Exhibit
4.29




UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
TRADE THE SECURITY BEFORE OCTOBER 16, 2007.




NORTHCORE
TECHNOLOGIES INC.




(Organized
under the laws of Ontario)




Series
(K) Convertible Secured Debenture




Date of
      Issue:  June 15, 2007
            CDN.
      $•Interest
      Rate:  11.0% per annum
            Certificate
      Number:  [K-•]


NORTHCORE
TECHNOLOGIES INC. (the “Corporation”), for value
received, hereby acknowledges itself indebted to and promises to pay • (the
“Registered Holder”) on
June _____, 2009 (the “Maturity
Date”) or on such earlier date as the principal hereof becomes payable in
accordance with the provisions of this Debenture (as defined herein), on
presentation and surrender of this Debenture, the principal sum of $• in lawful
money of Canada, at the address of the Registered Holder set forth on the
register of the Corporation to be maintained as provided in the terms and
conditions attached hereto as Schedule “A” and forming part hereof (the “Terms and Conditions”),
subject to the right of the Registered Holder in certain circumstances to elect
to receive Common Shares (as defined herein) of the Corporation in lieu of
receiving such sum, as provided in the Terms and Conditions, and to pay interest
on such principal amount as provided in the Terms and Conditions.  The
Terms and Conditions are hereby incorporated by reference herein.




This
Debenture is convertible, at the option of the Registered Holder into Common
Shares, upon and subject to the provisions and conditions contained in the said
Terms and Conditions. The Schedules and the Exhibits attached hereto are
incorporated in this Debenture by reference and are deemed to be an integral
part hereof.




IN WITNESS WHEREOF the
Corporation has caused this Debenture to be executed under the hand of its duly
authorized officer as of the ____day
of June, 2007.




NORTHCORE
      TECHNOLOGIES INC.Per:Authorized
      Signing Officer










SCHEDULE
“A”




Terms
and Conditions applicable to


Series
‘K’ Convertible Secured Debentures


dated
as of June 12, ____, 2007 issued by


NORTHCORE
TECHNOLOGIES INC.




ARTICLE
1-  INTERPRETATION




1.1       Defined
Terms




In
addition to the terms parenthetically defined herein, in this Debenture the
following terms shall have the following meanings respectively:




“Automatic Conversion” has the
meaning attributed to such term in subsection 4.1;




“Automatic Conversion
Condition” means that if, at any time after the Closing Date the volume
weighted average trading price of the Common Shares on the TSX (or if the
Corporation is not listed on the TSX, its principal trading market) for a 10
consecutive trading day period is $0.30 or more, all then outstanding
Debentures, including any accrued interest thereon, will be automatically
converted into Common Shares at the Conversion Price.




“Automatic Conversion Date”
means the first Trading Day following the Trading Day as of which the Automatic
Conversion Condition has been satisfied.




“Business Day” means any day,
other than Saturday, Sunday or any statutory holiday in the City of
Toronto;




“Capital Reorganization” has
the meaning attributed to such term in subsection 4.3(4);




“Closing Date” means on or
about June 15, 2007;




“Closing Market Price” at any
date means the closing price per share for Common Shares on or through, as
applicable, the Principal Market;




“Collateral” has the meaning
attributed to such term in the General Security Agreement;




“Common Share Reorganization”
has the meaning attributed to such term in subsection 4.3(1);




“Common Shares” means the
common shares without nominal or par value in the capital of the Corporation, as
such shares exist as at the Date of Issue; provided that, in the event of a
subdivision, redivision, reduction, combination or consolidation thereof, or
successive such subdivisions, redivisions, reductions, combinations or
consolidations, then, subject to adjustments, if any, having been made in
accordance with Section 4.3, “Common Shares” shall
thereafter mean the shares resulting from such subdivision, redivision,
reduction, combination or consolidation;




“Conversion”  has the
meaning attributed to such term in subsection 4.1(1);




