Exhibit 2.5

**November
  5, 2002**

This Convertible
  Debenture Certificate and Underlying Securities (as herein defined) represented
  hereby have not been and will not be qualified for sale under the securities
  laws of any province or territory of Canada. Accordingly, this Convertible Debenture
  Certificate may not be distributed in any province or territory, or to or for
  the benefit of any resident thereof, in contravention of the laws of any such
  jurisdiction. Compliance with the securities laws of any jurisdiction is the
  responsibility of the holder or its transferee. The Underlying Securities represented
  by this certificate may be subject to resale restrictions under applicable Canadian
  securities laws and may not be traded except in compliance with such laws.

UNLESS PERMITTED
  UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES SHALL NOT TRADE THE
  SECURITIES BEFORE MARCH 6, 2003.

RTICA INC.
  **(continued pursuant
  to the laws of the Province of Ontario)
  12% SECURED CONVERTIBLE DEBENTURES** **DUE NOVEMBER 5, 2007**

**$1,000,000_________________________
  AGGREGATE PRINCIPAL AMOUNT  
  OF CONVERTIBLE DEBENTURES**

**CONVERTIBLE DEBENTURE
  CERTIFICATE NO. 1**

**THIS
  IS TO CERTIFY THAT FOR VALUE RECEIVED**, Rtica Inc. (the Corporation),
  a company continued under the laws of Ontario and having its registered office
  at 220 Bay Street, Suite 700, Toronto, Ontario, M5J 2W4, subject to the terms
  and conditions attached hereto, hereby acknowledges itself indebted and promises
  to pay to or to the order of E2 VENTURE FUND INC. (herein called the "Debentureholder"
  or "Holder") as the registered holder hereof on November 5, 2007 or on such
  earlier date as the principal hereof may become due in accordance with the terms
  and conditions herein set out, the principal sum of one million dollars ($1,000,000)
  (the Principal Amount) in lawful money of Canada and to pay interest
  from the date hereof on the Principal Amount at the rate of 12% per annum, subject
  to adjustment as provided herein, calculated semi-annually in arrears and payable
  semi-annually on June 30th and December 31st, commencing
  on December 31, 2002; and should the Corporation at any time make default in
  payment of any principal or interest, to pay interest on the amount in default
  at the same rate, in like money and semi-annually on the same dates subject
  to adjustment as provided herein.

**Capitalized terms
  used, but not otherwise defined, in this Debenture are defined in Article XII
  hereof.**

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This
  Debenture is one of a series of Debentures designated 12% Secured Convertible
  Debentures due November 5, 2007. The Debentures consist of and are limited
  to an aggregate principal amount of $2,200,000 in lawful money of Canada. This
  Debenture will rank pari passu with all other Debentures from time to time issued,
  and for such purpose each Debentureholder shall be equally and rateably entitled
  to the benefits as set forth in the Debenture of such Holder together with the
  Debentures of all other Debentureholders in the manner and to the extent herein
  set forth.

This
  Debenture shall not be redeemable by the Corporation.

**This Debenture
  shall be subject to the terms and conditions set out below.**





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**ARTICLE
  I** **ISSUE AND PURCHASE OF A
  DEBENTURE**

**Section
  1.01 Issue and Form of Debentures.** This Debenture is issued concurrently
  with other convertible debentures dated of even date in an aggregate principal
  amount of $2,200,000, the terms and conditions of which are identical in all
  respects to this Debenture.

**Section
  1.02. Ownership, Registration and Transfer of Debentures.**

(1)
       Rtica Inc. will deem and treat the registered
  holder of any Debentures as the absolute owner thereof for all purposes and
  Rtica Inc. shall not be affected by any notice to the contrary.

(2)
       The Holder for the time being of any Debenture
  shall be entitled to the principal of and the interest on the Debenture and
  all other amounts payable or property deliverable under this Debenture, free
  from all equities or rights of set-off or counterclaim between Rtica Inc. and
  the original or any subsequent Holder thereof save in respect of equities of
  which Rtica Inc. and the Holder are required to take notice of by statute or
  by order of a court of competent jurisdiction, and all persons may act accordingly
  and the receipt of any such Holder for any such principal, interest or other
  amounts payable or property deliverable shall be a good discharge by Rtica Inc.
  and Rtica Inc. shall not be bound to inquire into the title of any such Holder
  save as aforesaid.

(3)
       Rtica Inc. shall cause a register to be kept at
  its registered office located at 220 Bay Street, Suite 700, Toronto, Ontario
  M5J 2W4, in which shall be entered the names and addresses of the holders of
  Debentures and other particulars of the Debenture held by them respectively
  and of all transfers of Debentures.

(4)
       Rtica Inc. shall not be bound to take notice of
  or see to the performance or observance of any duty owed to a third person in
  respect of the Debenture or otherwise, by the Holder or any person whom Rtica
  Inc. treats, as permitted or required by law, as the owner or the Holder of
  such Debenture, and Rtica Inc. may record the transfer of such Debenture on
  its register on the direction of the person so treated or registered as the
  Holder thereof, whether named as or otherwise as though that person were the
  beneficial owner thereof.

(5)
       The register referred to in this Section shall
  at all reasonable times be open for inspection by any Debentureholder or his
  legal representatives or his attorney duly appointed by an instrument in writing
  in form and execution satisfactory to Rtica Inc.

(6)
       The Debentures may only be transferred in accordance
  with applicable laws and upon compliance with the conditions herein by the Holder
  or his legal representatives or his attorney duly appointed by an instrument
  in writing in form and execution satisfactory to Rtica Inc., and upon due execution
  by the Holder and its transferee of the transfer and acknowledgement and direction
  in the form attached hereto as Exhibit A and compliance with

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such other
  reasonable requirements as Rtica Inc. may prescribe, such transferee shall be
  entitled to be entered on the appropriate register as the owner of this Debenture
  free from all equities or rights of set-off or counterclaim between Rtica Inc.
  and the original or any subsequent Holder thereof save in respect of equities
  of which Rtica Inc. and the Holder are required to take notice of by statute
  or by order of a court of competent jurisdiction.

**Section
  1.03. Debentureholders Not Shareholders.** A Debentureholder shall not,
  as such, be deemed to be, or considered as, a shareholder of Rtica Inc. nor
  shall such Debentureholder be entitled to any right or interest except as is
  expressly provided in this Debenture.

**Section
  1.04. Signing of Debentures.** This Debenture shall be signed either
  manually or by facsimile signature by any authorized officer of Rtica Inc. The
  facsimile signature upon any Debenture shall for all purposes hereof be deemed
  to be the signature of the person whose signature it purports to be and to have
  been signed at the time such facsimile signature is reproduced. If a person
  whose signature, either manually or in facsimile, may appear on this Debenture
  is not an officer of Rtica Inc. at the date of delivery of this Debenture, such
  fact shall not affect in any way the validity of the Debentures or the entitlement
  of the holder thereof to the benefits of this Debenture.

**Section
  1.05. Loss, Mutilation, Destruction or Theft of Debentures.** In case
  this Debenture shall become mutilated or be lost, destroyed or stolen and in
  the absence of notice that this Debenture has been acquired by a good faith
  purchaser within the meaning of the Business Corporations Act (Ontario), Rtica
  Inc. shall issue and deliver a new Debenture of like date and tenor as the one
  mutilated, lost, destroyed or stolen in exchange for and in place of, and upon
  surrender and cancellation of such mutilated Debenture or in lieu of and in
  substitution for such lost, destroyed or stolen Debenture, the substituted Debenture
  shall entitle the Holder to the benefits hereof.

**Section
  1.06. Exchange of Debenture Certificate**. The Debentureholder may at
  any time prior to the Maturity Date, by written instruction delivered to Rtica
  Inc., exchange this Debenture for Debentures evidencing Debentures of any other
  authorized denominations in equivalent aggregate principal amount and entitling
  the Debentureholder to acquire in the aggregate the same number of Rtica Inc.
  Units as was convertible under the Debenture so exchanged.

**Section
  1.07. Special Provisions, Transfer Restrictions and Legends.**

(1)
       No direct or indirect sale or transfer of Debentures
  shall be permitted unless it is made in compliance with applicable Securities
  Laws. Each Debentureholder, by its acceptance of this Debenture, shall be deemed
  to have acknowledged and agreed that it shall not transfer a Debenture or Underlying
  Security except as permitted by applicable Securities Laws.

(2)
       Rtica Inc. may require an opinion from counsel
  to the Debentureholder to the effect that the transfer is made in compliance
  with applicable Securities Laws, and may refuse to register any such transfer
  unless and until such opinion has been provided. Rtica Inc.

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|shall
          be entitled to assume such consent has been obtained where properly
          executed transfer forms are provided and shall have no liability for
          so doing.
        **ARTICLE II**
        **INTEREST**
        **Section
          2.01. Computation of Interest**
        (1)
               This Debenture, whether issued originally
          or upon exchange or in substitution for previously issued Debentures,
          shall bear interest from and including the date of original issuance
          or from and including the last Interest Payment Date if interest on
          the Debenture was paid in full on such Interest Payment Date or made
          available for payment on this Debenture, whichever shall be the later,
          at the rate of twelve per cent (12%) per annum both before and after
          an Event of Default, payable semi-annually on June 30 and December 31,
          commencing December 31, 2002.
        (2)
               The interest rate shall:
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| | (d)
             if the Debentureholder shall have previously
        received the Officers Certificate described in Section 2.01(2)(c),
        be reduced from 8% per annum to 6% per annum on the date on which the
        Debentureholder receives an Officers Certificate certifying that
        (i) the consolidated revenues of Rtica Corporation, as determined in accordance
        with GAAP consistently applied, for the 12 months ended (A) November 30,
        2003 were not less than $4,302,000, and (B) November 30, 2004 were not
        less than $6,612,000; (ii) the consolidated gross margin as a percentage
        of sales of Rtica Corporation, as determined in accordance with GAAP consistently
        applied, for the 12 months ended (A) November 30, 2003 was not less than
        20%, and (B) November 30, 2004 was not less than 26%; and (iii) the consolidated
        earnings of Rtica Corporation before interest, taxes, depreciation and
        amortization for the 12 months ended (A) November 30, 2003 were not less
        than $(516,047), and (B) November 30, 2004 were not less than $587,858;
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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (e)
             if the Debentureholder shall have previously
        received the Officers Certificate described in Section 2.01(2)(d),
        be reduced from 6% per annum to 5% per annum on the date on which the
        Debentureholer receives an Officers Certificate certifying that
        Rtica Corporation was Cashflow Positive for the three months ended November
        30, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

The Holder
  will have the right to review all work papers and procedures used to prepare
  any Officers Certificate delivered under this Section 2.01(2). Unless
  the Holder within 20 Business Days after receipt by the Holder of such Officers
  Certificate, notifies Rtica Inc. in writing that it objects to any of the items
  in such Officers Certificate (and Objection Notice), and specifies
  the basis for such objection, the Officers Certificate will become final
  and binding on the parties for purposes of this Debenture. In the event that
  the Holder fails to give an Objection Notice within such 20 Business Day period,
  the Holder shall be deemed to have waived any right to seek recourse to the
  courts in respect of the Officers Certificate. In the event that the Holder
  delivers an Objection Notice, the dispute will be submitted to Rtica Inc.s
  independent auditors who will be instructed by Rtica Inc. and the Holder jointly
  to resolve the dispute in accordance with the terms of this Debenture and in
  an expeditious manner. Such auditor will make a determination as to the matter
  or matters in dispute, which determination shall be set forth in a written statement
  addressed and delivered concurrently to the Holder and Rtica Inc. Such determination
  shall be final and binding on Rtica Inc. and the Holder and Rtica Inc. acknowledges
  and confirms, and the Holder shall be deemed to have acknowledged and confirmed,
  that each hereby expressly waives any right to seek recourse to the courts in
  respect of such determination. In the event that any statement or information
  contained in any Officers Certificate delivered pursuant to Section 2.01
  is found to be false or incorrect in any way, any reduction in the rate of interest
  payable on this Debenture made in reliance upon such Officers Certificate
  shall immediately be of no further force or effect and the rate of interest
  payable on this Debenture shall immediately increase to 12% per annum and Rtica
  Inc. shall, within five

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Business
  Days, pay to the Debentureholder an amount equal to the interest payable on
  the Debenture that would have accrued to the Holder had such reduction not been
  made and the rate of interest payable on the Debenture since the date of such
  reduction was 12% per annum.

(3)
       Interest on each Debenture shall cease to accrue
  on the earlier of (i) the Conversion Date (for that part of the Debenture converted);
  (ii) if an Accelerating Event occurs, the date of purchase pursuant to an Offer
  to Purchase; and (iii) the Maturity Date, unless, upon due presentation, payment
  of the principal and any accrued but unpaid interest or other amounts payable
  hereunder is improperly withheld or refused.

(4)
       Interest on this Debenture or part thereof, as
  applicable, in respect of which a notice of conversion has been provided pursuant
  to Section 5.01 hereof, that has accrued but is not due as of the date of the
  notice of conversion, is payable by Rtica Inc. to the Conversion Date, and no
  further interest shall accrue from and including the Conversion Date, unless
  payment or delivery of amounts or property payable or deliverable hereunder
  is improperly withheld or refused.

(5)
       Whenever in this Debenture there is mention, in
  any context, of the payment of interest, such mention shall be deemed to include
  mention of the payment of interest on amounts in default to the extent that,
  in such context, such interest is, was or would be payable pursuant to the provisions
  of this Debenture and express mention of interest on amounts in default in any
  provision hereof shall not be construed as excluding such interest in those
  provisions hereof where such express mention is not made.

(6)
       Interest for any period other than a semi-annual
  period on this Debenture shall accrue from day to day and shall be calculated
  on the basis of the actual number of days elapsed and on the basis of a year
  of 365 days or 366 days in a leap year.

**Section.
  2.02. Payment of Interest**

(1)
       As interest becomes due on this Debenture Rtica
  Inc. will send or cause to be sent, at least three Business Days prior to each
  Interest Payment Date, by prepaid registered mail a cheque for such interest
  payable to the Holder and addressed to the Holder at the Holders last
  address appearing on the register unless otherwise directed in writing by the
  Holder to send payment to some other person or some other address or, in the
  case of joint Holders, payable to all of them and addressed to the joint Holder
  whose name appears first in the register at such Holders last address
  appearing in the register unless otherwise directed in writing by all of them
  to send payment to some other person or some other address. The forwarding of
  such cheque will satisfy and discharge the liability for interest on such Debenture
  to the extent of the sum represented thereby unless such cheque is not paid
  on presentation. Notwithstanding the foregoing, in the event of the non-receipt
  of any such cheque by the Holder or the loss, theft or destruction thereof,
  Rtica Inc. upon being furnished with evidence of such non-receipt, loss, theft
  or destruction, will issue to such Holder a replacement cheque for the amount
  of such cheque.

(2)
       Subject to Rtica Inc. having obtained all necessary
  regulatory approvals and subject to compliance with applicable law, Rtica Inc.
  may, at its option, elect to satisfy and

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discharge
  its obligation to pay any interest due on this Debenture on an Interest Payment
  Date by the issue and delivery to the Holder of that number of fully paid and
  non-assessable Preference Shares (**Interest Preference Shares**)
  obtained by dividing the interest payable on such Interest Payment Date by the
  greater of (i) the Current Market Price on such Interest Payment Date, and (ii)
  $0.10. If Rtica Inc. elects to issue Preference Shares in payment of accrued
  interest on an Interest Payment Date or on the Maturity Date, to satisfy its
  interest payment obligations then outstanding, it shall send at least three
  Business Days prior to each Interest Payment Date, by prepaid registered mail
  a share certificate representing Preference Shares for such interest payable
  to the Holder of such Debenture and addressed to the Holder at the Holders
  last address appearing on the register unless otherwise directed in writing
  by the Holder to send payment to some other person or some other address or,
  in the case of joint Holders, payable to all of them and addressed to the joint
  Holder whose name appears first in the register at such Holders last address
  appearing in the register unless otherwise directed in writing by all of them
  to send payment to some other person or some other address. The forwarding of
  such share certificate will satisfy and discharge the liability for interest
  on such Debenture to the extent of the sum represented thereby. Notwithstanding
  the foregoing, in the event of the non-receipt of any such share certificate
  by the Holder of such Debenture or the loss, theft or destruction thereof, Rtica
  Inc. upon being furnished with evidence of such non-receipt, loss, theft or
  destruction, will issue to such Holder a replacement certificate.

