the beneficial owner's instructions will not give rise to any
obligations or liability on the part of the Company or the Warrant Agent to the
CDS Participant or the beneficial owner.

 
(3)  
Notwithstanding any provisions of this Warrant Indenture, a beneficial owner may
only exercise his Warrants or take any actions under this Warrant Indenture in
accordance with the rules and procedures of CDS.

 
 
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(4)  
Any subscription referred to in this Section 4.1 shall be signed by the
Warrantholder, shall specify the person(s) in whose name such Common Shares are
to be issued, the address(es) of such person(s) and the number of Common Shares
to be issued to each person, if more than one is so specified. If any of the
Common Shares subscribed for are to be issued to (a) person(s) other than the
Warrantholder, the signatures set out in the subscription referred to in
subsection 4.1(1) shall be guaranteed by a major Canadian chartered bank, or by
a medallion signature guaranteed from a member of a recognized Signature
Medallion Guarantee Program and the Warrantholder shall pay to the Company all
applicable transfer or similar taxes and the Company shall not be required to
issue or deliver certificates evidencing Common Shares unless or until such
Warrantholder shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid
or that no tax is due.

 
(5)  
If, at the time of exercise of the Warrants, in accordance with the provisions
of subsection 3.1(1), there are any trading restrictions on the Common Shares
pursuant to applicable securities legislation or stock exchange requirements,
the Company shall, on the advice of counsel, endorse any certificates
representing the Common Shares to such effect. The Warrant Agent is entitled to
assume compliance with all applicable securities legislation unless otherwise
notified in writing by the Company.

 
4.2 Effect of Exercise of Warrants
 
(1)  
Upon compliance by the Warrantholder with the provisions of Section 4.1, the
Common Shares so subscribed for shall be deemed to have been issued and the
Person or Persons to whom such Common Shares are to be issued shall be deemed to
have become the holder or holders of record of such Common Shares on the
Exercise Date unless the share registers maintained by the transfer agent for
the Common Shares shall be closed on such date, in which case the Common Shares
so subscribed for shall be deemed to have been issued, and such Person or
Persons shall be deemed to have become the holder or holders of record of such
Common Shares on the date on which such registers were reopened and such Common
Shares shall be issued at the Exercise Price in effect on the Exercise Date. To
the extent the opening of the registers remains within the control of the
Warrant Agent, the Company and the Warrant Agent shall cause such registers to
be open on Business Days.

 
(2)  
Within three (3) Business Days following the due exercise of a Warrant pursuant
to section 4.1, the Warrant Agent shall deliver to the Company a notice setting
forth the particulars of all Warrants exercised, and the persons in whose names
the Common Shares are to be issued (as applicable) and the addresses of such
holders of the Common Shares.

 
(3)  
Within five (5) Business Days of the due exercise of a Warrant pursuant to
section 4.1, the Company shall cause the transfer agent to issue to CDS the
Common Shares to which the exercising Warranholder is entitled pursuant to the
exercise or mail to the person in whose name the Common Shares so subscribed for
are to be issued, as specified in the subscription completed on the Warrant
Certificate, at the address specified in such subscription, a certificate or
certificates for the Common Shares to which the Warrantholder is entitled and,
if applicable, shall cause the Warrant Agent to mail a Warrant Certificate
representing any Warrants not then exercised.

 
 
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(4)  
If at the time of exercise of the Warrants there remain trading restrictions on
the Common Shares acquired upon such exercise pursuant to applicable securities
legislation or policy of any applicable regulatory body, the Company may, upon
the advice of Counsel, endorse any Common Share certificates to such effect.
Furthermore, the Company shall, or its Counsel shall, notify the Warrant Agent
in writing of any trading restrictions on the Common Shares acquired upon such
exercise pursuant to applicable securities legislation or policy of any
applicable regulatory body. Unless and until advised in writing by the Company
or its Counsel that a specific legend and trading restrictions apply to the
Common Shares, the Warrant Agent shall be entitled to assume that no specific
legend is required and that there are no trading restrictions on the Common
Shares.

 
4.3 Subscription for Less than Entitlement
 
The holder of any Warrant Certificate may subscribe for and purchase a whole
number of Common Shares that is less than the number that the holder is entitled
to purchase pursuant to the surrendered Warrant Certificate. In such event, the
holder thereof shall be entitled to receive, without charge except as aforesaid,
a new Warrant Certificate in respect of the balance of the Common Shares which
such holder was entitled to purchase pursuant to the surrendered Warrant
Certificate and which was not then purchased, such new Warrant Certificate to
contain the same legend as provided in subsection 2.9(3), if applicable.
 
4.4 No Fractional Common Shares
 
The Company shall not be required to issue fractional Common Shares in
satisfaction of its obligations hereunder. If any fractional interest in a
Common Share would, except for the provisions of this Section 4.4, be
deliverable upon the exercise of a Warrant, the Company shall in lieu of
delivering the fractional Common Shares therefor satisfy the right to receive
such fractional interest by payment to the holder of such Warrant of an amount
in funds equal (computed in the case of a fraction of a cent to the next lower
cent) to the value of the right to acquire such fractional interest on the basis
of the Current Market Price at the Exercise Date. The minimum amount for payment
pursuant to this section shall be $1.00.
 
4.5 Expiration of Warrants
 
After the Time of Expiry, all rights under any Warrant or this Indenture in
respect of which the right of subscription and purchase herein and therein
provided for shall not theretofore have been exercised shall wholly cease and
terminate and such Warrant shall be void and of no effect.
 
4.6 Cancellation of Surrendered Warrants
 
 
All Warrants surrendered to the Warrant Agent pursuant to the provisions of this
Indenture shall be cancelled by the Warrant Agent and the Warrant Agent shall
record the cancellation of such Warrants on the register of holders maintained
by the Warrant Agent pursuant to subsection 3.2(1). The Warrant Agent shall, if
requested in writing by the Company, furnish or cause to be furnished to the
Company a certificate identifying the Warrants so cancelled. All Warrants that
have been duly cancelled shall be without further force or effect whatsoever.
 
4.7 Accounting and Recording
 
(1)  
The Warrant Agent shall promptly account to the Company with respect to Warrants
exercised and forward to the Company (or into an account or accounts of the
Company with the bank or trust company designated by the Company for that
purpose) all monies received on the purchase of Common Shares through the
exercise of Warrants. All such monies, and any securities or other instruments
from time to time received by the Warrant Agent, shall be received in trust for,
and shall be segregated and kept apart by the Warrant Agent in trust for, the
Company.

 
 
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(2)  
The Warrant Agent shall record the particulars of the Warrants exercised which
shall include the name or names and addresses of the Persons who become holders
of Common Shares on exercise and the Exercise Date and Warrant Certificate
number.

 
4.8 Restriction on Exercise by U.S. Persons and in the United States; Exception
 
(1)  
Warrants may not be exercised by or on behalf of, or for the account or benefit
of, any U.S. Person or any person in the United States unless an exemption is
available from the registration requirements of the U.S. Securities Act and
applicable state securities laws and the holder of the Warrants has furnished an
opinion of counsel of recognized standing in form and substance satisfactory to
the Company to such effect; provided that an Institutional Accredited Investor
that purchased the Warrants in the offering of Units in the United States and to
U.S. Persons will not be required to deliver an opinion of counsel in connection
with the exercise of such Warrants, provided it provides the certification
required in subsection 4.8(2)(b) below.

 
(2)  
Any holder which exercises any Warrants shall provide/certify to the Company
either:

 
(a)  
the holder: (a) at the time of exercise of the Warrants is not in the United
States; (b) is not a U.S. Person and is not exercising the Warrants on behalf of
a U.S. Person or a person in the United States; (c) did not execute or deliver
the subscription form for the Warrants in the United States; and (d) has in all
other aspects complied with the terms of Regulation S under the U.S. Securities
Act;

 
(b)  
the holder: (a) acquired the Warrants directly from the Company pursuant to an
executed U.S. QIB letter or U.S. subscription agreement for the purchase of
Units; (b) is exercising the Warrants solely for its own account or for the
benefit of a U.S. Person or a person in the United States for whose account such
holder acquired the Warrants directly from the Company and for whose account
such holder exercises sole investment discretion; and (c) was, and any
beneficial purchaser for whose account such holder acquired the Warrants and is
exercising the Warrants was, an Institutional Accredited Investor, both on the
date the Warrants were purchased from the Company and on the date of exercise of
the Warrants; or

 
(c)  
a written opinion of counsel of recognized standing in form and substance
satisfactory to the Company to the effect that an exemption from the
registration requirements of the U.S. Securities Act and applicable state
securities laws is available for the issuance of the Common Shares issuable on
exercise of the Warrants.

 
(3)  
No certificates representing Common Shares will be registered or delivered to an
address in the United States unless the holder of the Warrant complies with the
requirements of paragraphs (b) or (c) of subsection 4.8(2).

 
 
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(4)  
If a Common Share certificate issued with respect to an exercise of Warrants is
tendered for transfer and bears the legend set forth in subsection 2.9(3) hereof
and the holder thereof has not obtained the prior written consent of the
Company, the Warrant Agent or the transfer agent, as the case may be, shall not
register such transfer unless the holder complies with the requirements of the
said subsection 2.9(3).

 
 
ARTICLE 5
 
 
ADJUSTMENT OF SUBSCRIPTION RIGHTS AND EXERCISE PRICE
 
5.1 Adjustment of Exercise Price and Number of Common Shares Purchasable Upon
Exercise
 
 
Subject to Section 5.2, the Exercise Price and the number of Common Shares
purchasable upon exercise of Warrants shall be subject to adjustment from time
to time in the events and in the manner provided as follows:
 
(a)  
Common Share Reorganization. If during the Exercise Period the Company shall:

 
(i)  
issue Common Shares or securities exchangeable for or convertible into Common
Shares to holders of all or substantially all of its then outstanding Common
Shares by way of stock dividend or other distribution (other than as a Dividend
Paid in the Ordinary Course or a distribution of Common Shares upon exercise of
the Warrants or pursuant to the exercise of directors, officers or employee
stock options granted under stock option plans of the Company), or

 
(ii)  
subdivide, redivide or change its outstanding Common Shares into a greater
number of Common Shares, or

 
(iii)  
consolidate, reduce or combine its outstanding Common Shares into a lesser
number of Common Shares,

 
(any of such events in these paragraphs (i), (ii) and (iii) being 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,
as the case may be, 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 fully exchanged for or converted into
Common Shares on such record date or effective date, as the case may be). From
and after any adjustment of the Exercise Price pursuant to this subsection
5.1(a), the number of Common Shares purchasable upon exercise of the Warrants
shall be adjusted contemporaneously with the adjustment of the Exercise Price by
multiplying the number of Common Shares then otherwise purchasable on the
exercise thereof by a fraction, the numerator of which shall be the Exercise
Price in effect immediately prior to the adjustment and the denominator of which
shall be the Exercise Price resulting from such adjustment.
 
 
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(b)  
Rights Offering. If and whenever during the Exercise Period, the Company 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 forty-five (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 (or having a conversion price or exchange
price per Share) of less than 95% of the Current Market Price (as defined in
Section 1.1 hereof) 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:

 
(i)  
the numerator of which shall be the aggregate of:

 
(1)  
the number of Common Shares outstanding as of the record date for the Rights
Offering, and

 
(2)  
a number determined by dividing either

 
(a)  
where the event giving rise to the application of this subsection 5.1(b) was the
issue of rights, options or warrants to the holders of Common Shares under which
such holders are entitled to subscribe for or purchase additional Common Shares,
the product of the number of Common Shares issued or subscribed for during the
Rights Period and the price at which such Common Shares are offered,

 
or, as the case may be,
 
(b)  
where the event giving rise to the application of this subsection 5.1(b) was the
issue of rights, options or warrants to the holders of Common Shares under which
such holders are entitled to subscribe for or purchase securities exchangeable
for or convertible into shares, 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 the Current Market Price of
the Common Shares as of the record date for the Rights Offering; and

 
 
(c)  
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.