“Conversion Price”has the
meaning attributed to such term in Section 4.1(2);




“Date of Issue”means the date
hereof;







“Date of Conversion”has the
meaning attributed to such term in subsection 4.2(2);




“Debentures”means the Series
K secured convertible debentures of the Corporation due on June ____, 2009,
including this Debenture;




“Event of Default”has the
meaning attributed to such term in the General Security Agreement;




“General Security Agreement”
means the general security agreement granted by the Corporation in favour of the
Holders, pursuant to which the Corporation shall grant a security interest in
the Collateral in favour of the Holders);




“Generally Accepted Accounting
Principles” means generally accepted accounting principles in Canada from
time to time;




“Hold Period” means four months
and one day from the Closing Date;




“Holders”means the registered
holders from time to time of the Debentures, including the Registered
Holder;




“including” means including
without limitation;




“Interest Rate”means 11% per
annum, calculated and payable as set forth in Section 2.3 hereof;




“Maturity Date”has the
meaning attributed to such term in Section 2.4 hereof;




“Obligations” means the
aggregate of all indebtedness, obligations and liabilities, direct or indirect,
absolute or contingent, matured or not, of the Corporation to the Registered
Holder wheresoever and howsoever incurred and whether incurred arising pursuant
to this Debenture and whether incurred at the time of, or subsequent to the
execution hereof, whether incurred alone or with another or others, including
extensions and renewals;




“Offering” means the
non-brokered best efforts private placement offering of up to $1,629,333
principal amount of Debentures by the Corporation to purchasers resident in
Ontario, Alberta and other jurisdictions outside of North America;




“Ontario Act” means the Securities Act
(Ontario);




“Permitted Security Interests”has the meaning attributed to such term in the General Security
Agreement;




“Person” means any individual,
partnership, limited partnership, joint venture, syndicate, sole proprietorship,
company or corporation with or without share capital, unincorporated
association, trust, trustee, executor, administrator or other legal personal
representative, government or governmental authority or entity, however
designated or constituted;




“PPSA” means the Personal Property Security
Act (Ontario) as the same may from time to time hereafter be amended or
any legislation that may be substituted therefor as the same may from time to
time be amended;




A -
2


“Principal Market” means such
stock exchange or quotation system on or through which the Common Shares are
listed or quoted which has the highest trading volume in the calendar month
immediately preceding the applicable date, being as at the date hereof the
TSX;




“Pro Rata Basis” means, in
respect of a Holder, the percentage determined by dividing (i) the outstanding
principal amount of the Holder’s Debenture by (ii) the aggregate outstanding
principal amount of all Debentures;




“Rights Offering” and “Rights Period” have the
respective meanings attributed to such terms in subsection 4.3(2);




“Security Interest” means,
collectively, the mortgage, charge, pledge, assignment and transfer of, and the
security interest in, the Collateral granted to the Holders by the Corporation
pursuant to the General Security Agreement;




“Successor Corporation” means
any corporation continuing from and which acquires all or substantially all of
the undertaking, property and assets of any other corporation pursuant to any
Capital Reorganization;




“Time of Expiry” means 5:00
p.m. (Toronto time) on the Maturity Date;




“Trading Day” means a day on
which the Principal Market is open for the trading of securities;




“Transfer Form” means the form
of transfer annexed as Exhibit 1 hereto;




“TSX” means the Toronto Stock
Exchange;




“U.S. Securities Act” means the
United States Securities Act of 1993, as amended; and




1.2       Statutory
References; Terms defined by the PPSA




Any
reference in this Debenture to a statute shall be deemed to be a reference to
such statute as amended, re-enacted or replaced from time to
time.  Unless there is something in the context or subject matter
inconsistent therewith, words and phrases not otherwise herein defined that are
defined by the PPSA shall have the meanings ascribed thereto respectively by the
PPSA.




1.3       Gender
and Number




Unless
the context otherwise requires, words importing the singular include the plural
and vice-versa and words importing gender include all genders.