**ARTICLE
  III****COVENANTS,
  REPRESENTATIONS AND WARRANTIES OF RTICA INC. AND****RTICA CORPORATION**

**Section
  3.01. Covenants of Rtica Inc. and Rtica Corporation.** Each of Rtica
  Inc. and Rtica Corporation hereby jointly and severally covenants that upon
  the issuance of this Debenture and for so long as this Debenture is outstanding:

| | (i)  | Rtica
        Inc. will have duly authorized and conditionally allotted for issuance
        a sufficient number of Preference Shares for the purpose of enabling it
        tosatisfy
        its obligations to issue Preference Shares in accordance with theterms
        hereof or the Debenture Warrants, as applicable; and suchPreference
        Shares will be, when issued in accordance with the termshereof
        or the Debenture Warrants, as applicable, fully paid and non-assessable
        shares of Rtica Inc.;                                                                                                                                                                                                              
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| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (ii) | Rtica
        Corporation will have duly authorized and conditionally allotted for issuance
        a sufficient number of its common shares for the purpose of enabling it
        to satisfy its obligations to issue common shares of Rtica Corporation
        in accordance with the terms of the Preference Shares and the Exchange
        Rights and such shares will be, when issued in accordance with the terms
        of this Debenture, fully paid and non-assessable shares of Rtica Corporation,
        and Rtica Corporation shall, subject to regulatory approval,list
        such common shares issuable in exchange for the Preference Shares onthe
        TSX Venture Exchange or such other stock market or other quotation

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| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
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| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |        | system
        as the common shares of Rtica Corporation may be listed or quotedat
        the time of issue thereof;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (iii)  | Rtica
        Inc. shall not issue any additional shares except as required under the
        terms of this Debenture and any other Debenture referred to in Section
        1.01 hereof or the Debenture Warrants;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (iv)   | while
        this Debenture is outstanding, on an annual basis, (i) Rtica Inc. will
        invite the Debentureholder to propose a nominee to the Board of Directors
        of Rtica Inc. and Rtica Inc. and Rtica Corporation shall do all things
        required to elect or appoint each such nominee, and concurrently, (ii)
        Rtica Corporation will (A) invite the Debentureholder to appoint an observer
        who will be invited to attend each formal or informal board meeting of
        Rtica Corporation, and (B) establish an advisory committee to the directors
        of Rtica Corporation in which the Holder may participate, and should the
        director or observer appointed by the Debentureholder become incapacitated
        or otherwise be unable to serve, the Debentureholder uponwritten
        notice to Rtica Inc. or Rtica Corporation may designate areplacement
        for such director or observer and Rtica Inc. and RticaCorporation
        shall do all things required to confirm such replacement;
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (v)    | Rtica
        Corporation will furnish to the Holder a copy of all financialstatements,
        whether annual or interim, of Rtica Corporation and the report,if
        any, of Rtica Corporations auditors thereon and of all annual and
        otherperiodic
        reports of Rtica Corporation furnished to its shareholders at thesame
        time as they are furnished to such shareholders;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (vi)   | each
        of Rtica Inc. and Rtica Corporation will duly and punctually perform and
        carry out all of the acts or things to be done by it as provided in this
        Debenture, the Exchange Rights, the Preference Shares, or the DebentureWarrants;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (vii)  | each
        of Rtica Inc. and Rtica Corporation shall promptly notify the Holderin
        writing of the details of the occurrence of any Event of Default;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (viii) | neither
        Rtica Inc. nor Rtica Corporation will directly or indirectly, declare
        or pay any dividends on account of any shares or any class of its shares
        now or hereafter outstanding (other than the Preference Shares) or redeem,
        retire, defease, purchase or otherwise acquire any shares of any class
        of capital stock (or set aside or otherwise deposit or invest any sums
        for any of the foregoing purposes) or apply or set apart any sum, or make
        any other distribution (by reduction of capital or otherwise) in respect
        of any such shares or agree to do any of the foregoing;                                                                                                                                                                                                                                                                                                                                                                                                          
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (ix)   | in
        order to prevent any accumulation after maturity of unpaid interest on,
        or of unpaid principal amount of, any Debentures, Rtica Inc. will not                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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| |        | directly
        or indirectly extend or assent to the extension of time for payment of
        any interest upon any Debentures or of any principal amount payable in
        respect of any Debentures and that it will not directly or indirectly
        be or become a party to or approve any such arrangement by purchasing
        or funding any interest on the Debentures or any principal amount thereof
        orin any other
        manner;                                                                                                                                                                                                                                                                       
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| | (x)    | if
        the time for the payment of any interest or principal amount of anyDebenture
        shall be so extended, whether or not such extension is by orwith
        the consent of Rtica Inc., notwithstanding anything herein or in theDebentures
        contained, such interest or principal amount shall not beentitled,
        in case of default hereunder, to the benefit of the applicableDebenture
        except subject to the prior payment in full of the principalamount
        of all Debentures then outstanding and of all matured interest onsuch
        Debentures the payment of which has not been so extended, in eachcase
        on a pro rata basis to all holders of such Debentures;          
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| | (xi)   | on
        or before November 1, 2003 and on or before November 1 in each subsequent
        year and at any other reasonable time if requested by the Holder, Rtica
        Inc. will furnish to the Holder an Officers Certificate stating
        that Rtica Inc. has complied with all covenants, conditions and other
        requirements contained in this Debenture, non-compliance with which would
        constitute an Event of Default hereunder or, if such is not the case,
        specifying the covenant, condition or other requirement which has notbeen complied
        with and giving particulars of such non-compliance and theaction,
        if any, Rtica Inc. proposes to take with respect thereto;
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (xii)  | Rtica
        Corporation will take all commercially reasonable steps and actions and
        do all such acts and things as may be required to: (i) as long as it meets
        the minimum listing requirements of such institutions, maintain the listingand posting
        for trading on the TSX of its common shares, and (ii) maintainits
        status as a reporting issuer not in default of the requirements ofapplicable
        securities legislation of the provinces of British Columbia,Alberta
        and Ontario;                                                                                                                                                                                           
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (xiii) | Rtica
        Inc. will not create or suffer to exist any Lien on any of its present
        orfuture assets
        to secure any borrowed money; provided that this covenantshall
        not apply to Liens arising by operation of law;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (xiv)  | Rtica
        Inc. will engage only in the business of conducting research anddevelopment
        related to alternatives to fibreglass for insulation and relatedservices;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (xv)   | Rtica
        Inc. will, and Rtica Corporation will cause Rtica Inc. to, ensure that
        the responses and other statements set forth in Investee Questionnaire-Ontario
        dated September 30, 2002 delivered by Rtica Inc. to the Holder in connection
        with the issue and sale of this Debenture remain true and correct to and
        including the Maturity Date;                                                                                                                                                                                                                                                                                                                                            

10

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| |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (xvi)   | as
        soon as available and in any event within 45 days after the end of each
        fiscal quarter, Rtica Inc. will deliver to the Holder unaudited comparative
        balance sheets as at the end of such quarter and consolidated statements
        of operations (which shall include a comparison of actual results with
        budgeted results) and cash flows for such fiscal quarter and for the period
        from the beginning of the then current fiscal year of Rtica Inc. to the
        endof such
        quarter;
| |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (xvii)  | as
        soon as available and in any event within 120 days after the fiscal year
        end of Rtica Inc, Rtica Inc. will deliver to the Holder Rtica Inc.s
        auditedcomparative
        balance sheets, as at the end of such year and consolidatedstatements
        of operations and cash flows for such fiscal year, and astatement
        of operations that compares actual results with budgeted resultsfor
        such fiscal year; and                                                                                 
| |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (xviii) | Rtica
        Inc. will not, in a single or series of transactions, amalgamate or consolidate
        with or merge into any other person, or permit any other person to sell,
        lease or otherwise dispose of all or substantially all of its property
        or assets to any person.                                                                                                                                                                                                                                                

**Section
  3.02 Further Assurances. Each of Rtica Inc**. and Rtica Corporation will
  do, execute, acknowledge and deliver or cause to be done, executed, acknowledged
  and delivered, all other acts, deeds and assurances in law as the Holder may
  reasonably require for the better accomplishing and effecting the intentions
  and provisions of this Debenture.

******Section
  3.03 Interest. Rtica Inc.** will duly and punctually pay and Rtica Corporation
  will cause Rtica Inc. to pay to the Holders the principal of and any interest
  accrued thereon (including, in the case of default, interest on the amount in
  default) at the dates and in the manner prescribed herein.

**Section
  3.04 Corporate Existence.** Subject to the express provisions hereof,
  Rtica Inc. and Rtica Corporation will do or cause to be done, all things necessary
  to preserve and keep in full force and effect its corporate existence, will
  carry on and conduct its business in a prudent manner in accordance with industry
  standards and good business practice.

**Section
  3.05 Notification of Accelerating Event**. Rtica Inc. or Rtica Corporation
  will provide written notice to the Holder immediately upon becoming aware of
  an Accelerating Event hereunder, any event or circumstance that, with the giving
  of notice or lapse of time or both could constitute an Accelerating Event or
  any material adverse change in the business, operations, prospects or assets
  or in the conditions of the Rtica Inc., Rtica Corporation or any Material Subsidiary.

11

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**Section
  3.06. Representations and Warranties of the Rtica Inc. and Rtica Corporation**.
  Rtica Inc. and Rtica Corporation, jointly and severally, represent and warrant
  to the Holder as follows:

)
 (b)
         each of Rtica Inc. and Rtica Corporation is
    duly qualified to carry on business under the laws of the jurisdiction in
    which it carries on its business and is in good standing in each such jurisdiction; (c)
         each of Rtica Inc. and Rtica Corporation has
    all of the right, title and interest in and to its property interests, free
    and clear of all mortgages, liens, charges, pledges, encumbrances, claims
    or demands of any kind whatsoever, other than the instruments attached as
    Schedule 3.06(c) hereto; (d)
         each of Rtica Inc. and Rtica Corporation has
    conducted and is, to the best of the knowledge of Rtica Inc. and Rtica Corporation,
    is conducting its business in compliance with all applicable licensing and
    environmental protection legislation, regulations or by-laws or other similar
    laws, by-laws, rules and regulations or other lawful requirements of each
    jurisdiction in which its business is carried on and possesses all material
    licenses, certificates, registrations, authorities, permits, consents and
    qualifications issued by the appropriate state, provincial, municipal or federal
    regulatory agencies or bodies necessary to conduct the business now operated
    by it and all such licences, certificates, registrations, authorities, permits,
    consents and qualifications are valid and subsisting and in good standing
    and do not contain any unusually burdensome provision, condition or limitation
    which has or would reasonably be expected to have a material adverse effect
    on the conduct of the business, operations, financial condition, income or
    future prospects of Rtica Inc. or Rtica Corporation, as the case may be, as
    now conducted or as presently proposed to be conducted and none of Rtica Inc.
    and Rtica Corporation has received any notice of proceedings relating to the
    revocation or modification of any such licenses, certificates, authorities,
    permits, consents or qualifications which, if the subject of an unfavourable
    decision, ruling or finding would materially and adversely affect the conduct
    of the business, operations, financial condition, income or future prospects
    of Rtica Inc. or Rtica Corporation, as the case may be; and none of Rtica
    Inc. or Rtica Corporation is in default under any material obligation or contract
    to which it is a party or by which it or its assets are bound; (e)
         the representations and warranties of Rtica
    Inc. and Rtica Corporation contained in this Section 3.06 apply mutatis mutandis
    to the Material Subsidiaries;




12

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) TSX-V
 (g)
         the authorized capital of Rtica Corporation
    consists of an unlimited number of common shares and an unlimited number of
    preferred shares ("Preferred Shares"), of which as at October 27, 2002, 35,119,636
    common shares were issued and outstanding and no Preferred Shares were issued
    or outstanding; (h)
         the authorized capital of Rtica Inc. consists
    of an unlimited number of common shares and an unlimited number of preference
    shares, of which as at the date hereof, 25,000,000 common shares were issued
    and outstanding and no preference shares; (i)
         Rtica Inc. is an "eligible business" as defined
    in Part III of the *Community and Small Business Investment Funds Act (Ontario)*; (j)
         the execution of this Debenture and compliance
    with its provisions and performance of any covenants herein contained will
    not entail or conflict with or result in any violation or default of any other
    agreement or document to which Rtica Inc. or Rtica Corporation is bound; (k)
         all of the press releases issued and other materials
    filed by or on behalf of Rtica Corporation with any of the securities regulatory
    authorities in any of the provinces of Canada or with TSX-V or its predecessors,
    since October 1997 when Rtica Corporation ceased to be a "private company"
    within the meaning of the Securities Act (Ontario), were true and correct
    in all material respects and did not contain a misrepresentation (as defined
    in the Securities Act (Ontario)) as at the date of such issuance or filing; (l)
         each of this Debenture, the Intercreditor Agreement,
    the certificates evidencing the Debenture Warrants, Exchange Right and the
    Preference Shares (collectively, the "Transaction Documents") have been, or
    will be, upon execution thereof, duly authorized, executed and delivered by
    any or all of Rtica Corporation or Rtica Inc., as applicable, and constitutes,
    or will constitute when executed, a legal, valid and binding obligation of
    Rtica Corporation and Rtica Inc., as the case may be, enforceable in accordance
    with its terms except that: (i) the enforcement thereof may be limited by
    bankruptcy, insolvency and other laws affecting the enforcement of creditors'
    rights generally, and (ii) equitable remedies, including, without limitation,
    specific performance and injunctive relief, may be granted only in the discretion
    of a court of competent jurisdiction;




13

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(m)the
    entering into of each of the Transaction Documents and the performance of
    the transactions contemplated thereby will not


**** )


(A)any
      statute, rule or regulation applicable to Rtica Corporation or Rtica Inc.;
      
      (B)any
      of the terms, conditions or provisions of the constating documents or by-laws
      or resolutions of Rtica Corporation or Rtica Inc.; 
      (C)any
      trust indenture, agreement, instrument or other document to which Rtica
      Corporation or Rtica Inc. is a party or by which Rtica Corporation or Rtica
      Inc. is contractually bound; or 
      (D)any
      judgement, decree or order binding on Rtica Corporation or Rtica Inc., or
      any of their assets, or


**** )
 ****(III)
         give rise to any lien, charge or claim in or
    with respect to the properties or assets now owned or hereafter acquired by
    Rtica Corporation or Rtica Inc. or the acceleration of or the maturity of
    any debt under any indenture, mortgage, lease, agreement or instrument binding
    or affecting either of them or any of their properties; (n)
         the audited consolidated annual financial statements
    of Rtica Corporation as at and for the year ended May 31, 2002 attached hereto
    as Schedule 3.07(o) (the "Financial Statements") (i) are in accordance with
    the consolidated books and records of Rtica Corporation, (ii) contain and
    reflect all necessary adjustments for the fair presentation of the consolidated
    results of operations and the consolidated financial condition of the business
    of Rtica Corporation for the periods covered thereby; and (iii) present fully,
    fairly and correctly, the consolidated assets and financial condition of Rtica
    Corporation as at the dates thereof and the consolidated results of operations
    and the changes in financial position for Rtica Corporation for the periods
    then ended in accordance with Canadian generally accepted accounting principles
    applied on a consistent basis; (o)
         except as disclosed in the Financial Statements,
    neither Rtica Corporation nor Rtica Inc. has, any liabilities, direct or indirect,
    contingent or otherwise, which materially adversely affects Rtica Corporation
    or Rtica Inc. or may in any way materially adversely affect the business,
    operations, condition (financial or otherwise) income or future prospects
    of Rtica Corporation or Rtica Inc. or their respective properties or assets.
    Without limiting the generality of the foregoing, except as set forth in the
    Financial Statements or those arising in the ordinary 14