 
 
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If the holder has exercised any of the Warrants during the period beginning
immediately after the record date for a Rights Offering and ending on the last
day of the Rights Period, the holder shall, in addition to the Common Shares to
which the holder is otherwise entitled upon such exercise in accordance with
Article 2 hereof, 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 5.1(b) 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 the Warrants held by such holder during such period,
and the resulting product is divided by the Exercise Price as adjusted for such
Rights Offering pursuant to this subsection 5.1(b); provided that the provisions
of subsection 5.4(1) shall be applicable to any fractional interest in a Common
Share to which such holder might otherwise be entitled under the foregoing
provisions of this subsection 5.1(b). Such additional Common Shares shall be
deemed to have been issued to the holder immediately following the end of the
Rights Period and a certificate for such additional Common Shares shall be
delivered to such holder within three (3) Business Days following the end of the
Rights Period.
 
If at any time after the date hereof and prior to the Time of Expiry, any of the
events set out in subsection 5.1(b) shall occur and the holder has not exercised
any of the Warrants during the Rights Period, and the occurrence of such event
results in an adjustment of the Exercise Price pursuant to provisions of this
Section 5.1, then the number of Common Shares purchasable pursuant to the
Warrants shall be adjusted contemporaneously with the adjustment of the Exercise
Price by multiplying the number of Common Shares then otherwise purchasable on
the exercise thereof by a fraction, the numerator of which shall be the Exercise
Price in effect immediately prior to the adjustment and the denominator of which
shall be the Exercise Price resulting from such adjustment.
 
(c)  
Special Distribution. If and whenever during the Exercise Period, the Company
shall issue or distribute to all or to substantially all the holders of the
Common Shares:

 
(i)  
securities of the Company including shares, rights, options or warrants to
acquire shares of any class or securities exchangeable for or convertible into
or exchangeable into any such shares or cash, property or assets and including
evidences of its indebtedness, or

 
(ii)  
any cash, property or other assets,

 
and if such issuance or distribution does not constitute Dividends Paid in the
Ordinary Course, a Common Share Reorganization or a Rights Offering (any of such
non-excluded events being herein called a "Special Distribution"), the Exercise
Price will be adjusted immediately after such record date so that it will equal
the rate determined by multiplying the Exercise Price in effect on such record
date by a fraction, of which the numerator shall be the total number of Common
Shares outstanding on such record date multiplied by the Current Market Price on
the earlier of such record date and the date on which the Company announces its
intention to make such distribution, less the aggregate fair market value (as
determined by the directors, acting reasonably, at the time such distribution is
authorized) of such shares or rights, options or warrants or evidences of
indebtedness or cash, securities or other property or assets so distributed, and
of which the denominator shall be the total number of Common Shares outstanding
on such record date multiplied by such Current Market Price. If at any time
after the date hereof and prior to the Time of Expiry, any of the events set out
in subsection 5.1(c) shall occur and the occurrence of such event results in an
adjustment of the Exercise Price pursuant to provisions of this Section 5.3,
then the number of Common Shares purchasable upon exercise of the Warrants shall
be adjusted contemporaneously with the adjustment of the Exercise Price by
multiplying the number of Common Shares then otherwise purchasable on the
exercise thereof by a fraction, the numerator of which shall be the Exercise
Price in effect immediately prior to the adjustment and the denominator of which
shall be the Exercise Price resulting from such adjustment.
 
 
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(d)  
Capital Reorganization. If and whenever 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 Company with or into any other corporation or other entity (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 securities), or a transfer of the undertaking or assets
of the Company as an entirety or substantially as an entirety to another
corporation or other entity (any of such events being herein called a "Capital
Reorganization"), the holder, where he has not exercised the right of
subscription and purchase prior to the effective date or record date, as the
case may be, of such Capital Reorganization, shall be entitled to receive, and
shall accept upon the exercise of such right for the same aggregate
consideration, in lieu of the number of Common Shares to which such holder was
theretofore entitled upon such exercise, the aggregate number of shares, other
securities or other property which such holder would have been entitled to
receive as a result of such Capital Reorganization if, on the effective date
thereof, he had been the registered holder of the number of Common Shares to
which such holder was theretofore entitled to subscribe for and purchase;
provided however, that no such Capital Reorganization shall be carried into
effect unless all necessary steps shall have been taken to so entitle the
holder. If determined appropriate by the board of directors of the Company,
acting reasonably and in good faith, and subject to the prior written approval
of the principal Canadian 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 of this Indenture with respect the rights and interest
thereafter of the Warrantholder to the end that the provisions of this Indenture
shall thereafter correspondingly be made applicable as nearly as may reasonably
be possible in relation to any shares or other securities or property thereafter
deliverable upon the exercise of the Warrants.

 
(e)  
If and whenever at any time after the date hereof and prior to the Time of
Expiry, the Company takes any action affecting its Common Shares to which the
foregoing provisions of this Section 5.1, in the opinion of the board of
directors of the Company, acting reasonably and in good faith, are not strictly
applicable, or if strictly applicable would not fairly adjust the rights of the
Holder against dilution in accordance with the intent and purposes thereof, or
would otherwise materially affect the rights of the holder hereunder, then the
Company shall execute and deliver to the holder an amendment hereto providing
for an adjustment in the application of such provisions so as to adjust such
rights as aforesaid in such a manner as the board of directors of the Company
may determine to be equitable in the circumstances, acting reasonably and in
good faith. The failure of the taking of action by the board of directors of the
Company to so provide for any adjustment on or prior to the effective date of
any action or occurrence giving rise to such state of facts will be conclusive
evidence that the board of directors has determined that it is equitable to make
no adjustment in the circumstances.

 
 
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5.2  
Rules Regarding Calculation of Adjustment of Exercise Price and Number of Common
Shares Purchasable Upon Exercise

 
For the purposes of Section 5.1:
 
(1)  
The adjustments provided for in Section 5.1 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 paragraphs of this Section 5.2

 
(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 this Warrant 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 Section 5.2(1) 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 Warrants shall be made in respect of any event
described in Section 5.1, other than the events referred to in subsection
5.1(a)(ii) and 5.1(a)(iii), if the holder is entitled to participate in such
event on the same terms, mutatis mutandis, as if it had exercised its Warrants
prior to or on the effective date or record date of such event. The terms of the
participation of the holder in such event shall be subject to any necessary
approval of the principal Canadian stock exchange or over-the-counter market on
which the Common Shares are then listed or quoted for trading.

 
(4)  
No adjustment in the Exercise Price shall be made pursuant to Section 5.1 in
respect of the issue from time to time:

 
(a)  
of Common Shares purchasable on exercise of the Warrants;

 
(b)  
of a Dividend Paid in the Ordinary Course of Common Shares to holders of Common
Shares who exercise an option or election to receive substantially equivalent
dividends in Common Shares in lieu of receiving a cash dividend pursuant to a
dividend reinvestment plan or similar plan adopted by the Company in accordance
with the requirements of the principal Canadian stock exchange or
over-the-counter market on which the Common Shares are then listed or quoted for
trading and applicable securities laws;

 
(c)  
of Common Shares pursuant to any stock option plan, stock purchase plan or
benefit plan in force at the date hereof for directors, officers, employees,
advisers or consultants of the Company, as such option or plan is amended or
superseded from time to time in accordance with the requirements of the
principal Canadian stock exchange or over-the-counter market on which the Common
Shares are then listed or quoted for trading and applicable securities laws, and
such other stock option plan, stock purchase plan or benefit plan as may be
adopted by the Company in accordance with the requirements of the principal
Canadian stock exchange or over-the-counter market on which the Common Shares
are then listed or quoted for trading and applicable securities laws;

 
 
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(d)  
of the payment of interest on any outstanding notes;

 
(e)  
of the issuance of securities in connection with strategic license agreements
and other partnering arrangements of the Company or any subsidiary thereof; or

 
(f)  
of full or partial consideration in connection with a strategic merger or
purchase of substantially all of the securities or assets of a corporation or
other entity;

 
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 5.1, such dispute shall, absent manifest error, be conclusively
determined by the Company'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, absent manifest error, shall
be binding upon the Company, the Warrant Agent and the Warrantholders.
Notwithstanding the foregoing, such determination shall be subject to compliance
with all regulatory requirements (including the rules 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 Company. In the event that any such determination is made, the
Company shall deliver a certificate to the Warrant Agent and a notice to the
Warrantholders in the manner contemplated in Section 3.6 describing such
determination.

 
(6)  
If the Company 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 Warrant shall be required by reason of the setting of such record date.

 
(7)  
In the absence of a resolution of the board of directors of the Company fixing a
record date for any dividend or distribution referred to in subsection 5.1(a)(i)
or any Rights Offering or Special Distribution, the Company shall be deemed to
have fixed as the record date therefor the date on which such dividend or
distribution is effected.

 
(8)  
As a condition precedent to the taking of any action which would require any
adjustment in any of the subscription rights pursuant to this Warrant Indenture,
including the Exercise Price and the number or class of shares or other
securities which are to be received upon the exercise thereof; the Company shall
take any corporate action which may, in the opinion of Counsel, be necessary in
order that the Company 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 the Holder of such Warrant is entitled to receive on the
full exercise thereof in accordance with the provisions hereof.

 
(9)  
In case the Company, after the date hereof, shall take any action affecting any
Common Shares, other than action described in Section 5.1, which in the opinion
of the Directors acting reasonably and in good faith would naturally affect the
rights of Warrantholders, the Exercise Price and the number or class of shares
or other securities which are to be received upon the exercise thereof shall be
adjusted in such manner, if any, and at such time, as the Directors, in their
sole discretion acting in good faith, may determine to be equitable in the
circumstances. Failure of the taking of action by the Directors so as to provide
for an adjustment in the Exercise Price and the number or class of shares or
other securities which are to be received upon the exercise thereof prior to the
effective date of any action by the Company affecting the Common Shares shall be
conclusive evidence that the directors have determined that it is equitable to
make no adjustment in the circumstances.

 
 
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(10)  
The Warrant Agent shall be entitled to act and rely on any adjustment
calculations by the Company or the Company's Auditors.

 
(11)  
On the happening of each and every such event set out in Section 5.1, the
applicable provisions of the Warrant Certificate and this Warrant Indenture,
including the Exercise Price, shall, ipso facto, be deemed to be amended
accordingly and the Company shall take all necessary action so as to comply with
such provisions as so amended.

 
5.3 Postponement of Subscription
 
In any case in which the application of Section 5.1 shall require that an
adjustment shall be effective immediately after a record date for an event
referred to herein, the Company may defer, until the occurrence of such an
event:
 
(a)  
issuing to the Warrantholder of any Warrant 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 such Warrantholder any distributions declared with respect to such
additional Common Shares after such Exercise Date and before such event;

 
 
provided, however, that the Company shall deliver or cause to be delivered to
such Warrantholder, an appropriate instrument evidencing such Warrantholder'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 Warrant and to such distributions declared with respect to
any additional Common Shares issuable on the exercise of any Warrant.
 
