ex-4.3






Exhibit 4.3




VUZIX CORPORATION




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COMPUTERSHARE TRUST COMPANY OF CANADA




 






WARRANT INDENTURE




Providing for the Issue


of • Unit Warrants and


• Compensation Unit Warrants of Vuzix Corporation




 






•, 2009




 









 








THIS WARRANT INDENTURE is made as of the • day of •, 2009.





			
	BETWEEN:	 	VUZIX CORPORATION, a corporation existing
under the laws of the State of Delaware
and having its head office in the City of
Rochester, New York
 

(the “Corporation”)
 

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	AND:	 	COMPUTERSHARE TRUST COMPANY OF CANADA, a
trust company incorporated under the laws
of Canada and having a place of business
in the City of Toronto, Ontario
 

(the “Warrant Agent”)




          WHEREAS Canaccord Capital Corporation, Bolder Investment Partners, Ltd. and Canaccord Adams
Inc. (collectively, the “Agents”) are acting as agents in connection with the issuance and sale by
the Corporation (the “Offering”) of up to • units of the Corporation (individually a “Unit” and
collectively, the “Units”);


          AND WHEREAS each Unit, issuable at a price of CDN$• per Unit, consists of one (1) Common Share
(as hereinafter defined) and one half (1/2) of one (1) Common Share purchase warrant (a “Unit
Warrant”);


          AND WHEREAS the Agents shall be issued that number of compensation options (the “Compensation
Options”) equal to 12.5% of the number of Units sold pursuant to the Offering;


          AND WHEREAS each Compensation Option shall entitle the holder thereof to acquire one (1) Unit
(a “Compensation Unit”) at a price of CDN$• per Compensation Unit at any time prior to 5:00 pm
(Toronto time) on the date that is one (1) year following the Closing Date (as hereinafter
defined);


          AND WHEREAS each Compensation Unit shall consist of one Common Share and one half (1/2) of one
(1) Common Share purchase warrant (a “Compensation Unit Warrant”);


          AND WHEREAS each Warrant shall entitle the holder thereof to purchase one (1) Common Share at
a price of CDN$• [NTD: 150% of price of Units] per share at any time prior to the Warrant Expiry
Time (as hereinafter defined) subject to adjustment in the circumstances herein provided;


          AND WHEREAS up to an aggregate of • Unit Warrants will be issued in connection with the
Offering and up to • Compensation Unit Warrants, entitling the holders thereof to purchase, in the
aggregate, up to • Common Shares, subject to adjustment in the circumstances herein provided;


          AND WHEREAS the Corporation is duly authorized to create and issue the Unit Warrants and the
Compensation Unit Warrants to be issued as herein provided;


          AND WHEREAS the foregoing recitals are made as representations and statements of fact by the
Corporation and not by the Warrant Agent; and


          AND WHEREAS the Warrant Agent has agreed to enter into this Indenture and to hold all rights,
interests and benefits contained herein for and on behalf of the Persons who become Warrantholders
(as hereinafter defined);



 









 







          NOW THEREFORE THIS INDENTURE WITNESSETH that for good and valuable consideration mutually
given and received, the receipt and sufficiency of which are hereby acknowledged, it is hereby
agreed and declared as follows:



ARTICLE ONE — INTERPRETATION





			
	1.01	 	Definitions




          In addition to the terms defined in the above recitals or elsewhere in this Indenture, unless
there is something in the subject matter or context inconsistent therewith, the following phrases
and words used in this Indenture and the Warrant Certificate shall have the respective meanings
indicated below:




“Applicable Legislation” means the provisions of the statutes of the Canada and its
provinces and the regulations under those statutes, if any, relating to trust indentures or
the rights, duties or obligations of corporations and warrant agents under trust indentures
as are from time to time in force and applicable to this Indenture;




“Auditors” of the Corporation means the independent registered public accounting firm duly
appointed as auditor or auditors of the Corporation for the time being;




“Business Days” means a day that is not a Saturday, Sunday, other statutory holiday in
Toronto, Ontario, Rochester, New York or a day on which the Warrant Agent is not open for
business;




“Closing Date” means •, 2009;




“Common Shares” means the shares of common stock in the capital of the Corporation, US$0.001
par value, as constituted on the date hereof, provided that in the event of any adjustment
pursuant to Article Three, Common Shares will thereafter mean the common shares or other
securities or property resulting from such adjustment;




“Convertible Security” means a security of the Corporation (other than the Warrants),
convertible into or exercisable or exchangeable for or otherwise carrying the right to
acquire Common Shares;




“Corporation” means Vuzix Corporation, a corporation incorporated under the laws of
Delaware;




“Counsel” means a barrister, solicitor or lawyer or firm of barristers, solicitors or
lawyers (who may be counsel to the Corporation) acceptable to the Warrant Agent;




“Current Market Price” of the Common Shares at any date means the price per Common Share
equal to the weighted average price at which the Common Shares have traded on the
TSX-V, or, if the Common Shares are not then listed on the TSX-V, on any stock exchange as
may be selected by the Directors for such purpose or, if the Common Shares are not then
listed on any stock exchange, in the over-the-counter market, during the period of twenty
(20) consecutive trading days ending not more than five (5) Business Days before such date;
provided that the weighted average price shall be determined by dividing the aggregate sale
price of all such Common Shares sold on the said exchange or market, as the case may be,
during the said twenty (20) consecutive trading days by the total number of such Common
Shares so sold; and provided further that if the Common Shares are not then listed on one of
the said exchanges or traded in the over-the-counter market, then the Current Market Price
shall be determined by the Directors, acting reasonably;



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“Directors” means the board of directors of the Corporation as constituted as of the
applicable date and reference without more to “action by the Directors” shall mean action by
the Directors as a board or by any authorized committee thereof;




“Dividends in the Ordinary Course” means such dividends whether (payable in cash or
securities, property or assets of equivalent value) paid on the Common Shares in any fiscal
year of the Corporation to the extent that such dividends in the aggregate do not exceed in
amount or value the greater of:




	 	(a)	 	10% of the aggregate amount or value of the dividends paid by the Corporation
on its Common Shares in the 12 consecutive months ended immediately prior to the first
day of such fiscal year;






	 	(b)	 	25% of the consolidated net earnings of the Corporation before extraordinary
items and after dividends paid on any and all other shares of the Corporation for the
period of 12 consecutive months ended immediately prior to the first day of such fiscal
year (such consolidated net earnings to be shown in the audited financial statements of
the Corporation for such 12 month period, or if there are no audited financial
statements in respect of such period, computed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the most
recently completed audited consolidated financial statements of the Corporation); and






	 	(c)	 	10% of the Shareholder’s Equity,






“Exercise Price” means CDN$• [NTD: 150% of price of Units] in lawful money of Canada per
Warrant, subject to adjustment in accordance with the terms of this Indenture;




“Extraordinary Resolution” means an Extraordinary Resolution of Warrantholders as defined in
section 5.11 and includes a written instrument signed by Warrantholders pursuant to the
provisions of section 5.11;




“Person” means an individual, a corporation, a partnership, a government or any department
or agency thereof, a joint venture, a trust, an estate, an unincorporated organization and
the heirs, executors, administrators or other legal representatives of an individual; and
pronouns and other words importing Persons have a similarly extended meaning;




“Price Adjustment Factor”, at any time, means that number, as may be adjusted by Article
Three hereof, which when multiplied by the Exercise Price gives the Subscription Price, and
that number, as at the date hereof, is equal to one;




Registration Statement” means the Corporation’s registration statement on Form S-1 (SEC File
No.: 333-160417) filed with the SEC under the U.S. Securities Act, registering the Common
Shares issuable upon exercise of the Unit Warrants;




“Regulation D” means Regulation D under the U.S. Securities Act;




“Regulation S” means Regulation S under the U.S. Securities Act;




“SEC” means the United States Securities and Exchange Commission;



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“Shareholder’s Equity” means the stockholders equity reported on the audited financial
statements of the Corporation for the most recently ended fiscal year;




“Subscription Price” at any time means the subscription price payable for one Common Share
upon the exercise at that time of any Warrant and calculated as the price that is the
product of the Exercise Price and the Price Adjustment Factor as at that time;




“This Indenture”, “hereto”, “herein”, “hereby”, “hereunder”, “hereof” and similar
expressions refer to this instrument and not to any particular Article, section, paragraph,
clause, subdivision or other portion hereof, and include any and every instrument
supplemental or ancillary hereto or in implementation hereof;




“Time of Exercise” means the time that surrender of the Warrant Certificate, the completion
of the Warrant exercise form and payment of the Subscription Price is effected by a
Warrantholder according to the provisions of section 3.03 hereof;




“Transfer Agent” means the transfer agent for the time being of the Common Shares;




“TSX-V” means the TSX Venture Exchange;




“United States” means the United States as that term is defined in Rule 902(l) of Regulation
S;




“U.S. Person” means a U.S. Person as that term is defined in Rule 902(k) Regulation S;




“U.S. Securities Act” means the United States Securities Act of 1933, as amended;




“U.S. Prospectus” means a prospectus meeting the requirements of Section 10(a) of
the U.S. Securities Act;




“U.S. Purchaser” means (i) a person in the United States, (ii) a U.S. Person or person
purchasing on behalf, or for the benefit or account, of any U.S. Person or person in the
United States, (iii) a person who was in the United States at the time the order was made to
exercise Warrants or (iv) a person who executed or delivered a Warrant Exercise Form while
in the United States;




“Voting Shares” means shares of any class of a corporation carrying voting rights under all
circumstances for the election of the directors of the corporation but not including shares
carrying voting rights only by reason of the happening of a contingency, whether or not such
contingency shall have happened;




“Warrant” means a Unit Warrant or a Compensation Unit Warrant issued and certified hereunder
and for the time being outstanding entitling the holder thereof at any time prior to the
Warrant Expiry Time to purchase one Common Share upon payment of the Subscription Price
therefor;




“Warrant Agent” means Computershare Trust Company of Canada or its successor or successors
or permitted assigns for the time being the duties and obligations hereby created;




“Warrant Certificate” means a certificate substantially in the form specified in Schedule 1
hereto, or such other form as may be approved by the Corporation, the Agents and the Warrant
Agent;




“Warrant Exercise Certification” means the warrant exercise certification attached hereto as
Schedule 2;



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“Warrant Exercise Form” means the warrant exercise form attached to the Warrant
Certificates;




“Warrant Expiry Time” means 5:00 p.m. (Toronto time) on •, 2012; provided that if at any
time the Current Market Price of the Common Shares exceeds CDN$ • [NTD: 250% of initial
offering price of the Units], the Corporation shall have the right and option, exercisable
at its sole discretion, to accelerate the Warrant Expiry Time by providing written notice to
each registered holder of Warrants within five (5) Business Days and issuing a press release
to the effect that the Warrants will expire at 5:00 p.m. (Toronto time) on the date
specified in such notice and press release, provided that such date shall not be less than
30 days following the date of such notice and press release;




“Warrantholder”, “holder” or “holder of Warrants” means with respect to the Warrants, a
Person entered on a register to be maintained under section 2.10 as the registered holder of
a Warrant for the time being;




“Warrantholders’ Request” means an instrument signed in one or more counterparts by
Warrantholders holding in the aggregate not less than 25% of the then outstanding Warrants
which requests the Warrant Agent to take some action or proceeding specified therein; and




“Written order of the Corporation”, “written request of the Corporation”, “written consent
of the Corporation”, “certificate of the Corporation” and any other document required to be
signed by the Corporation, mean, respectively, a written order, request, consent and
certificate or other document signed in the name of the Corporation by any officer of the
Corporation, and may consist of one or more instruments so executed.




			
	1.02	 	Meaning of “outstanding” for Certain Purposes






Every Warrant Certificate certified and delivered by the Warrant Agent hereunder shall be
deemed to be outstanding until the Warrant Expiry Time, or until it shall be surrendered to
the Warrant Agent upon the exercise thereof pursuant to Article Three, provided however
that:




	 	(a)	 	a Warrant which has been partially exercised shall be deemed to be outstanding
only to the extent of the unexercised part of the Warrant;






	 	(b)	 	where a Warrant Certificate has been issued in substitution for a Warrant
Certificate which has been lost, stolen or destroyed, only one of them shall be counted
for the purpose of determining the Warrants then outstanding; and






	 	(c)	 	for the purpose of any provision of this Indenture entitling holders of
outstanding Warrants to vote, sign consents, requests or other instruments or take any
other action under this Indenture, Warrants owned legally or equitably by the
Corporation thereof shall be disregarded, except that:






	 	(i)	 	for the purpose of determining whether the Warrant Agent shall
be protected in relying on any such vote, consent, request or other instrument
or other action, only the Warrants of which the Warrant Agent has notice that
they are so owned shall be so disregarded; and






	 	(ii)	 	Warrants so owned which have been pledged in good faith other
than to the Corporation shall not be so disregarded if the pledgee shall
establish to the satisfaction of the Warrant Agent the pledgee’s right to vote
the Warrants in his discretion free from the control of the Corporation, as the
case may be, and the terms of the pledge thereof as to the right to vote shall
govern.





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	1.03	 	Day not a Business Day






If the day on or before which any action (other than the exercise of a Warrant) would
otherwise be required to be taken hereunder is not a Business Day, that action will be
required to be taken on or before the requisite time on the next succeeding day that is a
Business Day.




			
	1.04	 	Words Importing the Singular






Words importing the singular include the plural and vice versa and words importing a
particular gender include all genders.




			
	1.05	 	Time of the Essence






Time shall be of the essence in this Indenture and the Warrant Certificates.




			
	1.06	 	Interpretation not Affected by Headings, etc.






The division of this Indenture into Articles and sections and the insertion of headings are
for convenience of reference only and shall not affect the construction or interpretation
hereof.




			
	1.07	 	Language






The parties hereto confirm their express wish that this Indenture and all documents and
agreements directly or indirectly relating thereto be drawn up in the English language.




Les parties reconnaissent leur volonté expresse que la présente convention de bons de
souscription ainsi que tous les documents et contrats s’y rattachant directement ou
indirectement soient rédigés en anglais.




			
	1.08	 	Benefit of Applicable Legislation






	 	(1)	 	If and to the extent that any provision of this Indenture limits, qualifies or
conflicts with a mandatory requirement of Applicable Legislation, the mandatory
requirement will prevail.






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





ARTICLE TWO — ISSUE OF WARRANTS





			
	2.01	 	Creation and Issue of Warrants






	 	(1)	 	A total of up to • Unit Warrants and • Compensation Unit Warrants (each subject
to adjustment) are hereby authorized to be created and issued by the Corporation.






	 	(2)	 	Subject to adjustment as provided in this Indenture, each Warrant will entitle
the holder thereof to purchase one Common Share at any time from and after the date of
issue of the Warrant to and including the Warrant Expiry Time at the Subscription
Price.