1.4       Monetary
References




Any
reference in this Debenture to “Dollars”, “dollars” or the symbol “$” shall be
deemed to be a reference to lawful money of Canada.




1.5       Day
Not a Business Day




In
the event that any day on which any action is required to be taken hereunder is
not a Business Day, then such action shall be required to be taken on the
requisite time on the first Business Day thereafter.




A -
3


1.6       Invalidity
of Provisions




Each
of the provisions contained in this Debenture is distinct and severable and a
declaration of invalidity or unenforceability of any such provision by a court
of competent jurisdiction shall not affect the validity or enforceability of any
other provision hereof or thereof.




1.7       Governing
Law




This
Debenture shall be governed by and construed in accordance with the PPSA and the
other laws of the Province of Ontario and the laws of Canada applicable therein
and shall be treated in all respects as an Ontario contract.




1.8       Assignment




Subject
to the restrictions on, and requirements for, transfer prescribed herein, the
rights and obligations of the Corporation and the Holders shall be binding upon
and shall enure to the benefit of their respective successors, heirs, executors,
administrators and permitted transferees and assigns.




ARTICLE
2-  THE DEBENTURES




2.1       Debentures
in Series




This
Debenture is one of a series of convertible debentures issued by the
Corporation, designated as “Series K Secured Subordinate Convertible
Debentures”.  The maximum aggregate principal amount of the Debentures
to be issued by the Corporation is $1,629,333 pursuant to the
Offering.




2.2       Denominations




Debentures
shall be issued in denominations of $1,000 and integral multiples
thereof.




2.3       Terms
of Debentures




All
Debentures shall bear simple interest at the Interest Rate from the Date of
Issue (or, if issued after the Date of Issue, from the actual date of issuance
thereof) to the earlier of a quarter end, the Maturity Date and the Date of
Conversion (in respect of the Debentures then being
Converted).  Interest on the Debentures shall accrue on the
outstanding principal amount of the Debentures from day to day both before and
after default, demand, maturity and judgment, for the actual number of days
elapsed on the basis of a year of 365 days.  Where the calendar year
of calculation contains 366 days, interest hereunder shall be expressed as a
yearly rate for purposes of the Interest Act (Canada) as such
rate multiplied by 366 and divided by 365.  Such interest shall be
payable in arrears upon the earlier of a quarter end, the Maturity Date and the
Date of Conversion (in respect of the Debentures then being Converted) and shall
be payable in full by the issuance of a number of Common Shares calculated as
pursuant to the following formula:




A -
4


A÷B,
where:


A
= the amount of accrued interest payable, in dollars; and


B
= the greater of:




i)
            $0.15;
      and




ii)
            the
      volume weighted average trading price of the Common Shares over the 20 day
      trading period ending at the close of business on the day prior to the
      date on which the interest payment is due, reduced by the maximum
      percentage discount permitted by the Toronto Stock
    Exchange.




Interest
will continue to accrue until paid.




2.4       Maturity
Date




Subject
to Section 2.5, the Debentures shall mature and the principal hereof shall
become payable on June ____, 2009 (the “Maturity Date”).




2.5       Debentures
to Rank Equally




This
Debenture shall rank equally with all other Debentures of the same series and be
equally and rateably entitled to the benefits hereof as if all the Debentures
had been issued and negotiated simultaneously.




2.6       Registration
of Debentures




(1)        The
Corporation shall cause to be kept by and at the principal office of the
Corporation in the City of Toronto a register in which shall be entered the
names and latest known addresses of the Holders of this and all other Debentures
and the other particulars, as prescribed by law, of the Debentures held by them
respectively and of all transfers of Debentures.  Such registration
shall be noted on the Debentures by the Corporation.  No transfer of a
Debenture shall be effective as against the Corporation unless made on the
register by the Registered Holder or his executors or administrators or other
legal representatives or his or their attorney duly appointed by an instrument
in form and execution reasonably satisfactory to the Corporation and upon
compliance with such requirements as the Corporation may reasonably prescribe,
and unless such transfer shall have been duly noted on such Debenture by the
Corporation.