---



(p)
         other than as disclosed in the Financial Statements,
    no actions, suits, inquiries or governmental proceedings are outstanding or
    pending or, to the knowledge of Rtica Corporation, are contemplated or threatened
    to which Rtica Corporation or Rtica Inc. is a party or to which the property
    of Rtica Corporation or Rtica Inc. is subject that, individually or in the
    aggregate materially adversely affects or may in any way materially adversely
    affect the business, operations, condition (financial or otherwise), income
    or future prospects of Rtica Corporation or Rtica Inc. or their respective
    properties or assets; (q)
         each of Rtica Corporation and Rtica Inc. has
    filed all necessary tax returns and notices and has paid all applicable taxes
    of whatever nature for all tax years to the date hereof to the extent such
    taxes have become due or have been alleged to be due and none of Rtica Corporation
    or Rtica Inc. is aware of any tax deficiencies or interest or penalties accrued
    or accruing, or alleged to be accrued or accruing, thereon with respect to
    Rtica Corporation or Rtica Inc. where, in any of the above cases it might
    reasonably be expected to result in any material adverse change in the business,
    operations, condition, financial or otherwise, income or future prospects
    of Rtica Corporation or Rtica Inc. or their respective properties or assets; (r)
         other than Paradigm Capital Inc., there is no
    person, firm or corporation acting or purporting to act at the request of
    Rtica Corporation or Rtica Inc., who is entitled to any brokerage or finder's
    fee in connection with the issue of this Debenture; (s)
         each of Rtica Corporation and Rtica Inc. has
    all requisite corporate capacity, power and authority to carry on its business
    as now conducted by it and as is presently proposed to be conducted by it
    and to own, lease and operate its assets and each of Rtica Corporation and
    Rtica Inc. has all requisite corporate power and authority to carry out the
    provisions of this Debenture and the transactions contemplated hereunder; (t)
         each of Rtica Corporation and Rtica Inc. holds
    all material licences, registrations, permits, consents or qualifications
    required in order to enable its business to be carried on as now conducted
    or as proposed to be conducted, and all such licences, certificates, registrations,
    permits, consents and qualifications are valid and subsisting and in good
    standing;


15

---



)
 (v)
         no order ceasing or suspending trading in securities
    of Rtica Corporation or prohibiting the sale of securities by Rtica Corporation
    or Rtica Inc. has been issued and no proceedings for this purpose have been
    instituted, are pending, contemplated or threatened except the temporary cease
    trade order issued by the Ontario Securities Commission dated October 22,
    2002 against certain insiders of Rtica Corporation; (w)
         none of Rtica Corporation or Rtica Inc. has
    directly or indirectly, declared or paid any dividend or declared or made
    any other distribution on any of its shares or securities of any class, or,
    directly or indirectly, redeemed, purchased or otherwise acquired any of their
    respective shares or securities or agreed to do any of the foregoing; (x)
         Equity Transfer Services Inc. of Toronto, Ontario
    has been duly appointed as the transfer agent and registrar for all of the
    outstanding common shares of Rtica Corporation; (y)
         since May 31, 2002 (i) there has not been any
    material adverse change in the consolidated assets, liabilities or obligations
    (absolute, accrued, contingent or otherwise) of Rtica Corporation except as
    otherwise disclosed in the attached Schedule 3.06(y); (ii) there has not been
    any material change in the capital stock or long-term debt of Rtica Corporation
    and Rtica Inc. that has not been disclosed; (iii) there has not been any material
    adverse change in the consolidated business, operations, prospects, condition
    (financial or otherwise) or consolidated results of the operations of Rtica
    Corporation that has not been disclosed; (iv) each of Rtica Corporation and
    Rtica Inc. has carried on business in the ordinary course; (z)
         to the knowledge of Rtica Corporation, Rtica
    Inc. and their respective directors and officers, no agreement is in force
    or effect which in any manner affects the voting or control of any of the
    securities of Rtica Corporation or Rtica Inc.; (aa)
         the definitive form of certificate representing
    the common shares of Rtica Corporation is in proper form under the laws of
    the Qualifying Province and do not conflict with the by-laws of Rtica Corporation; (bb)
         upon completion of all of the transactions contemplated
    in this agreement,




16

---



(cc)
         no default exists and no event has occurred
    which with notice or lapse of time, or both, would constitute a default, breach
    or violation by Rtica Corporation, Rtica Inc. or, to the knowledge of Rtica
    Inc., Rtica Corporation and their respective directors and senior officers,
    any other person, in the due performance and observance of: (i) any term,
    covenant or condition of any material contract, indenture, mortgage, deed
    of trust, bank loan, credit agreement, evidence of indebtedness or other agreement,
    understanding or instrument to which Rtica Corporation or Rtica Inc. is a
    party or by which either of them or any of their respective properties is
    bound or affected; or (ii) the provisions, articles, by-laws or resolutions
    of Rtica Corporation or Rtica Inc. or any statute, or any order, rule or regulation
    of any court or governmental agency or body, which default, breach or violation
    would have a material adverse effect on Rtica Corporation or Rtica Inc.; (dd)
         Rtica Corporation and Rtica Inc. have procured
    and maintain adequate insurance against all insurable risks which are material
    to Rtica Corporation and Rtica Inc., considered as a whole; (ee)
         Rtica Corporation owns all of the issued and
    outstanding common shares of Rtica Inc., RTICA Environmental Services Inc.
    and Inzeco Overseas Limited free and clear of all mortgages, liens, charges,
    pledges, security interests, encumbrances, claims and demands whatsoever;


17

---



) (gg)
         none of the directors, officers or employees
    of Rtica Corporation or Rtica Inc. or any associate or affiliate of any of
    the foregoing had or has any material interest, direct or indirect, in any
    material transaction that has occurred since June 1, 2000 or any proposed
    material transaction with Rtica Corporation or Rtica Inc. which, as the case
    may be, materially affects, is material to or will materially affect Rtica
    Corporation on a consolidated basis; (hh)
         each of Rtica Corporation and Rtica Inc., as
    applicable, has good and valid title to all material intellectual property
    rights used by Rtica Corporation or Rtica Inc., as applicable or relating
    to the operation of the business of Rtica Corporation or Rtica Inc., including
    copyrights, industrial designs, patents (including, without limitation, US
    patent number 5,582,905 (published on December 10, 1996), Canadian patent
    number 2,190,957 (published on April 6, 1999) NO patent number 309972 (published
    on April 30, 2001) and applications for product patents pending in the European
    Patent Office relating to the same products as referred to the aforementioned
    US patent Canadian patent and NO patent, patents pending in the U.S. and the
    world relating to the melt blowing operatives with parallel flow filament
    attenuating slot and a lofted product of an orientable polymer
    and an apparatus and method of producing such a product), trade marks, computer
    software, trade secrets, know how and proprietary rights necessary to carry
    on its business (hereinafter collectively, the "Intellectual Property") (all
    of which is set out in Schedule 3.06(hh) attached hereto) free and clear of
    any and all encumbrances. No material royalty or other fee is required to
    be paid by Rtica Corporation or Rtica Inc. to any other person in respect
    of the use of any of the Intellectual Property. Each of Rtica Corporation
    or Rtica Inc., as applicable, has the exclusive right to use all of the Intellectual
    Property and has not granted any licence or other rights to any other person
    in respect of the Intellectual Property other than in the ordinary course
    of business. To the best knowledge of Rtica Corporation and Rtica Inc., no
    employee of Rtica Corporation or Rtica Inc. is in violation of any term of
    any non-disclosure, proprietary rights or similar agreement between such employee
    and Rtica Corporation or Rtica Inc., as applicable, or between such employee
    and any former employer. To the best of the knowledge of Rtica Corporation
    and Rtica Inc., all technical information developed by and belonging to Rtica
    Corporation or Rtica Inc., as the case may be, which has not been patented
    or copyrighted has been kept confidential; (ii)
         there are no restrictions on the ability of
    Rtica Corporation or Rtica Inc., as applicable, to use and exploit all rights
    in the Intellectual Property required in the ordinary course of their respective
    businesses. None of the rights of Rtica Corporation, Rtica Inc. or Newco in
    the Intellectual Property will be impaired or affected in any way by the transactions
    contemplated by this agreement. To the 18