5.4  Notice of Adjustment of Exercise Price and Number of Common Shares
Purchasable Upon Exercise
 
(1)  
At least ten (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
pursuant to Section 5.1, including the Exercise Price and the number of Common
Shares which are purchasable upon the exercise thereof, the Company shall be
required to (a) file with the Warrant Agent a certificate of the Company
specifying the particulars of such event (including the record date or the
effective date for such event) and, if determinable, the required adjustment and
the computation of such adjustment; and (b) give notice to the Warrantholders of
the particulars of such event (including the record date or the effective date
for such event) and, if determinable, the required adjustment. Notice to the
Warrantholders shall be given in the manner specified in Section 3.6.

 
 
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(2)  
In case any adjustment for which such notice has been given is not then
determinable, the Company shall promptly after such adjustment is determinable
(a) file with the Warrant Agent a computation of such adjustment; and (b) give
notice to the Warrantholders of the adjustment. Notice to the Warrantholders
shall be given in the manner specified in Section 3.6.

 
(3)  
The Warrant Agent may, absent manifest error, for all purposes of the adjustment
act and rely upon the certificate of the Company submitted to it pursuant to
subsection 5.4(1) and on the accuracy of such certificate, calculations and
formulas contained therein.

 
 
ARTICLE 6
 
 
PURCHASES BY THE COMPANY
 
6.1 Purchases of Warrants for Cancellation
 
The Company may, at any time and from time to time, purchase Warrants by
invitation for tender, by private contract or otherwise (which shall include a
purchase through an investment dealer or firm holding membership on a Canadian
stock exchange) on such terms as the Company may determine. All Warrants
purchased pursuant to the provisions of this Section 6.1 shall be forthwith
delivered to, cancelled and destroyed by the Warrant Agent and shall not be
reissued.
 
6.2 Optional Purchases by the Company
 
Subject to applicable law, the Company may from time to time purchase on any
stock exchange, in the open market, by private agreement or otherwise any of the
Warrants. Any such purchase shall be made at the lowest price or prices at
which, in the opinion of the Directors, such Warrants are then obtainable, plus
reasonable costs of purchase, and may be made in such manner, from such Persons,
and on such other terms as the Company in its sole discretion may determine. The
Warrant Certificates representing the Warrants purchased pursuant to this
Section 6.2 shall forthwith be delivered to and cancelled by the Warrant Agent.
 
 
ARTICLE 7
COVENANTS OF THE COMPANY
 
7.1 Covenants of the Company
 
The Company covenants with the Warrant Agent for the benefit of the
Warrantholders and the Warrant Agent that so long as any Warrants remain
outstanding and may be exercised:
 
(a)  
the Company will at all times maintain its existence and will carry on and
conduct its business in a prudent manner in accordance with industry standards
and good business practice, and will keep or cause to be kept proper books of
account in accordance with applicable law;

 
(b)  
the Company will reserve and keep available a sufficient number of Common Shares
for issuance upon the exercise of Warrants issued by the Company;

 
(c)  
the Company will cause the Common Shares from time to time subscribed for
pursuant to the Warrants issued by the Company hereunder, in the manner herein
provided, to be duly issued in accordance with the Warrants and the terms
hereof;

 
 
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(d)  
the Company will cause the certificates representing the Common Shares from time
to time to be acquired, pursuant to the Warrants in the manner herein provided,
to be duly issued and delivered in accordance with the Warrants and the terms
hereof;

 
(e)  
the Company shall use all reasonable efforts to maintain the listing of the
Common Shares on the TSXV (or such other recognized stock exchange as may be
agreed upon by the Company and the Agents) and to have the Common Shares issued
pursuant to the exercise of the Warrants listed and posted for trading on the
TSXV (or such other recognized stock exchange as may be agreed upon by the
Company and the Agents) as expeditiously as possible;

 
(f)  
all Common Shares that shall be issued by the Company upon exercise of the
rights provided for herein shall be issued as fully paid and non-assessable;

 
(g)  
the Company will perform and carry out all of the acts or things to be done by
it as provided in this Indenture; and

 
(h)  
the Company will promptly advise the Warrant Agent and the Warrantholders in
writing of any default under the terms of this Indenture.

 
7.2 Warrant Agent's Remuneration and Expenses
 
The Company covenants that it will pay to the Warrant Agent from time to time
reasonable remuneration for its services hereunder and will pay or reimburse the
Warrant Agent upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Warrant Agent in the administration or
execution of the duties hereby created, except any such expense, disbursement or
advance as may arise out of or result from the gross negligence, wilful
misconduct or fraud of the Warrant Agent. This Section 7.2 will survive the
resignation or removal of the Warrant Agent or the termination of this
Indenture. Any amount owing hereunder and remaining unpaid thirty (30) days from
the invoice date will bear interest at the then current rate charged by the
Warrant Agent against unpaid invoices and shall be payable upon demand. This
Section 7.2 shall survive the termination of this Indenture and the removal or
resignation of the Warrant Agent.
 
7.3 Performance of Covenants by Warrant Agent
 
 
Subject to Section 11.6, if the Company shall fail to perform any of its
covenants contained in this Warrant Indenture and the Company has not rectified
such failure within twenty-five (25) Business Days after either giving notice of
such default pursuant to subsection 7.1(h) or receiving written notice from the
Warrant Agent of such failure, the Warrant Agent may notify the Warrantholders
in the manner provided in Section 3.6 of such failure on the part of the Company
or, subject to Section 11.1, may itself perform any of the covenants capable of
being performed by it, but shall be under no obligation to perform such
covenants or to notify the Warrantholders of such performance by it. All
reasonable sums expended or advanced by the Warrant Agent in so doing shall be
repayable as provided in Section 7.2. No such performance, expenditure or
advance by the Warrant Agent shall relieve the Company of any default hereunder
or of its continuing obligations under the covenants herein contained.
 
7.4 Securities Filings
 
(1)  
If, in the opinion of Counsel, any filing is required to be made with any
governmental or other authority in Canada (including the securities regulatory
authorities or any exchange or quotation system upon which any securities of the
Company are listed or quoted for trading), or any other step is required before
any Common Shares issuable upon the exercise of Warrants by a Warrantholder may
properly and legally be issued in Canada, the Company covenants that it will
take such action so required at its own expense.

 
 
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(2)  
The Company will give written notice of the issue of Common Shares pursuant to
the exercise of Warrants, in such detail as may be required, to each securities
administrator in each jurisdiction in which there is legislation requiring the
giving of such notice.

 
7.5 Certificates of No Default
 
 
At any time if requested by the Warrant Agent, the Company shall deliver to the
Warrant Agent an Officers' Certificate stating that the Company has complied to
the best of its knowledge, in all material respects, with all covenants,
conditions or other requirements contained in this Indenture. In the event that
the Company has not complied, in all material respects, with all the covenants
and conditions contained herein, it will advise the Warrant Agent and the
holders of such default as soon as reasonably practicable, specifying the
covenant, condition or other requirement which has not been complied with and
giving particulars of such non-compliance.
 
ARTICLE 8
ENFORCEMENT
 
8.1 Suits by Warrantholders
 
(1)  
Warrantholders May Not Sue. Except to the extent that the rights of an
individual Warrantholder or group of Warrantholders would be prejudiced thereby,
no Warrantholder has the right to institute any action or proceeding or to
exercise any other remedy authorized hereunder for the purpose of enforcing any
right on behalf of the Warrantholders as a whole or for the execution of any
trust or power hereunder or for the appointment of a liquidator or receiver or
receiver and manager or for a receiving order under the Bankruptcy and
Insolvency Act (Canada) or to have the Company wound up or to file or prove a
claim in any liquidation or bankruptcy proceedings, unless the Warrant Agent has
received a Warrantholders' Request directing it to take the requested action and
has been provided with sufficient funds or other security and/or such indemnity
satisfactory to the Warrant Agent in respect of the costs, expenses and
liabilities that may be incurred by it in so proceeding and the Warrant Agent
has failed to act within a reasonable time thereafter. If the Warrant Agent has
so failed to act, but not otherwise, any Warrantholder acting on behalf of all
Warrantholders will be entitled to take any of the proceedings that the Warrant
Agent might have taken hereunder. No Warrantholder has any right in any manner
whatsoever to effect, disturb or prejudice the rights hereby created by its
action or to enforce any right hereunder or under any Warrant, except subject to
the conditions and in the manner herein provided. Any money received as a result
of a proceeding taken by any Warrantholder on behalf of the Warrantholders
hereunder must be forthwith paid to the Warrant Agent.

 
(2)  
Warrant Agent not Required to Possess Warrants. All rights of action under this
Indenture may be enforced by the Warrant Agent without the possession of any of
the Warrants or the production thereof on any trial or other proceedings
relative thereto.

 
8.2 Limitation of Liability
 
 
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The obligations hereunder are not personally binding upon nor shall resort
hereunder be had to, the private property of any of the past, present or future
Directors or Shareholders of the Company or of any successor corporation or of
any of the past, present or future officers, employees or agents of the Company
or of any successor corporation, but only the property of the Company or of any
successor corporation shall be bound in respect hereof.
 
ARTICLE 9
MEETINGS OF WARRANTHOLDERS
 
9.1 Right to Convene Meetings
 
The Warrant Agent may at any time and from time to time, and shall on receipt of
a written request of the Company or of a Warrantholders' Request and upon
receiving sufficient funds and being indemnified to its reasonable satisfaction
by the Company or by the Warrantholders signing such Warrantholders' Request
against the cost which may be incurred in connection with the calling and
holding of such meeting, convene a meeting of the Warrantholders. In the event
of the Warrant Agent failing to so convene a meeting within fifteen (15)
Business Days after receipt of such written request of the Company or
Warrantholders' Request, funds and indemnity given as aforesaid, the Company or
such Warrantholders, as the case may be, may convene such meeting. Every such
meeting shall be held in the City of Toronto or at such other place as may be
approved or determined by the Warrant Agent unless the meeting was convened by
the Company or by Warrantholders as a result of the Warrant Agent's failure or
refusal to convene the meeting, in which case the meeting shall be held at such
place as may be determined by the Company or by the Warrantholders convening the
meeting, as the case may be.
 
9.2 Notice
 
At least twenty-one (21) Business Days prior notice of any meeting of
Warrantholders shall be given to the Warrantholders in the manner provided for
in Section 3.6 and a copy of such notice shall be sent by mail to the Warrant
Agent (unless the meeting has been called by the Warrant Agent) and to the
Company (unless the meeting has been called by the Company). Such notice shall
state the time when and the place where the meeting is to be held, shall state
briefly the general nature of the business to be transacted thereat and shall
contain such information as is reasonably necessary to enable the Warrantholders
to make a reasoned decision on the matter, but it shall not be necessary for any
such notice to set out the terms of any resolution to be proposed nor any of the
provisions of this Article 9. The notice convening any such meeting may be
signed by an appropriate officer of the Warrant Agent or by the Company or by
the Warrantholder or Warrantholders convening the meeting.
 
9.3 Chairman
 
An individual (who need not be a Warrantholder) nominated in writing by the
Warrant Agent shall be chairman of the meeting and if no individual is so
nominated, or if the individual so nominated is not present within fifteen
minutes from the time fixed for the holding of the meeting, or if such Person is
unable or unwilling to act as chairman, the Warrantholders present in person or
by proxy shall choose some individual present to be chairman.
 