(2)        The
register referred to in this section shall at all reasonable times be open for
inspection by the Holders.




(3)        Subject
to any restriction under applicable law or policy of any applicable regulatory
body, any Holder may at any time and from time to time have such Debenture or
any portion of the principal amount thereof transferred at the place at which
the register is kept pursuant to the provisions of this section in accordance
with such reasonable regulations as the Corporation may
prescribe.  The transferor of such Debenture or any portion of the
principal amount thereof shall duly complete and exercise a Transfer
Form.




(4)        The
Corporation shall not be charged with notice of or be bound to see to the
execution of any trust, whether express, implied or constructive, in respect of
any Debenture, except where the Corporation is required to take notice by
statute or order of a court of competent jurisdiction and may transfer any
Debenture on the direction of the Holder thereof, whether named as trustee or
otherwise, as though that Person were the beneficial owner thereof.




A -
5


(5)        The
Corporation shall not register any transfers of the Debenture or issue or
transfer any Common Shares issuable on conversion of the Debenture:




(i)           to
any person in the United States or a resident of the United States or any person
for the account or benefit of any person in the United States or a resident of
the United States except pursuant to Rule 144 under the U.S. Securities Act, if
available;




(ii)           in
connection with any transfers or conversions which are otherwise not in
compliance with (a) the U.S. Securities Act and the regulations thereunder if
applicable, (b) the Ontario Act and the rules and regulations thereunder, (c)
applicable securities laws and regulations of other relevant jurisdictions, or
(d) the policies of the TSX; and




(iii)           within
four months and a day from the Date of Issue, unless the Corporation and its
legal counsel are satisfied, acting reasonably, that it is permitted under
Ontario securities laws and under the policies of the TSX.




The
Holder acknowledges that this Debenture and the securities underlying the
Debenture are subject to resale restrictions which provide that this Debenture
and such securities may not be resold or otherwise distributed until a period of
at least four (4) months and one day have elapsed from the Date of Issue except
as permitted by applicable securities laws and acknowledges that the
certificates representing the Debenture and if the Debenture is Converted or if
the any of the Warrants are exercised prior to the expiry of such hold period,
the Common Shares issuable upon Conversion, the Warrants and the Common Shares
underlying the Warrants will bear the following legend denoting the restrictions
on transfer under applicable securities laws, in addition to any other legends
required by the TSX or other stock market on which such securities may
trade:




“UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
TRADE THE SECURITY BEFORE [4 MONTHS AND ONE DAY FROM THE DATE OF ISSUANCE OF THE
DEBENTURE].”




2.7       Ownership
of Debentures




(1)        The
Holder of a Debenture shall be deemed to be the owner thereof for all purposes
and payment of or on account of the principal of a Debenture shall be made only
to or upon the order in writing of the Holder thereof and such payment shall be
a complete discharge to the Corporation and any paying agent for the amounts so
paid.




(2)        The
Holder for the time being of any Debenture shall be entitled to the principal
evidenced by such Debenture, free from all equities or rights of set-off or
counterclaim between the Corporation and the original or any intermediate Holder
thereof (except any equities of which the Corporation is required to take notice
by law) and all Persons may act accordingly and a transferee of a Debenture
shall, after the Transfer Form is lodged with the Corporation and upon
compliance with all other conditions contained in such Debenture or by law or by
any policy of any regulatory body, be entitled to be entered on the register as
the owner of such Debenture free from all equities or rights of set-off or
counterclaim between the Corporation and the transferor or any previous Holder
thereof, 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.  Delivery to the registered Holder by the Corporation or
the receipt by the Holder of the principal monies and interest evidenced by this
Debenture and the units issuable pursuant to this Debenture, if any, shall be a
good discharge to the Corporation of its obligations hereunder and the
Corporation shall not be bound to enquire into the title of the Registered
Holder, save as ordered by a Court of competent jurisdiction or as required by
statute.