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	2.02	 	Form and Terms of Warrant Certificates






	 	(1)	 	The Warrant Certificates representing the Warrants shall be substantially in
the form set out in Schedule 1 hereto, with such additions, variations or omissions as
may be permitted by the provisions of this Indenture or may from time to time be agreed
upon between the Corporation and the Warrant Agent and shall be numbered in the manner
as the Corporation, with the approval of the Warrant Agent, may prescribe. All Warrant
Certificates shall, save and except as to the denominations thereof, be of like tenor
and effect. Warrant Certificates may be engraved, lithographed, printed or partly in
one form and partly in another, as the Corporation and the Warrant Agent, acting
reasonably, may determine.






	 	(2)	 	Each Warrant Certificate authorized to be issued hereunder shall entitle the
holder upon exercise, surrender and payment of the Exercise Price in accordance with
the provisions of Article Three (Exercise of Warrants), to be issued that number of
Common Shares subscribed for in accordance with the exercise form of the Warrant
Certificate. With the exception of the Compensation Unit Warrants, the Warrant
Certificates will be dated as of the date of this Indenture (regardless of the actual
dates of their issue).






	 	(3)	 	The Warrant Certificate(s) representing an aggregate of • [NTD: 2.5% of the
total number of Units sold in the Offering] Compensation Unit Warrants and the Common
Shares issuable upon exercise thereof, in each case if issued before the date which is
four (4) months and one (1) day after the Closing Date, shall bear the following
legends:
	 
	 	 	 	“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
TRADE THE SECURITY BEFORE • , 2010.”[NTD: Date that is four months and one day from
Closing Date to be inserted.]
	 
	 	 	 	“WITHOUT PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE AND COMPLIANCE WITH ALL
APPLICABLE SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE
MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF THE
TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO THE BENEFIT OF A CANADIAN RESIDENT
BEFORE • , 2010.” .”[NTD: Date that is four months and one day from Closing Date to
be inserted.]






			
	2.03	 	Purchase of Warrants by the Corporation






	 	(1)	 	The Corporation, when not in default under this Indenture and in accordance
with all applicable securities laws, may purchase in the market, by private contract,
by tender or otherwise all or any portion of the Warrants on such terms as the
Corporation may determine. All Warrants so purchased shall forthwith be delivered to
the Warrant Agent and cancelled by it and no Warrants shall be issued in substitution
therefor.






	 	(2)	 	If, upon an invitation for tenders, more Warrants are tendered at the same
lowest price than the Corporation is prepared to accept at that price, the Warrants to
be purchased by the Corporation shall be selected by the Warrant Agent pro rata in
accordance with the number of Warrants tendered.





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	2.04	 	Issue of Warrant Certificates






Warrant Certificates in the definitive form authorized in section 2.02 to be issued and
delivered from time to time under this Indenture shall be executed by the Corporation and
certified by the Warrant Agent to or upon the written order of the Corporation, without the
Warrant Agent receiving any consideration therefore.




			
	2.05	 	Warrantholder not a Shareholder






Nothing in this Indenture or in the ownership of a Warrant evidenced by a Warrant
Certificate, or otherwise, will be construed as conferring on a Warrantholder any right or
interest whatsoever as a shareholder of the Corporation, including but not limited to any
right to vote at, to receive notice of, or to attend, any meeting of shareholders or any
other proceeding of the Corporation or any right to receive any dividend or other
distribution.




			
	2.06	 	Execution of Warrant Certificates






Warrant Certificates shall be signed by any one officer of the Corporation. The signature
of such officer may be mechanically reproduced in facsimile and Warrant Certificates bearing
facsimile signatures shall be binding upon the Corporation as if they had been manually
signed by such officer. Notwithstanding that any of the Persons whose manual or facsimile
signature appears on any Warrant Certificates as one of the officers may no longer, prior to
the certification and delivery of the Warrant Certificate, hold the official capacity in
which he signed, any Warrant Certificate signed as aforesaid shall be valid and binding upon
the Corporation when the Warrant Certificate has been certified by the Warrant Agent in
accordance with section 2.07, and the registered holder thereof shall be entitled to the
benefits of this Indenture.




			
	2.07	 	Certification by Warrant Agent






	 	(1)	 	No Warrant Certificate shall be issued, or if issued, shall be valid or entitle
the holder to the benefit hereof until it has been certified by the Warrant Agent by
being countersigned by or on behalf of the Warrant Agent and the countersignature upon
any Warrant Certificate shall be conclusive evidence as against the Corporation that
the Warrant Certificate so countersigned has been duly issued hereunder and is a valid
obligation of the Corporation, and that the holder is entitled to the benefit hereof.






	 	(2)	 	The countersigning by or on behalf of the Warrant Agent on any Warrant
Certificate issued hereunder shall not be construed as a representation or warranty by
the Warrant Agent as to the validity of this Indenture or of the Warrants and the
Warrant Agent shall in no respect be liable or answerable for the use made of any
Warrant Certificate or of the consideration therefore, except as otherwise specified
herein. The countersignature of or on behalf of the Warrant Agent shall, however, be a
representation and warranty by the Warrant Agent that the Warrant Certificate has been
duly countersigned by or on behalf of the Warrant Agent pursuant to the provisions of
this Indenture.






			
	2.08	 	Exchange of Warrant Certificates






The holder of a Warrant Certificate may at any time after the date of issue thereof and
prior to the Warrant Expiry Time, upon surrender thereof to the Warrant Agent at its
principal transfer offices in Toronto, Ontario, exchange the same for Warrant Certificates
entitling the holder to subscribe for, in the aggregate, the same number of Common Shares
for which the holder may subscribe under the surrendered Warrant Certificate. On each
exchange the Warrant Agent may request a
reasonable charge to reimburse the Warrant Agent for any tax or other governmental charge
required to be paid.



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	2.09	 	Issue in Substitution for Lost Certificates






	 	(1)	 	If a Warrant Certificate becomes mutilated or is lost, destroyed or stolen,
upon the instructions of the holder thereof, the Corporation, subject to subsection
(2), will issue and thereupon the Warrant Agent will countersign or certify and deliver
a new certificate of like tenor as the one mutilated, lost, destroyed or stolen in
exchange for and in place of and on surrender and cancellation of the mutilated
certificate or in lieu of and in substitution for the lost, destroyed or stolen
certificate, and the substituted Warrant Certificate shall entitle the holder thereof
to the same rights and benefits as the certificate being replaced.






	 	(2)	 	The applicant for the issue of a new certificate pursuant to this section will
bear the cost of the issue thereof and in case of loss, destruction or theft will, as a
condition precedent to the issue thereof:






	 	(a)	 	furnish to the Corporation and to the Warrant Agent such
evidence of ownership and of the loss, destruction or theft of the certificate
to be replaced as is satisfactory to the Corporation and to the Warrant Agent,
or the Transfer Agent acting reasonably,






	 	(b)	 	if so required, furnish a bond in amount and form satisfactory
to the Corporation and to the Warrant Agent, acting reasonably,






	 	(c)	 	agree to indemnify and hold harmless the Corporation, the
Warrant Agent and the Transfer Agent against any damages they may incur as a
result of acting upon the instructions of the applicant, and






	 	(d)	 	pay the reasonable charges of the Corporation and the Warrant
Agent in connection therewith.






			
	2.10	 	Registration and Transfer of Warrants






	 	(1)	 	The Corporation shall cause to be kept by and at the principal offices of the
Warrant Agent in Toronto, Ontario and by the Warrant Agent or such other registrar as
the Corporation, with the approval of the Warrant Agent, may appoint, at such other
place or places, if any, as the Corporation may designate with the approval of the
Warrant Agent, registers in which shall be entered in alphabetical order the names and
addresses (including street and number, if any) of the holders of Warrants and
particulars of the Warrants held by them respectively. Such registration shall be
noted on the Warrant Certificates by the Warrant Agent or such other registrar as the
Corporation and the Warrant Agent may appoint.






	 	(2)	 	No transfer of a Warrant shall be valid unless made on any one of the registers
upon surrender of the Warrant Certificate to the Warrant Agent or other registrar
accompanied by a written instrument of transfer in form satisfactory to the Warrant
Agent or other registrar executed by the registered holder or his executors,
administrator or other legal representatives or his or their attorney duly appointed by
an instrument in writing in form and execution satisfactory to the Warrant Agent or
other registrar and upon compliance with such reasonable requirements as the Warrant
Agent or other registrar may prescribe, which, in the case of a transfer of a
Compensation Unit Warrant made prior to the expiry





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	 	 	 	of the applicable hold period, may include an opinion of counsel in the form
satisfactory to the Warrant Agent, nor, except in the case where a new Warrant
Certificate is issued upon a transfer, unless the transfer shall have been noted on
the Warrant Certificate by the Warrant Agent or other registrar.
	 
	 	(3)	 	The registered holder of Warrants may at any time and from time to time have
the registration of the Warrants transferred from the register in which the
registration thereof appears to another authorized register upon compliance with such
reasonable requirements as the Warrant Agent or other registrar may prescribe.






	 	(4)	 	The Corporation shall also cause to be kept by and at the principal offices of
the Warrant Agent in Toronto, Ontario or at such other place or places, if any, as the
Corporation and the Warrant Agent may designate, registers in which all transfers of
Warrants and the date and other particulars of each transfer shall be set out.






	 	(5)	 	The transferee of Warrants shall, after the Warrant Certificate and the
appropriate form of transfer are lodged with the Warrant Agent or other registrar as
the Corporation and the Warrant Agent may appoint and upon compliance with all other
conditions in that behalf required by this Indenture or by law, be entitled to be
entered on one of the registers as the owner of the Warrants free from all equities or
right of set-off or counterclaim between the Corporation and his transferor or any
previous holder of the Warrants, save in respect of equities of which the Corporation
is required to take notice by statute or by order of a court of competent jurisdiction.
The receipt by the registered holder of Warrants of the Common Shares purchasable
pursuant thereto will be a good discharge to the Corporation and the Warrant Agent
therefor and neither the Corporation nor the Warrant Agent will be bound to inquire
into the title of the holder except as aforesaid.
	 
	 	 	 	Notwithstanding the foregoing, Warrants represented by Warrant Certificates bearing
the legends set forth in the form of Warrant Certificate attached as Schedule “1”
hereto and set out in section 2.02 hereof may not be transferred unless the
conditions set out in such legends are met and the Warrant Agent and the Corporation
shall have received evidence, if any, as the Corporation shall reasonably require to
assure the transfer complies with applicable securities laws and the restrictions on
transfer set out therein.






	 	(6)	 	Subject to applicable law, neither the Corporation nor the Warrant Agent nor
any registrar shall be bound to take notice of or see to the execution of any trust,
whether express, implied or constructive, in respect of any Unit Warrant, and may
transfer the same on the direction of the Person registered as the holder thereof,
whether named as Warrant Agent or otherwise, as though that Person were the beneficial
owner thereof.






	 	(7)	 	The registers hereinbefore referred to shall at all reasonable times be open
for inspection by the Corporation, the Warrant Agent or any Warrantholder. The Warrant
Agent and every registrar as the Corporation and the Warrant Agent may appoint shall
from time to time when requested so to do by the Corporation, by the Warrant Agent or
by a Warrantholder furnish the Corporation, the Warrant Agent or upon payment by the
Warrantholder of a reasonable fee, the Warrantholder, as the case may be, with a list
of names and addresses of holders of Warrants entered on the registers kept by them and
showing the number of Warrants held by each such holder.






	 	(8)	 	Any Warrant Certificate representing the Warrants issued to a transferee in a
transfer contemplated by this section 2.10 shall bear the appropriate legend(s) set
forth in subsection[s] 2.02 [and 3.09(2)], as required by the transfer form attached to
the Warrant Certificate representing the Warrants.





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	2.11	 	Enforcement of Rights of Warrantholders






	 	(1)	 	All or any of the rights conferred upon a Warrantholder by the terms of a
Warrant or of this Indenture may be enforced by the holder by appropriate legal
proceedings but without prejudice to the right that is hereby conferred upon the
Warrant Agent to proceed in its own name to enforce each and all of the provisions
herein contained for the benefit of the holders of the Warrants from time to time
outstanding.






	 	(2)	 	No recourse under or upon any obligation, covenant or agreement contained in
this Indenture or in the Warrant Certificates shall be had against any shareholder,
officer or director, past, present or future, of the Corporation or of any of its
subsidiaries or of any successor corporation, either directly or through the
Corporation, or the Subsidiaries or otherwise, by any legal or equitable proceeding by
virtue of any statute or otherwise.






	 	(3)	 	This Indenture and the Warrants issued hereunder are solely corporate
obligations and no personal liability whatsoever shall attach to or be incurred by the
shareholders, officers or Directors, past, present or future, of the Corporation, or of
any of its subsidiaries, or any successor corporation, under or by reason of the
obligations, covenants or agreements contained in this Indenture or in the Warrant
Certificates.






			
	2.12	 	Warrants to Rank Pari Passu






Except as otherwise provided herein, all Warrants will rank pari passu, whatever may be the
actual dates of issue thereof.




			
	2.13	 	Notice to Warrantholders






	 	(1)	 	Unless herein otherwise expressly provided, a notice to be given hereunder to
Warrantholders will be deemed to be validly given if the notice is delivered, or if
sent by first class insured, postage pre-paid or by telecopier with originals to follow
by pre-paid first class mail at their respective addresses appearing on any of the
registers above mentioned; and if in the case of joint holders of any Warrant more than
one address appears on the register in respect of the joint holding, the notice shall
be addressed or delivered, as the case may be, only to the first address so appearing.
Any notice so given by mail or so delivered by hand shall be deemed to have been given
on the fifth Business Day after it has been mailed or on the day upon which it has been
delivered, or if transmitted by telecopier on the first Business Day following the
transmission, as the case may be. In determining under any provision hereof the date
when notice of any meeting or other event must be given, the date of giving the notice
shall be included and the date of the meeting or other event shall be excluded.
Accidental error or omission in giving notice or accidental failure to mail notice to
any Warrantholder shall not invalidate any action or proceeding founded thereon.






	 	(2)	 	If, by reason of a strike, lockout or other work stoppage, actual or
threatened, involving postal employees, a notice to be given to the Warrantholders
hereunder could reasonably be considered unlikely to reach or to be delayed in reaching
its destination, the notice will be valid and effective only if it is published once in
the Report on Business section in the national edition of The Globe and Mail newspaper
and in the Legal Notices section of the national edition of The Wall Street Journal,
or, if there is a disruption of circulation of that newspaper, once in newspapers in
the English language of general circulation and approved by the Warrant Agent in such
cities in Canada and the United States where the Warrantholders reside, as noted on the
register and, in the case of notice convening a meeting of Warrantholders, with such
additional publications, in the same or in other





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	 	 	 	cities or both, as the Warrant Agent deems necessary for the reasonable protection
of the Warrantholders or to comply with any applicable requirement of law or a stock
exchange on which the Common Shares are listed and if a daily newspaper of general
circulation is not, for any reason, published at the time in the English language in
any city, the notice may be published in any other publication available in that
city as is acceptable to the Warrant Agent. A notice so given will be deemed to
have been given on the day on which it has been published in all of the cities in
which publication was required (or first published in all the cities if more than
one publication in any of them is required).
	 