(jj)      none
      of Rtica Corporation, Rtica Inc., nor to the best knowledge of Rtica Corporation
      or Rtica Inc., any other person, has ever caused or permitted any hazardous
      material to be placed, held, located or disposed of on, under or at any
      premises occupied by Rtica Corporation or Rtica Inc. and the business and
      assets of Rtica Corporation and Rtica Inc. are being operated in material
      compliance with all applicable laws, rules, regulations and statutes intended
      to protect the environment, and, to the best knowledge of Rtica Corporation
      and Rtica Inc. knowledge, no civil, criminal or enforcement actions or complaints
      in respect thereof are threatened, pending or have been commenced against
      Rtica Corporation or Rtica Inc. nor has any notice been received by them
      of any such action or potential liability under any such laws; (kk)      there
      are no environmental audits, evaluations, assessments, studies or tests
      that were commissioned by Rtica Corporation or Rtica Inc. in respect of
      the business, operations, properties of facilities of Rtica Corporation
      or Rtica Inc.; (ll)      none
      of Rtica Corporation or Rtica Inc. is aware of any legislation which it
      anticipates will materially and adversely affect the business, affairs,
      operations, assets, liabilities (contingent or otherwise) or prospects of
      Rtica Corporation and Rtica Inc. taken as a whole; and (mm)      none
      of Rtica Corporation or Rtica Inc. has withheld, and none will withhold
      from the Holder any facts relating toRtica
      Corporation or Rtica Inc. or to the issue and sale of the Debenture, the
      Debenture Warrants, Preference Shares or common shares of Rtica Corporation
      that would be material to a prospective purchaser of the Debenture.
 **ARTICLE
    IV
    ADJUSTMENT** **Section
    4.01. Adjustment.** ****(1)
         In this Article IV, the terms record date
    and effective date where used herein shall mean 5:00 p.m. (Toronto
    time) on the relevant date. 19   ****(2)
         The Conversion Number (or the number and kind
    of shares or other securities to be received upon conversion in the case of
    Subsection 4.01(6) below) shall be subject to adjustment from time to time
    in the events and in the manner herein. ****(3)
         If, during the Conversion Period, Rtica Corporation
    shall: (a)
      issue
          or make a distribution to all or substantially all the holders of its
          common shares by way of a stock dividend or otherwise common shares
          or securities convertible or transferable into common shares, or(b)
      subdivide
          its outstanding common shares into a greater number of commonshares,
          or(c)
      combine
          or consolidate its outstanding common shares into a smaller number of
          common shares, (any of those events being
  herein called a Share Reorganization), the Conversion Number shall
  be adjusted effective immediately after the record date at which the holders
  of shares are determined for the purposes of the Share Reorganization to a number
  that is the product of (1) the Conversion Number in effect on the record date
  and (2) a fraction: (i)
      the
          numerator of which shall be the total number of Rtica Corporation common
          shares outstanding after giving effect to the Share Reorganization;
          and(ii)
      the
          denominator of which shall be the number of Rtica Corporationcommon
          shares outstanding on the record date before giving effect to theShare
          Reorganization. ****(4)
         If, during the Conversion Period, Rtica Corporation
    shall issue rights, options or warrants to all or substantially all the holders
    of the Underlying Shares pursuant to which those holders are entitled to subscribe
    for, purchase or otherwise acquire Underlying Shares or Securities within
    a period of 45 days from the date of issue thereof at a price, or at a conversion
    price, of less than 95% of the Current Market Price at the record date for
    such distribution (any such issuance being herein called a "Rights Offering"
    and Underlying Shares that may be acquired upon conversion or exchange of
    the Securities offered by the Rights Offering, being herein called the "Offered
    Shares"), the Conversion Number shall be adjusted effective immediately after
    the record date at which holders of Underlying Shares are determined for the
    purposes of the Rights Offering to a Conversion Number that is the product
    of (1) the Conversion Number in effect immediately prior to the record date
    and (2) a fraction: (a)the
      numerator of which shall be the sum of: (a) the number of Underlying Shares
      outstanding on the record date; and (b) the number of Offered Shares offered
      pursuant to the Rights Offering or the maximum number of Offered Shares
      into which the Securities so offered pursuant to the Rights Offering may
      be converted or exchanged, as the case may be; and 20
   ) the
    denominator of which shall be the sum of:
 (i)
      the
          total number of Underlying Shares outstanding on the record date; and(ii)
      the
          number arrived at when (A) either the product of (1) the number of Offered
          Shares so offered and (2) the price at which those shares are offered,
          or the product of (3) the conversion price thereof and (4) the maximum
          number of Offered Shares for or into which the Securities so offered
          pursuant to the Rights Offering may be converted or exchanged, as the
          case may be, is divided by (B) the Current Market Price of the Underlying
          Shares on the record date. Any Underlying Shares
  owned by or held for the account of Rtica Corporation shall be deemed not to
  be outstanding for the purpose of any such computation. If all the rights, options
  or warrants are not so issued or if all rights, options or warrants are not
  converted prior to the expiration thereof, the Conversion Number shall be readjusted
  to the Conversion Number in effect immediately prior to the record date, and
  the Conversion Number shall be further adjusted based upon the number of Offered
  Shares (or Securities exchanged or converted into Offered Shares) actually delivered
  upon the conversion of the rights, options or warrants, as the case may be,
  but subject to any other adjustment required hereunder by reason of any event
  arising after that record date. ****(5)
         If, during the Conversion Period, Rtica Corporation
    shall issue or distribute to all or substantially all the holders of Underlying
    Shares, (i) shares of any class other than Underlying Shares, or (ii) rights,
    options or warrants, other than rights, options or warrants exercisable within
    45 days from the date of issue thereof at a price, or at a conversion price,
    of at least 95% of the Current Market Price at the record date for such distribution,
    or (iii) evidences of indebtedness, or (iv) any other assets (excluding cash
    dividends that Debentureholders receive under Section 3.03) and that issuance
    or distribution does not constitute a Share Reorganization or a Rights Offering
    (any of those events being herein called a "Special Distribution"), the Conversion
    Number shall be adjusted effective immediately after the record date at which
    the holders of Underlying Shares are determined for purposes of the Special
    Distribution to a Conversion Number that is the product of: (1) the Conversion
    Number in effect on the record date; and (2) a fraction: ) (b)      the
      denominator of which shall be:
  21    (i)the
      product of (A) the sum of the number of Underlying Shares outstanding on
      the record date plus the number of Underlying Shares which the Debentureholder
      would be entitled to receive upon conversion of this Debenture if this Debenture
      were converted on the record date and (B) the Current Market Price thereof
      on that date; less (ii)      the
      aggregate fair market value, as determined by the directors, whose determination
      shall be conclusive, of the shares, rights, options, warrants, evidences
      of indebtedness or other assets issued or distributed in the Special Distribution.
 Any Underlying Shares
  owned by or held for the account of Rtica Corporation shall be deemed not to
  be outstanding for the purpose of any such computation. To the extent that the
  distribution of shares, rights, options, warrants, evidences of indebtedness
  or assets is not so made or to the extent that any rights, options or warrants
  so distributed are not converted, the Conversion Number shall be readjusted
  to the Conversion Number that would then be in effect based upon the shares,
  rights, options, warrants, evidences of indebtedness or assets actually distributed
  or based upon the number of rights, options or warrants actually converted,
  as the case may be, but subject to any other adjustment required hereunder by
  reason of any event arising after the record date. ****(6)
         If, during the Conversion Period, there is a
    reclassification or other similar change to the Underlying Shares or a reorganization
    of Rtica Corporation not otherwise provided for in Subsection 4.01(3), or
    a consolidation or merger or amalgamation of Rtica Corporation with or into
    another body corporate, including a transaction whereby all or substantially
    all of Rtica Corporation's assets become the property of any other corporation
    (any such event being herein called a "Capital Reorganization"), the Holder,
    to the extent that the Holder has not converted this Debenture for Preference
    Shares prior to the effective date of the Capital Reorganization shall be
    entitled to receive and shall accept, upon the exchange of any Preference
    Shares obtained by the Holder upon conversion of this Debenture at any time
    after the effective date of the Capital Reorganization, in lieu of the number
    of Preference Shares (and any other securities or property to which holders
    are entitled upon the exchange of such Preference Shares) to which he was
    theretofore entitled upon conversion of such Preference Shares, the aggregate
    number of shares or other securities or property of Rtica Corporation, or
    the continuing, successor, as the case may be, under the Capital Reorganization
    that the Holder would have been entitled to receive as a result of the Capital
    Reorganization if, on the effective date thereof, he had been the Holder of
    the number of Preference Shares (and any other securities to which Holders
    are entitled upon the exchange of such Preference Shares) to which immediately
    before the transaction he was entitled upon conversion of such Preference
    Shares. No Capital Reorganization shall be carried into effect unless all
    necessary steps shall have been taken so that the Holder shall thereafter
    be entitled to receive the number of shares or other securities or property
    of Rtica Corporation, or of the continuing, successor or purchasing Rtica
    Inc., as the case may be, under the Capital Reorganization, subject to adjustment
    thereafter in accordance with provisions the same, as nearly as may be possible,
    as those contained in this Section. 22   ****(7)
         The adjustments and readjustments provided for
    in this Article IV are cumulative and, subject to Subsection 4.01(8), shall
    apply (without duplication) to successive issues, subdivisions, combinations,
    consolidations, distributions and any other events that require adjustment
    of the Conversion Number or the number or kind of shares or other securities
    to be received upon conversion of the Debentures. ****(8)
         No adjustment in the Conversion Number shall
    be required unless the adjustment would result in a change of at least 1%
    in the Conversion Number then in effect, provided however that any adjustments
    that, except for the provisions of this Subsection would otherwise have been
    required to be made, shall be carried forward and taken into account in any
    subsequent adjustment. ****(9)
         No adjustment in the Conversion Number shall
    be made in respect of any event described in paragraph 4.01(3)(a) or Subsections
    4.01(4), 4.01(5) or 4.01(6) if the Holder is entitled to participate in the
    event on the same terms, mutatis mutandis, as if they had converted this Debenture
    immediately prior to the effective date or record date of the event. ****(10)
         For greater certainty, no adjustment in the
    Conversion Number shall be made pursuant to this Section 4.01 in respect of
    the issue: (a)
      of
          Preference Shares pursuant to this Debenture ; or(b)
      of
          Underlying Shares pursuant to the exercise of stock options granted
          under RticaCorporation's
          stock option plan or pursuant tothe
          exerciseofwarrants,agreements
          or rights attached to classes ofUnderlying
          Shares,ineach caseexisting
          on the original date of issue hereof; and any such issue shall
  be deemed not to be a Share Reorganization, a Rights Offering or a Special Distribution. ****(11)
         If a dispute shall at any time arise with respect
    to adjustments of the Conversion Number, the dispute shall be conclusively
    determined by Rtica Corporation's auditors or, if they are unable or unwilling
    to act, by such firm of independent chartered accountants as may be selected
    by the directors, and any such determination shall be conclusive and binding
    upon Rtica Corporation, all transfer agents and the Debentureholder. ****(12)
         If Rtica Corporation shall set a record date
    to determine the holders of Underlying Shares for the purpose of entitling
    them to receive any dividend or distribution or any subscription or purchase
    rights and shall thereafter legally abandon its plans to pay or deliver the
    dividend, distribution or subscription or purchase rights, then no adjustment
    in the Conversion Number shall be required by reason of the setting of the
    record date. ****(13)
         In any case where the application of this Section
    4.01 results in an increase of the Conversion Number taking effect immediately
    after the record date for or occurrence of a specific event, if this Debenture
    and the Preference Shares issuable upon conversion hereof are 23   converted after that record
  date or occurrence and prior to completion of the event or of the period for
  which a calculation is required to be made, Rtica Corporation may postpone the
  issuance to the Holder of the Underlying Shares to which the holder is entitled
  by reason of the increase of the Conversion Number or of other securities or
  property, but the Underlying Shares or other securities or property shall be
  so issued and delivered to that holder upon completion of that event or period,
  with the number of those Underlying Shares calculated on the basis of the Conversion
  Number on the Conversion Date adjusted for completion of that event or period,
  and Rtica Corporation shall forthwith after the Conversion Date deliver to the
  person or persons in whose name or names the Underlying Shares or other securities
  or property are to be issued an appropriate instrument evidencing the person's
  or persons' right to receive the Underlying Shares or other securities or property. ****(14)
         Notwithstanding anything to the contrary in
    this Debenture, no Debentures converted prior to the requirement to make an
    adjustment shall be entitled to any participation in respect thereof. ****(15)
         In the absence of a resolution of the directors
    of Rtica Corporation fixing a record date for a Special Distribution or Rights
    offering, Rtica Corporation will be deemed to have fixed as the record date
    therefor the date on which the Special Distribution or Rights Offering is
    effected. **Section
    4.02. Proceedings Prior to any Action Requiring Adjustment.**
     As
    a condition precedent to the taking of any action which would require an adjustment
    in any of the rights under the Debenture, Rtica Corporation will take any
    action which, in the opinion of counsel to Rtica Corporation, may be necessary
    in order that Rtica Corporation will be obligated to take in order that it
    may validly and legally issue all the Underlying Shares which the holders
    of the Debenture would be entitled to receive thereafter and to convert such
    Debenture in accordance with the provisions hereof. ******Section
    4.03. Notice and Certificate of Adjustment.** ****(1)
         Rtica Corporation shall, at least 14 days before
    the effective date or the record date of any event referred to in Section
    4.01 that requires or might require an adjustment in the Conversion Number
    give notice to the Debentureholder of the particulars of the event and, if
    determinable, the adjustment and a computation of the adjustment. ****(2)
         If notice has been given under Subsection (1)
    and the adjustment is not then determinable, Rtica Corporation shall promptly
    after the adjustment is determinable give notice to the Debentureholder of
    the adjustment and a computation of the adjustment. ******Section
    4.04. Fractional Preference Shares and Fractional Common Shares.**
    Rtica Corporation shall not be required to issue fractions of Underlying Shares
    upon conversion of the Preference Shares or to distribute certificates which
    evidence fractional Underlying Shares, and, in lieu thereof, may pay to the
    Debentureholder at the time of 24   conversion of the Preference
  Shares an amount in cash equal to such fraction of an Underlying Share as would
  otherwise be issuable (adjusted as provided in this Article 4, mutatis mutandis)
  multiplied by the Current Market Price on the date of conversion, provided that
  any one beneficial holder (as certified by the registered holder) shall only
  be entitled to payment in respect of a single fractional amount. ******Section
    4.05. Covenant to Qualify Shares.** If at any time any order, ruling,
    registration, notice or filing pursuant to any securities laws of Canada or
    any province thereof is required to ensure that any Underlying Shares issuable
    upon the conversion of the Preference Shares are issued in compliance with
    all such laws or to ensure that any such Underlying Shares, once issued, are
    not subject to any general restriction as to the resale thereof under the
    securities laws of Canada or any province thereof at any time after the date
    that is four months after the original date of issue of this Debenture, other
    than in the case of a sale from control within the meaning of the Securities
    Act (Ontario), the Corporation covenants that it will take all such action
    as may be necessary to make or obtain such order, ruling, registration or
    filing, or give notice as the case may be. ******Section
    4.06. Taxes and Charges on Conversio**n. Rtica Inc. and Rtica Corporation
    will from time to time promptly pay or make provision satisfactory to the
    Holder for the payment of all taxes and charges which may be imposed by the
    laws of Canada or any province thereof (except income tax or security transfer
    tax, if any) which shall be payable with respect to the issuance or delivery
    of Preference Shares or Underlying Shares to the Holder upon the exercise
    of its right of conversion pursuant to the terms of this Debenture or the
    Preference Shares, as applicable. **ARTICLE
    V** **CONVERSION OF
    DEBENTURES** **Section
    5.01. Conversion of Debentures.** ****(1)
         Rtica Inc. shall use its best efforts to achieve,
    at the Stoney Creek Facility, an average production rate of at least 60 kg
    per hour for 24 consecutive hours (the Conversion Milestone) and
    Rtica will, within two Business Days of achieving the Conversion Milestone
    deliver to the Holder an Officers Certificate certifying that Rtica
    Inc. has achieved the Conversion Milestone. At any time after (i) the date
    on which Rtica Inc. achieves the Conversion Milestone, or (ii) upon the occurrence
    of an Accelerating Event prior to the Maturity Date, or (iii) October 1, 2007,
    a Holder may convert all or any principal amount of this Debenture, for the
    number of Rtica Inc. Units equal to the Conversion Number in effect on the
    Conversion Date, upon providing to Rtica Inc. this Debenture together with
    the conversion form set forth in this Debenture or another form of a written
    instrument satisfactory to Rtica Inc. evidencing the election (which on delivery
    to Rtica Inc. shall be irrevocable) of the Holder to convert the amount of
    this Debenture for the Conversion Number of Rtica Inc. Units to which the
    Holder is entitled. The date of receipt by Rtica Inc. of such Debenture Certificate
    and written instrument shall be the Conversion Date for the purposes of this
    Debenture. If the Holder is not converting the entire principal amount of
    this Debenture, the Holder shall be entitled to receive a 25   Debenture certificate
  representing the aggregate principal amount of this Debenture which is the difference
  between $1,000,000 and the aggregate principal amount being so converted. ****(2)
         On the Maturity Date all outstanding Debentures
    shall be repayable in cash unless the Debentureholder shall have provided,
    at least 3 days prior to Maturity Date, a written conversion notice to the
    Corporation. Upon any conversion of the Debenture, the Debentureholder shall
    be entitled to receive for all or any number of the Debentures held, that
    number of Rtica Inc. Units equal to the Conversion Number. ****(3)
         Upon the conversion of the Debenture in accordance
    with the terms hereof, Rtica Inc. will send within two Business Days of the
    Conversion Date by prepaid registered mail, certificates representing the
    Preference Shares and Debenture Warrants to which the Holder is entitled on
    conversion of this Debenture and addressed to the Holder at the Holders
    last address appearing on the register of Rtica Inc. unless otherwise directed
    in writing by the Holder to send payment to some other person or some other
    address or, in the case of joint Holders, payable to all of them and addressed
    to the joint Holder whose name appears first in the register at such Holders
    last address appearing in the register of Rtica Inc. unless otherwise directed
    in writing by all of them to send payment to some other person or some other
    address. The forwarding of such certificates will satisfy and discharge the
    liability on this Debenture. Notwithstanding the foregoing, in the event of
    the non-receipt of any such certificates by the Holder of this Debenture or
    the loss, theft or destruction thereof, Rtica Inc. upon being furnished with
    reasonable evidence of such non-receipt, loss, theft or destruction will issue
    to such Holder a replacement certificate. ****(4)
         Rtica Inc. Units in respect of which this Debenture
    is converted shall be deemed to have been issued on the Conversion Date, at
    which time the Debentureholder shall be deemed to have become the holder of
    record of Rtica Inc. Units. All provisions of this Debenture are subject to
    this Section. For greater certainty, on the Maturity Date, this Debenture
    need not be delivered by the Holder to Rtica Inc. in order for the Holder
    to receive the cash to which he is entitled. ****(5)
         Subject to Section 4.05, if, at the time of
    conversion of this Debenture for Rtica Inc. Units, there remain trading restrictions
    on the Rtica Inc. Units acquired, or the Underlying Shares, due to applicable