9.4 Quorum
 
Subject to the provisions of Section 9.11, at any meeting of the Warrantholders
a quorum shall consist of Warrantholders present in person or by proxy and
holding at least 25% of the aggregate number of all the then outstanding
Warrants, provided that at least two Persons entitled to vote thereat are
personally present (except in the case where there is only one Warrantholder).
If a quorum of the Warrantholders shall not be present within thirty minutes
from the time fixed for holding any meeting, the meeting, if summoned by the
Warrantholders or on a Warrantholders' Request, shall be dissolved; but in any
other case the meeting shall be adjourned to the same day in the next week
(unless such day is not a Business Day in which case it shall be adjourned to
the next following Business Day) at the same time and place and subject to
Section 9.11 no notice of the adjournment need be given. Any business may be
brought before or dealt with at an adjourned meeting which might have been dealt
with at the original meeting in accordance with the notice calling the same. No
business shall be transacted at any meeting unless a quorum be present at the
commencement of business. At the adjourned meeting the Warrantholders present in
person or by proxy shall form a quorum and may transact the business for which
the meeting was originally convened, notwithstanding that they may not hold at
least 25% of all then outstanding Warrants.
 
 
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9.5 Power to Adjourn
 
The chairman of any meeting at which a quorum of the Warrantholders is present
may, with the consent of the meeting, adjourn any such meeting, and no notice of
such adjournment need be given except such notice, if any, as the meeting may
prescribe.
 
9.6 Show of Hands
 
Every question submitted to a meeting shall be decided in the first place by a
majority of the votes given on a show of hands except that votes on an
Extraordinary Resolution shall be given in the manner hereinafter provided. At
any such meeting, unless a poll is duly demanded as herein provided, a
declaration by the chairman that a resolution has been carried or carried
unanimously or by a particular majority or lost or not carried by a particular
majority shall be conclusive evidence of the fact.
 
9.7 Poll and Voting
 
(1)  
On every Extraordinary Resolution, and on any other question submitted to a
meeting and after a vote by show of hands when demanded by the chairman or by
one or more of the Warrantholders acting in Person or by proxy, a poll shall be
taken in such manner as the chairman shall direct. Questions other than those
required to be determined by Extraordinary Resolution shall be decided by a
majority of votes cast on the poll.

 
(2)  
On a show of hands, every Person who is present and entitled to vote, whether as
a Warrantholder or as proxy for one or more absent Warrantholders, or both,
shall have one vote. On a poll, each Warrantholder present in person or
represented by a proxy duly appointed by instrument in writing shall be entitled
to one vote in respect of each Common Share which he is entitled to purchase
pursuant to the Warrant or Warrants then held or represented by him. A proxy
need not be a Warrantholder. The chairman of any meeting shall be entitled, both
on a show of hands and on a poll, to vote in respect of the Warrants, if any,
held or represented by him.

 
9.8 Regulations
 
(1)  
Subject to the provisions of this Indenture, the Warrant Agent or the Company
with the approval of the Warrant Agent may from time to time make and from time
to time vary such regulations as it shall think fit:

 
(a)  
for the deposit of voting certificates and instruments appointing proxies at
such place and time as the Warrant Agent, the Company or the Warrantholders
convening the meeting, as the case may be, may in the notice convening the
meeting direct;

 
 
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(b)  
for the deposit of voting certificates and instruments appointing proxies at
some approved place or places other than the place at which the meeting is to be
held and enabling particulars of such instruments appointing proxies to be
mailed, delivered or sent by facsimile transmission before the meeting to the
Company or to the Warrant Agent at the place where the same is to be held and
for the voting of proxies so deposited as though the instruments themselves were
produced at the meeting;

 
(c)  
for the form of the voting certificates and instrument of proxy and the manner
in which the form of proxy may be executed; and

 
(d)  
generally for the calling of meetings of Warrantholders and the conduct of
business thereat including setting a record date for Warrantholders entitled to
receive notice of or to vote at such meeting.

 
(2)  
Any regulations so made shall be binding and effective and the votes given in
accordance therewith shall be valid and shall be counted. Save as such
regulations may provide, or as may be expressly provided for herein the only
Persons who shall be recognized at any meeting as a Warrantholder, or be
entitled to vote or be present at the meeting in respect thereof (subject to
Section 9.9) shall be Warrantholders or Persons holding voting certificates or
proxies of Warrantholders.

 
9.9 Company, Warrant Agent and Warrantholders May be Represented
 
The Company and the Warrant Agent, by their respective directors, officers and
employees, and the Counsel for the Company, for the Warrant Agent and for any
Warrantholder may attend any meeting of the Warrantholders, but shall have no
vote as such, except in their capacity as Warrantholders.
 
9.10 Powers Exercisable by Extraordinary Resolution
 
In addition to all other powers conferred upon them by any other provisions of
this Indenture or by law, the Warrantholders at a meeting shall have the power,
exercisable from time to time by Extraordinary Resolution, subject to applicable
law and any regulatory approval:
 
(a)  
to agree to any modification, abrogation, alteration, compromise or arrangement
of the rights of Warrantholders or (with the consent of the Warrant Agent, such
consent not to be unreasonably withheld) the Warrant Agent in its capacity as
warrant agent hereunder or on behalf of the Warrantholders against the Company
whether such rights arise under this Indenture, the Warrant Certificate or
otherwise, provided that following such action the rights of the Warrantholders
or any individual Warrantholder shall not exceed the rights of the
Warrantholders hereunder, or otherwise result in an increase of the obligations
and liabilities of the Company hereunder;

 
(b)  
to amend, alter or repeal any Extraordinary Resolution previously passed or
sanctioned by the Warrantholders;

 
 
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(c)  
to direct or to authorize the Warrant Agent, subject to its prior
indemnification pursuant to subsection 11.1(2), to enforce any of the covenants
on the part of the Company contained in this Indenture or the Warrant
Certificates or to enforce any of the rights of the Warrantholders in any manner
specified in such Extraordinary Resolution or to refrain from enforcing any such
covenant or right;

 
(d)  
to waive, and to direct the Warrant Agent to waive, any default on the part of
the Company in complying with any provisions of this Indenture or the Warrant
Certificates either unconditionally or upon any conditions specified in such
Extraordinary Resolution;

 
(e)  
to restrain any Warrantholder from taking or instituting any suit, action or
proceeding against the Company for the enforcement of any of the covenants on
the part of the Company contained in this Indenture or the Warrant Certificates
or to enforce any of the rights of the Warrantholders;

 
(f)  
to direct any Warrantholder who, as such, has brought any suit, action or
proceeding to stay or to discontinue or otherwise to deal with the same upon
payment of the costs, charges and expenses reasonably and properly incurred by
such Warrantholder in connection therewith; and

 
(g)  
to remove the Warrant Agent and appoint a successor warrant agent in the manner
specified in section 11.7 hereof.

 
9.11 Meaning of Extraordinary Resolution
 
(1)  
The expression "Extraordinary Resolution" when used in this Indenture means,
subject as hereinafter provided in this Section 9.11 and in Section 9.14, a
resolution (i) passed at a meeting of the holders of Warrants duly convened for
that purpose and held in accordance with the provisions of this Article 9 at
which there are holders of Warrants present in person or represented by proxy
representing at least 25% of the aggregate number of all the then outstanding
Warrants and passed by the affirmative vote of Warrantholders representing not
less than 66 2/3% of the aggregate number of all the then outstanding Warrants
represented at the meeting and voted on the poll upon such resolution; or (ii)
adopted by an instrument in writing signed by the holders of Warrants
representing not less than 66 2/3% percent of the aggregate number of all the
then outstanding Warrants.

 
(2)  
If, at any meeting called for the purpose of passing an Extraordinary
Resolution, Warrantholders holding at least 25% of the aggregate number of all
the then outstanding Warrants are not present in person or by proxy within
thirty (30) minutes after the time appointed for the meeting then the meeting,
if convened by Warrantholders or on a Warrantholders' Request, shall be
dissolved; but in any other case it shall stand adjourned to such day, being not
less than ten (10) Business Days later, and to such place and time as may be
appointed by the chairman. Not less than three (3) days' prior notice shall be
given of the time and place of such adjourned meeting in the manner provided for
in such notice shall state that at the adjourned meeting the Warrantholders
present in person or by proxy shall form a quorum but it shall not be necessary
to set forth the purposes for which the meeting was originally called or any
other particulars. At the adjourned meeting the Warrantholders present in person
or by proxy shall form a quorum and may transact the business for which the
meeting was originally convened and a resolution proposed at such adjourned
meeting and passed by the requisite vote as provided in subsection 9.11(1) shall
be an Extraordinary Resolution within the meaning of this Indenture
notwithstanding that Warrantholders representing at least 25% of all the then
outstanding Warrants are not present in person or by proxy at such adjourned
meeting.

 
 
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(3)  
Votes on an Extraordinary Resolution shall always be given on a poll and no
demand for a poll on an Extraordinary Resolution shall be necessary.

 
9.12 Powers Cumulative
 
 
It is hereby declared and agreed that any one or more of the powers or any
combination of the powers in this Indenture stated to be exercisable by the
Warrantholders by Extraordinary Resolution or otherwise may be exercised from
time to time and the exercise of any one or more of such powers or any
combination of powers from time to time shall not be deemed to exhaust the right
of the Warrantholders to exercise such power or powers or combination of powers
then or thereafter from time to time.
 
9.13 Minutes
 
Minutes of all resolutions and proceedings at every meeting of Warrantholders
shall be made and duly entered in books to be provided from time to time for
that purpose by the Warrant Agent at the expense of the Company, and any such
minutes as aforesaid, if signed by the chairman of the meeting at which such
resolutions were passed or proceedings had, shall be prima facie evidence of the
matters therein stated and, until the contrary is proved, every such meeting in
respect of the proceedings of which minutes shall have been made shall be deemed
to have been duly convened and held, and all resolutions passed or proceedings
taken thereat shall be deemed to have been duly passed and taken.
 
9.14 Instruments in Writing
 
All actions which may be taken and all powers that may be exercised by the
Warrantholders at a meeting held as provided in this Article 9 may also be taken
and exercised by Warrantholders representing at least 66 2/3% of the aggregate
number of all the then outstanding Warrants by an instrument in writing signed
in one or more counterparts by such Warrantholders in person or by attorney duly
appointed in writing, and the expression "Extraordinary Resolution" when used in
this Indenture shall include an instrument so signed.
 
9.15 Binding Effect of Resolutions
 
Every resolution and every Extraordinary Resolution passed in accordance with
the provisions of this Article 9 at a meeting of Warrantholders shall be binding
upon all the Warrantholders, whether present at or absent from such meeting, and
every instrument in writing signed by Warrantholders in accordance with Section
9.14 shall be binding upon all the Warrantholders, whether signatories thereto
or not, and each and every Warrantholder and the Warrant Agent (subject to
receiving prior indemnification pursuant to subsection 11.1(2)) shall be bound
to give effect accordingly to every such resolution and instrument in writing.
In the case of an instrument in writing the Warrant Agent shall give notice in
the manner contemplated in Section 3.6 and Section 13.1 of the effect of the
instrument in writing to all Warrantholders and the Company as soon as is
reasonably practicable.
 
9.16 Holdings by Company Disregarded
 
In determining whether Warrantholders are present at a meeting of Warrantholders
for the purpose of determining a quorum or have concurred in any consent,
waiver, Extraordinary Resolution, Warrantholders' Request or other action under
this Indenture, Warrants owned legally or beneficially by the Company or any
Subsidiary of the Company or any other Affiliate of the Company, as determined
in accordance with the provisions of Section 13.7, shall be disregarded. The
Company shall provide, upon the written request of the Warrant Indenture, a
certificate as to the registration particulars of any Warrants held by the
Company.
 