	 	(3)	 	Any mailings shall be made by registered mail, postage prepaid.






			
	2.14	 	Notice to the Corporation or the Warrant Agent






	 	(1)	 	Unless herein otherwise expressly provided, a notice to be given hereunder to
the Corporation or the Warrant Agent will be validly given if delivered or if sent by
registered mail, postage prepaid or if transmitted by telecopier:






	 	(a)	 	if to the Corporation:
	 
	 	 	 	Vuzix Corporation

75 Town Centre Drive

Rochester, New York

14623
	 
	 	 	 	Attention:      Paul J. Travers

Facsimile:      585-359-4172
	 
	 	 	 	with a copy to:
	 
	 	 	 	Wildeboer Dellelce LLP

Suite 800, Wildeboer Dellelce Place

365 Bay Street

Toronto, Ontario

M5H 2V1
	 
	 	 	 	Attention:     Robert Fonn

Fax:               416-361-1790
	 
	 	 	 	and to:
	 
	 	 	 	Boylan, Brown, Code, Vigdor & Wilson, LLP

2400 Chase Square

Rochester, New York

14604
	 
	 	 	 	Attention:     Robert F. Mechur

Fax:               585-232-3528





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	 	(b)	 	if to the Warrant Agent:
	 
	 	 	 	Computershare Trust Company of Canada

100 University Avenue, 8th Floor

Toronto, Ontario

M5J 2Y1
	 
	 	 	 	Attention:     Manager, Corporate Trust

Fax:               416-361-0470






	 	 	 	and any notice delivered in accordance with the foregoing will be deemed to have
been received on the date of delivery or, if mailed, on the fifth Business Day
following the day of the mailing of the notice, or if transmitted by telecopier, on
the first Business Day following the transmission.
	 
	 	(2)	 	The Corporation or the Warrant Agent, as the case may be, may from time to time
notify the other in the manner provided in subsection (1) of a change of address which,
from the effective date of the notice and until changed by like notice, will be the
address of the Corporation or the Warrant Agent, as the case may be, for all purposes
of this Indenture.






	 	(3)	 	If, by reason of a strike, lockout or other work stoppage, actual or
threatened, involving postal employees, a notice to be given to the Warrant Agent or to
the Corporation hereunder by registered mail could reasonably be considered unlikely to
reach or to be delayed in reaching its destination, the notice will 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 courier, cable, telecopier, telegram, telex or other means of prepaid,
transmitted, recorded communication, and any notice delivered in accordance with the
foregoing will be deemed to have been received on the date of delivery to the officer
or if delivered by courier, cable, telecopier, telegram, telex or other means of
prepaid, transmitted, recorded communication, on the first Business Day following the
date of the sending of the notice.






	 	(4)	 	Any mailings shall be made by registered mail, postage prepaid.





ARTICLE THREE — EXERCISE OF WARRANTS





			
	3.01	 	Method of Exercise of Warrants






	 	(1)	 	Subject to and upon compliance with the provisions of this Article Three, the
holder of any Warrant Certificate may exercise the right of purchase therein provided
for by surrendering the Warrant Certificate to the Warrant Agent at its principal
transfer offices in Toronto, Ontario during normal business hours on a Business Day
prior to the Warrant Expiry Time, together with the Warrant exercise form attached to
and forming part of the Warrant Certificate duly completed and executed by the holder
specifying the number of Common Shares which the holder desires to purchase and the
Subscription Price applicable at the time of the surrender calculated in accordance
with the provisions of this Indenture.






	 	(2)	 	Notwithstanding any provision to the contrary contained in this Indenture, if
any Common Shares issuable upon the exercise of Warrants require the maintenance of an
effective Registration Statement, with respect to such Common Shares under the U.S.
Securities Act, in no event shall such Common Shares be issued unless the Common Shares
are registered under the U.S. Securities Act pursuant to an effective Registration
Statement and the Corporation causes to be delivered to the holder a U.S. Prospectus;
provided however, that if the Registration Statement ceases to be effective, prior to
the





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Expiry Time and for so long as the Registration Statement is not effective, subject
to applicable law, a holder of any Warrant may, at its option:




	 	(a)	 	exercise such Warrants, if the holder is not a U.S. Purchaser
and the holder delivers a duly completed and executed Warrant Exercise
Certification certifying that the holder: (A)(1) is not in the United States;
(2) is not a U.S. Person and is not exercising the Warrants for, or on behalf
or benefit of, a U.S. Person or person in the United States; (3) did not
execute or deliver the Warrant Exercise Form in the United States; (4) agrees
not to engage in hedging transactions with regard to the Securities prior to
the expiration of the six month distribution compliance period set forth in
Rule 903(b)(3) of Regulation S; (5) acknowledges that the Common Shares
issuable upon exercise of the Warrants are “restricted securities” as defined
in Rule 144 of the U.S. Securities Act and upon the issuance thereof, and until
such time as the same is no longer required under the applicable requirements
of the U.S. Securities Act or applicable U.S. state laws and regulations, the
certificates representing the Common Shares will bear a restrictive legend; and
(6) acknowledges that the Corporation shall refuse to register any transfer of
the Securities not made in accordance with the provisions of Regulation S,
pursuant to registration under the U.S. Securities Act, or pursuant to an
available exemption from registration under the U.S. Securities Act; and (B)
neither the Corporation nor the holder has engaged in any “directed selling
efforts” (as defined in Regulation S) in the United States; or






	 	(b)	 	exercise such Warrants in a transaction that does not require
registration under the U.S. Securities Act or any applicable U.S. state laws
and regulations and the holder has (A) delivered a duly completed and executed
Warrant Exercise Certification certifying that the holder is exercising the
Warrants pursuant to such exemptions and (B) furnished to the Corporation,
prior to such exercise, an opinion of counsel of recognized standing in form
and substance satisfactory to the Corporation to such effect.






	 	(3)	 	Unless the Warrant is exercised pursuant to an effective Registration Statement
or under the conditions set forth in Section 3.02(a), the certificate representing the
Common Shares issued upon exercise of the Warrant will bear legends restricting the
transfer without registration under the U.S. Securities Act and applicable state
securities laws and restricting transfer under the TSX-V, substantially in the form set
forth below:
	 
	 	 	 	THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES AND MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED ONLY (I) TO THE COMPANY, (II) OUTSIDE THE UNITED STATES IN
COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (III) IN
COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER, OR (IV) IN COMPLIANCE WITH ANOTHER
EXEMPTION FROM REGISTRATION, IN EACH CASE AFTER PROVIDING A LEGAL OPINION OR
OTHER EVIDENCE SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER MAY BE MADE
WITHOUT REGISTRATION UNDER THE SECURITIES ACT. HEDGING TRANSACTIONS
INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH U.S. SECURITIES LAWS.





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	 	 	 	THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TSX VENTURE
EXCHANGE (“TSX-V”); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH
THE FACILITIES OF TSX-V SINCE THEY ARE NOT FREELY TRANSFERABLE, AND
CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD
DELIVERY” IN SETTLMENT OF TRANSACTIONS ON TSX-V.
	 
	 	(4)	 	If any Common Shares issuable upon the exercise of Warrants require the
maintenance of a current Registration Statement, with respect to such Common Shares
under the U.S. Securities Act, the Corporation shall have the authority to suspend the
exercise of any or all Warrants while such registration statement is not current.
Similarly, a Holder residing in a state where a required registration or governmental
approval of issuance of the Common Shares is not in effect as of or has not been
obtained within a reasonable time after the surrender date of the Warrant Certificate
for exercise shall not be entitled to exercise Warrants, unless in the opinion of
counsel to the Corporation such registration or approval in such state shall not be
required or the Corporation otherwise authorizes the issuance. In such event, the
Warrant Holder shall be entitled to transfer the Warrants to others, but only prior to
the Expiration Date for the Warrants being transferred. If no Registration Statement
is effective at any time when any Warrant is exercised, such Warrantholder shall be
notified forthwith by the Warrant Agent that such Warrantholder is entitled, at his or
her option, to exercise the Warrant only in accordance with the conditions set forth in
Sections 3.01(2)(a)-(b) and upon delivery of a Warrant Exercise Certification to the
Warrant Agent and the Corporation.






	 	(5)	 	Notwithstanding that the Corporation may not have maintained a current
Registration Statement in respect of Common Shares under the U.S. Securities Act, no
Warrantholder (whether a U.S. Purchaser or otherwise) shall have any right to receive,
and the Corporation shall be under no obligation to pay to any Warrantholder (whether a
U.S. Purchaser or otherwise), any cash amount or other consideration or compensation
upon exercise of the Warrants, other than as expressly provided by this Indenture, and
the Corporation shall not be under any obligation to redeem or otherwise purchase any
Warrants in any circumstance; provided, however, that nothing in this clause shall
limit or restrict any remedies of the Warrant Agent or any Warrantholder or
Warrantholders in respect of a breach by the Corporation of a representation, warranty
or covenant hereunder.






			
	3.02	 	Payment of Subscription Price






The Subscription Price for Common Shares subscribed for upon exercise of the Warrants shall
be paid by certified cheque, bank draft, money order or wire transfer of immediately
availably funds payable to the Corporation at par in Canadian dollars in Toronto, Ontario.




			
	3.03	 	Surrender of Warrant Certificate






Surrender of a Warrant Certificate and the exercise form and payment of the Subscription
Price will be deemed to have been effected only on personal delivery thereof to, or if sent
by mail or other means of transmission on actual receipt thereof by, the Warrant Agent at
the office specified in section 3.01. All certified cheques, bank drafts, money orders or
wire transfer of immediately availably funds received by the Warrant Agent as a result of
the exercise by any Warrantholder held by it will forthwith be delivered by the Warrant
Agent to the Corporation.



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	3.04	 	Subscription






	 	(1)	 	Every Warrant Exercise Form shall be signed by a Warrantholder who desires to
exercise in whole or in part the right of purchase therein provided for, shall specify
the number of Common Shares that the Warrantholder wishes to purchase (being not more
than he is entitled to purchase), the Person or Persons in whose name or names the
Common Shares which the Warrantholder desires to purchase are to be issued and such
Person or Persons address or addresses and the number of Common Shares to be issued to
each such Person, if more than one is so specified, and shall be substantially in the
form of the exercise form comprising part of the Warrant Certificate.






	 	(2)	 	If any Common Shares subscribed for are to be issued to a Person or Persons
other than the Warrantholder, the Warrantholder must pay to the Corporation or to the
Warrant Agent on its behalf an amount equal to all exigible transfer taxes or other
government charges, and the Corporation will not be required to issue or deliver any
certificate evidencing any Common Shares unless or until that amount has been so paid
or the Warrantholder has established to the satisfaction of the Corporation that the
taxes and charges have been paid or that no taxes or charges are owing.






			
	3.05	 	Effect of the Exercise of Warrants






	 	(1)	 	Subject to sections 3.05(2) and 3.12, on exercise of a Warrant, the Corporation
shall cause to be issued to the Person or Persons in whose name or names the Common
Shares so subscribed for are to be issued as specified in the exercise form, the number
of Common Shares to be issued to such Person or Persons and such Person or Persons
shall become a shareholder or shareholders of the Corporation in respect of those
Common Shares with effect from the date on which the Warrant is exercised and shall be
entitled to delivery of a certificate or certificates evidencing the Common Shares and
the Corporation shall cause the certificate or certificates to be mailed to such Person
or Persons at the address or addresses specified in the exercise form within five
Business Days of the date on which the Warrant is exercised.






	 	(2)	 	Notwithstanding any provision herein contained to the contrary, the Corporation
shall not be required to deliver certificates for Common Shares in any period while the
share transfer books of the Corporation are closed, in which case the Common Shares
subscribed for shall be deemed to have been issued, and such Person or Persons deemed
to have become the holder or holders of record of such Common Shares, on the date on
which such transfer books are reopened and such Common Shares shall be issued at the
Exercise Price in effect on such date and, in the event of the exercise of any Warrant
during any such period, delivery of certificates for Common Shares may be postponed for
a period not exceeding five Business Days after the date of the reopening of the share
transfer books.






			
	3.06	 	Partial Exercise of Warrants






A Warrantholder may, from time to time, subscribe for and purchase any lesser number of
Common Shares than the number of Common Shares to which such holder is entitled upon the
exercise of Warrants, in which case the Warrantholder shall be entitled to receive a new
Warrant Certificate in respect of the Common Shares purchasable under the Warrant
Certificate and not then subscribed for and purchased, and the Warrant Agent shall issue a
new Warrant Certificate upon surrender of the Warrant Certificate.



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	3.07	 	Cancellation of Warrants






All Warrants exercised as provided in section 3.01, partially exercised as provided in
section 3.06 or exchanged for other Warrants as provided in section 2.08 shall be cancelled
by the Warrant Agent and, if required by the Corporation, the Warrant Agent shall furnish
the Corporation with a certificate as to the cancellation.




			
	3.08	 	Expiration of Warrants






After the Warrant Expiry Time, all rights under this Indenture and under any Warrant that
has not been exercised shall wholly cease and terminate and the Warrant Certificate therefor
shall be wholly void and of no effect.




			
	3.09	 	Intentionally Deleted






			
	3.10	 	Price Adjustment Factor and Subscription Rights






	 	(1)	 	The Price Adjustment Factor and the number of Common Shares to be acquired by a
Warrantholder on exercise of the Warrants will be adjusted from time to time in the
events and in the manner provided and in accordance with the provisions of and rules
set out in this section 3.10.






	 	(2)	 	If and whenever at any time from the date hereof to the Warrant Expiry Time,
the Corporation:






	 	(a)	 	issues Common Shares or Convertible Securities to all or
substantially all of the holders of Common Shares by way of stock dividend,






	 	(b)	 	subdivides or splits the outstanding Common Shares into a
greater number of shares, or






	 	(c)	 	combines, consolidates or reduces the outstanding Common Shares
into a lesser number of shares.
	 
	 	 	 	(each of such events being herein called a “Common Share Reorganization”), the Price
Adjustment Factor will be adjusted, effective immediately after the record date for
the dividend or, in the case of a subdivision, combination, consolidation or
reduction, effective immediately after the record date or the effective date if no
record date is fixed, to the number that is the product of:






	 	(d)	 	the Price Adjustment Factor in effect on that effective date or
record date; and






	 	(e)	 	the fraction, of which:






	 	(i)	 	the numerator is the total number of Common
Shares outstanding on that effective date or record date before giving
effect to the Common Share Reorganization, and






	 	(ii)	 	the denominator is the total number of Common
Shares that are or would be outstanding immediately after that
effective date or record date after giving effect to the Common Share
Reorganization and assuming all Convertible Securities issued as part
of the Common Share
Reorganization had then been converted into or exchanged for Common
Shares or all rights to acquire Common Shares had then been
exercised.