    securities legislation, Rtica Inc. or Rtica Corporation may, on the advice
    of counsel, endorse the certificates representing the Rtica Inc. Units or
    Underlying Shares to such effect, and prior to issuance of any such certificates
    by the registrar and transfer agent for the Rtica Inc. Units or Underlying
    Shares, the Holder shall be advised in writing by Rtica Inc. or Rtica Corporation
    whether such endorsement or legending is required. **ARTICLE
    VI****DEFAULT** ******Section
    6.01. Events of Default**. The amounts outstanding under the Debentures
    and any accrued and unpaid interest shall become immediately due and payable
    in cash, subject to the terms hereinafter contained, upon the happening of
    any one or more of the following events (each an Event of Default): 26    (a)Rtica
        Inc. fails to pay any principal amount of this Debenture when due;(b)Rtica
          Inc. fails to pay the interest due on any of the Debentures, whether
          in cash or Interest Shares, on an Interest Payment Date or the Maturity
          Date and such default continues for a period of five (5) days;(c)Rtica
          Inc. fails to deliver certificates evidencing fully-paid and non-assessable
          Preference Shares and Debenture Warrants upon conversion of all or part
          of this Debenture in accordance with the terms of this Debenture and
          such default continues for a period of ten (10) days;(d)Rtica
          Inc. fails to pay the Holder the amounts owing in the event of an Acceleration
          Event in accordance with the terms of this Debenture and such default
          continues for a period of ten (10) days;(e)either
          Rtica Inc. or Rtica Corporation (the Defaulting Party) defaults
          in the observance or performance of any other covenant or agreement
          contained in this Debenture or any representation or warranty of Rtica
          Inc. or Rtica Corporation contained herein or in any document executed
          or delivered in connection herewith becomes untrue, which default continues
          for a period of ten(10)days after
          the Defaulting Party receives written notice specifying the default
          (and demanding that such default be remedied) from the Holder;(f)one
          or more judgements in an aggregate amount in excess of $250,000 shall
          have been rendered against Rtica Inc. and Rtica Corporation, considered
          as a whole, and such judgements remain undischarged, unpaid or unstayed
          for a period of thirty (30) days after such judgement or judgements
          become final and non-appealable;(g)any
          proceeding or filing shall be instituted or made against Rtica Inc.
          or Rtica Corporation seeking to have an order for relief entered against
          it as debtor or to adjudicate it a bankrupt or insolvent, or seeking
          liquidation, winding-up, reorganization, arrangement, adjustment or
          composition of it or its debts under any law relating to bankruptcy,
          insolvency, reorganization or relief of debtors (including, without
          limitation, the Bankruptcy and Insolvency Act (Canada) and the Companies'
          Creditors Arrangement Act (Canada)), or seeking appointment of a receiver,
          liquidator, trustee, custodian or other similar official for it or for
          any substantial part of its properties or assets unless the same is
          being contested actively and diligently in good faith by appropriate
          and timely proceedings and is dismissed, vacated or permanently stayed
          within thirty (30) days of institution;(h)Rtica
            Inc. or Rtica Corporation shall cease, or threaten to cease, to carry
            on business or shall make a general assignment for the benefit of
            creditors; or any proceeding or filing shall be instituted or made
            by Rtica Inc. or Rtica Corporation (including the filing of a proposal
            or a notice of intention to file a proposal) 27    (i)      any
      proceedings are taken relating to Rtica Inc. or Rtica Corporation or any
      substantial portion of the property of Rtica Inc. or Rtica Corporation under
      any reorganization, arrangement, or readjustment of debt, dissolution, winding
      up, adjustment, composition or liquidation law or statute of any jurisdiction,
      whether now or hereafter in effect and, if taken by a person other than
      Rtica Inc. or RticaCorporation,
      are not being contested in good faith by Rtica Inc. or Rtica Corporation
      by appropriate proceedings promptly instituted and diligently conducted; (j)      an
      encumbrancer legally takes possession of the property of Rtica Inc. or Rtica
      Corporation or any part thereof which is, in the opinion of the Holder,
      acting reasonably, a substantial and material part thereof or a distress
      or execution or any similar process is levied or enforced against such property
      and remains unsatisfied for such period as would permit such property or
      such part thereof to be sold thereunder; (k)      Rtica
      Inc. or Rtica Corporation is in default under the terms and provisions of
      any agreement which is material to Rtica Inc. or Rtica Corporation; (l)      the
      Holder believes in good faith that the prospect of payment or performance
      of any of the Obligations is impaired or that the Collateral is in danger
      of being lost, damaged or confiscated, or of being encumbered by Rtica Inc.
      or seized or otherwise attached by anyone pursuant to any legal process
      and the event or cause giving rise to such belief shall continue for a period
      of 30 days after notice thereof by the Holder to Rtica Inc.; (m)      an
      event of default occurs in payment or performance of any obligation in favour
      of any person from whom Rtica Inc. or an Affiliate thereof or Rtica Corporation
      or an Affiliate thereof has borrowed money aggregating $50,000.00 which
      would entitle the holder of such borrowed money to accelerate payment of
      the borrowed money, and such default shall continue for 10 days; and (n)      if
      there shall occur or arise any change (or any condition, event or development
      involving a prospective change) in the business, operations, affairs, assets,
      liabilities (including any contingent liabilities that may arise through
      outstanding pending or threatened litigation or otherwise), capitalization,
      financial 28
      ******6.02
    Remedies.** ****(1)
         On or after the occurrence of any Event of Default,
    (i) any or all of the Obligations will at the option of the Holder become
    immediately due and payable or be subject to immediate performance, as the
    case may be, without presentment, protest or notice of dishonour, all of which
    are expressly waived; (ii) the obligation, if any, of the Holder to extend
    further credit to Rtica Inc. will cease; (iii) any or all security granted
    hereby will, at the option of the Holder, become immediately enforceable;
    and (iv) in addition to any right or remedy provided by law, the Holder will
    have the rights and remedies set out below, all of which rights and remedies
    will be enforceable successively, concurrently or both:  ) (b)      the
      Holder may take possession of the Collateral and require Rtica Inc. to assemble
      the Collateral and deliver or make the Collateral available to the Holder
      at such place or places as may be specified by the Holder; (c)      the
      Holder may take such steps as it considers desirable to maintain, preserve
      or protect the Collateral; (d)      the
      Holder may carry on or concur in the carrying on of all or any part of the
      business of Rtica Inc.; (e)      the
      Holder may enforce any rights of Rtica Inc. in respect of the Collateral
      by any manner permitted by law; (f)      the
      Holder may sell, lease or otherwise dispose of the Collateral at public
      auction, by private tender, by private sale or otherwise either for cash
      or upon credit upon such terms and conditions as the Holder may determine
      and without notice to Rtica Inc. unless required by law; (g)      the
      Holder may accept the Collateral in satisfaction of the Obligations upon
      notice to Rtica Inc. of its intention to do so in the manner required by
      law; 29
     ) (i)      the
      Holder may enter upon, occupy and use all or any of the premises, buildings
      and plant occupied by Rtica Inc. and use all or any of the Equipment and
      other personal property of Rtica Inc. for such time as the Holder requires
      to facilitate the realization of the Collateral, free of charge, and the
      Holder will not be liable to Rtica Inc. for any neglect in so doing or in
      respect of any rent, charges, depreciation or damages in connection with
      such actions; (j)      the
      Holder may charge on its own behalf and pay to others all reasonable amounts
      for expenses incurred and for services rendered in connection with the exercise
      of the rights and remedies of the Holder hereunder, including, without limiting
      the generality of the foregoing, reasonable legal, Receiver and accounting
      fees and expenses, and in every such case the amounts so paid together with
      all costs, charges and expenses incurred in connection therewith, including
      interest thereon at such rate as the Holder deems reasonable, will be added
      to and form part of the Obligations hereby secured; and (k)      the
      Holder may discharge any claim, lien, mortgage, charge, security interest,
      encumbrance or any rights of others that may exist or be threatened against
      the Collateral, and in every such case the amounts so paid together with
      costs, charges and expenses incurred in connection therewith will be added
      to the Obligations hereby secured.
 ****(2)
         The Holder may (i) grant extensions of time,
    (ii) take and perfect or abstain from taking and perfecting security, (iii)
    give up securities, (iv) accept compositions or compromises, (v) grant releases
    and discharges, and (vi) release any part of the Collateral or otherwise deal
    with Rtica Inc., debtors of Rtica Inc., sureties and others and with the Collateral
    and other security as the Holder sees fit without prejudice to the liability
    of Rtica Inc. to the Holder or the Holder's rights hereunder. ****(3)
         The Holder will not be liable or responsible
    for any failure to seize, collect, realize, or obtain payment with respect
    to the Collateral and is not bound to institute proceedings or to take other
    steps for the purpose of seizing, collecting, realizing or obtaining possession
    or payment with respect to the Collateral or for the purpose of preserving
    any rights of the Holder, Rtica Inc. or any other person, in respect of the
    Collateral. ****(4)
         The Holder may apply any proceeds of realization
    of the Collateral to payment of expenses in connection with the preservation
    and realization of the Collateral as above described and the Holder may apply
    any balance of such proceeds to payment of the Obligations in such order as
    the Holder sees fit. If there is any surplus remaining, the Holder may pay
    it to any person having a claim thereto in priority to Rtica Inc. of whom
    the Holder has knowledge and any balance remaining must be paid to Rtica Inc..
    If the disposition of the 30   Collateral fails to satisfy
  the Obligations secured by this Agreement and the aforesaid expenses, Rtica
  Inc. will be liable to pay any deficiency to the Holder forthwith on demand. ******Section
    6.03 Remedies not Exclusive.**No remedy herein conferred upon or reserved
    to the Holders is intended to be exclusive of any other remedy that may be
    available herein or in any other agreement including, without limitation,
    the Security Agreements, but each and every such remedy shall be cumulative
    and shall be in addition to every other remedy given hereunder or now existing
    or hereafter to exist by law. ******Section
    6.04 Costs.** Rtica Inc. and Rtica Corporation shall be jointly and
    severally liable to the Holders for all costs incurred by the Holders in connection
    with the enforcement of rights under this Debenture together with interest
    thereon, at a rate of 12% per annum, from thirty (30) days after the date
    of receipt of the invoice from advisors to the Holders to Rtica Inc. and Rtica
    Corporation with respect to such costs until the date payment thereof is received
    by the Holder. ******Section
    6.05 Delay.** No delay or omission of any Holder to exercise any remedy
    shall impair any such remedy or be construed to be a waiver of default hereunder
    or acquiescence therein. ******Section
    6.06 No Recourse Against Other Parties.** The Holders shall not have
    any right, cause of action or remedy now or hereafter existing in any jurisdiction
    against any past, present or future incorporator, shareholder, director or
    officer of any of Rtica Inc. or Rtica Corporation, either directly or through
    Rtica Inc. or Rtica Corporation, for the payment for or to Rtica Inc. or Rtica
    Corporation or any receiver, liquidator, or sequestrator thereof or for or
    to any Holder or otherwise, of the principal or interest under any or all
    of the Debentures or on any covenant, agreement, representation or warranty
    of Rtica Inc. or Rtica Corporation contained herein. ******Section
    6.07 Rights Exclusive to Parties.** All the covenants, stipulations
    and agreements in this Debenture contained, by or on behalf of Rtica Inc.
    or Rtica Corporation to be kept, observed, fulfilled or performed, are and
    shall be for the sole and exclusive benefit of the parties hereto and of the
    Holders. ******Section
    6.08 Waiver of Default.** Upon the happening of any Event of Default
    hereunder the Holder shall have the power by written notice to Rtica Inc.
    that it has waived any default hereunder upon such terms and conditions as
    shall be prescribed in such waiver without prejudicing the rights of any other
    holder of Debentures; provided that no delay or omission of the Holder to
    exercise any right or power accruing upon any default shall impair any such
    right or power or shall be construed to be a waiver of any such default or
    acquiescence therein and provided further that no act or omission of the Holder
    in the premises shall extend to or be taken in any manner whatsoever to affect
    any subsequent default hereunder or the rights resulting therefrom. ******Section
    6.09 Certificate upon Default.**Each of Rtica Inc. and Rtica Corporation
    shall provide a certificate of an officer of the applicable company to the
    Holders 31   promptly upon any officer
  obtaining knowledge that an Event of Default has occurred and, if applicable,
  describing such Event of Default and the status thereof. ******Section
    6.10. Application of Monies.** Except as herein otherwise expressly
    provided, any money to be received from Rtica Inc. or Rtica Corporation pursuant
    to the foregoing provisions of this Article 6, or as a result of legal or
    other proceedings or from any trustee in bankruptcy or liquidator of Rtica
    Inc. or Rtica Corporation shall be applied, together with any other monies
    in the hands of the trustee in bankruptcy available for such purpose as follows: ) (b)      second,
      but subject as hereinafter in this Section 6.12 provided, in payment, rateably
      and proportionately to the Holder in the following priority namely: first,
      accrued and unpaid interest and interest on amounts in default; thereafter,
      principal; (c)      third,
      in payment of the surplus, if any, of such monies to Rtica Inc. and Rtica
      Corporation or any of their respective assigns;
 provided, however, that
  no payment shall be made pursuant to Section 6.12(b) above with respect to the
  principal or interest on any Debenture held, directly or indirectly, by or for
  the benefit of Rtica Inc. or Rtica Corporation (other than any Debenture pledged
  for value and in good faith to a person other than Rtica Inc. or Rtica Corporation
  but only to the extent of such person's interest therein) except subject to
  the prior payment in full of the principal and interest of this Debenture. **Section
    6.11. Distribution of Proceeds.** Payments to Holders pursuant to Section
    6.11(b) shall be made by sending by prepaid registered mail a cheque payable
    to the Holder and addressed to the Holder at the Holders last address
    appearing on the register unless otherwise directed in writing by the Holder
    to send payment to some other person or some other address or, in the case
    of joint Holders, payable to all of them and addressed to the joint Holder
    whose name appears first in the register at such Holders last address appearing
    in the register unless otherwise directed in writing by all of them to send
    payment to some other person or some other address. **ARTICLE
    VII** **SECURITY** **Section
    7.01 Security Interest.** 32   ****(1)
         As general and continuing security for the payment
    and performance of all Obligations, Rtica Inc. hereby grants to the Holder
    a security interest in the present and future undertaking and property, both
    real and personal, of Rtica Inc. (collectively, the Collateral),
    and as further general and continuing security for the payment and performance
    of the Obligations, Rtica Inc. hereby assigns the Collateral to the Holder
    and mortgages and charges the Collateral to the Holder. Without limiting the
    generality of the foregoing, the Collateral will include all right, title
    and interest that Rtica Inc. now has or may hereafter have, be possessed of,
    be entitled to, or acquire, by way of amalgamation or otherwise, now or hereafter,
    in all property of the following kinds: 1
      )
      Receivables:
          all debts, accounts, claims and choses in action for monetary amounts
          which arenow
          or which may hereafter become due, owing or accruing due to Rtica Inc.
          (collectively, theReceivables);2
      )
      Inventory:
          all inventory of whatever kind and wherever situated including, without
          limiting the generality of the foregoing, all goods held for sale or
          lease or furnished or to be furnished under contracts for service or
          used or consumed in the business of Rtica Inc. (collectively, the Inventory);3
      )
      Equipment:
          all machinery, equipment, fixtures, furniture, plant, vehicles and other
          tangible personal property which are not Inventory (collectively, the
          Equipment);4
      )
      Chattel
          Paper: all chattel paper;5
      )
      Documents
          of Title: all warehouse receipts, bills of lading and other documents
          of title, whether negotiable or not;6
      )
      Securities
          and Instruments: all shares, stock, warrants, bonds, debentures,
          debenture stock and other securities and all instruments (collectively,
          the Securities);7
      )
      Intangibles:
          all intangibles not otherwise described in this Section including, without
          limiting the generality of the foregoing, all goodwill, licenses, patents,
          trademarks, copyrights and other intellectual property;8
      )
      Money:
          all coins or bills or other medium of conversion adopted for use as
          part of the currency of Canada or of any foreign government;9
      )
      Books,
          Records, Etc.: all books, papers, business plans, accounts, invoices,
          documents and other records in any form evidencing or relating to any
          of the property described in this Section and all contracts, securities,
          instruments and other rights and benefits in respect thereof,10
      )
      Substitutions,
          Etc.: all replacements of, substitutions for and increases, additions
          and accessions to any of the property described in this Section; and11
      )
      Proceeds:
          all proceeds of any Collateral in any form derived directly or indirectly
          from any dealing with the Collateral or that indemnifies or compensates
          for the loss of or damage to the Collateral, provided that the said
    assignment and mortgage and charge will not (i) extend or apply to the last
    day of the term of any lease or any agreement therefor now held or hereafter
    acquired by Rtica 33   Inc., but should the Holder
  enforce the said assignment or mortgage and charge, Rtica Inc. will thereafter
  stand possessed of such last day and must hold it in to assign the same to any
  person acquiring such term in the course of the enforcement of the said assignment
  and mortgage and charge, or (ii) render the Holder liable to observe or perform
  any term, covenant or condition of any agreement, document or instrument to
  which Rtica Inc. is a party or by which it is bound. ****(2)
         Rtica Inc. acknowledges that value has been
    given and agrees that the security interest granted hereby will attach when
    Rtica Inc. signs this Debenture and Rtica Inc. has any rights in the Collateral. **Section
    7.02 Covenants. Rtica Inc.**covenants with the Holder that
    Rtica Inc. will: ) (b)      not
      permit the Collateral to be affixed to real or personal property so as to
      become a fixture or accession without the prior written consent of the Holder; (c)      defend
      the Collateral against all claims and demands respecting the Collateral
      made by all persons at any time and, except as otherwise provided herein,
      will keep the Collateral free and clear of all security interests, mortgages,
      charges, liens and other encumbrances or interests except for those hereafter
      approved in writing by the Holder prior to their creation or assumption; (d)      not
      change its chief executive office and the location of the office where it
      keeps its records respecting the Receivables, or move any of the Inventory,
      Securities or Equipment from the locations specified in any schedule hereto,
      without the prior written consent of the Holder; (e)      pay
      all rents, taxes, levies, assessments and government fees or dues lawfully
      levied, assessed or imposed in respect of the Collateral or any part thereof
      as and when the same become due and payable, and will exhibit to the Holder,
      when required, the receipts and vouchers establishing such payment; (f)      keep
      proper books of account in accordance with sound accounting practice, will
      furnish to the Holder such financial information and statements and such
      information and statements relating to the Collateral as the Holder may
      from time to time require, and Rtica Inc. will permit the Holder or its
      authorized agents at any time at the expense of Rtica Inc. to examine the
      books of account and other financial records and reports relating to the
      Collateral and to make copies thereof and take extracts therefrom; (g)      from
      time to time forthwith at the request of the Holder furnish to the Holder
      in writing all information requested relating to the Collateral, and the
      Holder will be entitled from time to time at any reasonable time to inspect
      the Collateral and make copies of all information relating to the Collateral
      and for 34
    (h)      from
      time to time forthwith at the request of the Holder execute and deliver
      all such financing statements, schedules, assignments and documents, and
      do all such further acts and things as may be reasonably required by the