 
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ARTICLE 10
SUPPLEMENTAL INDENTURES
 
10.1 Provision for Supplemental Indentures for Certain Purposes
 
From time to time the Company (when properly authorized by action by the
Directors) and the Warrant Agent may, subject to the provisions hereof, and they
shall, when so directed in accordance with the provisions hereof and regulatory
approval, execute and deliver by their proper officers, indentures, or
instruments supplemental hereto, which thereafter shall form part hereof, for
any one or more or all of the following purposes:
 
(a)  
providing for the issue of additional Warrants hereunder and any consequential
amendments hereto as may be required by the Warrant Agent, relying on advice of
Counsel;

 
(b)  
setting forth any adjustments resulting from the application of the provisions
of Section 5.1 or any modification affecting the rights of Warrantholders
hereunder on exercise of the Warrants, provided that any such adjustments or
modifications shall be subject to compliance with all regulatory requirements
(including the rules of any stock exchange or over-the-counter market on which
the Common Shares are then listed or quoted for trading);

 
(c)  
adding to the provisions hereof such additional covenants and enforcement
provisions as, in the opinion of Counsel, are necessary or advisable, provided
that the same are not in the opinion of the Warrant Agent, relying on the advice
of Counsel, prejudicial to the rights or interests of the Warrantholders as a
group;

 
(d)  
giving effect to all Extraordinary Resolution passed as provided in Article 9;

 
(e)  
making such provisions not inconsistent with this Indenture as may be necessary
or desirable with respect to matters or questions arising hereunder, provided
that such provisions are not, in the opinion of the Warrant Agent, relying on
the advice of Counsel, prejudicial to the rights or interests of the
Warrantholders as a group;

 
(f)  
adding to or altering the provisions hereof in respect of the transfer of
Warrants, making provision for the exchange of Warrant Certificates, and making
any modification in the form of the Warrant Certificates which does not affect
the substance thereof;

 
(g)  
modifying any of the provisions of this Indenture or relieving the Company from
any of the obligations, conditions or restrictions herein contained, provided
that such modification or relief shall be or become operative or effective only
if, in the opinion of the Warrant Agent, relying on the advice of Counsel, such
modification or relief in no way prejudices any of the rights or interests of
the Warrantholders as a group or of the Warrant Agent, and provided further that
the Warrant Agent may in its sole discretion decline to enter into any such
supplemental indenture which in its opinion may not afford adequate protection
to the Warrant Agent when the same shall become operative; and

 
 
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(h)  
for any other purpose not inconsistent with the terms of this Indenture,
including the correction or rectification of any ambiguities, defective or
inconsistent provisions, errors, mistakes or omissions herein, provided that in
the opinion of the Warrant Agent, relying on the advice of Counsel, the rights
or interests of the Warrant Agent and of the Warrantholders as a group are in no
way prejudiced thereby.

 
10.2 Successor Companies
 
In the case of the consolidation, amalgamation, merger or transfer of the
undertaking or assets of the Company as an entirety or substantially as an
entirety to another corporation ("successor corporation"), the successor
corporation resulting from such consolidation, amalgamation, merger or transfer
(if not the Company) shall expressly assume, by supplemental indenture
satisfactory in form to the Warrant Agent and executed and delivered to the
Warrant Agent, the due and punctual performance and observance of each and every
covenant and condition of this Indenture to be performed and observed by the
Company.
 
 
ARTICLE 11
CONCERNING THE WARRANT AGENT
 
11.1 Indenture Legislation
 
(1)  
If, and to the extent, any provision of this Indenture limits, qualifies or
conflicts with a mandatory requirement of applicable statutes of Canada and its
provinces and the regulations under those statutes relating to warrant
indentures ("Applicable Legislation"), such mandatory requirement shall prevail.

 
 
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(2)  
The Company and the Warrant Agent agree that each will at all times in relation
to this Indenture and any action to be taken hereunder observe and comply with
and be entitled to the benefit of Applicable Legislation.

 
11.2 Rights and Duties of Warrant Agent
 
(1)  
In the exercise of the rights and duties prescribed or conferred by the terms of
this Indenture, the Warrant Agent shall act honestly and in good faith with a
view to the best interests of the Warrantholders and shall exercise that degree
of care, diligence and skill that a reasonably prudent warrant agent would
exercise in comparable circumstances. No provision of this Indenture shall be
construed to relieve the Warrant Agent from, or require any Person to indemnify
the Warrant Agent against, liability for its own gross negligence, wilful
misconduct or fraud. The duties and obligations of the Warrant Agent shall be
determined solely by the provisions hereof and, accordingly, the Warrant Agent
shall only be responsible for the performance of such duties and obligations as
it has undertaken herein. The Warrant Agent shall retain the right not to act
and shall not be held liable for refusing to act in circumstances that require
the delivery to or receipt by the Warrant Agent of documentation unless it has
received clear and reasonable documentation which complies with the terms of
this Indenture. Such documentation must not require the exercise of any
discretion or independent judgement other than as contemplated by this
Indenture. The Warrant Agent shall incur no liability with respect to the
delivery or non-delivery of any certificate or certificates whether delivered by
hand, mail or any other means, provided that it has complied with the terms of
this Indenture in respect of the discharging of its obligations in respect of
the delivery of such certificates.

 
(2)  
The obligation of the Warrant Agent to commence or continue any act, action or
proceeding for the purpose of enforcing any rights of the Warrant Agent or the
Warrantholders hereunder shall be conditional upon the Warrantholders
furnishing, when required by notice in writing by the Warrant Agent, sufficient
funds to commence or to continue such act, action or proceeding and an indemnity
reasonably satisfactory to the Warrant Agent to protect and to hold harmless the
Warrant Agent against the costs, charges and expenses and liabilities to be
incurred thereby and any loss and damage it may suffer by reason thereof. None
of the provisions contained in this Indenture shall require the Warrant Agent to
expend or to risk its own funds or otherwise to incur financial liability in the
performance of any of its duties or in the exercise of any of its rights or
powers.

 
(3)  
The Warrant Agent may, before commencing or at any time during the continuance
of any such act, action or proceedings, require the Warrantholders, at whose
instance it is acting, to deposit with the Warrant Agent the Warrant
Certificates held by them, for which the Warrant Agent shall issue receipts.

 
(4)  
Every provision of this Indenture that by its terms relieves the Warrant Agent
of liability or entitles it to rely upon any evidence submitted to it is subject
to the provisions of this Section 11.1 and of Section 11.2.

 
11.3 Evidence, Experts and Advisers
 
(1)  
In addition to the reports, certificates, opinions and evidence required by this
Indenture, the Company shall furnish to the Warrant Agent such additional
evidence of compliance with any provision hereof, and in such form as may be
prescribed by Applicable Legislation or as the Warrant Agent may reasonably
require by written notice to the Company.

 
(2)  
The Warrant Agent shall be protected in acting and relying upon any written
notice, request, waiver, consent, certificate, receipt, statutory declaration or
other paper or document furnished to it, not only as to its due execution and
the validity and effectiveness of its provisions, but also as to the truth of
and acceptability of any information therein contained which it in good faith
believes to be genuine and what it purports to be.

 
(3)  
Proof of the execution of an instrument in writing, including a Warrantholders'
Request, by any Warrantholder may be made by the certificate of a notary public,
or other officer with similar powers, that the Person signing such instrument
acknowledged to him the execution thereof, or by an affidavit of a witness to
such execution or in any other manner which the Warrant Agent may consider
adequate and in respect of a corporate Warrantholder, shall include a
certificate of incumbency of such Warrantholder together with a certified
resolution authorizing the person who signs such instrument to sign such
instrument.

 
(4)  
The Warrant Agent may employ or retain such Counsel, accountants, appraisers or
other experts or advisers as it may reasonably require for the purpose of
determining and discharging its duties hereunder and shall not be responsible
for any misconduct or negligence on the part of such experts or advisors who
have been appointed and supervised with due care by the Warrant Agent. The fees
of such Counsel and other experts shall be part of the Warrant Agent's fees
hereunder. The Warrant Agent shall be fully protected in acting or not acting
and relying, in good faith, in accordance with any opinion or instruction of
such Counsel. Any remuneration so paid by the Warrant Agent shall be repaid to
the Warrant Agent in accordance with Section 7.2.

 
 
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11.4 Action by Warrant Agent to Protect Interest
 
Subject to the provisions of this Indenture and Applicable Legislation, the
Warrant Agent shall have power to institute and to maintain such actions and
proceedings as it may consider necessary or expedient to preserve, protect or
enforce its interests and the interests of the Warrantholders.
 
11.5 Warrant Agent not Required to Give Security
 
The Warrant Agent shall not be required to give any bond or security in respect
of the execution of the duties, obligations and powers of this Indenture or
otherwise.
 
11.6 Protection of Warrant Agent
 
By way of supplement to the provisions of any law for the time being relating to
warrant agents it is expressly declared and agreed as follows:
 
(a)  
The Warrant Agent shall not be liable for or by reason of any statement of fact
or recitals in this indenture or in the Warrant Certificates (except the
representations contained in Section 11.8 or in the certificate of the Warrant
Agent on the Warrant Certificates) or be required to verify the same, but all
such statements or recitals are and shall be deemed to be made by the Company;

 
(b)  
Nothing herein contained shall impose any obligation on the Warrant Agent to see
to or to require evidence of the registration or filing (or renewal thereof) of
this Indenture or any instrument ancillary or supplemental hereto;

 
(c)  
The Warrant Agent shall not be bound to give notice to any Person or Persons of
the execution hereof; and

 
(d)  
The Warrant Agent shall not incur any liability or responsibility whatever or be
in any way responsible for the consequence of any breach on the part of the
Company of any of the covenants herein contained or of any acts of any
Directors, officers, employees, agents or servants of the Company.

 
11.7 Replacement of Warrant Agent; Successor by Merger
 
(1)  
The Warrant Agent may resign its duties and be discharged from all further
duties and liabilities hereunder, by giving to the Company not less than thirty
(30) days prior notice in writing or such shorter prior notice as the Company
may accept as sufficient. The Warrantholders by Extraordinary Resolution shall
have power at any time to remove the existing Warrant Agent and to appoint a new
warrant agent. In the event of the Warrant Agent resigning or being removed as
aforesaid or being dissolved, becoming bankrupt, going into liquidation or
otherwise becoming incapable of acting hereunder, the Company shall forthwith
appoint a new warrant agent unless a new warrant agent has already been
appointed by the Warrantholders; failing such appointment by the Company, the
retiring Warrant Agent or any Warrantholder may apply to a justice of the
Ontario Superior Court of Justice (the "Court"), at the Company's expense, on
such notice as such justice may direct, for the appointment of a new warrant
agent; but any new warrant agent so appointed by the Company or by the Court
shall be subject to removal as aforesaid by the Warrantholders. Any new warrant
agent appointed under any provision of this Section 11.7 shall be a company
authorized to carry on the business of a transfer agent in the province of
Ontario. On any such appointment the new warrant agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named herein as Warrant Agent without any further assurance, conveyance, act or
deed; but there shall be immediately executed, at the expense of the Company,
all such conveyances or other instruments as may, in the opinion of Counsel, be
necessary or advisable for the purpose of assuring the same to the new warrant
agent, provided that, any resignation or removal of the Warrant Agent and
appointment of a successor warrant agent shall not become effective until the
successor warrant agent shall have executed an appropriate instrument accepting
such appointment and, at the request of the Company, the predecessor Warrant
Agent, upon payment of its outstanding remuneration and expenses, shall execute
and deliver to the successor warrant agent an appropriate instrument
transferring to such successor warrant agent all rights and powers of the
Warrant Agent hereunder.