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	 	(3)	 	If and whenever at any time from the date hereof to the Warrant Expiry Time,
the Corporation shall fix a record date for the issuance of rights, options or warrants
to all or substantially all of the holders of the outstanding Common Shares entitling
them, for a period expiring not more than 45 days after the record date, to subscribe
for or purchase Common Shares or Convertible Securities at a price per share (or having
a conversion price per share) less than 95% of the Current Market Price on the earlier
of the record date and the date on which the Corporation announces its intention to
make such issuance (any such issuance being herein called a “Rights Offering”), the
Price Adjustment Factor shall be adjusted on the record date so that it shall equal the
number which is the product of the Price Adjustment Factor in effect immediately prior
to the record date and the fraction:






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






	 	A.	 	the number of Common Shares
outstanding as of the record date for the Rights Offering, and






	 	B.	 	a number determined by dividing
(1) the product of the number of Common Shares which may be
issued or subscribed for during the Rights Period upon the
exercise of the rights, warrants, or options under the Rights
Offering and the price at which such Common Shares are offered
by (2) the Current Market Price of the Common Shares as of the
record date for the Rights Offering; and






	 	(ii)	 	the denominator of which shall be the number of
Common Shares outstanding after giving effect to the Rights Offering
and including the number of Common Shares actually issued or subscribed
for during the Rights Period upon exercise of the rights, warrants or
options under the Rights Offering.






	 	 	 	The adjustment shall be made successively whenever a record date is fixed, provided
that if two or more such record dates or dates of announcement, as applicable, or
record dates or dates of announcement, as applicable, referred to in subsection (5)
are fixed within a period of 35 trading days, the adjustment shall be made
successively as if each of such record dates occurred on the earliest of such record
dates. To the extent that any rights, options or warrants are not so issued or any
of the rights, options or warrants so issued are not exercised prior to the
expiration thereof, the Price Adjustment Factor will be readjusted to the Price
Adjustment Factor in effect immediately prior to the record date, and the Price
Adjustment Factor will be further adjusted based upon the number of additional
Common Shares actually delivered upon the exercise of the rights, options or
warrants, as the case may be.
	 
	 	(4)	 	If at any time from the date hereof to the Warrant Expiry Time, the Corporation
shall fix a record date for the issue of rights, options or warrants to all or
substantially all the holders of the outstanding Common Shares entitling them, for a
period expiring not more than 45 days after such record date, to subscribe for or
purchase Common Shares or Convertible Securities at a price per share (or having a
conversion price per share) not less than 95% of the Current Market Price on the
earlier of the record date and the date on
which the Corporation announces its intention to make such issuance, no adjustment
shall be made to the Price Adjustment Factor.





- 18 -









 









	 	(5)	 	If and whenever at any time from the date hereof to the Warrant Expiry Time the
Corporation shall fix a record date for the making of an issue or distribution to all
or substantially all the holders of its outstanding Common Shares of (a) shares of any
class, excluding Common Shares or Convertible Securities referred to in paragraph
3.10(2)(a), whether of the Corporation or any other corporation; (b) rights, options or
warrants, excluding those referred to in subsection 3.10(3) or (4); or (c) evidences of
its indebtedness; or (d) property, cash or other assets, excluding cash dividends in
the ordinary course or property distributed in lieu thereof at the option of the
shareholders and if such issuance or distribution does not constitute a Common Share
Reorganization or a Rights Offering (any of such non-excluded events being herein
called a “Special Distribution”) then, in each such case, the Price Adjustment Factor
shall be adjusted on the record date so that it shall equal the number that is the
product of the Price Adjustment Factor in effect immediately prior to the record date
and the fraction:






	 	(i)	 	the numerator of which shall be the total number of Common
Shares outstanding immediately prior to the record date multiplied by the
Current Market Price on the earlier of the day immediately prior to such record
date and the date on which the Corporation announces its intention to make such
issuance, less the aggregate fair market value (as determined by the Directors
with the approval of the Warrant Agent, which determination shall be
conclusive) of the shares or rights, options or warrants or evidences of
indebtedness or property, cash or assets so distributed, and






	 	(ii)	 	the denominator of which shall be the total number of Common
Shares outstanding immediately prior to the record date multiplied by such
Current Market Price of the Common Shares.






	 	 	 	The adjustment shall be made successively whenever a record date is
fixed, provided that if two or more such record dates or dates of announcement,
as applicable, or record dates or dates of announcement, as applicable,
referred to in subsection (3) are fixed within a period of 35 trading days, the
adjustment shall be made successively as if each of such record dates occurred
on the earliest of such record dates. To the extent that any distribution is
not so made, the Price Adjustment Factor shall then be readjusted to the Price
Adjustment Factor which would then be in effect if the record date had not been
fixed or to the Price Adjustment Factor which would then be in effect based
upon the shares or rights, options or warrants or evidences of indebtedness or
property, cash or assets actually distributed, as the case may be.
	 
	 	(6)	 	On any adjustment of the Price Adjustment Factor pursuant to subsection
3.10(2), (3) or (5), including any readjustment, the number of Common Shares
purchasable on exercise of each Warrant will be adjusted, effective at the same time as
the adjustment of the Price Adjustment Factor, by multiplying the number of Common
Shares so purchasable immediately before the adjustment by a fraction which is the
reciprocal of the fraction used in the adjustment of the Price Adjustment Factor.






	 	(7)	 	If and whenever at any time from the date hereof to the Warrant Expiry Time
there is:






	 	(a)	 	a reclassification or redemption of the Common Shares
outstanding, a change of Common Shares into other shares or securities (other
than a Common Share
Reorganization), or any other capital reorganization of the Corporation
except as described in subsections 3.10(2), (3), (4) and (5),





- 19 -









 









	 	(b)	 	a consolidation, merger, arrangement or amalgamation of the
Corporation with or into another body corporate resulting in a reclassification
of outstanding Common Shares or a change of Common Shares into other shares or
securities, or






	 	(c)	 	a transaction whereby all or substantially all the
Corporation’s undertaking and assets become the property of another corporation
or other entity






	 	 	 	(any of those events being herein called a “Corporate Reorganization”), a holder who
thereafter exercises Warrants will be entitled to receive and will accept, for the
Subscription Price then in effect, in lieu of the Common Shares (and any other
securities to which Warrantholders are then entitled on the exercise of Warrants) to
which he would otherwise have been entitled on exercise immediately prior to the
Corporate Reorganization, the kind and amount of shares or other securities or
property (including cash) that he would have been entitled to receive as a result of
the Corporate Reorganization if, on the effective date thereof, he had been the
holder of the number of Common Shares (and any other securities to which
Warrantholders are then entitled on the exercise of Warrants) to which he would have
been entitled on the exercise of the Warrant or Warrants immediately prior to the
Corporate Reorganization.
	 
	 	(8)	 	As a condition precedent to taking any action that would require an adjustment
pursuant to subsection (7), the Corporation will take all action that, in the opinion
of Counsel, is necessary in order that the Corporation, any successor or any successor
to its assets and undertaking, shall be obligated to and may validly and legally issue
as fully paid and non-assessable all the Common Shares or other shares or securities or
property to which Warrantholders will be entitled on the exercise of Warrants
thereafter.






	 	(9)	 	If necessary as a result of any Corporate Reorganization, appropriate
adjustments will be made in the application of the provisions set forth in this Article
Three with respect to the rights and interests of Warrantholders to the end that the
provisions set forth in this Article Three will thereafter correspondingly be made
applicable as nearly as may reasonably be possible to any shares or other securities or
property thereafter deliverable on the exercise of a Warrant. Any such adjustment will
be made by and set forth in an amendment hereto approved by the Directors and by the
Warrant Agent and will for all purposes be conclusively deemed to be an appropriate
adjustment.






	 	(10)	 	If the purchase price provided for in any right, warrant or option issued in
connection with a Rights Offering is decreased, or the conversion price for Convertible
Securities issued in connection with a Common Share Reorganization is increased, the
Price Adjustment Factor shall forthwith be changed to whatever Price Adjustment Factor
would have been obtained had the adjustment made in connection with the issuance of all
such rights, warrants, options or Convertible Securities been made upon the basis of
the purchase price as so decreased or the conversion price as so increased, provided
that the provisions of this subparagraph shall not apply to any increase or decrease
resulting from provisions in any rights, warrants, options or securities designed to
prevent dilution if the increase or decrease shall not have been proportionately
greater than the change, if any, in the Price Adjustment Factor to be made at the same
time pursuant to the provisions of this section 3.10.





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	3.11	 	Subscription Rights Adjustment Rules






The following rules and procedures will be applicable to adjustments made pursuant to
section 3.10:




	 	(1)	 	the adjustments and readjustments provided for in section 3.10 shall be
cumulative and, subject to paragraph 3.11(2), will apply (without duplication) to
successive issues, subdivisions, combinations, consolidations, distributions and other
events that require an adjustment;






	 	(2)	 	no adjustment in the Price Adjustment Factor, or resulting adjustment in the
number of Common Shares issuable on exercise of Warrants, will be made unless the
adjustment would result in a change of at least 1% in the prevailing Price Adjustment
Factor or the number of Common Shares purchasable upon the exercise of the Warrants
would change by at least one one-hundredth of a Common Share; provided that any
adjustment that would have been required to be made except for the provisions of this
paragraph, will be carried forward and taken into account in any subsequent adjustment;






	 	(3)	 	no adjustment will be made in respect of an event described in paragraph
3.10(2)(a) or subsection 3.10(3) or (5) if the Warrantholders are entitled to
participate in the event on the same terms, mutatis mutandis, as if they had exercised
their Warrants on or prior to the effective date or record date of such event. Any
participation of Warrantholders in the distributions, dividends or other operations
referred to in paragraph 3.10(2)(a) or subsection 3.10(3) or (5) is subject to the
prior approval of the TSX-V;






	 	(4)	 	for the purposes of subsections 3.10(2), (3), (4) and (5), there will be deemed
not to be outstanding any Common Shares owned by or held for the account of the
Corporation;






	 	(5)	 	any dispute that arises at any time with respect to any adjustment pursuant to
this Indenture will be conclusively determined (as between the Corporation, the
Warrantholders, the Warrant Agent and all transfer agents and shareholders of the
Corporation) by the Auditors or, if they are unable or unwilling to act, by such firm
of independent chartered accountants or registered public accountants as is selected by
the Directors, and any determination by them will be binding on the Corporation, the
Warrantholders, the Warrant Agent and all transfer agents and shareholders of the
Corporation. In the event any such determination is made, the Corporation shall
deliver a certificate to the Warrantholders describing such determination;






	 	(6)	 	in the absence of a resolution of the Directors fixing the record date for an
event referred to in section 3.10, the Corporation will be deemed to have fixed as the
record date therefore the date on which the event is effected or such date as may be
required by law;






	 	(7)	 	in the event that the Corporation, after the date of issue of the Warrants,
shall take any action affecting the Common Shares, other than action contemplated in
section 3.10, which in the opinion of the Directors would materially affect the rights
of Warrantholders, the Exercise Price or the number of Common Shares purchasable upon
exercise shall be adjusted in such manner, if any, and at such time, by action of the
Directors, in their sole discretion as they may determine to be equitable in the
circumstances, but subject in all cases to TSX-V Approval and any necessary regulatory
approval. Failure of the taking of action by the Directors so as to provide for an
adjustment on or prior to the effective date of any action by the Corporation affecting
the Common Shares shall be conclusive evidence that the Directors have determined that
it is equitable to make no adjustment in the circumstances; and





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	 	(8)	 	as a condition precedent to the taking of any action which would require an
adjustment in any of the rights under the Warrants, the Corporation will take any
action which may in the opinion of Counsel to the Corporation, or any successor to the
Corporation, will be obligated to and may validly and legally issue all the shares or
other securities or property which the holders of Warrants would be entitled to receive
thereafter on the exercise thereof in accordance with the provisions hereof.






			
	3.12	 	Postponement of Issue of Common Shares, etc.






In any case in which section 3.10 requires an adjustment to take effect immediately after
the effective date of or record date for an event, and a Warrant is exercised after that
date and before the consummation of the event (which in the case of rights, options and
warrants will be the date the rights, options and warrants are issued), the Corporation may
postpone until consummation issuing to the Warrantholder such of the shares, securities or
property to which the Warrantholder is entitled pursuant to the exercise as exceeds those to
which he would have been entitled if the Warrant had been exercised immediately before that
date, provided however, that the Corporation will deliver to the Warrantholder an
appropriate instrument evidencing such holder’s right to receive such additional shares,
securities or property upon the occurrence and consummation of such event and the right to
receive any dividend or other distribution in respect of such additional shares, securities
or property declared in favour of the holders of record of Common Shares or of such
securities or property on or after that date or such later date as such holder would, but
for the provisions of this subsection, have become the holder of record of such
additional shares or of such securities or property pursuant to section 3.05.




			
	3.13	 	Notice of Certain Events.






	 	(1)	 	At least 14 days before the effective date of or record date for any event
referred to in section 3.10, other than a subdivision or consolidation of the Common
Shares, that requires or might require an adjustment in the subscription rights
pursuant to a Warrant, including the Price Adjustment Factor and the number of Common
Shares purchasable on exercise of Warrants, the Corporation will:






	 	(a)	 	give notice to the Warrant Agent of the particulars of the
event and, to the extent determinable, any adjustment required and the
computation of the adjustment, and






	 	(b)	 	give notice to the Warrantholders of the particulars of the
event and, to the extent determinable, any adjustment required.






	 	 	 	The notice need only set forth particulars as have been determined
at the date that notice is given.
	 
	 	(2)	 	If any adjustment for which a notice pursuant to subsection 3.13(1) is given is
not then determinable, the Corporation will promptly after the adjustment is
determinable:






	 	(a)	 	give notice to the Warrant Agent of the adjustment, such notice
to set forth the computation of the adjustment and to be certificated by an
officer of the Corporation, and






	 	(b)	 	give notice to the Warrantholders of the adjustment.






	 	(3)	 	(a) 	 	The Warrant Agent shall be entitled to act and rely on any adjustment
calculation of the Corporation or the Auditors.





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	 	(b)	 	The Warrant Agent shall not at any time be under any duty or
responsibility to any holder to determine whether facts exist which may require
any adjustment contemplated by this article, or with respect to the nature or
extent of any such adjustment when made, or with respect to the method employed
in making same.






	 	(c)	 	The Warrant Agent shall not be accountable with respect to the
validity or value (or the kind or amount) of any shares or of any other shares
or securities or property which may at any time be issued or delivered upon the
exercise or deemed exercise of any Warrant.