A -
6


2.8       Exchange
of Debentures




(1)       
Debentures of any denomination may be exchanged for Debentures of any other
authorized denomination or denominations, any such exchange to be for Debentures
of an equivalent aggregate principal amount.  Exchanges of Debentures
may be made at the principal offices of the Corporation in the City of
Toronto.




(2)        Except
as otherwise provided herein, upon any exchange of Debentures of any
denomination for Debentures of any other authorized denominations and upon any
transfer of Debentures, the Corporation or other registrar of Debentures may
make a sufficient charge to reimburse it for any stamp tax, security transfer
tax or other governmental charge required to be paid, and payment of such charge
shall be made by the party requesting such exchange or transfer as a condition
precedent thereto.




2.9       Replacement
of Debentures




If
any of the Debentures shall become mutilated or be lost, stolen or destroyed and
in the absence of notice that such Debentures have been acquired by a good faith
purchaser within the meaning of the Business Corporations Act
(Ontario), the Corporation will issue and deliver a new Debenture upon surrender
and cancellation of the mutilated Debenture, or, in the case of a lost, stolen
or destroyed Debenture, in lieu of and in substitution for the
same.  In case of loss, theft or destruction, the applicant for a new
Debenture shall furnish to the Corporation such evidence of such loss, theft or
destruction as shall be satisfactory to the Corporation in its discretion and
shall also furnish an indemnity in amount and form satisfactory to the
Corporation in its sole discretion.  The applicant shall pay all
reasonable expenses incidental to the issuance of any such new
Debenture.




ARTICLE
3-  PURCHASE FOR CANCELLATION OF DEBENTURES




3.1       Purchase
of Debentures for Cancellation




The
Corporation may purchase all or any of the Debentures in the market (which shall
include purchase from or through an investment dealer or a firm holding
membership on a recognized stock exchange) or by invitation for tenders or by
private contract; provided that the price at which any Debenture may be so
purchased shall not exceed the outstanding principal amount of such
Debenture.




If,
upon an invitation for tenders, more Debentures are tendered at the same price
than the Corporation is prepared to accept, the Debentures to be purchased by
the Corporation shall be selected by lot, or in such other manner as the
Corporation may consider equitable, from the Debentures tendered by each Holder
who tendered at such lowest price.  The Holder of any Debenture of
which a part only is purchased, upon surrender of such Debenture for payment,
shall be entitled to receive, without expense to such Holder, one or more new
Debentures for the unpurchased part so surrendered and the Corporation shall
issue and deliver such new Debenture or Debentures upon receipt of the Debenture
so surrendered.




A -
7


ARTICLE
4-  CONVERSION




4.1       Conversion




(1)        The
conversion price is $0.12 (the “Conversion Price”) for each
Common Share to be issued upon the Conversion of the Debentures, unless such
price shall have been adjusted as provided in this Article, in which case the
Conversion Price shall mean the price as so adjusted and in effect at such
time.




(2)        Subject
to and upon compliance with the provisions of this Article 4, the Holder of each
Debenture shall have the right, at his option, at any time prior to the Time of
Expiry, to convert such Debenture or any portion of the principal amount thereof
which is $1,000 or an integral multiple of $1,000, into Common Shares at the
Conversion Price (a “Conversion”).




(3)        In
the event that, at any time prior to the Time of Expiry, the Automatic
Conversion Condition has been met then the Corporation shall (and the Holder
hereby authorizes and directs the Corporation to) convert the full outstanding
principal amount, under this Debenture into Common Shares at the Conversion
Price (an “Automatic
Conversion”), with such conversion to be effective as of the Automatic
Conversion Date.




(4)        In
the event of a Conversion or Automatic Conversion, as the case may be, the
accrued and unpaid interest on the principal amount of a Holder’s Debenture
which is Converted to Common Shares pursuant to this Section 4.1 will be paid in
Common Shares, pursuant to Section 2.3 above, within 10 Business Days of the
Date of Conversion.