      Holder to effectively carry out the full intent and meaning of this Agreement
      or to better evidence and perfect the security interest, assignment and
      mortgage and charge granted hereby, and Rtica Inc. hereby irrevocably constitutes
      and appoints the Holder, or any Receiver appointed by the court or the Holder,
      the true and lawful attorney of Rtica Inc., with full power of substitution,
      to do any of the foregoing in the name of Rtica Inc. whenever and wherever
      the Holder or any such Receiver may consider it to be necessary or expedient; (i)      not
      change its name or amalgamate with any other corporation without first giving
      notice to the Holder of its new name and the names of all amalgamating corporations
      and the date when such new name or amalgamation is to become effective;
      and (j)      pay
      to the Holder forthwith upon demand all reasonable costs and expenses (including,
      without limiting the generality of the foregoing, all legal, Receiver's
      and accounting fees and expenses) incurred by or on behalf of the Holder
      in connection with the preparation, execution and perfection of this Agreement
      and the carrying out of any of the provisions of this Agreement including,
      without limiting the generality of the foregoing, protecting and preserving
      the security interest, assignment and mortgage and charge granted hereby
      and enforcing by legal process or otherwise the remedies provided herein;
      and all such costs and expenses will be added to and form part of the Obligations
      secured hereunder.
 **Section
    7.03 Debentures Pari Passu**. This Debenture and all Debentures referred
    to in Section 1.01 hereof will rank pari passu in all respects including granting
    of a security interest, whatever may be the actual date of the issue of the
    Debenture Certificates by which they are evidenced and thereafter until all
    duties of Rtica Inc. hereunder have been finally and fully performed, and
    repayment by Rtica Inc. on any Debenture shall require equal repayment on
    all Debentures pro rata to the amounts then outstanding. ******Section
    7.04 Transactions in Ordinary Course of Business.** Until an Event
    of Default occurs, the charge herein created shall in no way hinder or prevent
    Rtica Inc. from selling, assigning, transferring, exchanging, or otherwise
    disposing of or dealing with its inventory subject thereto in the ordinary
    course of its business and for the purpose of carrying on the same, provided
    that (i) such action is not in breach of any of the covenants herein contained
    or of any agreement to which the Holder and Rtica Inc. are parties; and (ii)
    all proceeds of any such sale will continue to be subject to the security
    interest, assignment and mortgage and charge granted hereby and all money
    received by Rtica Inc. will be received as trustee for the Holder and must
    be held separate and apart from other money of Rtica Inc. and must be paid
    over to the Holder upon request. 35   ******Section
    7.05 Rights and Duties of the Holder.** ****(1)
         The Holder may perform any of its rights and
    duties hereunder by or through agents and is entitled to retain counsel and
    to act in reliance upon the advice of such counsel concerning all matters
    pertaining to its rights and duties hereunder. ****(2)
         In the holding of the Collateral, the Holder
    and any nominee on its behalf is only bound to exercise the same degree of
    care as it would exercise with respect to similar property of its own of similar
    value held in the same place. The Holder and any nominee on its behalf will
    be deemed to have exercised reasonable care with respect to the custody and
    preservation of the Collateral if it takes such action for that purpose as
    Rtica Inc. reasonably requests in writing, but failure of the Holder or its
    nominee to comply with any such request will not of itself be deemed a failure
    to exercise reasonable care. ******Section
    7.06 Registration of Securities.**The Holder may have any Securities
    registered in its name or in the name of its nominee and will be entitled
    but not bound or required to exercise any of the rights that any holder of
    such Securities may at any time have, provided that until an Event of Default
    has occurred and is continuing, Rtica Inc. will be entitled to exercise, in
    a manner not prejudicial to the interests of the Holder or which would violate
    or be inconsistent with this Debenture, all voting power from time to time
    exercisable in respect of the Securities. The Holder will not be responsible
    for any loss occasioned by its exercise of any of such rights or by failure
    to exercise the same within the time limited for the exercise thereof. Rtica
    Inc. must from time to time forthwith upon the request of the Holder deliver
    to the Holder those Securities requested by the Holder duly endorsed for transfer
    to the Holder or its nominee to be held by the Holder subject to the terms
    of this Debenture. **Section
    7.07 Notification of Account Debtors.** Before an Event of Default
    occurs, the Holder may give notice of this Debenture and the security interest
    and assignment granted hereby to any account debtors of Rtica Inc. or to any
    other person liable to the Debtor and, after the occurrence of an Event of
    Default, may give notice to any such account debtors or other person to make
    all further payments to the Holder, and any payment or other proceeds of Collateral
    received by Rtica Inc. from account debtors or from any other person liable
    to Rtica Inc. whether before or after any notice is given by the Holder must
    be held by Rtica Inc. in trust for the Holder and paid over to the Holder
    on request. **Section
    7.08 Application of Funds.** Except where Rtica Inc., when not in default
    hereunder, so directs in writing at the time of payment, all money collected
    or received by the Holder in respect of the Collateral may be applied on account
    of such parts of the Obligations as the Holder in its sole discretion determines,
    or may be held unappropriated in a collateral account, or in the discretion
    of the Holder may be released to Rtica Inc., all without prejudice to the
    Holders rights against Rtica Inc. **ARTICLE
    VIII** **NOTICES** **Section
    8.01. Notice to Rtica Inc. and Rtica Corporation**. 36   ****(1)
         Any notice or other communication hereunder
    shall be in writing and shall be given by delivery or telecopier, if to Rtica
    Inc. or Rtica Corporation, addressed to Rtica Corporation, Attention: Warren
    Arseneau, President, 999 Barton Street, Stoney Creek, Ontario, L8E 5H4, Telecopy:
    (905) 643-1442; with a copy to Stikeman, Graham, Keeley & Spiegel LLP,
    220 Bay Street, Toronto, Ontario, M5J 2W4 Telecopy: (416) 365-1813; and shall
    be deemed to have been given when actually delivered or transmitted. ****(2)
         If, by reason of a strike, lockout or other
    work stoppage, actual or threatened, involving postal employees, any notice
    to be given to the or Rtica Inc. hereunder could reasonably be considered
    unlikely to reach its destination, the 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 that party at the appropriate address provided in
    Subsection (1) by telecopy or other means of prepaid, transmitted or recorded
    communication, and any notice delivered in accordance with the foregoing shall
    be deemed to have been received on the date of delivery to the officer or
    if delivered by telecopy or other means of prepaid, transmitted or recorded
    communication, on the first business day following the date of the sending
    of the notice by the person giving the notice. **Section
    8.02. Notice to the Holder**. Any notice to the Holder under the provisions
    of this Debenture shall be valid and effective if delivered to or if given
    by registered mail, postage prepaid, addressed to the Holder and if delivered
    in the vent of a postal disruption by courier at its address as the same will
    appear in the register to be kept by the or, in the case of joint holders,
    to the first such address, and shall be deemed to have effectively been given
    on the date of delivery or, if mailed, 5 days after actual posting of such
    notice. Accidental error or omission in giving notice or accidental failure
    to mail notice to the Holder shall not invalidate any action or proceeding
    founded thereon. **ARTICLE
    IX
    GENERAL** **Section
    9.01. Language.**The parties hereto confirm their express wish that this Debenture and all
    documents and agreements directly or indirectly relating thereto be drawn
    up in the English language. Notwithstanding such express wish, the parties
    agree that this Debenture or any such document or agreement or any part thereof
    may be drawn up in the French language. ****Les
    parties reconnaissent leur volonte express que la presente contrat ainsi que
    tous les documents et contrats s'y rattachant directement ou indirectment
    soient rédigés en anglais. Nonobstant cette volonte expresse,
    les parties conviennent que tout document ou contrat, ou toute parties de
    ces derniers ou de la presente contrat, puisse être rédigée
    en français. **Section
    9.02. Attornment. Rtica Inc.**hereby attorns to the non-exclusive jurisdiction of the courts of the Province
    of Ontario. 37   **ARTICLE
    X****CHANGE
    OF CONTROL** **Section
    10.01. Repurchase of Debentures upon a Change of Control** ****(1)
         If a Change of Control occurs, Rtica Inc. must
    commence, within 45 days of the Change of Control Date, and consummate an
    Offer to Purchase for this Debenture (to the extent then outstanding), at
    a purchase price equal to the greater of (i) the sum of (A) the principal
    amount thereof purchased, plus (B) accrued and unpaid interest on the principal
    amount of this Debenture to but not including the Change of Control Date,
    plus (C) a bonus in an amount equal to the Foregone Interest, and (ii) the
    sum of (A) an amount equal to 105% of the principal amount thereof purchased,
    plus (B) accrued and unpaid interest on the principal amount of the Debenture
    so purchased to but not including the date fixed for purchase (such price,
    as applicable, at which Debentures shall be purchased pursuant to an Offer
    to Purchase being herein referred to as the **Offer to Purchase
    Price**). ****(2)
         An Offer to Purchase shall be commenced by mailing
    a notice to the Holder stating: (i) the covenant contained herein pursuant
    to which the offer is being made and that this Debenture, if validly tendered,
    will be accepted for payment; (ii) the Offer to Purchase Price and the related
    payment date (the **Payment Date**); (iii) that the
    Holder may tender to the Offer to Purchase all or part of the Debentures held;
    (iv) that any Debenture not tendered will continue to accrue interest pursuant
    to its terms; (v) that, unless Rtica Inc. defaults in the payment of the Offer
    to Purchase Price, if the Debenture is accepted for payment pursuant to the
    Offer to Purchase interest thereon shall cease to accrue on and after the
    Payment Date; (vi) that if the Holder elects to have a Debenture purchased
    pursuant to the Offer to Purchase, it will be required to surrender the Debenture
    to Rtica Inc. at the address specified in the notice prior to 5:00 p.m. (Toronto
    time) on the Business Day immediately preceding the Payment Date; (vii) that
    the Holder will be entitled to withdraw its election if Rtica Inc. receives,
    not later than 5:00 p.m. (Toronto time) on the third Business Day immediately
    preceding the Payment Date, a facsimile transmission or letter setting forth
    the name of the Holder, the principal amount of Debentures delivered for purchase
    and a statement that the Holder is withdrawing his election to have such Debentures
    purchased; and (viii) that if this Debenture is being purchased only in part
    will be issued replacement Debentures equal in principal amount to and as
    evidence of the same underlying indebtedness as was evidenced by the unpurchased
    portion of this Debenture surrendered. ****(3)
         On the Payment Date, Rtica Inc. shall (i) accept
    for payment this Debenture or portions hereof to the extent tendered pursuant
    to an Offer to Purchase; and (ii) promptly mail to the Holder payment in an
    amount equal to the purchase price, and shall promptly mail to the Holder
    a replacement Debenture equal in principal amount to any unpurchased portion
    of the Debenture surrendered. ****(4)
         Rtica Inc. will comply with all applicable securities
    laws in the event that the Corporation is required to repurchase Debentures
    pursuant to an Offer to Purchase. **Section
    10.02. Notice of Proposed Change of Control.** Notice of a proposed
    Change of Control shall be given by or on behalf of Rtica Corporation to the
    Holder in written form and in the manner specified in Section 8.02 no later
    than one Business Day following the 38   public announcement of
  the proposed Change of Control made by or on behalf of the Corporation in accordance
  with the requirements of the Securities Act (Ontario) and the regulations thereunder.
  Such notice shall, to the extent known by Rtica Corporation at the time of the
  notice, set out the expected Change of Control Date and describe the proposed
  Change of Control in substantially the same detail as the aforementioned public
  announcement, such notice shall state that the Corporation must commence an
  Offer to Purchase within 45 days of the Change of Control Date. **ARTICLE
    XI
    SUBORDINATION** ******Section
    11.01. Agreement to Subordinate.** Rtica Inc. covenants and agrees,
    and the Holder, by its acceptance hereof, likewise agrees that the payment
    of the principal amount and interest evidenced by this Debenture is hereby
    expressly subordinated, to the extent and in the manner hereinafter set forth,
    in right of payment to prior payment in full of all debt obligations of Rtica
    Inc., except (i) a debt obligation issued by Rtica Inc. that is prescribed
    to be a small business security for the purposes of paragraph (a) of the definition
    of small business property in subsection 206(1) of the *Income
    Tax Act* (Canada), or (ii) a debt obligation owing to a shareholder of
    Rtica Inc. or to a person related (within the meaning of section 1(2) of the
    *Community Small Business Investment Funds Act* (Ontario)) to the shareholder
    (all such debt obligations to which this Debenture is hereby expressly subordinated
    being hereinafter referred to as Permitted Debt.) **Section
    11.02. Subrogation of Debentures.** Subject to the payment in full
    of all Permitted Debt, to the extent that any payment or distribution of assets
    of Rtica Inc. otherwise payable to the Holder is made on account of the Permitted
    Debt, the Holder shall be subrogated to the rights of the holders of Permitted
    Debt to receive payments and distributions of assets of Rtica Inc. made in
    respect of or on account of Permitted Debt, until all payments of any kind
    or character, whether in cash or securities, which may be payable to the Holder
    hereunder shall be paid in full. No payment or distribution of assets of Rtica
    Inc. to the Holder which would be payable or distributable to the holders
    of Permitted Debt pursuant to this Article XI shall, as between Rtica Inc.,
    its creditors (other than the holders of Permitted Debt) and the Holder, be
    deemed to be a payment by Rtica Inc. to or on account of the Holder, it being
    understood that the provisions of this Article XI are, and are intended, solely
    for the purpose of defining the relative rights of the Holder, on the one
    hand, and the holders of the Permitted Debt, on the other hand. Nothing contained
    in this Article XI or elsewhere in this Debenture is intended to or shall
    impair, as between Rtica Inc. and its creditors (other than the holders of
    Permitted Debt and the Holder), the obligation of Rtica Inc., which is unconditional
    and absolute, to pay to the Holder the payments of any kind or character,
    whether in cash, securities or other property which may be payable to the
    Holder on this Debenture as and when the same shall become due and payable
    in accordance with its terms, or to affect the relative rights of the Holder
    and creditors of Rtica Inc. (other than the holders of the Permitted Debt),
    nor shall anything herein or therein prevent the Holder from exercising all
    remedies otherwise permitted by applicable law upon default under this Debenture,
    subject to the rights, if any, under this Article XI, of the holders of Permitted
    Debt upon the exercise of any such remedy. 39   **ARTICLE
    XII 
    INTERPRETATION** **Section
    12.01. Definitions.** ****(1)
         As used in this Debenture , the recitals hereto
    and the Debenture Certificates, unless there is something in the subject matter
    or context inconsistent therewith: ******Accelerating
    Event** means any of the following occurrences prior to the Maturity
    Date: (i)
      any
          person becomes the beneficial owner, directly or indirectly, orexercises
          control or direction over common shares of RticaCorporation
          carrying in excess of 50.1% of the total voting rightsattached
          to all of the common shares of Rtica Corporation;(ii)
      any
          person or group of persons acting together or in concert shallsucceed
          in having a sufficient number of its nominees elected to theboard
          of directors of Rtica Corporation such that such nominees,when
          added to any existing director remaining on the board ofdirectors
          of the Rtica Corporation after such election who was anominee
          of such person or group of persons, will constitute themajority
          of the board of directors of Rtica Corporation;(iii)
      Rtica
          Corporation consolidates or amalgamates with, or merges with or into,
          another person or sells, assigns, conveys, transfers, leases or otherwise
          disposes of all or substantially all of its assets to anyperson,
          or any person consolidates or amalgamates with, or mergesinto,
          Rtica Corporation, in any such event pursuant to a transactionin
          which any of the outstanding common shares of RticaCorporation
          are converted into or exchanged for cash, securities orother
          property; or the sale of all or substantially all of the assets ofRtica
          Corporation;(iv)
      the
          occurrence of an Event of Default; and(iv)
      Rtica
          Inc. ceases to qualify as an eligible business under the *Community
          Small Business Investment Funds Act (Ontario)*; ******Affiliate**
    has the meaning given to that term in the Business Corporations Act (Ontario); ******Aggregate
    Cash Inflows** means, in respect of any period, the revenues
    of Rtica Corporation less increase in accounts receivable plus
    decrease in accounts receivable plus interest income less non-cash
    interest income plus dividends from equity method investees plus
    amortization of bond premiums plus cash and equivalent portions of
    foreign currency 40   translation adjustment
  gains, in each case for such period and as determined on a consolidated basis
  and in accordance with GAAP consistently applied; ******Aggregate
    Cash Outflows** means, in respect of any period, the consolidated
    selling, general and administrative expenses of Rtica Corporation plus costs
    of goods sold plus increase in inventories less decrease in inventories less
    increase in accounts payable plus increase in prepaid expenses less decrease
    in prepaid expenses plus increase in accrued liabilities less decrease in
    accrued liabilities plus increase in other non-cash, non-tax current assets
    less decrease in other non-cash, non-tax current assets plus cash and equivalent
    portions of foreign currency translation loss, in each case for such period
    and as determined on a consolidated basis in accordance with GAAP consistently
    applied; ******Business
    Day** means a day on which chartered banks are normally open
    for business in the city of Toronto, excluding Saturday, Sunday and any statutory
    and municipal holiday; ******Cashflow
    Positive** means that, in respect of any period, the Aggregate
    Cash Inflows exceeded the Aggregated Cash Outflows; ******Change
    of Control** means the occurrence of any event referred to in
    paragraph (i), (ii) or (iii) of the definition of Accelerating Event
    in this Section; ******Change
    of Control Date** means the date on which a Change of Control
    occurs; ******Conversion
    Date** means the earlier of 5:01 p.m. (Toronto time) on the Maturity
    Date or such time as a notice of conversion is provided pursuant to Section
    5.01 hereof; ******Conversion
    Number**, at any time, means that number of Rtica Inc. Units
    that the Holder is entitled to receive as that number may be adjusted by Article
    IV, and the Conversion Number, as at the date hereof, is equal to the amount
    determined by dividing the principal amount of indebtedness and accrued and
    unpaid interest outstanding under any Debenture on the date of conversion
    by the Conversion Price; ******Conversion
    Period** means the period commencing on the date on which the
    Holder is entitled to convert this Debenture into Preference Shares and Debenture
    Warrants, as determined in accordance with Section 5.01; and ending on the
    Maturity Date; ******Conversion
    Price** means, subject to adjustment under Article IV, $0.30
    per Rtica Inc. Unit; ******counsel**
    means a barrister and solicitor or a firm of barristers and solicitors retained
    by the or retained by Rtica Inc. and acceptable to the Debentureholder; ******Current
    Market Price** means, at any date, the weighted average price
    per common share at which the common shares of Rtica Corporation have traded
    on the TSX 41   Venture Exchange, and
  if the common shares are not then listed on such Exchange such other exchange
  on which the common shares of Rtica Corporation are listed as may be chosen
  by the directors of Rtica Corporation, during the 20 consecutive trading days
  (on each of which at least 100 common shares are traded) 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 of Rtica Corporation
  sold in board lots on the Exchange during the 20 consecutive trading days by
  the number of common shares sold; ******Debenture,
    herein, hereto, hereunder, hereof,
    hereby** and similar expressions mean or refer to this
    Debenture and not to any particular Article, Section, Subsection, paragraph,
    clause, subdivision or portion hereof, and include any Debenture , deed or
    instrument supplemental or ancillary hereto; and the expressions Article,
    Section, Subsection and paragraph followed
    by a number mean and refer to the specified Article, Section, Subsection or
    paragraph of this Debenture; ******Debenture**
    means this Debenture and may also mean a Debenture referred to in Section
    1.01 hereof, as the context requires, which is outstanding from time to time; ******Debenture
    Warrant** means one warrant to purchase a Preference Share substantially
    in the form attached hereto as Schedule A; ******Debentureholder**
    or **Holder** means the registered holder of a Debenture
    hereunder; ******director**
    means a director of Rtica Inc. for the time being, and reference without more
    to action by the directors means action by the directors of Rtica Inc. as