	 	(d)	 	The Warrant Agent shall not be responsible for any failure of
the Corporation to make any cash payment or to issue, transfer or
deliver shares or share certificates upon the surrender of any Warrant for the purpose
of exercise or deemed exercise, or to comply with any of the covenants
contained in this Article Three.






			
	3.14	 	No Fractional Common Shares






The Corporation will not, pursuant to section 3.10 or under any other circumstances, be
obligated to issue any fraction of a Common Share on the exercise of Warrants. If any
fractional interest in a Common Share would, except for the provisions of this section, be
deliverable upon the exercise of any Warrants, the Corporation shall in lieu of delivering a
fractional Common Share therefor, satisfy the right to receive the fractional Common Share
by payment to the holder of the Warrants of an amount in cash (computed, in the case of a
fraction of a cent, rounded to the next lower cent) equal to the same fraction of the
Current Market Price per Common Share on the date of exercise of the Warrants.




			
	3.15	 	Reclassifications, Reorganizations, etc.






	 	(1)	 	In case of:






	 	(a)	 	any reclassifications, redesignations or change of the Common
Shares (other than a change from no par value to par value, or as a result of a
subdivision or consolidation);






	 	(b)	 	any consolidation or merger of the Corporation with, or
consolidation or merger of the Corporation into, any other corporation (other
than a consolidation or merger in which the Corporation is the continuing
corporation and which does not result in any reclassification or change, other
than as aforesaid, of the Common Shares);






	 	(c)	 	a reorganization of the Corporation; or






	 	(d)	 	any sale, transfer or other disposition of all or substantially
all of the assets of the Corporation,






the Corporation or the corporation formed by the amalgamation or the corporation
into which the Corporation shall have been merged or the reorganized Corporation, or
the corporation which shall have acquired such assets, as the case may be, shall
execute and deliver to the Warrant Agent a supplemental indenture providing that the
holder of Warrants then outstanding shall have the right thereafter (until the
Warrant Expiry Time) to exercise Warrants only into the kind and amount of
common shares and other securities and property (including cash) receivable upon such
reclassification, change, amalgamation, merger, reorganization, sale, transfer or
other disposition by a holder of



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	 	 	 	the number of Common Shares which were purchasable upon the exercise of the Warrants
had the Warrants been exercised immediately prior to the reclassification, change,
amalgamation, merger, reorganization, sale, transfer or other disposition.
	 
	 	(2)	 	The supplemental indenture shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this Article
Three.






	 	(3)	 	The provisions of this section 3.15 shall apply to successive
reclassifications, changes, amalgamations, mergers, reorganizations, sales, transfers
or other dispositions.






			
	3.16	 	Securities Law Restrictions






Notwithstanding anything herein contained, Common Shares will only be issued by the
Corporation upon exercise of the Warrants in compliance with the securities laws of any
applicable jurisdiction.



ARTICLE FOUR — COVENANTS OF THE CORPORATION





			
	4.01	 	General Covenants






The Corporation represents, warrants and covenants with the Warrant Agent for the benefit of the
Warrant Agent and the Warrantholders that so long as any warrants remain outstanding:




	 	(1)	 	it will at all times use commercially reasonable efforts to maintain its
corporate existence;






	 	(2)	 	it is duly authorized to create and issue the Warrants to be issued hereunder
and the Warrant Certificates when issued and certified as herein provided will be
legal, valid and binding obligations of the Corporation;






	 	(3)	 	subject to the provisions of this Indenture, it will cause the Common Shares
from time to time subscribed for and purchased pursuant to the exercise of Warrants,
and the certificates representing such Common Shares, to be duly issued and delivered
in accordance with the Warrants and the terms hereof;






	 	(4)	 	at all times while any Warrants are outstanding it shall reserve and there
shall remain unissued out of its authorized capital a number of Common Shares
sufficient to enable the Corporation to meet its obligation to issue Common Shares on
the exercise of Warrants outstanding hereunder from time to time;






	 	(5)	 	upon the exercise by the holder of any Warrants of the right of purchase
provided for therein and herein and, upon payment of the Subscription Price applicable
thereto for each Common Share in respect of which the right of purchase is so
exercised, all Common Shares issuable upon the exercise shall be issued as fully paid
and non-assessable;






	 	(6)	 	it shall do, execute, acknowledge and deliver or cause to be done, executed,
acknowledged and delivered all other acts, deeds and assurances in law as the Warrant
Agent may reasonably require for better accomplishing and effecting the intentions and
provisions of this Indenture;






	 	(7)	 	use its commercially reasonable best efforts to maintain the listing of the
Common Shares issued pursuant to the exercise of the Warrants on the TSX-V or such
other exchange or quotation system as the Directors determine appropriate;





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	 	(8)	 	it will use its commercially reasonable efforts to maintain its status as a
reporting issuer or equivalent not in default, and not be in default in any material
respect of the applicable requirements of, the applicable securities laws of each of
the provinces of Canada and the federal securities laws of the United States;






	 	(9)	 	if at any time no Registration Statement is effective, the Corporation will
give notice to the Warrant Agent forthwith and will give notice, in accordance with the
provisions set out in Section 2.14, as soon as reasonably practicable, but in any event
within 5 Business Days, after learning that no Registration Statement is effective.
Such notice must be sent by fax, if possible, to any securities depositary that is a
registered holder;






	 	(10)	 	it will use its commercially reasonable efforts to maintain the Registration
Statement continuously effective under the U.S. Securities Act;






	 	(11)	 	if, in the opinion of outside counsel, any instrument is required to be filed
with, or any permission, order or ruling is required to be obtained from any securities
administrator, regulatory agency or governmental authority in Canada or the United
States or any other step is required under any federal or provincial law of Canada or
any federal or state law of the United States before the Common Shares issuable upon
exercise of Warrants may be issued or delivered to a Warrantholder, the Corporation
will use its reasonable efforts to file such instrument, obtain such permission, order
or ruling or take all such other actions, at its expense, as are required; and






	 	(12)	 	it shall notify promptly (but no later than five (5) Business Days) in writing
the Warrant Agent and the Agents of any breach by the Corporation of its obligations
hereunder.






			
	4.02	 	Warrant Agent’s Remuneration and Expenses






The Corporation will pay to the Warrant Agent from time to time such reasonable remuneration
for its services hereunder as may be agreed upon between the Corporation and the Warrant
Agent and will pay or reimburse the Warrant Agent upon its request for all reasonable
expenses, disbursements and advances properly incurred or made by the Warrant Agent in the
administration or execution of the duties and obligations hereby created (including the
reasonable compensation and the disbursements of its counsel and all other advisors and
assistants not regularly in its employ), both before any default hereunder and thereafter
until all duties and obligations of the Warrant Agent under the provisions hereof shall be
finally and fully performed, except any such expense, disbursement or advance as may arise
from the negligence or wilful misconduct of the Warrant Agent, its servants or agents or its
counsel or other advisors or assistants aforesaid. Any amount due under this section and
unpaid 30 days after request for such payment shall bear interest from the expiration of
such 30 days at rates as determined for the Warrant Agent’s corporate client account at
Toronto, Ontario from time to time.




			
	4.03	 	Notice to Warrantholders of Certain Events






The Corporation covenants with the Warrant Agent for the benefit of the Warrant Agent and
the Warrantholders that, so long as any of the Warrants are outstanding, it will not:




	 	(1)	 	pay any dividend payable in shares of any class to the holders of its Common
Shares or make any other distribution (other than a cash distribution made as a
dividend out of out of funds legally available for the payment of dividends) to the
holders of its Common Shares;





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	 	(2)	 	offer to the holders of its Common Shares rights to subscribe for or to
purchase any Common Shares or shares of any class or any other securities, rights,
warrants or options;






	 	(3)	 	make any repayment of capital on, or distribution of evidences of indebtedness
or any of its assets (excluding cash dividends) to the holders of, its Common Shares;






	 	(4)	 	consolidate or merge with any other Person or sell or lease all or
substantially all of its assets;






	 	(5)	 	effect any subdivision, consolidation or reclassification of its Common Shares;
or






	 	(6)	 	liquidate, dissolve or wind-up;






unless, in each such case, the Corporation shall have given notice, in the manner specified
in section 2.13, to each Warrantholder, of the action proposed to be taken and the date on
which (a) the books of the Corporation shall close or a record shall be taken for such
dividend, repayment, distribution, subscription rights or other rights, warrants or
securities, or (b) such subdivision, consolidation, reclassification, merger, sale or lease,
dissolution, liquidation or winding-up shall take place, as the case may be, provided that
the Corporation shall only be required to specify in the notice those particulars of the
action as shall have been fixed and determined at the date on which the notice is given.
The notice shall also specify the date as of which the holders of Common Shares of record
shall participate in the dividend, repayment, distribution, subscription of rights or other
rights, warrants or securities, or shall be entitled to exchange their Common Shares for
securities or other property deliverable upon such reclassification, merger, sale or lease,
other disposition, dissolution, liquidation or winding-up, as the case may be. The notice
shall be given, with respect to the actions described in subsections (i), (ii), (iii), (iv),
(v) and (vi) above not less than 10 days prior to the record date or the date on which the
Corporation’s transfer books are to be closed with respect thereto.




			
	4.04	 	Closure of Common Share Transfer Books






The Corporation further covenants and agrees that it will not during the period of any
notice given under section 4.03 close its share transfer books or take any other corporate
action which might deprive the Warrantholders of the opportunity of exercising their
Warrants; provided that nothing contained in this section 4.04 shall be deemed to affect the
right of the Corporation to do or take part in any of the things referred to in section 4.03
or to pay cash dividends on the shares of any class or classes in its capital from time to
time outstanding.




			
	4.05	 	Enforcement by Warrant Agent






If the Corporation shall fail to perform any of its covenants contained in this Indenture,
the Warrant Agent may notify the holders of such failure on the part of the Corporation or
may itself perform any of said covenants capable of being performed by it, but shall be
under no obligation to do so or to notify the holders. All sums expended or advanced by the
Warrant Agent in so doing shall be repayable as provided in section 4.02. No such
performance, expenditure or advance by the Warrant Agent shall be deemed to relieve the
Corporation of any default hereunder or its continuing obligations hereunder.



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ARTICLE FIVE — MEETINGS OF WARRANTHOLDERS





			
	5.01	 	Right to Convene Meeting






The Warrant Agent may at any time and from time to time, and shall on receipt of a written
request of the Corporation or of a Warrantholders’ Request, convene a meeting of the
Warrantholders provided that the Warrant Agent is indemnified and funded to its reasonable
satisfaction by the Corporation or by the Warrantholders signing such Warrantholders’
Request against the costs which may be incurred in connection with the calling and holding
of such meeting. If the Warrant Agent fails to convene a meeting within seven (7) Business
Days after the receipt of a written request of the Corporation or Warrantholders’ Request
and indemnity given as aforesaid, the Corporation or such Warrantholders, as the case may
be, may convene such meeting. Any such meeting shall be held in such location as may be
approved or determined by the Warrant Agent.




			
	5.02	 	Notice






At least twenty-one (21) days’ prior notice of any meeting of Warrantholders shall be given
to the Warrantholders in the manner provided for in section 2.13 and a copy of such notice
shall be delivered to the Warrant Agent unless the meeting has been called by it, and to the
Corporation unless the meeting has been called by it. Such notice shall state the time and
place of the meeting, the general nature of the business to be transacted and shall contain
such information as is reasonably necessary to enable the Warrantholders to make a reasoned
decision on the matter, but it shall not be necessary for any such notice to set out the
terms of any resolution to be proposed or any of the provisions of this Article Five. The
notice convening any such meeting may be signed by an appropriate officer of the Warrant
Agent or of the Corporation or the Person designated by such Warrantholders, as the case may
be.




			
	5.03	 	Chairman






The Warrant Agent may nominate in writing an individual to be Chairman of the meeting and if
no individual is so nominated, or if the individual so nominated is not present within
fifteen (15) minutes after the time fixed for the holding of the meeting, the Warrantholders
present in Person or by proxy shall appoint an individual present to be Chairman.




			
	5.04	 	Quorum






Subject to the provisions of section 5.11, at any meeting of the Warrantholders a quorum
shall consist of Warrantholders present in person or represented by proxy holding at least
10% of the aggregate number of then outstanding Warrants provided that at least two (2)
Persons entitled to vote thereat are personally present or represented by proxy. If a
quorum of the Warrantholders shall not be present within thirty (30) minutes from the time
fixed for holding any meeting, the meeting, if summoned by the Warrantholders or on a
Warrantholders’ Request, shall be dissolved; but in any other case the meeting shall be
adjourned to the same day in the next week (unless such day is not a Business Day, in which
case it shall be adjourned to the next following Business Day) at the same time and place
and no notice of the adjournment need be given. Any business may be brought before or dealt
with at an adjourned meeting which might have been dealt with at the original meeting in
accordance with the notice calling the same. No business shall be transacted at any meeting
of Warrantholders unless a quorum is present at the commencement of the meeting. At the
adjourned meeting the Warrantholders present in person or by proxy shall form a quorum and
may transact the business for which the meeting was originally convened, notwithstanding
that they may not hold at least 10% of the aggregate number of the then outstanding
Warrants.



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	5.05	 	Power to Adjourn






The Chairman of any meeting at which a quorum of the Warrantholders is present may, with the
consent of the meeting, adjourn any such meeting, and no notice of such adjournment need be
given except such notice, if any, as the meeting may prescribe.




			
	5.06	 	Show of Hands






Subject to section 5.07, every question submitted to a meeting shall be decided in the first
place by a majority of the votes given on a show of hands except that votes on an
Extraordinary Resolution shall be given in the manner hereinafter provided. At any such
meeting, unless a poll is duly demanded as herein provided, a declaration by the Chairman
that a resolution has been carried or carried unanimously or by a particular majority or
lost or not carried by a particular majority shall be conclusive evidence of the fact.




			
	5.07	 	Poll and Voting






On every Extraordinary Resolution, and when demanded by the Chairman or by one or more of
the Warrantholders acting in Person or by proxy on any other question submitted to a meeting
and after a vote by show of hands, a poll shall be taken in such manner as the Chairman
shall direct. Questions other than those required to be determined by Extraordinary
Resolution shall be decided by a majority of the votes cast on the poll. On a show of
hands, every Person who is present and entitled to vote, whether as a Warrantholder or as
proxy for one or more absent Warrantholders, or both, shall have one vote. On a poll, each
Warrantholder present in Person or represented by a proxy duly appointed by instrument in
writing shall be entitled to one vote in respect of each whole Common Share which he is
entitled to acquire upon the exercise of the Warrants then held by him. A proxy need not be
a Warrantholder. The Chairman of any meeting shall be entitled, both on a show of hands and
on a poll, to vote in respect of the Warrants, if any, held or represented by him but shall
not be entitled to a casting vote in the case of an equality of votes.