 
 
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(2)  
Upon the appointment of a successor, warrant agent the Company shall promptly
notify the Warrantholders thereof in the manner provided for in Section 3.6.

 
(3)  
This Indenture shall enure to the benefit of and be binding upon the parties
hereto and their respective successors and assigns.

 
(4)  
Any Warrants certified but not delivered by a predecessor Warrant Agent may be
certified by the new or successor warrant agent in the name of the predecessor
or the new or successor warrant agent.

 
(5)  
Any corporation into or with which the Warrant Agent may be merged or
consolidated or amalgamated, or to which all or substantially all of its
corporate trust business is sold or otherwise transferred, or any corporation
resulting there from to which the Warrant Agent shall be a party, or any
corporation succeeding to the business of the Warrant Agent shall be the
successor to the Warrant Agent hereunder without any further act on its part or
any of the parties hereto, provided that such corporation would be eligible for
appointment as a successor warrant agent under Subsection 11.7(1) above.

 
(6)  
In case at any time the name of the Warrant Agent is changed and at such time
any of the Warrant Certificates have been countersigned but not delivered, the
Warrant Agent may adopt the countersignature under its prior name and deliver
Warrant Certificates so countersigned; and in case at that time any of the
Warrant Certificates have not been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its changed
name; and in all such cases such Warrant Certificates will have the full force
provided in the Warrant Certificates and in this Indenture.

 
11.8 Conflict of Interest
 
(1)  
The Warrant Agent represents to the Company that at the time of execution and
delivery hereof no material conflict of interest exists in its role as a warrant
agent hereunder and agrees that in the event of a material conflict of interest
arising hereafter it will, within ninety (90) days after ascertaining that it
has such material conflict of interest, either eliminate the same or resign its
duties and obligations hereunder to a successor warrant agent approved by the
Company and meeting the requirements set forth in subsection 11.7(1).
Notwithstanding the foregoing provisions of this subsection 11.8(1), if any such
material conflict of interest exists or hereinafter shall exist, the validity
and enforceability of this Indenture and the Warrant Certificates shall not be
affected in any manner whatsoever by reason thereof.

 
 
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(2)  
Subject to subsection 11.8(1), the Warrant Agent, in its personal or any other
capacity, may buy, lend upon and deal in securities of the Company and generally
may contract and enter into financial transactions with the Company or any
Subsidiary of the Company without being liable to account for any profit made
thereby.

 
11.9 Warrant Agent Not to be Appointed Receiver
 
The Warrant Agent and any Person related to the Warrant Agent shall not be
appointed a receiver, a receiver and manager or liquidator of all or any part of
the assets or undertaking of the Company.
 
11.10 Payments by Warrant Agent
 
The forwarding of a cheque by the Warrant Agent will satisfy and discharge the
liability for any amounts due to the extent of the sum or sums represented
thereby (plus the amount of any tax deducted or withheld as required by law)
unless such cheque is not honoured on presentation; provided that in the event
of the non-receipt of such cheque by the payee, or the loss or destruction
thereof, the Warrant Agent, upon being furnished with reasonable evidence of
such non-receipt, loss or destruction and indemnity reasonably satisfactory to
it, will issue to such payee a replacement cheque for the amount of such cheque.
 
11.11 Deposit of Securities
 
The Warrant Agent shall not be responsible or liable in any manner whatsoever
for the sufficiency, correctness, genuineness or validity of any security
deposited with it.
 
11.12 Act, Error, Omission etc.
 
The Warrant Agent shall not be liable for any error in judgement or for any act
done or step taken or omitted by it in good faith, for any mistake, in fact or
law, or for anything which it may do or refrain from doing in connection
herewith except arising out of its own gross negligence, wilful misconduct or
fraud.
 
11.13 Indemnification
 
The Company is liable to, and shall indemnify and save harmless the Warrant
Agent and each of its directors, officers, employees, shareholders and agents,
and each of their successors and assigns (collectively, the "Indemnified
Parties") in respect of:
 
(a)  
any liability and all losses, damages, costs, charges and expenses sustained or
incurred in respect of any action, suit or proceeding that is proposed or
commenced against any Indemnified Party, as the case may be, for or in respect
of any act, omission or error in respect of the duties and obligations created
hereby and such person's execution of all duties and responsibilities and
exercise of all powers and authorities pertaining thereto;

 
 
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(b)  
any liability and all losses, damages, costs, charges and expenses sustained or
incurred in respect of any action, suit or proceeding that is proposed or
commenced against any Indemnified Party, as the case may be, in respect of their
providing or failing to provide service contemplated hereunder; and

 
(c)  
all other costs, charges, taxes, penalties and interest in respect of unpaid
taxes, and all other expenses and liabilities sustained or incurred by any
Indemnified Party in respect of the administration or termination of the duties
and obligations created hereby,

 
in each case including the aggregate amount paid in reasonable settlement of any
actions, suits, proceedings, investigations or claims, the reasonable fees and
expenses of counsel to the Indemnified Parties that may be incurred in obtaining
advice with respect to and defending any action, suit, proceeding, investigation
or claim that may be made or threatened against any Indemnified Party, or that
may be incurred in enforcing this indemnity, unless and to the extent any of the
foregoing arise principally and directly out of the gross negligence, wilful
default, misconduct or fraud of the Warrant Agent or any of its directors,
officers, employees, shareholders or agents, in which case the provisions of
this Section 11.13 shall not apply. It is understood and agreed that this
indemnification shall survive the termination of this Agreement or the
resignation or removal of the Warrant Agent.
 
11.14 Notice
 
The Warrant Agent shall not be bound to give any notice or do or take any act,
action or proceeding by virtue of the powers conferred on it hereby unless and
until it shall have been required to so under the terms hereof; nor shall the
Warrant Agent be required to take notice of any default hereunder, unless and
until notified in writing of such default, which notice shall distinctly specify
the default desired to be brought to the attention of the Warrant Agent and in
the absence of any such notice the Warrant Agent may for all purposes of this
Indenture conclusively assume that no default has been made in the observance or
performance of any of the representations, warranties, covenants, agreements or
conditions contained herein. Any such notice shall in no way limit any
discretion herein given the Warrant Agent to determine whether or not it shall
take action with respect to any default.
 
11.15 Reliance by the Warrant Agent
 
The Warrant Agent may act on the opinion or advice obtained from Counsel to the
Warrant Agent and shall, provided it acts in good faith in reliance thereon, not
be responsible for any loss occasioned by doing so nor shall it incur any
liability or responsibility for determining in good faith not to act upon such
opinion or advice. The Warrant Agent may rely, and shall be protected in
relying, upon any statement, request, direction or other paper or document
believed by it to be genuine and to have been signed, sent or presented by or on
behalf of the proper party or parties. The Warrant Agent may assume for the
purposes of this Indenture that any address on the register of the
Warrantholders is the holder's actual address and is also determinative as to
residency and that the address of any transferee to whom any Warrants are to be
registered, as shown on the transfer document is the transferee's actual address
and is also determinative as to residency of the transferee. The Warrant Agent
shall have no obligation to ensure that legends appearing on the Warrant
Certificates or Common Shares comply with regulatory requirements or securities
laws of any applicable jurisdiction.
 
 
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11.16 Privacy
 
The parties to this Warrant Indenture acknowledge that federal and/or provincial
legislation that addresses the protection of individuals' personal information
(collectively, "Privacy Laws") applies to obligations and activities under this
Warrant Indenture. Despite any other provision of this Warrant Indenture,
neither party shall take or direct any action that would contravene, or cause
the other party to contravene, applicable Privacy Laws. The Company shall, prior
to transferring or causing to be transferred personal information to the Warrant
Agent, obtain and retain required consents of the relevant individuals to the
collection, use and disclosure of their personal information, or shall have
determined that such consents either have previously been given upon which the
parties can rely or are not required under applicable Privacy Laws. The Warrant
Agent shall use commercially best efforts to ensure that its services hereunder
comply with applicable Privacy Laws. Specifically, the Warrant Agent agrees: (a)
to have a designated chief privacy officer; (b) to maintain policies and
procedures to protect personal information and to receive and respond to any
privacy complaint or inquiry; (c) to use personal information solely for the
purposes of providing its services under or ancillary to this Warrant Indenture
and not to use it for any other purpose except with the consent of or direction
from the Company or the individual involved; (d) not to sell or otherwise
improperly disclose personal information to any third party; and (e) to employ
administrative, physical and technological safeguards to reasonably secure and
protect personal information against loss, theft or unauthorized access, use or
modification.
 
11.17 Anti-Money Laundering
 
The Warrant Agent shall retain the right not to act and shall not be liable for
refusing to act if, due to a lack of information or for any other reason
whatsoever, the Warrant Agent, in its sole judgment, acting reasonably,
determines that such act might cause it to be in non-compliance with any
applicable anti-money laundering, anti-terrorist or economic sanction
legislation, regulation or guideline. Further, should the Warrant Agent, in its
sole judgment, acting reasonably, determine at any time that its acting under
this Indenture has resulted in its being in non-compliance with any applicable
anti-money laundering, anti-terrorist or economic sanction legislation,
regulation or guideline, then it shall have the right to resign on ten (10)
Business Days' prior written notice sent to the Company provided that (i) the
Warrant Agent's written notice shall describe the circumstances of such
non-compliance; and (ii) if such circumstances are rectified to the Warrant
Agent's satisfaction within such ten (10) Business Day period, then such
resignation shall not be effective.
 
11.18 Force Majeure
 
Neither party to this Indenture shall be personally liable to the other, or held
in breach of this Indenture, if prevented, hindered, or delayed in the
performance or observance of any provision contained herein by reason of an act
of God, riots, terrorism, acts of war, epidemics, governmental action or
judicial order, earthquakes, or any other similar causes (including, but not
limited to, mechanical, electronic or communication interruptions, disruptions
or failures). Performance times under this Indenture shall be extended for a
period of time equivalent to the time lost because of any delay that is
excusable under this Section 11.18.
 
 
ARTICLE 12
ACCEPTANCE OF APPOINTMENT BY WARRANT AGENT
 
12.1 Appointment and Acceptance of Functions
 
The Company hereby appoints the Warrant Agent under the terms and conditions set
forth in this Indenture. The Warrant Agent hereby accepts the terms of this
Indenture declared and provided for and agrees to perform the same upon the
terms and conditions set forth herein.
 
 
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ARTICLE 13
GENERAL
 
13.1 Notice to the Company and the Warrant Agent
 
(1)  
Unless herein otherwise expressly provided, any notice to be given hereunder to
the Company and to the Warrant Agent shall be in writing and may be given by
mail, or by telecopy (with original copy to follow by mail) or by personal
delivery and shall be addressed as follows:

 
(a)  
if to the Company, to

 
Tribute Pharmaceuticals Canada Inc.
151 Steeles Avenue E.,
Milton, Ontario L9T
 
Attention:                      Robert Harris
Facsimile:                      (519) 434-4382
 
with a copy to:
 
Fogler, Rubinoff LLP
Suite 3000, 77 King Street West
TD Centre, North Tower
Toronto, Ontario M5K 1G8
 
Attention:                      Eric Roblin
Facsimile:                      (416) 941-8811
 
(b)  
if to the Warrant Agent, to

 
Equity Financial Trust Company
Suite 300, 200 University Avenue
Toronto, Ontario M5H 4H1
 
Attention:                      Manager, Toronto - Corporate Trust Services
Facsimile:                      (416) 361-0470
 
and shall be deemed to have been given, if delivered or sent by courier, on the
date of delivery or, if mailed, on the third (3rd) Business Day following the
date of the postmark on such notice or, if sent via facsimile, on the Business
Day following facsimile transmission. Any delivery made or sent by facsimile on
a day other than a Business Day, or after 3:00 p.m. (Toronto time) on a Business
Day, shall be deemed to be received on the next following Business Day.
 