    a board or, whenever duly empowered, action by a committee of the board; ******Exchange**
    means the TSX Venture Exchange; ******Exchange
    Righ**t means the share exchange right of even date herewith
    granted by Rtica Corporation to the Holder; ******Foregone
    Interest** means, in respect of this Debenture, an amount equal
    to the interest payable on this Debenture that would have accrued to the Holder
    without giving effect to the provisions of subsection 2.01(3) from and including
    the Change of Control Date to but not including the Maturity Date; ******GAAP**
    means Canadian generally accepted accounting principles; ******Intercreditor
    Agreement** means the intercreditor agreement dated November
    1, 2002 between E2 Venture Fund Inc., Skylon Advisors Inc. and Rtica Inc.; ******Interest
    Payment Date** means December 31 and June 30 each year, commencing
    December 30, 2002; 42   ******Interest
    Preference Shares** has the meaning set out in Section 2.02(2); ******Lien**
    means any lien, encumbrance, mortgage, pledge, charge, security interest or
    other encumbrance; ******Material
    Subsidiary** means Rtica Environmental Services Inc., Inzeco
    Overseas Limited and each other Affiliate of Rtica Inc. or Rtica Corporation; ******Maturity
    Date** means November 5, 2007; ******Obligations**
    means all obligations and liabilities of any kind whatsoever of Rtica Inc.
    to the Holder in connection with or relating to this Debenture; ******Officers
    Certificate** means a certificate of Rtica Inc. signed by the
    Chief Executive Officer and Chief Financial Officer of Rtica Inc. and addressed
    to the Holder; ******Preference
    Shares** means the voting preference shares in the capital of
    Rtica Inc. having the terms and conditions set out in Schedule B hereto; ******person**
    includes individuals, bodies corporate, partnerships, firms and unincorporated
    associations, and governments and their agencies and instrumentalities; ******Qualifying
    Provinces** means the Provinces of British Columbia, Ontario
    and Alberta and such other Provinces designated by the in writing prior to
    the time of issuance of the Debentures and in which purchasers of Debenture
    are resident; ******Rtica
    Inc.'s auditors** means the firm of accountants appointed by
    the shareholders of Rtica Inc. as the auditors of Rtica Inc. in accordance
    with the provisions of the *Ontario Business Corporations Act*; ******Rtica
    Inc. Unit** means, subject to adjustment, one Preference Share
    and one Debenture Warrant; ******Securities**
    means securities of Rtica Inc. or Rtica Corporation convertible into or exchangeable
    for or otherwise carrying the right to acquire shares of Rtica Corporation
    and Security means any one of them; ******Securities
    Commissions** means the securities commission or other securities
    regulatory authority under the applicable Securities Laws of the Qualifying
    Province; ******Securities
    Laws** means the applicable securities laws and rules of the
    Qualifying Province and the respective regulations made and forms prescribed
    thereunder together with all applicable published policy statements and blanket
    orders and rulings of the Securities Commission; 43   ******Stoney
    Creek Facility** means the production facility maintained by
    Rtica Inc. for Rtica insulation located at 999 Barton Street., Stoney Creek,
    Ontario or such other location maintained by Rtica Inc. or any Affiliate thereof
    for such purpose; ******Underlying
    Securities** means Preference Shares, Debenture Warrants and
    Underlying Shares; ******Underlying
    Shares** means the fully-paid and non-assessable common shares
    of Rtica Corporation outstanding from time to time and any other securities,
    money or property resulting from the application of Article IV; ****The
    terms accessions, accounts, chattel paper,
    documents of title, goods, instruments,
    intangibles, inventory, money, proceeds
    and securities whenever used herein have the meanings given to
    those terms in the Personal Property Security Act (Ontario), as now enacted
    or as the same may from time to time be amended, re-enacted or replaced. **Section
    12.02. Headings.** The division of this Debenture into Articles, Sections,
    Subsections or other subdivisions, 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 Debenture or the Debenture. **Section
    12.03. Gender.** Words importing the singular number only shall include
    the plural and vice versa and words importing the masculine gender shall include
    the feminine gender. **Section
    12.04. Business Days.** Any action or payment required or permitted
    to be taken or made hereunder on a day which is not a business day in the
    Province of Ontario may be taken or made on the next succeeding business day
    with the same force and effect as if taken within the period for the taking
    of such action. **Section
    12.05. Meaning of Outstanding.** This Debenture shall be
    deemed to be outstanding until it shall be cancelled or delivered to Rtica
    Inc. for cancellation, provided that: ) (b)      where
      this Debenture has been issued in substitution for a Debenture that has
      been lost, stolen or destroyed, only one of them shall be counted for the
      purpose of determining the Debenture outstanding.
 ******Section
    12.06. Time.**Time shall be of the essence hereof and for the Debentures
    issued hereunder. 44   **Section
    12.07. Applicable Law.** This Debenture and the Debentures shall be
    construed in accordance with the laws of the Province of Ontario and of Canada
    applicable therein and shall be treated in all respects as Ontario contracts. **Section
    12.08. Severability.** In the event that any provision hereof shall
    be determined to be invalid or unenforceable in any respect, such determination
    shall not affect such provision in any other respect, or any other provision
    hereof, all of which shall remain in full force and effect. **Section
    12.09. Power of Attorney.** Upon the occurrence of an Event of Default
    that is continuing, Rtica Inc. hereby irrevocably constitutes and appoints
    any officer for the time being of the Holder the true and lawful attorney
    of Rtica Inc., with full power or substitution, to do, make and execute all
    such statements, assignments, documents, acts, matters or things with the
    right to use the name of Rtica Inc. or whenever and wherever the officer may
    deem necessary or expedient and from time to time to exercise all rights and
    powers and to perform all acts of ownership in respect to the Collateral in
    accordance with this Debenture. 45   ****IN
    WITNESS WHEREOF the parties hereto have caused this Indenture to be duly executed
    by their duly authorized officers as of the day and year first above written. ******Rtica
    Inc.** ****By:
    ______________________
                      ****Name:
    Title: ****By:
    ______________________
                      ****Name:
    Title: **Rtica
    Corporation** ****By:
    ______________________
                      ****Name:
    Title: ****By:
    ______________________
                      ****Name:
    Title:   **EXHIBIT
    "A"** **TRANSFER
    OF SECURED CONVERTIBLE DEBENTURES** ****FOR
    VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to ________________________________________________________________________________________________ ________________________________________________________________________________________________ ________________________________________________________________________________________________ $ __________________________
    principal amount of 12% secured convertible debentures due 2007 of Rtica Inc.
    registered in the name of the undersigned on the records of Rtica Inc. represented
    by the Debenture certificate attached hereto, together with any rights of
    action for rescission or otherwise available to the undersigned, and irrevocably
    appoints _______________________________ the attorney of the undersigned to
    transfer the said securities on the books or register with full power of substitution. DATED ___________________________________________________________________________________
      ___________________________________________Signature Medallion
      Guaranteed
    (Signature
      of Debentureholder) Instructions: 1
      .
      Signature
          of the Debentureholder must be the signature of the Person appearing
          on theface
          of the attached Debenture certificate.2
      .
      If
          the 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, the certificate must be accompanied
          by evidence of authority to signsatisfactory
          to Rtica Inc.3
      .
      The
          signature on the Transfer Form must be signature guaranteed by a Canadian
          chartered bank or a major Canadian trust company or by a medallion signature
          guaranteefrom
          a member of a recognized Medallion Signature Guarantee Program.4
      .
      Debentures
          shall only be transferable in accordance with applicable laws.    **EXHIBIT B** **CONVERSION
    NOTICE** The undersigned holder
    of the within Debenture, hereby subscribes for ______________ Preference Shares
    and Debenture Warrants of Rtica. Inc(the Corporation) in conversion
    of $ _____________ of the principal amount and $ __________ accrued and unpaid
    interest at a conversion price of $ per each unit of Preference Share and
    Debenture Warrant in accordance with the conversion referred to in Article
    V of the Debenture according to the conditions thereof. **[The undersigned
    also hereby subscribes for __________ Preference Shares of the Corporation
    upon the exercise of the Debenture Warrants issued on conversion of this Debenture
    at a price equal to $ ___________per Preference Share and tenders herewith
    the sum of $_________ on account of the aggregate subscription price] [and
    further exercises the undersigneds right to exchange the number of Preference
    Shares issued upon conversion of this Debenture and the exercise of the Debenture
    Warrants referred to above for common shares of Rtica Corporation upon the
    terms and conditions of the Exchange Rights dated November 1, 2002 in favour
    of the undersigned or its assignee].** DATED at ____________________________
    ,this _____ day of _____________ , ______________. ____________________________________________Name
        of Debenture Holder____________________________________________Authorized
        Signatory**Registration
        Instructions:**
      **Delivery
        Instructions:**____________________________________________
      ____________________________________________Name
      Account
        reference, if applicable____________________________________________
      ____________________________________________Account reference,
        if applicable
      Contact
        Name____________________________________________
      ____________________________________________Address
      Address____________________________________________(Telephone
        Number)   **SCHEDULE A** **UNLESS PERMITTED
    UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES SHALL
    NOT TRADE THE WARRANT OR COMMON SHARES ISSUABLE ON EXERCISE THEREOF IN THE
    PROVINCE OF ONTARIO BEFORE _________________________________.** Certificate
    No. • **RTICA
    INC.
    (an Ontario corporation)** Dated this
    • day of • , 200• **W
    A R R A N T  C E R T I F I C A T E** 5.___________________
    (the **Holder**) is the holder of a share purchase
    warrant (the **Warrant**) of RTICA Inc. (the **Corporation**)
    and is thereby entitled to purchase at any time prior to 5:00 p.m. (Toronto
    time) on November 5, 2004 (the **Expiry Date**) fully
    paid and non-assessable preference shares (the **Preference Shares**)
    in the capital of the Corporation as constituted on the date hereof, at a
    price per Preference Share equal to Cdn.$0.40 (the **Exercise
    Price**), subject, in each case, to adjustment in the manner
    set forth herein, by delivering: (i) the exercise form, attached hereto as
    Exhibit I (the **Exercise Form**), duly
    completed and executed; and (ii) a certified cheque, bank draft or wire transfer
    payable in lawful money of Canada to or to the order of the Corporation at
    its principal offices at 220 Bay Street, Suite 700, Toronto, Ontario M5J 2W4
    or such other address as may be set forth in a written notice to the Holder
    from the Corporation (the **Corporations Address**).
    The Corporation will cause to be personally delivered to the person or persons
    specified in the Exercise Form the certificate or certificates for the Preference
    Shares subscribed for at the respective address or addresses specified therein
    within three business days of its receipt of the duly completed Exercise Form
    and the aggregate Subscription Price in respect thereof. 6.The
    Holder may exercise the Warrant only prior to the Expiry Date. The Holder
    shall not be entitled to exercise the Warrant after the Expiry Date. The Holder
    shall be entitled to exercise the Warrant in part only for a number of Preference
    Shares which is less than the total number of Preference Shares into which
    the Warrant may be exercised. No fractional Preference Shares will be issued. 7.The
    holding of the Warrant under this Warrant certificate does not make the Holder
    a shareholder of the Corporation, nor does it entitle the Holder to any right
    or interest except as is expressly provided in this Warrant certificate. 8.Exhibit
    I and Exhibit II form part of this Warrant certificate
    and, without limitation, the Holder shall be entitled to the additional rights
    contained in Exhibit II. 9.From
    time to time the Corporation may, subject to the provisions of this certificate,
    execute and deliver by its proper officers, instruments supplemental hereto,
    which thereafter    - 2 - shall
          form part hereof, for any one or more or all of the following purposes
          of setting forth adjustments in the application of Exhibit II
          hereto.
          In the case of the consolidation, amalgamation, arrangement or merger
          (**successor corporation**), the successor
          corporation shall be bound by all the provisions hereof including the
          due and punctual performance of all covenants of the Corporation and
          forthwith following the occurrence of such event the successor corporation
          resulting from such consolidation, amalgamation, arrangement, merger
          or transfer (if not the Corporation) shall expressly assume, by supplemental
          certificate satisfactory in form to the Holder and executed and delivered
          to the Holder, the due and punctual performance and observance of each
          and every covenant and condition of this certificate to be performed
          and observed by the Corporation.10.Time
          shall be of the essence hereof. This Warrant certificate shall be governed
          by and construed in accordance with the laws in force in the Province
          of Ontario and the laws of Canada applicable therein and shall be treated
          in all respects as an Ontario contract.11.All
        dollar amounts herein are expressed in lawful money of Canada.12.A
          register shall be kept by the Corporation at the Corporations
          Address, and at such other offices as may be required by law wherein
          shall be entered the name, address and description of the Holder and
          particulars of the Warrant.13.In
          case this Warrant certificate shall become mutilated or be lost, destroyed
          or stolen, the Corporation shall issue and shall certify and deliver
          a new Warrant certificate of like date and tenor as the one mutilated,
          lost, destroyed or stolen upon surrender of and in place of and upon
          cancellation of the mutilated Warrant certificate or in lieu of and
          in substitution for the lost, destroyed or stolen Warrant certificate
          and the substituted Warrant certificate shall rank equally in accordance
          with its terms with the previous Warrant certificate issued to the Holder.
          The applicant for the issue of a new Warrant certificate pursuant to
          this section 10 shall bear the 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 Corporation such evidence of ownership
          and of the loss, destruction or theft of the Warrant certificate so
          lost, destroyed or stolen as shall be satisfactory to the Corporation
          in its discretion and the applicant may also be required to furnish
          an indemnity in amount and form satisfactory to the Corporation in its
          discretion, and shall pay the reasonable charges of the Corporation
          in connection therewith.14.This
          Warrant certificate may, upon compliance with the reasonable requirements
          of the Corporation, be exchanged for one or more Warrant certificates
          representing Warrants entitling the Holder to acquire an equal aggregate
          number of Preference Shares. Warrants may be exchanged only at the Corporations
          Address or at any other place that is designated by the Corporation.
          Any Warrants tendered for exchange shall be surrendered to the Corporation
          and cancelled. The Corporation shall sign all Warrant certificates necessary
          to carry out exchanges as aforesaid and those Warrant certificates shall
          be certified by or on behalf of the Corporation.    - 3 - 15.In
    the event any provision hereof shall be void or unenforceable for any reason,
    it shall be severed from the remainder of the provisions hereof and such remainder
    shall remain in full force and effect notwithstanding such severance. Any
    court with jurisdiction over any dispute with respect to the Warrants may
    amend the provisions hereof to the minimum extent required to render the impugned
    provision valid and enforceable. .******IN
    WITNESS WHEREOF**,
    the Corporation has executed this Warrant certificate. **RTICA INC.**Per:
      _____________________________________Authorized Signatory     **REGISTRATION
    PANEL** (No writing on this panel
    except by the Corporation or other Registrar)    **Exhibit
    I** **EXERCISE FORM** **TO:     RTICA
    INC.** (the Corporation) The
    Holder hereby exercises its right to purchase _____________________________________________
    Preference Shares (or such number of other securities or property to which
    such Warrants entitle the Holder in lieu thereof or in addition thereto under
    the provisions set out elsewhere in the attached Warrant certificate) pursuant
    to the provisions of this Warrant certificate at a price of Cdn.$0.40 per
    Preference Share (or such other adjusted Exercise Price as may be prescribed
    elsewhere in the attached Warrant certificate) on the terms specified in this
    Warrant certificate and encloses and tenders herewith a certified cheque,
    bank draft or wire transfer payable in lawful money of Canada to or to the
    order of the Corporation at par for the aggregate Exercise Price of Cdn.$
    ________________. Capitalized
  terms used in this Exercise Form have the same meanings ascribed to them elsewhere
  in this Warrant certificate. The
    Holder hereby directs that the securities or property be registered as follows:  (Please print the full
  name in which certificates representing the Preference Shares are to be issued.
  If space is insufficient, attach a separate sheet. If any of the securities
  are to be issued to a person or persons other than the Holder, the Holder must
  pay all requisite transfer taxes and provide proof of such payments to the Corporation.)   - ii - The
    Holder hereby acknowledges that, upon the registration of the securities purchased
    herein and except as set out below, the Holders rights under this Warrant
    certificate are hereby terminated and that, if the number of Warrants exercised
    is less than the total number of Warrants represented by this Warrant certificate,
    the Corporation shall forthwith deliver to the Holder a new Warrant certificate
    in respect of the Warrants not then exercised. Dated
    this ____________ day of _________________ , ___________ . ________________________________________________SignaturePrint name and address
        of Holder in fullbelowName __________________________________________Address:________________________________________________________________________________________________________________________________________ This Exercise Form must
  be completed and delivered, together with payment for the Preference Shares
  purchased, to the Corporation.   **Exhibit
    II** **1.01    
       Adjustment** (1)
         In this Exhibit II, the terms record date
    and effective date where used herein shall mean 5:00 p.m. (Toronto
    time) on the relevant date. (2)
         The Preference Shares available under this Warrant
    (the Exercise Number)(or the number and kind of shares or other securities
    to be received upon conversion shall be subject to adjustment from time to
    time in the events and in the manner herein. (3)
         If, prior to the Expiry Date, Rtica Corporation
    shall: (a)
      issue
          or make a distribution to all or substantially all the holders of its
          common shares by way of a stock dividend or otherwise common shares
          or securities convertible or transferable into common shares, or(b)
      subdivide
          its outstanding common shares into a greater number of commonshares,
          or(c)
      combine
          or consolidate its outstanding common shares into a smaller number of
          common shares, (any of those
    events being herein called a Share Reorganization), the Exercise
    Number shall be adjusted effective immediately after the record date at which
    the holders of shares are determined for the purposes of the Share Reorganization
    to a number that is the product of (1) the Exercise Number in effect on the
    record date and (2) a fraction: (i)
      the
          numerator of which shall be the total number of Rtica Corporationcommon
          shares outstanding after giving effect to the ShareReorganization;
          and(ii)
      the
          denominator of which shall be the number of Rtica Corporationcommon
          shares outstanding on the record date before giving effect to theShare
          Reorganization. (4)
         If, prior to the Expiry Date, Rtica Corporation
    shall issue rights, options or warrants to all or substantially all the holders
    of its common shares (the Underlying Shares) pursuant to which
    those holders are entitled to subscribe for, purchase or otherwise acquire
    Underlying Shares or Securities within a period of 45 days from the date of
    issue thereof at a price, or at a conversion price, of less than 95% of the
    Current Market Price (as defined in the Convertible Warrant issued by the
    Corporation to the Holder on November •, 2002) at the record date for
    such distribution (any such issuance being herein called a "Rights Offering"
    and Underlying Shares that may be acquired upon conversion or exchange of
    the Securities offered by the Rights Offering, being herein called the "Offered
    Shares"), the Exercise Number shall be adjusted effective immediately after
    the record date at which holders of Underlying Shares are   - ii - determined for the purposes
  of the Rights Offering to an Exercise Number that is the product of (1) the
  Exercise Number in effect immediately prior to the record date and (2) a fraction: (a)
      