			
	5.08	 	Regulations






Subject to the provisions of this Indenture, the Warrant Agent, or the Corporation with the
approval of the Warrant Agent, may from time to time make and from time to time vary such
regulations as it shall consider necessary for:




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






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






	 	(c)	 	the form of the instrument of proxy and the manner in which such form of proxy
must be executed; and






	 	(d)	 	generally for the calling of meetings of Warrantholders and the conduct of
business thereat.





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Any regulations so made shall be binding and effective on Warrantholders and the votes given
in accordance therewith shall be valid and shall be counted. Save as such regulations may
provide, the only Persons who shall be recognized at any meeting as a Warrantholder, or be
entitled to vote or be present at the meeting in respect thereof (subject to section 5.09),
shall be Warrantholders or their duly appointed proxies.




			
	5.09	 	Corporation, Warrant Agent and Counsel may be Represented






The Corporation and the Warrant Agent, by their respective employees, directors and
officers, and the counsel for each of the Corporation, the Warrantholders and the Warrant
Agent may attend any meeting of the Warrantholders and speak thereto but shall have no vote
as such.




			
	5.10	 	Powers Exercisable by Extraordinary Resolution






In addition to all other powers conferred upon them by any other provisions of this
Indenture or by law, the Warrantholders shall have the power, exercisable from time to time
by Extraordinary Resolution:




	 	(a)	 	to agree with the Corporation to any modification, alteration, compromise or
arrangement of the rights of Warrantholders and/or the Warrant Agent (subject to
consent of the Warrant Agent) in its capacity as warrant agent hereunder or on behalf
of the Warrantholders against the Corporation, whether such rights arise under this
Indenture or the Warrants or otherwise;






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






	 	(c)	 	upon the Warrant Agent being furnished with an indemnity as it may in its
discretion determine, to direct or authorize the Warrant Agent to enforce any of the
covenants on the part of the Corporation contained in this Indenture or the Warrants or
to enforce any of the rights of the Warrantholders in any manner specified in such
Extraordinary Resolution or to refrain from enforcing any such covenant or right;






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






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






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






	 	(g)	 	to direct or authorize the Warrant Agent subject to receipt of adequate funding
and indemnity to enforce any of the covenants on the part of the Corporation contained
in this Indenture or the Warrants or to enforce any of the rights of the Warrantholders
in any manner specified in such Extraordinary Resolution or to refrain from enforcing
any such covenant or right;





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	 	(h)	 	to agree with the Corporation to any change in or omission from the provisions
contained in the Warrants and this Indenture or any ancillary or supplemental
instrument which may be agreed to by the Corporation, and to authorize the Warrant
Agent to concur in and execute any ancillary or supplemental agreement embodying the
change or omission;






	 	(i)	 	to remove the Warrant Agent or its successor in office and to appoint a new
warrant agent or warrant agents to take the place of the Warrant Agent so removed; and






	 	(j)	 	to assent to any compromise or arrangement with any creditor or creditors or
any class or classes of creditors, whether secured or otherwise, and with the holders
of any shares or other securities of the Corporation.






			
	5.11	 	Meaning of Extraordinary Resolution






	 	(a)	 	The expression “Extraordinary Resolution” when used in this Indenture means,
subject as hereinafter in this section 5.11 and in section 5.14 provided, a resolution
proposed at a meeting of Warrantholders duly convened for that purpose and held in
accordance with the provisions of this Article Five, at which there are present in
Person or by proxy Warrantholders holding at least 10% of the aggregate number of the
then outstanding Units and passed by the affirmative votes of Warrantholders holding
not less than 66-2/3% of the aggregate number of the then outstanding Warrants
represented at the meeting and voted on the poll upon such resolution.






	 	(b)	 	If, at any meeting called for the purpose of passing an Extraordinary
Resolution, Warrantholders holding at least 10% of the aggregate number of the then
outstanding Warrants are not present in Person or by proxy within thirty (30) minutes
after the time appointed for the meeting, then the meeting, if convened by
Warrantholders or on a Warrantholders’ Request, shall be dissolved; but in any other
case it shall stand adjourned to such day, being not less than fifteen (15) or more
than sixty (60) days later, and to such place and time as may be appointed by the
Chairman. Not less than ten (10) days’ prior notice shall be given of the time and
place of such adjourned meeting in the manner provided in section 2.13. Such notice
shall state that at the adjourned meeting the Warrantholders present in Person or
represented by proxy shall form a quorum but it shall not be necessary to set forth the
purposes for which the meeting was originally called or any other particulars. At the
adjourned meeting the Warrantholders present in Person or represented by proxy shall
form a quorum and may transact the business for which the meeting was originally
convened and a resolution proposed at such adjourned meeting and passed by the
requisite vote as provided in subsection 5.11(a) shall be an Extraordinary Resolution
within the meaning of this Indenture notwithstanding that Warrantholders holding at
least 25% of the then outstanding Warrants are not present in Person or represented by
proxy at such adjourned meeting.






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






			
	5.12	 	Powers Cumulative






It is hereby declared and agreed that any one or more of the powers or any combination of
the powers in this Indenture stated to be exercisable by the Warrantholders by Extraordinary
Resolution or otherwise may be exercised from time to time and the exercise of any one or
more of such powers or any combination of powers from time to time shall not be deemed to
exhaust the right of the Warrantholders to exercise such powers or combination of powers
then or thereafter from time to time.



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	5.13	 	Minutes






Minutes of all resolutions and proceedings at every meeting of Warrantholders shall be made
and duly entered in books to be from time to time provided for that purpose by the Warrant
Agent at the reasonable expense of the Corporation, and any such minutes as aforesaid, if
signed by the Chairman of the meeting at which such resolutions were passed or proceedings
had, or by the Chairman of the next succeeding meeting of the Warrantholders, shall be prima
facie evidence of the matters therein stated and, until the contrary is proved, every such
meeting in respect of the proceedings of which minutes shall have been made shall be deemed
to have been duly convened and held, and all resolutions passed thereat or proceedings taken
shall be deemed to have been duly passed and taken.




			
	5.14	 	Instruments in Writing






All actions which may be taken and all powers that may be exercised by the Warrantholders at
a meeting held as provided in this Article Five may also be taken and exercised by
Warrantholders holding at least 66-2/3% of the aggregate number of the then outstanding
Warrants issuable upon the exercise of all the then outstanding Warrants by an instrument in
writing signed in one or more counterparts by such Warrantholders in Person or by attorney
duly appointed in writing, and the expression “Extraordinary Resolution” when used in this
Indenture shall include an instrument so signed.




			
	5.15	 	Binding Effect of Resolutions






Every resolution and every Extraordinary Resolution passed in accordance with the provisions
of this Article Five at a meeting of Warrantholders shall be binding upon all the
Warrantholders, whether present at or absent from such meeting, and every instrument in
writing signed by Warrantholders in accordance with section 5.14 shall be binding upon all
the Warrantholders, whether signatories thereto or not, and each and every Warrantholder and
the Warrant Agent (subject to the provisions for indemnity herein contained) shall be bound
to give effect accordingly to every such resolution and instrument in writing. In the case
of an instrument in writing the Warrant Agent shall give notice in the manner contemplated
in sections 2.13 and 2.14 of the effect of the instrument in writing to all Warrantholders
and the Corporation as soon as is reasonably practicable.



ARTICLE SIX — SUPPLEMENTAL INDENTURES AND SUCCESSOR COMPANIES





			
	6.01	 	Provision for Supplemental Indentures for Certain Purposes






From time to time the Corporation (when authorized by the Directors) and the Warrant Agent
may, subject to the provisions of these presents, and they shall, when so directed by these
presents, execute and deliver by their proper officers or directors, as the case may be,
indentures or instruments supplemental hereto, which thereafter shall form part hereof, for
any one or more or all of the following purposes:




	 	(a)	 	providing for the issuance of additional Warrants hereunder and any
consequential amendments hereto as may be required by the Warrant Agent, relying on the
advice of Counsel;






	 	(b)	 	setting forth any adjustments resulting from the application of the provisions
of Article Three;





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	 	(c)	 	adding hereto such additional covenants and enforcement provisions as in the
opinion of Counsel are necessary or advisable, and are not in the opinion of the
Warrant Agent relying on Counsel prejudicial to the interest of any of the
Warrantholders;






	 	(d)	 	giving effect to any Extraordinary Resolution passed as provided in Article
Five;






	 	(e)	 	making any modification in the form of Warrant Certificate which, in the
opinion of the Warrant Agent, does not affect the substance thereof;






	 	(f)	 	making any additions to, deletions from or alterations of the provisions of
this Indenture which, in the opinion of the Warrant Agent relying on Counsel, do not in
any way prejudice or adversely affect the rights or interests of any of the
Warrantholders and are necessary or advisable in order to incorporate, reflect or
comply with any Applicable Legislation; and






	 	(g)	 	for any other purpose not inconsistent with the terms of this Indenture,
including the correction or rectification of any ambiguities, defective provisions,
errors or omissions herein, provided that in the opinion of the Warrant Agent the
rights of the Warrant Agent or of any of the Warrantholders are in no way prejudiced
thereby.






Notwithstanding anything to the contrary in this Indenture, no supplement or amendment to
the terms of the Warrants or to this Indenture may be made without the consent of the TSX-V
for so long as the Warrants or the Common Shares are listed on the TSX-V.




			
	6.02	 	Correction of Manifest Errors






The Corporation and the Warrant Agent may correct typographical and clerical errors in this
Indenture provided that such correction shall in the opinion of the Warrant Agent in no way
prejudice the rights of the Warrant Agent or any of the Warrantholders hereunder, and the
Corporation and the Warrant Agent may execute and deliver all such documents as may be
necessary to correct such errors.




			
	6.03	 	Amending Adjustment Provisions






The Corporation and the Warrant Agent may modify the adjustments resulting from the
application of the provisions of Article Three if a modification is required as a result of
any approval or requirement of any securities regulatory authorities including the TSX-V (or
any other exchange on which the Common Shares are listed and posted for trading, or quoted,
as the case may be) and the Corporation and the Warrant Agent may execute and deliver such
documents as may be necessary to effect the modification.




			
	6.04	 	Successor Companies






In the case of the consolidation, merger or transfer of the assets of the Corporation as an
entirety or substantially as an entirety to another corporation (“successor corporation”),
the successor corporation resulting from the consolidation, merger or transfer (if not the
Corporation) will be bound by the provisions hereof and for the due and punctual performance
and observance of each and every covenant and obligation contained in this Indenture to be
performed by the Corporation and, if requested by the Warrant Agent, will by supplemental
indenture satisfactory in form to the Warrant Agent and executed and delivered to the
Warrant Agent, expressly assume those obligations.



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ARTICLE SEVEN — ENFORCEMENT





			
	7.01	 	Suits by Warrantholders






All or any of the rights conferred on any holder by the terms of the Warrants or of this
Indenture may be enforced by such holder by appropriate legal proceedings but without
prejudice to the right which is hereby conferred on the Warrant Agent to proceed in its own
name to enforce each and every provision herein contained for the benefit of the holders.




			
	7.02	 	Warrant Agent May Institute Proceedings






The Warrant Agent shall have the power at any time and from time to time to institute and to
maintain such suits and proceedings as it may be advised shall be necessary or advisable to
preserve and protect its interests an the interests of the Warrantholders.




			
	7.03	 	Immunity of Shareholders, etc






Subject to applicable law, the Warrant Agent and, by acceptance of the Warrant Certificate
and as part of the consideration for the issue of the Warrants, the Warrantholders hereby
waive and release any right, cause of action or remedy now or hereafter existing in any
jurisdiction against any Person in its capacity as an incorporator or any past, present or
future shareholder, director, officer, employee or agent of the Corporation for the creation
and issue of the Common Shares pursuant to any Warrant or any covenant, agreement,
representation or warranty by the Corporation herein or in the Warrant Certificates
contained.




			
	7.04	 	Limitation of Liability






The obligations hereunder are not Personally binding on, nor shall resort hereunder be had
to, the private property of, any past, present or future director, shareholder, officer,
employee or agent of the Corporation, but only the property of the Corporation shall be
bound in respect hereof.



ARTICLE EIGHT — CONCERNING THE WARRANT AGENT





			
	8.01	 	Rights and Duties of Warrant Agent






	 	(1)	 	In the exercise of the rights, duties and obligations prescribed or conferred
by the terms of this Indenture, the Warrant Agent will act honestly and in good faith
with a view to the best interests of the Warrantholders and will exercise that degree
of care, diligence and skill that a reasonably prudent Warrant Agent would exercise in
comparable circumstances.






	 	(2)	 	No provision of this Indenture will be construed to relieve the Warrant Agent
from liability for its own negligent act, negligent failure to act, wilful misconduct
or bad faith.






	 	(3)	 	The obligation of the Warrant Agent to commence or continue any act, action or
proceeding for the purpose of enforcing any rights of the Warrant Agent or the
Warrantholders hereunder shall be conditional upon the Warrantholders furnishing, when
required by notice in writing by the Warrant Agent, sufficient funds to commence or
continue such act, action or proceeding and an indemnity reasonably satisfactory to the
Warrant Agent to protect and hold harmless the Warrant Agent against the costs, charges
and expenses and liabilities to be incurred thereby and any loss and damage it may
suffer by reason thereof.





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	 	(4)	 	No provision of this Indenture shall require the Warrant Agent to expend or
risk its own funds or otherwise incur financial liability in the performance of any of
its duties or in the exercise of any of its rights or powers unless funded and
indemnified as aforesaid.






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






			
	8.02	 	Evidence, Experts and Advisors






	 	(1)	 	In addition to the reports, certificates, opinions and other evidence required
by this Indenture, the Corporation will furnish to the Warrant Agent such additional
evidence of compliance with any provision hereof, and in such form, as is prescribed by
Applicable Legislation or as the Warrant Agent reasonably requires by written notice to
the Corporation.






	 	(2)	 	In the exercise of any right or duty hereunder the Warrant Agent, if it is
acting in good faith, may act and rely, as to the truth of any statement or the
accuracy of any opinion expressed therein, on any affidavit, statutory declaration,
opinion, report, certificate or other evidence furnished to the Warrant Agent pursuant
to a provision hereof or of Applicable Legislation or pursuant to a request of the
Warrant Agent, if the evidence complies with Applicable Legislation and the Warrant
Agent examines the evidence and determines that it complies with the applicable
requirements of this Indenture.






	 	(3)	 	Whenever Applicable Legislation requires that evidence referred to in
subsection 8.02(a) be in the form of a statutory declaration, the Warrant Agent may
accept the statutory declaration in lieu of a certificate of the Corporation required
by any provision hereof.






	 	(4)	 	Any statutory declaration may be made by one or more of the chairman, president
or secretary of the Corporation.






	 	(5)	 	Proof of the execution of an instrument in writing, including a Warrantholders’
request, by a Warrantholder may be made by the certificate of a notary public, or other
officer with similar powers, that the Person signing the instrument acknowledged to him
the execution thereof, or by an affidavit of a witness to the execution, or in any
other manner that the Warrant Agent considers adequate.