4.2       Manner
of Exercise or Deemed Exercise of Right to Convert




(1)        The
Holder of a Debenture wishing to Convert such Debenture in whole or in part into
Common Shares shall surrender such Debenture to the Corporation at its principal
office in the City of Toronto, together with written notice in form and
substance satisfactory to the Corporation substantially in the form of Exhibit
“2” annexed hereto, duly executed by the Holder, his executors, administrators,
other legal representatives or his or their attorney duly appointed by an
instrument in form and substance satisfactory to the Corporation, exercising his
right to convert such Debenture in accordance with the provisions of this
Article.  Thereupon such Holder or, subject to payment of all
applicable stamp taxes, security transfer taxes or other governmental charges
and compliance with all reasonable requirements of the Corporation, his nominee
or assignee, shall be entitled to be entered in the books of the Corporation as
at the Date of Conversion (or such later date as is specified in subsection
4.2(2)) as the registered holder of the numbers of Common Shares into which such
Debenture is convertible in accordance with the provisions hereof and, as soon
as practicable thereafter, the Corporation shall deliver to such Holder or,
subject as aforesaid, his nominee or assignee certificates for such Common
Shares for any amounts payable under Sections 2.3, 4.1(3) or 4.5.




In the event of an Automatic Conversion
the Registered Holders shall be entitled, without any further act on the
Registered Holder’s part, to be entered in the books of the Corporation as at
the Date of Conversion as the registered holder of the numbers of Common Shares
into which such Debenture is convertible in accordance with the provisions
hereof and, as soon as practicable thereafter and in any event within three
Trading Days, the Corporation shall deliver to the Registered Holder a
certificate for such Common Shares.




(2)        For
the purposes hereof, a Debenture shall be deemed to be surrendered for
conversion on the date (the ”Date of Conversion”) which
is:




i)         In
respect of a Conversion, the date on which it is so surrendered in accordance
with the provisions hereof and, in the case of a Debenture so surrendered by
mail or other means of delivery, on the date on which it is received by the
Corporation at its office specified in subsection 4.2(1), provided that if a
Debenture is surrendered for Conversion on a day on which the register of Common
Shares is closed, the Person entitled to receive Common Shares shall become the
holder of record of such Common Shares as at the date on which such register is
next reopened; and




A -
8


ii)         In
respect of an Automatic Conversion, the date as of which the Automatic
Conversion Condition has first been met.




(3)        Any
part, being $1,000 or an integral multiple thereof, of a Debenture may be
Converted as provided herein and all references in this Debenture to Conversion
of Debentures shall be deemed to include Conversion of such
parts.  The Holder of any Debenture of which part only is Converted
shall, upon the exercise of his right of Conversion, surrender such Debenture to
the Corporation, and the Corporation shall cancel the same and shall forthwith
issue and deliver to the Holder a new Debenture or Debentures in an aggregate
principal amount equal to the unconverted part of the principal amount of the
Debenture so surrendered.




(4)        The
Common Shares issued upon Conversion shall rank only in respect of dividends
declared in favour of holders of record of Common Shares on or after the Date of
Conversion or such later date as such Holder shall become the holder of record
of such Common Shares pursuant to subsection 4.2(2), from which applicable date
they will for all purposes be and be deemed to be issued and outstanding as
fully paid and non-assessable Common Shares.