      the
        numerator of which shall be the sum of: (a) the number of Underlying Sharesoutstanding
        on the record date; and (b) the number of Offered Shares offeredpursuant
        to the Rights Offering or the maximum number of Offered Shares intowhich
        the Securities so offered pursuant to the Rights Offering may be convertedor exchanged,
        as the case may be; and(b)
      
      the
        denominator of which shall be the sum of:(i)
      the
        total number of Underlying Shares outstanding on the record date; and(ii)
      the
        number arrived at when (A) either the product of (1) the number ofOffered
        Shares so offered and (2) the price at which those shares areoffered,
        or the product of (3) the conversion price thereof and (4) themaximum
        number of Offered Shares for or into which the Securities sooffered
        pursuant to the Rights Offering may be converted or exchanged, asthe
        case may be, is divided by (B) the Current Market Price of theUnderlying
        Shares on the record date. Any Underlying
    Shares owned by or held for the account of Rtica Corporation shall be deemed
    not to be outstanding for the purpose of any such computation. If all the
    rights, options or warrants are not so issued or if all rights, options or
    warrants are not converted prior to the expiration thereof, the Exercise Number
    shall be readjusted to the Exercise Number in effect immediately prior to
    the record date, and the Exercise Number shall be further adjusted based upon
    the number of Offered Shares (or Securities exchanged or converted into Offered
    Shares) actually delivered upon the conversion of the rights, options or warrants,
    as the case may be, but subject to any other adjustment required hereunder
    by reason of any event arising after that record date. (5)
         If, prior to the Expiry Date, Rtica Corporation
    shall issue or distribute to all or substantially all the holders of Underlying
    Shares, (i) shares of any class other than Underlying
    Shares, or (ii) rights, options or warrants, other than rights, options or
    warrants exercisable within 45 days from the date of issue thereof at a price,
    or at a conversion price, of at least 95% of the Current Market Price at the
    record date for such distribution, or (iii) evidences of indebtedness, or
    (iv) any other assets (excluding cash dividends that Warrantholders receive
    under Section 3.03) and that issuance or distribution does not constitute
    a Share Reorganization or a Rights Offering (any of those events being herein
    called a "Special Distribution"), the Exercise Number shall be adjusted effective
    immediately after the record date at which the holders of Underlying Shares
    are determined for purposes of the Special Distribution to a Exercise Number
    that is the product of: (1) the Exercise Number in effect on the record date;
    and (2) a fraction: (a)
      the
        numerator of which shall be the product of: (i) the sum of the total number
        ofUnderlying
        Shares outstanding on the record date plus the number of Underlying    - iii - Shares
        which the Warrantholder would be entitled to receive upon exercise of
        thisWarrant
        if this Warrant were exercised on the record date; and (ii) the CurrentMarket Price
        thereof on that date; and(b)
      the denominator
        of which shall be:(i)
      the
        product of (A) the sum of the number of Underlying Sharesoutstanding
        on the record date plus the number of Underlying Shareswhich
        the Holder would be entitled to receive upon exercise of thisWarrant
        if this Warrant were exercised on the record date and (B) theCurrent
        Market Price thereof on that date;less(ii)
      the
        aggregate fair market value, as determined by the directors, whosedetermination
        shall be conclusive, of the shares, rights, options, warrants,evidences
        of indebtedness or other assets issued or distributed in theSpecial
        Distribution. Any Underlying
    Shares owned by or held for the account of Rtica Corporation shall be deemed
    not to be outstanding for the purpose of any such computation. To the extent
    that the distribution of shares, rights, options, warrants, evidences of indebtedness
    or assets is not so made or to the extent that any rights, options or warrants
    so distributed are not converted, the Exercise Number shall be readjusted
    to the Exercise Number that would then be in effect based upon the shares,
    rights, options, warrants, evidences of indebtedness or assets actually distributed
    or based upon the number of rights, options or warrants actually converted,
    as the case may be, but subject to any other adjustment required hereunder
    by reason of any event arising after the record date. (6)
         If, prior to the Expiry Date, there is a reclassification
    or other similar change to the Underlying Shares or a reorganization of Rtica
    Corporation not otherwise provided for in paragraph (3), or a consolidation
    or merger or amalgamation of Rtica Corporation with or into another body corporate,
    including a transaction whereby all or substantially all of Rtica Corporation's
    assets become the property of any other corporation. (any such event being
    herein called a "Capital Reorganization"), the Holder, to the extent that
    the Holder has not converted this Warrant for Preference Shares prior to the
    effective date of the Capital Reorganization shall be entitled to receive
    and shall accept, upon the exchange of any Preference Shares obtained by the
    Holder upon exercise of this Warrant at any time after the effective date
    of the Capital Reorganization, in lieu of the number of Preference Shares
    (and any other securities or property to which holders are entitled upon the
    exchange of such Preference Shares) to which he was theretofore entitled upon
    conversion of such Preference Shares, the aggregate number of shares or other
    securities or property of Rtica Corporation, or the continuing, successor,
    as the case may be, under the Capital Reorganization that the Holder would
    have been entitled to receive as a result of the Capital Reorganization if,
    on the effective date thereof, he had been the Holder of the number of Preference
    Shares (and any other securities to which Holders are entitled upon the exchange
    of such Preference Shares) to which immediately before the transaction he
    was entitled upon conversion of such Preference Shares. No Capital Reorganization
    shall be carried into   - iv - effect unless
    all necessary steps shall have been taken so that the Holder shall thereafter
    be entitled to receive the number of shares or other securities or property
    of Rtica Corporation, or of the continuing, successor or purchasing Rtica
    Inc., as the case may be, under the Capital Reorganization, subject to adjustment
    thereafter in accordance with provisions the same, as nearly as may be possible,
    as those contained in this Section. (7)
         The adjustments and readjustments provided for
    in this Exhibit II are cumulative and, subject to paragraph 8, shall apply
    (without duplication) to successive issues, subdivisions, combinations, consolidations,
    distributions and any other events that require adjustment of the Exercise
    Number or the number or kind of shares or other securities to be received
    upon exercise of the Warrants. (8)
         No adjustment in the Exercise Number shall be
    required unless the adjustment would result in a change of at least 1% in
    the Exercise Number then in effect, provided however that any adjustments
    that, except for the provisions of this paragraph would otherwise have been
    required to be made, shall be carried forward and taken into account in any
    subsequent adjustment. (9)
         No adjustment in the Exercise Number shall be
    made in respect of any event described in paragraph 3(a) or paragraphs 4,
    5 or 6 if the Holder is entitled to participate in the event on the same terms,
    *mutatis mutandis*, as if they had exercised this Warrant immediately
    prior to the effective date or record date of the event. (10)
        For greater certainty, no adjustment in the Exercise
    Number shall be made pursuant to this Exhibit II in respect of the issue: (a)
      of Preference
        Shares pursuant to this Warrant; or(b)
      of Underlying
        Shares pursuant to the exercise of stock options granted underRtica
        Corporation's stock option plan or pursuant to the exercise of warrants,agreements
        or rights attached to classes of Underlying Shares, in each caseexisting
        on the original date of issue hereof; and any
    such issue shall be deemed not to be a Share Reorganization, a Rights Offering
    or a Special Distribution. (11)
         If a dispute shall at any time arise with respect
    to adjustments of the Exercise Number, the dispute shall be conclusively determined
    by Rtica Corporation's auditors or, if they are unable or unwilling to act,
    by such firm of independent chartered accountants as may be selected by the
    directors, and any such determination shall be conclusive and binding upon
    Rtica Corporation, all transfer agents and the holder. (12)
         If Rtica Corporation shall set a record date
    to determine the holders of Underlying Shares for the purpose of entitling
    them to receive any dividend or distribution or any subscription or purchase
    rights and shall thereafter legally abandon its plans to pay or deliver the   - v - dividend,
    distribution or subscription or purchase rights, then no adjustment in the
    Exercise Number shall be required by reason of the setting of the record date. (13)
         In any case where the application of this Exhibit
    II results in an increase of the Exercise Number taking effect immediately
    after the record date for or occurrence of a specific event, if this Warrant
    and the Preference Shares issuable upon exercise hereof are exercised after
    that record date or occurrence and prior to completion of the event or of
    the period for which a calculation is required to be made, Rtica Corporation
    may postpone the issuance to the Holder of the Underlying Shares to which
    the holder is entitled by reason of the increase of the Exercise Number or
    of other securities or property, but the Underlying Shares or other securities
    or property shall be so issued and delivered to that holder upon completion
    of that event or period, with the number of those Underlying Shares calculated
    on the basis of the Exercise Number on the date of Exercise (Exercise
    Date) adjusted for completion of that event or period, and Rtica Corporation
    shall forthwith after the Exercise Date deliver to the person or persons in
    whose name or names the Underlying Shares or other securities or property
    are to be issued an appropriate instrument evidencing the person's or persons'
    right to receive the Underlying Shares or other securities or property. (14)
         Notwithstanding anything to the contrary in
    this Warrant, no Warrants exercised prior to the requirement to make an adjustment
    shall be entitled to any participation in respect thereof. (15)
         In the absence of a resolution of the directors
    of Rtica Corporation fixing a record date for a Special Distribution or Rights
    offering, Rtica Corporation will be deemed to have fixed as the record date
    therefor the date on which the Special Distribution or Rights Offering is
    effected. **1.02****Proceedings
    Prior to any Action Requiring Adjustment.** As
    a condition precedent to the taking of any action which would require an adjustment
    in any of the rights under the Warrant, Rtica Corporation will take any action
    which, in the opinion of counsel to Rtica Corporation, may be necessary in
    order that Rtica Corporation will be obligated to take in order that it may
    validly and legally issue all the Underlying Shares which the holders of the
    Warrant would be entitled to receive thereafter and to exercise such Warrant
    in accordance with the provisions hereof. **1.03    
       Notice and Certificate of Adjustment.** (1)
         Rtica Corporation shall, at least 14 days before
    the effective date or the record date of any event referred to in Section
    1.01 that requires or might require an adjustment in the Exercise Number give
    notice to the Warrantholder of the particulars of the event and, if determinable,
    the adjustment and a computation of the adjustment. (2)
         If notice has been given under Subsection (1)
    and the adjustment is not then determinable, Rtica Corporation shall promptly
    after the adjustment is determinable give notice to the Holder of the adjustment
    and a computation of the adjustment.   - vi - **1.04    
       Fractional Preference Shares and Fractional Common Shares.** Rtica
    Corporation shall not be required to issue fractions of Underlying Shares
    upon conversion of the Preference Shares or to distribute certificates which
    evidence fractional Underlying Shares, and, in lieu thereof, may pay to the
    holder at the time of conversion of the Preference Shares an amount in cash
    equal to such fraction of an Underlying Share as would otherwise be issuable
    (adjusted as provided in this Exhibit II, mutatis mutandis) multiplied by
    the Current Market Price on the date of conversion, provided that any one
    beneficial holder (as certified by the registered holder) shall only be entitled
    to payment in respect of a single fractional amount. **1.05****Covenant to Qualify Shares.** If
    at any time any order, ruling, registration, notice or filing pursuant to
    any securities laws of Canada or any province thereof is required to ensure
    that any Underlying Shares issuable upon the conversion of the Preference
    Shares are issued in compliance with all such laws or to ensure that any such
    Underlying Shares, once issued, are not subject to any general restriction
    as to the resale thereof under the securities laws of Canada or any province
    thereof at any time after the date that is four months after the original
    date of issue of this Warrant, other than in the case of a sale from control
    within the meaning of the Securities Act (Ontario), the Corporation covenants
    that it will take all such action as may be necessary to make or obtain such
    order, ruling, registration or filing, or give notice as the case may be. **1.06****Taxes and Charges on Conversion.** Rtica
    Inc. and Rtica Corporation will from time to time promptly pay or make provision
    satisfactory to the Holder for the payment of all taxes and charges which
    may be imposed by the laws of Canada or any province thereof (except income
    tax or security transfer tax, if any) which shall be payable with respect
    to the issuance or delivery of Preference Shares or Underlying Shares to the
    Holder upon the exercise of its right of conversion pursuant to the terms
    of this Warrant or the Preference Shares, as applicable.   **SCHEDULE B**   **SCHEDULE 1.01**   **SCHEDULE 3.06(c)**   **SCHEDULE 3.06(o)**   **SCHEDULE 3.06(y)**   **SCHEDULE 3.06(hh)**