	 	(6)	 	The Warrant Agent may employ or retain such counsel as it reasonably requires
for the purpose of determining and discharging its duties hereunder and may pay
reasonable remuneration for all services so performed by any of them, without taxation
of costs of any counsel, and will not be responsible for any misconduct or negligence
on the part of any of them who has been selected with due care by the Warrant Agent.
Any remuneration so paid by the Warrant Agent shall be repaid to the Warrant Agent in
accordance with the provisions of Article Seven.






	 	(7)	 	The Warrant Agent may act and rely and shall be protected in acting and relying
upon any resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, letter, telegram, cablegram or other paper document believed
by it to be genuine and to have been signed, sent or presented by or on behalf of the
proper party or parties.






	 	(8)	 	The Warrant Agent may act and rely and shall be protected in acting and relying
in good faith on the opinion or advice of or information obtained from any counsel,
accountant,
appraiser, engineer or other expert or advisor, whether retained or employed by the
Corporation or by the Warrant Agent, in relation to any matter arising in the
administration of its duties and obligations hereof.





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	8.03	 	Documents, Moneys, etc. Held by Warrant Agent






	 	(1)	 	Any security, document of title or other instrument that may at any time be
held by the Warrant Agent subject to the duties and obligations hereof may be placed in
the deposit vaults of the Warrant Agent or of any Schedule “1” Canadian chartered bank
or deposited for safekeeping with the bank.






	 	(2)	 	Unless herein otherwise expressly provided, any money so held pending the
application or withdrawal thereof under any provision of this Indenture may be
deposited in the name of the Warrant Agent in any Schedule ”1” Canadian chartered bank
at the rate of interest (if any) then current on similar deposits.
	 
	 	 	 	The Warrant Agent may retain any cash balance held in connection with this Indenture
and may, but need not, hold the same in its deposit department or the deposit
department of one of its Affiliates (as defined below); but the Warrant Agent and
its Affiliates shall not be liable to account for any profit to the Corporation or
any other Person or entity other than at a rate, if any, established from time to
time by the Warrant Agent or its Affiliates.
	 
	 	 	 	For the purpose of this Section, “Affiliates” means affiliated companies within the
meaning of the Canada Business Corporations Act (“CBCA”).






	 	(3)	 	Unless the Corporation is in default hereunder, all interest or other income
received by the Warrant Agent in respect of deposits and investments will belong to the
Corporation.






			
	8.04	 	Action by Warrant Agent to Protect Interests






The Warrant Agent shall have power to institute and to maintain such actions and proceedings
as it may consider necessary or expedient to preserve or protect its interests and the
interests of the Warrantholders.




			
	8.05	 	Warrant Agent not Required to Give Security






The Warrant Agent shall not be required to give any bond or security in respect of the
execution of the duties and obligations of this Indenture or otherwise in respect of the
premises.




			
	8.06	 	Protection of Warrant Agent






By way of supplement to the provisions of any law for the time being relating to the Warrant
Agent:




	 	(a)	 	the Warrant Agent shall not be liable for or by reason of any statements of
fact or recitals in this Indenture (except the representation contained in section 8.08
and by virtue of the countersignature of the Warrant Agent on the Warrant Certificates)
or required to verify the same, but all such statements or recitals are and shall be
deemed to be made by the Corporation;






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





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	 	(c)	 	the Warrant Agent shall not incur any liability or responsibility whatever or
be in any way responsible for the consequence of any breach on the part of the
Corporation of any obligation herein contained or of any acts of the Directors,
officers, employees or agents of the Corporation; and






	 	(d)	 	the Warrant Agent shall not be bound to give any notice or to do or take any
act, action or proceeding by virtue of the powers conferred on it hereby unless and
until it shall have been required so to do under the terms hereof nor shall the Warrant
Agent be required to take notice of any default of the Corporation hereunder unless and
until notified in writing of the default (which notice must specify the nature of the
default) and, in the absence of that notice, the Warrant Agent may for all purposes
hereunder conclusively assume that no default by the Corporation hereunder has
occurred. The giving of or failure to give any notice shall in no way limit the
discretion of the Warrant Agent hereunder as to whether any action is required to be
taken in respect of any default hereunder.






			
	8.07	 	Replacement of Warrant Agent






	 	(1)	 	The Warrant Agent may resign its duties and obligations and be discharged from
all further duties and liabilities hereunder, except as provided in this subsection, by
giving to the Corporation and the Warrantholders not less than thirty (30) days’ notice
in writing or, if a new Warrant Agent has been appointed, such shorter notice as the
Corporation accepts as sufficient.






	 	(2)	 	If the Warrant Agent so resigns or is dissolved, becomes bankrupt, goes into
liquidation or otherwise becomes incapable of acting hereunder, the Corporation will
forthwith appoint a new Warrant Agent unless a new Warrant Agent has already been
appointed by the Warrantholders.






	 	(3)	 	Failing appointment by the Corporation, the retiring Warrant Agent at the
expense of the Corporation or any Warrantholder may apply to a court of competent
jurisdiction in the Province of Ontario (the “Court”) on such notice as the Court
directs, for the appointment of a new Warrant Agent.






	 	(4)	 	Any new Warrant Agent so appointed by the Corporation or by the Court will be
subject to removal as aforesaid by the Warrantholders.






	 	(5)	 	Any new Warrant Agent appointed under any provision of this section must be a
corporation authorized to carry on the business of a trust company in the Province of
Ontario and, if required by the Applicable Legislation, in any other province.






	 	(6)	 	On any appointment the new Warrant Agent will be vested with the same powers,
rights, duties and responsibilities as if it had been originally named herein as
Warrant Agent without any further assurance, conveyance, act or deed, but there will be
immediately executed, at the expense of the Corporation, all such conveyances or other
instruments as, in the opinion of Counsel, are necessary or advisable for the purpose
of assuring the powers, rights, duties and responsibilities of the new Warrant Agent,
provided that, any resignation or removal of the Warrant Agent and the appointment of a
successor trustee shall have executed an appropriate instrument accepting such
appointment and, at the request of the Corporation, the Warrant Agent, upon payment of
its outstanding remuneration and expenses, shall execute and deliver to the successor
trustee an appropriate instrument transferring to such successor trustee all rights and
powers of the Warrant Agent hereunder.





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	 	(7)	 	On the appointment of a new Warrant Agent, the Corporation will promptly give
notice thereof to the Warrantholders.






	 	(8)	 	A corporation into or with which the Warrant Agent is merged or consolidated or
amalgamated, or a corporation succeeding to the trust business of the Warrant Agent,
will be the successor to the Warrant Agent hereunder without any further act on its
part or on the part of any party hereto if the corporation would be eligible for
appointment as a new Warrant Agent under subsection (6).






	 	(9)	 	A Warrant Certificate certified but not delivered by a predecessor Warrant
Agent may be delivered by the new or successor Warrant Agent in the name of the
predecessor Warrant Agent or successor Warrant Agent.






			
	8.08	 	Conflict of Interest






	 	(1)	 	The Warrant Agent represents to the Corporation that at the time of the
execution and delivery hereof no material conflict of interest exists between its role
as Warrant Agent under this Indenture and its role in any other capacity and if a
material conflict of interest arises hereafter it will, within 30 days after
ascertaining that it has a material conflict of interest, either eliminate the conflict
of interest or resign its duties and obligations hereunder in favour of a successor or
trustee approved by the Corporation. If any such material conflict of interest exists
or hereafter shall exist, the validity and enforceability of this Indenture and the
Warrants shall not be affected in any manner whatsoever.






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






			
	8.09	 	Acceptance of Duties and Obligations






The Warrant Agent hereby accepts the duties and obligations in this Indenture declared and
provided for and agrees to perform them on the terms and conditions herein set forth. The
Warrant Agent accepts the duties and responsibilities under this Indenture declared and
provide for and agrees to perform them on the terms and conditions herein set forth, solely
as a custodian, bailee and agent. No trust is intended to be, or is or will be, created
hereby and the Warrant Agent shall owe no duties hereunder as a trustee.




			
	8.10	 	Indemnity






The Corporation hereby indemnifies and saves harmless the Warrant Agent and its officers,
directors, employees and agents from and against any and all liabilities, losses, costs,
claims, actions or demands whatsoever brought against the Warrant Agent which it may suffer
or incur as a result of or arising out of the performance of its duties and obligations
under this Indenture, including any and all legal fees and disbursements of whatever kind or
nature, save only in the event of the negligence, wilful misconduct or bad faith of the
Warrant Agent. It is understood and agreed that this indemnification shall survive the
termination or discharge of this Indenture or the resignation of the Warrant Agent.




			
	8.11	 	Warrant Agent not Required to Give Security






The Warrant Agent will not be required to give any bond or security in respect of
the execution of the trusts and powers on this Indenture or otherwise in respect of the
premises.



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	8.12	 	Warrant Agent not Appointed Receiver






The Warrant Agent and any Person related to the Warrant Agent will not be appointed
a receiver and manager or liquidator of all or any part of the assets or undertaking of
the Corporation.



ARTICLE NINE — GENERAL





			
	9.01	 	Satisfaction and Discharge of Indenture






On the earlier of




	 	(i)	 	the date by which there has been delivered to the Warrant Agent for exercise or
destruction all Warrant Certificates theretofore certified hereunder, or






	 	(ii)	 	the 61st day following the latest Warrant Expiry Date,






and if all Common Shares required to be issued in compliance with the provisions hereof have
been issued and delivered hereunder, this Indenture will cease to be of further effect and
the Warrant Agent, on demand of and at the cost and expense of the Corporation and on
delivery to the Warrant Agent of a certificate of the Corporation stating that all
conditions precedent to the satisfaction and discharge of this Indenture have been complied
with and on payment to the Warrant Agent of the fees and other remuneration payable to the
Warrant Agent, will execute proper instruments acknowledging satisfaction of and discharging
this Indenture.




			
	9.02	 	Sole Benefit of Parties and Warrantholders






Nothing in this Indenture expressed or implied, will give or be construed to give to any
Person other than the parties hereto and the Warrantholders, as the case may be, any
legal or equitable right, remedy or claim under this Indenture, or under any covenant
or provision herein contained, all covenants and provisions being for the sole benefit
of the parties hereto and the Warrantholders.




			
	9.03	 	Discretion of Directors






Any matter provided herein to be determined by the Directors will be determined by
the Directors in their sole discretion, and a determination so made will be conclusive.




			
	9.04	 	Counterparts and Formal Date






This Indenture may be executed in several counterparts, each of which when so
executed will be deemed to be an original, and the counterparts together will
constitute one and the same instrument and notwithstanding the date of their execution
will be deemed to be dated as of •, 2009.




			
	9.05	 	Governing Law






This Indenture shall be governed by and construed in accordance with the laws of the
Province of Ontario and the laws of Canada applicable therein.




			
	9.06	 	Enurement






This Indenture shall enure to the benefit of and be binding upon the Corporation and the
Warrant Agent and their respective successors and permitted assigns. No party to this
Indenture may
assign or delegate all or any portion of its rights, obligations or liabilities under this
Indenture without the prior written consent of the other party to this Indenture.



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	9.07	 	Currency






Unless otherwise indicated, all dollar amounts referred to in this Indenture are in lawful
money of Canada.


IN WITNESS WHEREOF the parties hereto have executed these presents under their respective seals and
the hands of their proper officers in that behalf.



	 	 	 	 	 
	 	






VUZIX CORPORATION


 	 
	 	By:  	 	 
	 	 	Authorized Signing Officer 	 
	 	 	 	 
	 
	 	
COMPUTERSHARE TRUST COMPANY OF CANADA


 	 
	 	By:  	 	 
	 	 	Authorized Signing Officer 	 
	 	 	 	 
	 
	 	 	 
	 	By:  	 	 
	 	 	Authorized Signing Officer 	 
	 	 	 	 
	 



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SCHEDULE 1


FORM OF WARRANT CERTIFICATE



[The following legends shall be include on Warrant Certificates representing up to • Compensation
Options, if and only if such Compensation Options are issued within 4 months of the Closing Date]:
““UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE
SECURITY BEFORE •, 2010.” .[NTD: Date that is four months and one day from Closing Date to be
inserted.]


“WITHOUT PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE AND COMPLIANCE WITH ALL APPLICABLE
SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, HYPOTHECATED BY THIS CERTIFICATE, MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR
OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF THE TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR
TO THE BENEFIT OF A CANADIAN RESIDENT BEFORE •, 2010”. ”[NTD: Date that is four months and one day
from Closing Date to be inserted.]



WARRANT CERTIFICATE




VUZIX CORPORATION





			
	No. 2009-l	 	<*> WARRANTS entitling the holder to acquire, subject to adjustment, one
Common Share of Vuzix Corporation for each Warrant represented hereby, subject to adjustment
in certain events






     THIS CERTIFICATE IS TO CERTIFY that for value received                                               (herein
referred to as the “Holder” or the “Warrantholder”), is the registered holder of the number of
Warrants of Vuzix Corporation (the “Corporation”) stated above and is entitled to acquire for each
Warrant represented hereby, subject to adjustment one fully paid and non-assessable share of common
stock in the capital of the Corporation (a “Common Share”) at an exercise price of CDN$l per
Common Share, all in the manner and subject to the restrictions and adjustments set forth in the
Warrant Indenture (as hereinafter defined), at any time prior to 5:00 pm (Toronto time) on l,
2010; provided that if at any time the Current Market Price (as defined in the Warrant Indenture)
of the Common Shares exceeds CDN$ l [NTD: 250% of initial offering price of the Units], the
Corporation shall have the right and option, exercisable at its sole discretion, to accelerate such
date by providing written notice to each registered holder of Warrants within five (5) Business
Days and issuing a press release to the effect that the Warrants will expire at 5:00 p.m. (Toronto
time) on the date specified in such notice and press release, provided that such date shall not be
less than 30 days following the date of such notice and press release (such time being hereinafter
referred to as the “Warrant Expiry Time”’).


The Warrants represented by this Certificate are issued or issuable in fully registrable form only
under the provisions of an indenture (which indenture together with all other instruments ancillary
thereto is referred to herein as the “Warrant Indenture”) dated as of l, 2009 between the
Corporation and Computershare Trust Company of Canada (the “Warrant Agent”). Capitalized terms not
otherwise defined herein shall have the meanings ascribed thereto in the Warrant Indenture.
Reference is hereby made to the Warrant Indenture for a full description of the rights of the
Holders of the Warrants, the Corporation and the Warrant Agent in respect thereof, and the terms
and conditions upon which the Warrants evidenced hereby are issued and held, all to the same effect
as if the provisions of the Warrant



 









 







Indenture were herein set forth. By acceptance of this Certificate, the holder assents to all
provisions of the Warrant Indenture. To the extent that the terms and conditions set forth in this
Certificate conflict with the terms and conditions of the Warrant Indenture, the Warrant Indenture
shall prevail. The Corporation will furnish to the holder of this Certificate, upon request and
without charge, a copy of the Warrant Indenture.