4.3           Adjustment
of Conversion Price




The
Conversion Price will be subject to adjustment from time to time in the events
and in the manner provided as follows:




(1)        If
and whenever at any time after the date hereof, and prior to the Time of Expiry,
the Corporation:




(i)           issues
Common Shares or securities exchangeable for or convertible into Common Shares
to all or substantially all the holders of Common Shares as a stock dividend or
other distribution (other than an issue of Common Shares to holders of Common
Shares pursuant to a right granted to such holders to receive such Common Shares
in lieu of dividends paid in the ordinary course);




(ii)           subdivides
its outstanding Common Shares into a greater number of Common Shares;
or




(iii)           consolidates
its outstanding Common Shares into a smaller number of Common
Shares,




(any
of such events in clauses (i), (ii) and (iii) of this subsection being called a
“Common Share
Reorganization”), then the Conversion Price shall be adjusted effective
immediately after the effective date or record date for the happening of a
Common Share Reorganization, as the case may be, at which the holders of Common
Shares are determined for the purpose of the Common Share Reorganization by
multiplying the Conversion Price in effect immediately prior to such effective
date or record date by a fraction, the numerator of which will be the number of
Common Shares outstanding on such effective date or record date before giving
effect to such Common Share Reorganization and the denominator of which will be
the number of Common Shares outstanding immediately after giving effect to such
Common Share Reorganization (including, in the case where securities
exchangeable for or convertible into Common Shares are distributed, the number
of Common Shares that would have been outstanding had all such securities been
exchanged for or converted into Common Shares on such effective date or record
date).




(2)        If
and whenever at any time after the date hereof, and prior to the Time of Expiry,
the Corporation fixes a record date for the issue of rights, options or warrants
to all or substantially all the holders of Common Shares (the “Rights”) under which such
holders are entitled, during a period expiring not more than forty-five (45)
days after the date of such issue (the “Rights Period”), to subscribe
for or purchase Common Shares (or securities convertible into Common Shares) at
a price per share to the holder (or at an exchange or conversion price per share
during the Rights Period to the holder in the case of securities exchangeable
for or convertible into Common Shares) of less than 95% of the price (the “Current Market Price”) which
is equal to the average Closing Market Price for the period of 20 Trading Days
immediately preceding such record date (any of such events being called a “Rights Offering”), then the
Conversion Price shall be adjusted effective immediately after the end of the
Rights Period to a price determined by multiplying the Conversion Price in
effect on such record date by a fraction:




A -
9


(iv)       the
numerator of which will be the aggregate of:




(1)           the
number of Common Shares outstanding as of the record date for the Rights
Offering; plus




(2)           a
number determined by dividing (a) the product of the number of Common Shares
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 (b) the Current Market Price of the Common
Shares as of the record date for the Rights Offering, and




(v)        the
denominator of which will 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.




Any
Holder who has exercised the right to Convert in accordance with this Article 4
during the period beginning immediately after the record date for a Rights
Offering and ending on the last day of the Rights Period for the Rights Offering
will, in addition to the Common Shares and Warrants to which that Holder would
otherwise be entitled upon such Conversion, be entitled to that number of
additional Common Shares equal to the difference between the shares received on
such Conversion and the shares that would have been received if the Conversion
Price as adjusted for such Rights Offering pursuant to this subsection had
applied when the Holder exercised the right to Convert; provided that the
provisions of Section 4.5 will be applicable to any fractional interest in a
Common Share to which such Holder might otherwise be entitled under the
foregoing provisions of this subsection.  Such additional Common
Shares will be deemed to have been issued to the Holder immediately following
the end of the Rights Period and a certificate for such additional Common Shares
will be delivered to such Holder within five Business Days following the end of
the Rights Period.  To the extent that any such rights, options or
warrants are not so exercised on or before the expiry thereof, the Conversion
Price will be readjusted to the Conversion Price which would then be in effect
based on the number of Common Shares (or the securities convertible into or
exchangeable for Common Shares) actually delivered on the exercise of such
rights, options or warrants.