(2)  
The Company or the Warrant Agent, as the case may be, may from time to time give
notice in the manner provided in subsection 13.1(1) of a change of address
which, from the effective date of such notice and until changed by like notice,
shall be the address of the Company or the Warrant Agent, as the case may be,
for all purposes of this Indenture. A copy of any notice of change of address of
the Company given pursuant to this subsection 13.1(2) shall be sent to the
principal transfer office of the Warrant Agent in the City of Toronto, Ontario
and shall be available for inspection by Warrantholders during normal business
hours.

 
 
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(3)  
If, by reason of a strike, lockout or other work stoppage, actual or threatened,
involving postal employees, any notice to be given to the Warrant Agent or to
the Company hereunder could reasonably be considered unlikely to reach its
destination, such notice shall be valid and effective only if it is delivered to
an officer of the party to which it is addressed or if it is delivered to such
party at the appropriate address provided in subsection 13.1(1) by telecopy or
other means of prepaid, transmitted, recorded communication and any such notice
delivered in accordance with the foregoing shall be deemed to have been received
on the date of delivery to such officer or if delivered by telecopy or other
means of prepaid, transmitted, recorded communication, on the first Business Day
following the date of the sending of such notice by the Person giving such
notice.

 
13.2 Time of the Essence
 
Time shall be of the essence in this Indenture.
 
13.3 Counterparts and Formal Date
 
 
This Indenture may be executed in several counterparts, each of which when so
executed shall be deemed to be an original and such counterparts together shall
constitute one and the same instrument and notwithstanding their date of
execution shall be deemed to be dated as of the date hereof.
 
13.4 Discretion of Directors
 
Any matter provided herein to be determined by the Directors in their sole
discretion and determination so made will be conclusive.
 
13.5 Satisfaction and Discharge of Indenture
 
Upon the earlier of (a) the date by which there shall have been delivered to the
Warrant Agent for exercise or destruction all Warrant Certificates theretofore
certified hereunder or (b) the expiration of the Exercise Period, this
Indenture, except to the extent that Common Shares and certificates therefor
have not been issued and delivered hereunder or the Warrant Agent or the Company
have not performed any of their obligations hereunder, shall cease to be of
further effect and the Warrant Agent, on demand of and at the cost and expense
of the Company and upon delivery to the Warrant Agent of a certificate of the
Company stating that all conditions precedent to the satisfaction and discharge
of this Indenture have been complied with and upon payment to the Warrant Agent
of the fees and other remuneration payable to the Warrant Agent, shall execute
proper instruments acknowledging satisfaction of and discharging of this
Indenture.
 
13.6  Provisions of Indenture and Warrant Certificates for the Sole Benefit of
Parties and Warrantholders
 
Nothing in this Indenture or the Warrant Certificates, expressed or implied,
shall give or be construed to give to any Person other than the parties hereto
and the holders of the Warrant Certificates any legal or equitable right, remedy
or claim under this Indenture, or under any covenant or provision herein
contained, all such covenants and provisions being for the sole benefit of the
parties hereto and the Warrantholders.
 
 
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13.7  Warrants Owned by the Company or its Subsidiaries Certificates to be
Provided
 
For the purpose of disregarding any Warrants owned legally or beneficially by
the Company or any Subsidiary of the Company or any other Affiliate of the
Company in Section 9.16, the Company shall provide to the Warrant Agent, from
time to time, a certificate of the Company setting forth as at the date of such
certificate the number of Warrants owned legally and beneficially by the Company
or any Subsidiary of the Company or any other Affiliate of the Company, and the
Warrant Agent in making the determination in Section 9.16 shall be entitled to
rely on such certificate.
 
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
 
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IN WITNESS WHEREOF the parties hereto have executed this Indenture as of the
date first written above.
 
 
 
TRIBUTE PHARMACEUTICALS CANADA INC.

 
 
By:
/s/ Robert Harris
 

 
Name:
Robert Harris

 
 
Title:
Chief Executive Officer

 
 
 
EQUITY FINANCIAL TRUST COMPANY

 
 
By:
/s/ Shelley Martin
 

 
Name:
Shelley Martin

 
 
Title:
Authorized Signing Officer

 
 
 
By:
/s/ Carol Mikos
 

 
 
Name:
Carol Mikos

 
 
Title:
Authorized Signing Officer

 
 
 

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SCHEDULE "A"
 
 
FORM OF WARRANT CERTIFICATE
 
 
[For U.S. Persons, persons in the United States or persons for the account or
benefit of a U.S. Person or a person in the United States, the following legend
is to be inserted:
 
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY
PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF TRIBUTE PHARMACEUTICALS
CANADA INC. (THE "CORPORATION") THAT SUCH SECURITIES MAY BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE
UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S.
SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C)
IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT
PROVIDED BY (1) RULE 144 THEREUNDER, IF AVAILABLE, OR (2) RULE 144A THEREUNDER,
IF AVAILABLE, AND, IN BOTH CASES, IN COMPLIANCE WITH APPLICABLE STATE SECURITIES
LAWS, (D) IN ANOTHER TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE
U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, OR (E) PURSUANT TO
A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE U.S.
SECURITIES ACT, AND, IN THE CASE OF (C)(1) AND (D) ABOVE, AFTER THE SELLER
FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN
FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO SUCH EFFECT.  DELIVERY OF
THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF
TRANSACTIONS ON STOCK EXCHANGES IN CANADA.]
 
THESE WARRANTS AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S.
SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES.  THESE WARRANTS MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR ON
BEHALF OF, OR FOR THE ACCOUNT OR BENEFIT OF, A PERSON IN THE UNITED STATES OR A
U.S. PERSON UNLESS THESE WARRANTS AND THE SECURITIES ISSUABLE UPON EXERCISE OF
THESE WARRANTS HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND THE
APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE OR AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS IS AVAILABLE.  "UNITED STATES" AND "U.S. PERSON" ARE
AS DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT.
 
For the CDS Global Certificate, if any
 
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF CDS
CLEARING AND DEPOSITORY SERVICES INC. ("CDS") TO TRIBUTE PHARMACEUTICALS CANADA
INC. (THE "ISSUER") OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IN RESPECT THEREOF IS REGISTERED IN THE NAME
OF CDS & CO., OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF CDS (AND ANY PAYMENT IS MADE TO CDS & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED HOLDER HEREOF, CDS & CO., HAS A PROPERTY INTEREST
IN THE SECURITIES REPRESENTED BY THIS CERTIFICATE HEREIN AND IT IS A VIOLATION
OF ITS RIGHTS FOR ANOTHER PERSON TO HOLD, TRANSFER OR DEAL WITH THIS
CERTIFICATE.
 
 
 

--------------------------------------------------------------------------------

 
 
TRIBUTE PHARMACEUTICALS CANADA INC.
 
a corporation amalgamated under the laws of the Province of Ontario and having
its principal office at
 
151 Steeles Avenue E., Milton, Ontario, L9T 1Y1
 
 
CUSIP: 89609J122
 
ISIN: CA 89609J1223
 
NO. • • WARRANTS
 
Each whole warrant entitling the holder to purchase one (1) common share of
Tribute Pharmaceuticals Canada Inc.
 
COMMON SHARE PURCHASE WARRANTS
 
 
THIS IS TO CERTIFY THAT for value received • (the "Holder") is the registered
holder of the number of warrants (the "Warrants") stated above and is entitled,
for each whole Warrant represented hereby, to purchase one Common Share in the
capital of Tribute Pharmaceuticals Canada Inc. (the "Company") at any time from
the date of issue hereof up to and including 4:00 p.m. (Toronto Time) on July
15, 2016 (the "Expiry Time") by surrendering to Equity Financial Trust Company
(the "Warrant Agent") at its principal transfer office in Toronto, Ontario this
Warrant Certificate with a subscription in the form of the attached Subscription
Form duly completed and executed and accompanied by payment of CDN$0.90 per
share, subject to adjustment as hereinafter referred to (the "Exercise
Price") by certified cheque, money order or bank draft in lawful money of Canada
payable to or to the order of the Company at par in Toronto, Ontario. The Holder
may purchase less than the number of Common Shares which the Holder is entitled
to purchase on the exercise of the Warrants represented by this Warrant
Certificate, in which event a new Warrant Certificate representing the Warrants
not then exercised will be issued to the holder.
 
The Warrants represented by this Warrant Certificate shall be deemed to have
been surrendered and payment by certified cheque, money order or bank draft
shall be deemed to have been made, only upon personal delivery thereof or, if
sent by post or other means of transmission, upon actual receipt thereof by the
Warrant Agent at the office specified above.
 
This Warrant Certificate represents Warrants issued under the provisions of the
Warrant Indenture (which indenture together with all other instruments
supplemental or ancillary there is referred to herein as the "Warrant
Indenture") dated as of July 15, 2014 between the Company and the Warrant Agent,
which contains particulars of the rights of the holders of the Warrants and the
Company and of the Warrant Agent in respect thereof and the terms and conditions
upon which the Warrants are issued and held, all to the same effect as if the
provisions of the Warrant Indenture were herein set forth, to all of which the
holder of this Warrant Certificate by acceptance hereof assents. A copy of the
Warrant Indenture is available for inspection on the Company's profile on
www.sedar.com or the Company shall, on the written request of the Holder and
without charge, provide the Holder with a copy of the Warrant Indenture.
Capitalized terms used in this Warrant Certificate and not otherwise defined
shall have the meanings ascribed thereto in the Warrant Indenture. In the event
of any inconsistency between the provisions of the Warrant Indenture (and any
amendments thereto and instruments supplemental thereto) and the provisions of
this Warrant Certificate, the provisions of the Warrant Indenture shall prevail.
 
 
 

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Subject to the Warrant Indenture and to any restriction under applicable law or
policy of any applicable regulatory body, the Warrants and Warrant Certificates
and the rights thereunder shall only be transferable by the registered holder
hereof in compliance with the conditions prescribed in the Warrant Indenture and
the due completion, execution and delivery of a Transfer Form (as attached
hereto) in accordance with the terms of the Warrant Indenture.
 
Upon due exercise of the Warrants represented by this Warrant Certificate and
payment of the Exercise Price, the Company shall cause to be issued, within five
(5) Business Days after the exercise of Warrants represented by this Warrant
Certificate, to the person(s) in whose name(s) the Common Shares so subscribed
for are to be issued, the number of Common Shares, as fully paid and
non-assessable and certificate(s) representing such Common Shares and such
person(s) shall become a holder in respect of such Common Shares with effect
from the date of such exercise and upon the due surrender of this Warrant
Certificate.
 
The Warrant Indenture provides for adjustment in the number of Common Shares to
be delivered upon exercise of the right of purchase hereby granted and to the
Exercise Price in certain events therein set forth.
 