Upon exercise, the Warrants so exercised will be void and of no value or effect.


The right to acquire Common Shares may only be exercised by the Holder within the time set forth
above by:




	 	(1)	 	duly completing and executing the Exercise Form attached hereto; and






	 	(2)	 	surrendering this Certificate, together with cash or a certificate cheque, bank
draft or money order in lawful money of Canada payable to or to the order of the
Corporation at par in Toronto, Ontario in an amount equal to the aggregate Exercise
Price of the Common Shares to be purchased hereunder, to the Warrant Agent at the
principal transfer offices of the Warrant Agent in the city of Toronto, Ontario.




If any Common Shares issuable upon the exercise of Warrants require the maintenance of a current
Registration Statement, with respect to such Shares under the Securities Act of 1933 ,as amended
(the “U.S. Securities Act”), in no event shall such Common Shares be issued unless the Common
Shares are registered under the U.S. Securities Act pursuant to an effective Registration Statement
and the Corporation causes to be delivered to the holder a U.S. Prospectus; provided, however that,
if the Registration Statement ceases to be effective, prior to the Expiry Time and for so long as
the Registration Statement is not effective, subject to applicable law, a holder of any Warrant
may, at its option: (i) exercise such Warrants, if the holder is not a U.S. Purchaser and the
holder delivers a duly completed and executed Warrant Exercise Certification (in the form attached
as Schedule B to the Indenture) certifying that the holder: (A)(1) is not in the United States; (2)
is not a U.S. Person and is not exercising the Warrants for, or on behalf or benefit of, a U.S.
Person or person in the United States; (3) did not execute or deliver the Warrant Exercise Form in
the United States; (4) agrees not to engage in hedging transactions with regard to the Securities
prior to the expiration of the one-year distribution compliance period set forth in Rule 903(b)(3)
of Regulation S; (5) acknowledges that the Common Shares issuable upon exercise of the Warrants are
“restricted securities” as defined in Rule 144 of the U.S. Securities Act and upon the issuance
thereof, and until such time as the same is no longer required under the applicable requirements of
the U.S. Securities Act or applicable U.S. state laws and regulations, the certificates
representing the Common Shares will bear a restrictive legend; and (6) acknowledges that the
Corporation shall refuse to register any transfer of the Securities not made in accordance with the
provisions of Regulation S, pursuant to registration under the U.S. Securities Act, or pursuant to
an available exemption from registration under the U.S. Securities Act; and (B) neither the
Corporation nor the holder has engaged in any “directed selling efforts” (as defined in Regulation
S) in the United States; or (ii) exercise such Warrants in a transaction that does not require
registration under the U.S. Securities Act or any applicable U.S. state laws and regulations and
the holder has (a) delivered a duly completed and executed Warrant Exercise Certification (in the
form attached hereto as Schedule 2) certifying that the holder is exercising the Warrants pursuant
to such exemptions and (b) furnished to the Corporation, prior to such exercise, an opinion of
counsel of recognized standing in form and substance satisfactory to the Corporation to such
effect. If no Registration Statement is effective at any time when any Warrant is exercised, the
holder shall deliver a completed Warrant Exercise Certification (attached to the Indenture as
Schedule 2) to the Warrant Agent and the Corporation.



 









 







Except where otherwise expressly provided, the Warrants represented by this Certificate shall be
deemed to be surrendered only upon Personal delivery hereof or, if sent by mail or other means of
transmission, upon actual receipt thereof by the Warrant Agent at the office referred to above.


Upon surrender of these Warrants, the Person or Persons in whose name or names the Common Shares
issuable upon exercise of the Warrants are to be issued shall be deemed for all purposes (except as
provided in the Warrant Indenture) to be the holder or holders of record of such Common Shares and
the Corporation has covenanted that it will (subject to the provisions of the Warrant Indenture)
cause a certificate or certificates representing the Common Shares to be delivered or mailed to the
Person or Persons at the address or addresses specified in the Exercise Form within three Business
Days.


In the event of any subdivision or consolidation of the Common Shares or any reclassification,
capital reorganization, amalgamation or merger of the Corporation, the holders of Warrants shall,
upon exercise of the Warrants following the occurrence of any of those events, be entitled to
receive the same number and kind of securities that they would have been entitled to receive had
they exercised their Warrants immediately prior to the occurrence of those events, provided that no
fractional securities will be issued. The Warrantholder should refer to the Warrant Indenture
which provides for adjustments in certain other events.


The terms and conditions relating to the Warrants and this Certificate may be modified, changed or
added to in accordance with the provisions of the Warrant Indenture. The Warrant Indenture contains
provisions making binding upon all holders of Warrants outstanding thereunder resolutions passed at
meetings of such holders held in accordance with such provisions and instruments in writing signed
by the holders entitled to acquire a specified majority of the Common Shares which may be acquired
pursuant to the exercise of all of the then outstanding Warrants.


The holding of the Warrants evidenced by this Certificate shall not constitute, or be construed as
conferring upon, the Holder any right or interest whatsoever as a shareholder of the Corporation
except such rights as may be provided in the Warrant Indenture or in this Certificate.


At any time prior to the Warrant Expiry Time, the Holder of this Certificate may, upon compliance
with the reasonable requirements of the Warrant Agent and the requirements contained in the Warrant
Indenture and upon surrender of this Certificate, exchange this Certificate for another certificate
or certificates entitling the Holder thereof to receive, in the aggregate, the same number of
Common Shares as are issuable under this Certificate.


The Warrants evidenced by this Certificate may only be transferred upon due execution and delivery
to the Warrant Agent of a Transfer Form in the form attached hereto and in compliance with all the
conditions prescribed in the Warrant Indenture and compliance with such other reasonable
requirements as the Warrant Agent may prescribe.


The holder acknowledges its consent and expressly requests that the Warrant Certificate be drawn up
in the English language only. Le détenteur a expressément exigé que le certificat de bon de
souscription soit rédigé en langue anglaise seulement.


This Warrant Certificate shall not be valid for any purpose until it has been certified by or on
behalf of the Warrant Agent under the Warrant Indenture.


This Certificate shall be governed by and construed in accordance with the laws of Ontario and the
federal laws of Canada applicable therein.



 









 







Time shall be of the essence hereof.


IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate to be signed as of
                              , 2009.



	 	 	 	 	 
	 	
VUZIX CORPORATION


 	 
	 	By:  	 	 
	 	 	Paul J. Travers 	 
	 	 	President and Chief Executive Officer 	 
	 


This Warrant Certificate is one of the Warrant Certificates referred to in the Warrant Indenture.



	 	 	 	 	 
	 	
COMPUTERSHARE TRUST COMPANY OF CANADA


 	 
	 	By:  	 	 
	 	 	Authorized Officer 	 
	 	 	 	 
	 



 









 








EXERCISE FORM





			
	TO:	 	Vuzix Corporation

c/o Computershare Trust Company of Canada

100 University Avenue, 8th Floor

Toronto, Ontario

M5J 2Y1
 

Attention:     Manager, Corporate Trust

Fax:               416-361-0470




The undersigned Holder of the Warrants evidenced by the within Certificate hereby irrevocably
subscribes for, and exercises his right to be issued, the number of Common Shares set forth below,
such Common Shares being issuable upon exercise of such Warrants pursuant to the terms specified in
the said Warrants and the Warrant Indenture.


The undersigned hereby irrevocably directs that the Common Shares be issued and delivered as
follows:



	 	 	 	 	 
	 	 	 	 	Number(s) of
	Name(s) in full	 	Address(es) (include Postal Code)	 	Common Shares
	 
	 
	 	 	 
 	 
	 
	 
	 	 	 
 	 
	 
	 
	 	 	 
 	 
	 
	 
	 	 	 
 	 
	 
	 
	 	 	 
 	 
	 

	 	TOTAL	 	 
	 

	 	 	 	 




(Please print full name in which certificate(s) are to be issued. If any of the Common Shares are
to be issued to a Person or Persons other than the Warrantholder, the Warrantholder must pay to the
Warrant Agent all requisite taxes or other government charges.)


Dated this                                day of                                    ,     
           .



	 	 	 
	 

Signature Guarantee (see instruction 2)

	 	 

Signature of Registered Holder
	 
	 
 	 
	 

	 	 

Name of Registered Holder







			
	o	 	Please check box if certificates representing these Common Shares are to be delivered at the office of the Warrant
Agent where this Warrant Certificate is surrendered, failing which the certificates will be mailed to the address(es)
set forth above.





 









 








Instructions:



The Holder may exercise its right to receive Common Shares by completing this form and surrendering
this form and the Warrant Certificate representing the Warrants being exercised to the Warrant
Agent at its principal transfer offices in Toronto, Ontario. Certificates for Common Shares will be
delivered or mailed within five Business Days after the exercise of the Warrants.


If the Exercise Form indicates that Common Shares are to be issued to a Person or Persons other
than the registered holder of the Certificate, the signature on this Exercise Form must be
guaranteed by a Schedule 1 major chartered bank company or a member of an acceptable medallion
guarantee program. The Guarantor must affix a stamp bearing the actual words “Signature
Guaranteed”. Signature guarantees are not accepted from Treasury Branches or credit unions unless
they are members of the Stamp Medallion Program. In the United States, signature guarantees must be
done by members of the “Medallion Signature Guarantee Program” only.


If the Exercise Form is signed by an agent, 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 sign satisfactory to the Warrant Agent
and the Corporation.


If the Holder exercises its right to receive Common Shares prior to the date which is four months
plus one day from the issuance date of the Warrants, the Common Shares may be subject to a hold
period and may be issued with a legend reflecting such hold period.



 









 








TRANSFER FORM



Any transfer of Warrants will require compliance with applicable securities legislation.
Transferors and transferees are urged to contact legal counsel before effecting any such transfer.


FOR VALUE RECEIVED, the undersigned hereby sells, transfers and assigns to                               ,
                               Warrants represented by this Warrant Certificate and does hereby irrevocably appoint
                                    as its attorney with full power of substitution to transfer the said Warrants
on the appropriate register of the Warrant Agent.


DATED this                                day of                                    ,     
           .



	 	 	 
	 

Signature Guarantee

	 	 

Signature of Registered Holder
	 
	 
 	 
	 

	 	 

Name of Registered Holder





Instructions:




	1.	 	Signature of the Warrantholder must be the signature of the registered holder appearing on
the face of this Warrant Certificate.






	2.	 	If this Transfer Form is signed by an agent, 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 sign satisfactory to
the Warrant Agent and the Corporation, acting reasonably.






	3.	 	The signature on this Transfer Form must be guaranteed by a Schedule 1 major chartered
bank/trust company or a member of an acceptable medallion guarantee program. The guarantor
must affix a stamp bearing the actual words “Signature Guaranteed”. Signature guarantees are
not accepted from Treasury Branches or credit unions unless they are members of the Stamp
Medallion Program. In the United States, signature guarantees must be done by members of the
“Medallion Signature Guarantee Program” only.






	4.	 	Warrants shall only be transferable in accordance with applicable laws and the applicable
provisions of the Warrant Indenture.





[NTD:  Any applicable US restrictions to be added.]




 









 








SCHEDULE 2


WARRANT EXERCISE CERTIFICATION


(TO BE COMPLETED ONLY IF A REGISTRATION STATEMENT


IS NOT EFFECTIVE)





			
	To:	 	VUZIX CORPORATION






			
	And To:	 	COMPUTERSHARE TRUST COMPANY OF CANADA




The undersigned holder of the within Warrant Certificate, pursuant to the Warrant Indenture
mentioned therein, hereby exercises certain Warrants (the “Exercised Warrants”) evidenced thereby
and hereby subscribes for a number of Common Shares of VUZIX CORPORATION equal to such number of
Common Shares or number or amount of other securities or property, or combination thereof, to which
such exercise entitles him under the provisions of the Warrant Indenture at an aggregate price
equal to the product of the Exercise Price and the number of Exercised Warrants, and on the terms
specified in such Warrant Certificate and the Warrant Indenture, and in payment therefor, delivers
herewith a bank draft, certified cheque or money order payable to VUZIX CORPORATION. Capitalized
terms not defined herein shall have the definitions set forth in the Warrant Indenture.


The undersigned represents that it (A) has had access to such current public information concerning
VUZIX CORPORATION as it considered necessary in connection with its investment decision and (B)
understands that the securities issuable upon exercise hereof have not been registered under the
United States Securities Act of 1933, as amended (the “U.S. Securities Act”).


The undersigned represents and warrants that it: [check one only]




	o	 	A.	 	is not a U.S. Purchaser and it (1) is not in the United States; (2) is not a
U.S. Person and is not exercising the Warrants for, or on behalf or benefit of, a U.S.
Person or person in the United States; (3) did not execute or deliver the Warrant
Exercise Form in the United States; (4) agrees not to engage in hedging transactions
with regard to the Securities prior to the expiration of the one-year distribution
compliance period set forth in Rule 903(b)(3) of Regulation S; (5) acknowledges that
the Common Shares issuable upon exercise of the Warrants are “restricted securities” as
defined in Rule 144 of the U.S. Securities Act and upon the issuance thereof, and until
such time as the same is no longer required under the applicable requirements of the
U.S. Securities Act or applicable U.S. state laws and regulations, the certificates
representing the Common Shares will bear a restrictive legend; and (6) acknowledges
that the Corporation shall refuse to register any transfer of the Securities not made
in accordance with the provisions of Regulation S, pursuant to registration under the
U.S. Securities Act, or pursuant to an available exemption from registration under the
U.S. Securities Act; and (B) it holder has not engaged in any “directed selling
efforts” (as defined in Regulation S) in the United States.
	 
	o	 	B.	 	the undersigned is delivering a written opinion of U.S. Counsel or a written confirmation from
the Corporation to the effect that the Warrants and the Common Shares to be delivered upon
exercise hereof have been registered under the United States Securities Act of 1933, as
amended (the “U.S. Securities Act”) or are exempt from registration thereunder.





 









 







The undersigned holder understands that the certificate representing the Corporation’s Common
Shares issued upon exercise of this Warrant will bear a legend restricting the transfer without
registration under the U.S. Securities Act and applicable state securities laws substantially the
form set forth in Section 3.01(3) of the Warrant Indenture.



	 	 	 
	Name:
	 	 
	Nome:

	 	 

Please print or type name and address (including postal code)
	 
	 	 
	Address:
	 	 
	Adresse:

	 	 







	 	 	 
	Number of Warrants being Exercised:

	 	 

	 
	 	 
	 

	 	 






DATED this                 day of                               .


Signature guaranteed by:



	 	 	 
	 

	 	 

	 

	 	Name of registered holder (please print) —
	 
	 
 	 
	 

	 	 

	 

	 	Signature of or on behalf of registered holder
	 
	 
 	 
	 

	 	 

	 

	 	Office, Title or other Authorization

(if holder not an individual)