The Warrants represented hereby and the Common Shares issuable upon the exercise
hereof have not been registered under the United States Securities Act of 1933,
as amended (the "1933 Act"), or applicable state securities laws, and the
Warrants evidenced by this Warrant Certificate may not be exercised unless the
holder hereof provides the Company with a written certification in the form as
set forth on the Subscription Form on the reverse side of this Warrant
Certificate.  Any certificates representing Common Shares issued to, or for the
account or benefit of, persons in the United States or "U.S. persons", as such
term is defined in Regulation S under the 1933 Act, shall bear a legend
restricting the transfer of such securities under United States federal and
state securities laws.
 
The Warrants and the Warrant Indenture shall be governed by and performed,
construed and enforced in accordance with the laws of the Province of Ontario
and the federal laws of Canada applicable therein and shall be treated in all
respects as Ontario contracts.
 
Time shall be of the essence hereof and of the Warrant Indenture.
 
This Warrant Certificate shall not be valid for any purpose until it has been
certified by or on behalf of the Warrant Agent for the time being under the
Warrant Indenture.
 
IN WITNESS WHEREOF this Warrant Certificate has been executed on behalf of
Tribute Pharmaceuticals Canada Inc. as of the day
of                                 , 2014.
 
TRIBUTE PHARMACEUTICALS CANADA INC.
 
By:  _________________________________________
 
 
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This Warrant Certificate represents Warrants referred to in the Warrant
Indenture within mentioned. Countersigned:
EQUITY FINANCIAL TRUST COMPANY
 
Dated:           ______________________________                                                                By:  _________________________________________
 
 
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SUBSCRIPTION FORM
 
TO:           Equity Financial Trust Company
Suite 401, 200 University Avenue
Toronto, ON M5H 3C6
 
Attention: Manager, Toronto - Corporate Trust Services
 
The undersigned holder of the within Warrants hereby irrevocably subscribes for
Common Shares of Tribute Pharmaceuticals Canada Inc. (the "Company") at the
Exercise Price referred to in the attached Warrant Certificate on the terms and
conditions set forth in such certificate and the Warrant Indenture and encloses
herewith a certified cheque, bank draft or money order payable at par in
Toronto, Ontario to the order of Tribute Pharmaceuticals Canada Inc. in payment
in full of the subscription price of the number of Common Shares hereby
subscribed for.
 
The undersigned represents, warrants and certifies as follows (one (only) of the
following must be checked):
 
q
A.
the undersigned holder: (a) at the time of exercise of the Warrant is not in the
United States; (b) is not a "U.S. person", as defined in Regulation S under the
United States Securities Act of 1933, as amended (the "U.S. Securities Act"),
and is not exercising the Warrants on behalf of a U.S. person or a person in the
United States; (c) did not execute or deliver this exercise form in the United
States; and (d) has in all other aspects complied with the terms of Regulation S
under the U.S. Securities Act.

 
q
B.
the undersigned holder: (a) purchased Units directly from the Company for its
own account or the account of another institutional "accredited investor", that
one or more of the criteria set forth in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the U.S. Securities Act (an "Institutional Accredited
Investor"), pursuant to an executed U.S. QIB letter or U.S. subscription
agreement for the purchase of Units of the Company; (b) is exercising the
Warrants solely for its own account or the account of such other Institutional
Accredited Investor for whose account such holder exercises sole investment
discretion; (c) was an Institutional Accredited Investor, both on the date the
Units were purchased from the Company and on the date of the exercise of the
Warrants; and (d) if the Warrants are being exercised on behalf of another
person, the undersigned holder represents, warrants and certifies that such
person was the beneficial purchaser for whose account the undersigned holder
originally acquired Units upon the exercise of which the Warrants were acquired
and was an Institutional Accredited Investor, both on the date the Units were
purchased from the Company and on the date of the exercise of the Warrants; or

 
q
C.
the undersigned holder has delivered to the Company an opinion of counsel (which
will not be sufficient unless it is from counsel of recognized standing and in
form and substance satisfactory to the Company) to the effect that an exemption
from the registration requirements of the U.S. Securities Act and applicable
state securities laws is available.

 
Notes:
 
1.  
Certificates will not be registered or delivered to an address in the United
States unless Box B or C above is checked.

 
 
 

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2.  
If Box B or C are checked, the certificate representing the Common Shares will
bear a legend restricting transfer without registration under the United
Securities Act of 1933, as amended and applicable state securities laws unless
an exemption from registration is available.

 
3.  
If Box C above is checked, holders are encouraged to consult with the Company in
advance to determine that the legal opinion tendered in connection with the
exercise will be satisfactory in form and substance to the Company.

 
The undersigned hereby directs that the said Common Shares be issued as follows:
 
Name(s) in full
Address(es)
(including Postal Code)
Number(s) of
Common Shares

 
(please print)
 
DATED this ____ day of _____________, 20__.
_______________________________________                                                                                    ____________________________________
 
Signature
Guaranteed                                                                                    Name
of Warrantholder
_______________________________________                                                                                    ____________________________________
Name of Authorized
Representative                                                                                    Signature
of Warrantholder or Authorized
Representative
 
(Print Name of Subscribers)
_____________________________________                                                                                             ______________________________________
Title or Capacity of
Authorized                                                                        Daytime
Phone Number of Warrantholder or
 
Representative                                Authorized Representative
_____________________________________
_____________________________________
 
(Address of Subscriber in full)
 
q
Please check this box if the securities are to be picked up at the office where
the Warrant Certificate is surrendered, failing which the securities will be
mailed to the address indicated above.

 
Instructions:
 
The signature of the Warrantholder must be the signature of the registered
holder appearing on the face of this Warrant Certificate.
 
If this Subscription Form is signed by a trustee, executor, administrator,
curator, guardian, attorney, officer of a corporation or any person acting in a
fiduciary or representative capacity, this Subscription Form must be accompanied
by evidence of authority to sign satisfactory to the Warrant Agent and the
Company, acting reasonably.
 
The signature on this Subscription Form must be guaranteed by a major Canadian
chartered bank, medallion guaranteed by a recognized medallion signature
guarantee program or in any other manner satisfactory to the Warrant Agent. The
guarantor must affix a stamp bearing the actual words "Signature Guaranteed".
Signature guarantees are not accepted from Treasury Branches or credit unions
unless they are members of the Stamp Medallion Program. In the United States,
signature guarantees must be done by members of the "Medallion Signature
Guarantee Program" only.
 
 
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If securities are to be issued to a person other than the registered holder, the
Subscription Form must be completed and the holder must pay or cause to be paid
to the Company all applicable transfer or similar taxes, if any, and the Company
shall not be required to issue or deliver certificates evidencing the Common
Shares and, if applicable, the Warrants, unless and until such holder shall have
paid to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid or that no tax is due.
 
The Warrants will expire at 4:00 p.m. (Toronto Time) on July 15, 2016 and must
be exercised before that time, otherwise the same shall expire and be void and
of no value.
 
 
3

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TRANSFER FORM
 
ANY TRANSFER OF WARRANTS WILL REQUIRE COMPLIANCE WITH APPLICABLE SECURITIES
LEGISLATION. TRANSFERORS AND TRANSFEREES ARE URGED TO CONTACT LEGAL COUNSEL
BEFORE EFFECTING ANY SUCH TRANSFER.
 
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
(name)
____________________________________________________________________________________
(the "Transferee"),
____________________________________________________________________________________
(Residential Address of Transferee),
 
_____________________ Warrants of Tribute Pharmaceuticals Canada Inc. (the
"Company") registered in the name of the undersigned on the records of the
Company represented by the within Warrant Certificate, and irrevocably appoints
_______________________ as the attorney of the undersigned to transfer the said
securities on the books or register of transfer, with full power of
substitution.
 
In connection with this transfer, the undersigned transferee hereby represents,
warrants and certifies that it (i) is not a "U.S. person" (as defined in Rule
902(k) of Regulation S under the United States Securities Act of 1933, as
amended, the "U.S. Securities Act"), (ii) at the time of transfer is not within
the United States, and (iii) is not acquiring any of the Warrants represented by
this Warrant Certificate by or on behalf of any U.S. Person or person within the
United States, unless registered under the U.S. Securities Act and any
applicable state securities laws or unless an exemption from such registration
is available.
 
DATED the ______ day of _________________, 20__.
 
Signature Guaranteed (Signature of Holder, to be the same as appears on the face
of this Warrant Certificate)
 
_______________________________________                                                                                    ____________________________________
Name of Authorized
Representative                                                                                    Signature
of Holder, to be the same as appears
on the face of this Warrant Certificate
 
____________________________________
 
Print Name
 
____________________________________
 
_____________________________________
 
Address
 
 
 

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Instructions:
 
 
If this Transfer Form is signed by a trustee, executor, administrator, curator,
guardian, attorney, officer of a corporation or any person acting in a fiduciary
or representative capacity, this Transfer Form must be accompanied by evidence
of authority to sign satisfactory to the Warrant Agent and the Company, acting
reasonably.
 
 
The signature on this Transfer Form must be guaranteed by a major Canadian
chartered bank, medallion guaranteed by a recognized medallion signature
guarantee program or in any other manner satisfactory to the Warrant Agent. The
guarantor must affix a stamp bearing the actual words "Signature Guaranteed".
Signature guarantees are not accepted from Treasury Branches or credit unions
unless they are members of the Stamp Medallion Program. In the United States,
signature guarantees must be done by members of the "Medallion Signature
Guarantee Program" only.
 
 
2

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SCHEDULE "B"
FORM OF DECLARATION FOR REMOVAL OF U.S. LEGEND
 
FORM OF DECLARATION FOR REMOVAL OF LEGEND
 
 
TO:
Equity Financial Trust Company

 
 
as registrar and transfer agent for Common Shares and Warrants of

 
 
Tribute Pharmaceuticals Canada Inc.

 
The undersigned (a) acknowledges that the sale of the securities of TRIBUTE
PHARMACEUTICALS CANADA INC. (the "Company") to which this declaration relates is
being made in reliance on Rule 904 of Regulation S under the United States
Securities Act of 1933, as amended (the "U.S. Securities Act") and (b) certifies
that (1) the undersigned is not an "affiliate" (as that term is defined in Rule
405 under the U.S. Securities Act) of the Company, (2) the offer of such
securities was not made to a person in the United States and either (A) at the
time the buy order was originated, the buyer was outside the United States, or
the seller and any person acting on its behalf reasonably believed that the
buyer was outside the United States, or (B) the transaction was executed in, on
or through the facilities of the TSX Venture Exchange, the Toronto Stock
Exchange or any other designated offshore securities market and neither the
seller nor any person acting on its behalf knows that the transaction has been
prearranged with a buyer in the United States, (3) neither the seller nor any
affiliate of the seller nor any person acting on any of their behalf has engaged
or will engage in any "directed selling efforts" in the United States in
connection with the offer and sale of such securities, (4) the sale is bona fide
and not for the purpose of "washing off' the resale restrictions imposed because
the securities are "restricted securities" (as such term is defined in Rule
144(a)(3) under the U.S. Securities Act), (5) the seller does not intend to
replace such securities with fungible unrestricted securities of the Company,
and (6) the contemplated sale is not a transaction, or part of a series of
transactions which, although in technical compliance with Regulation S under the
U.S. Securities Act, is part of a plan or scheme to evade the registration
provisions of the U.S. Securities Act. Terms used herein have the meanings given
to them by Regulation S under the U.S. Securities Act.
 
Dated:                     ___________________________                                                      ___________________________________
Name of Seller
 
By: ________________________________
 
Name:
 
Title:
 
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