A -
10


(3)           If
and whenever at any time after the date hereof and prior to the Time of Expiry,
the Corporation fixes a record date for the issue or the distribution to all or
substantially all the holders of Common Shares of (i) securities of the
Corporation, including rights, options or warrants to acquire securities of the
Corporation or any of its property or assets and including evidences of
indebtedness or (ii) any property or other assets, including evidences of
indebtedness, and if such issuance or distribution does not constitute (A) a
dividend paid in the ordinary course; (B) a Common Share Reorganization; (C) a
Rights Offering; or (D) the issue of Rights to the holders of all or
substantially all of its outstanding Common Shares under which such holders are
entitled to subscribe for or purchase Common Shares or securities exchangeable
for or convertible into Common Shares during the Rights Period, where the cost
per Common Share during the Rights Period, is 95% or more of the Current Market
Price (any of such non-excluded events being called a “Special Distribution”),
the Conversion Price shall be adjusted effective immediately after such record
date to a price determined by multiplying the Conversion Price in effect on such
record date by a fraction:




(vi)       the
numerator of which will be:




(1)           the
product of the number of Common Shares outstanding on such record date and the
Current Market Price of the Common Shares on such record date; less




(2)           subject
to the prior written consent of the Principal Market, if applicable, the excess,
if any, of (a) the fair market value, as determined by action by the
Corporation’s board of directors (whose determination will be conclusive), to
the holders of Common Shares of such securities or property or other assets so
issued or distributed in the Special Distribution over (b) the fair market value
of the consideration received therefor by the Corporation from the holders of
Common Shares, as determined by the Corporation’s board of directors (whose
determination will be conclusive); and




(vii)      the
denominator of which will be the product of the number of Common Shares
outstanding on such record date and the Current Market Price of the Common
Shares on such record date.




To
the extent that any Special Distribution is not so made, the Conversion Price
will be readjusted effective immediately to the Conversion Price which would
then be in effect based upon such securities or property or other assets as
actually distributed.




(4)        If
and whenever at any time after the date hereof, and prior to the Time of Expiry,
there is a reclassification of the Common Shares at any time outstanding or
change of the Common Shares into other shares or into other securities or other
capital reorganization (other than a Common Share Reorganization), or a
consolidation, amalgamation or merger of the Corporation with or into any other
corporation or other entity (other than a consolidation, amalgamation or merger
which does not result in any reclassification of the outstanding Common Shares
or a change of the Common Shares into other shares), or a transfer of the
undertaking or assets of the Corporation as an entirety or substantially as an
entirety to another corporation or other entity in which the holders of Common
Shares are entitled to receive shares, other securities or other property (any
of such events being called a “Capital Reorganization”), any
Holder who exercises the right to Convert Debentures into Common Shares pursuant
to Debentures then held after the effective date of such Capital Reorganization
will be entitled to receive, and will accept for the same aggregate
consideration in lieu of the number of Common Shares to which such Holder was
previously entitled upon such Conversion, the aggregate number of shares, other
securities or other property or cash which such Holder would have been entitled
to receive as a result of such Capital Reorganization if, on the effective date
thereof, the Holder had been the registered holder of the number of Common
Shares to which such Holder was previously entitled upon Conversion subject to
adjustment thereafter in accordance with provisions the same, as nearly
possible, as those contained in this Article 4.  The Corporation will
take all steps necessary to ensure that, on a Capital Reorganization, the
Holders of Debentures will receive the aggregate number of shares, other
securities or other property or cash to which they are entitled as a result of
the Capital Reorganization.  Appropriate adjustments will be made as a
result of any such Capital Reorganization in the application of the provisions
set forth in this Article 4 with respect to the rights and interests thereafter
of Holders of Debentures to the end that the provisions set forth in this
Article 4 will thereafter correspondingly be made applicable as nearly as may
reasonably be in relation to any shares, other securities or other property
thereafter deliverable upon the conversion of any Debenture.  Subject
to the prior written consent of the Principal Market, if applicable, any such
adjustment will be made by and set forth in an instrument supplemental hereto
approved by action of the board of directors of the Corporation and will for all
purposes be conclusively deemed to be an appropriate adjustment.




A -
11


(5)        If
the purchase price provided for in any rights, options or warrants (the “Rights Offering Price”)
referred to in subsections 4.3(2) or (3) is decreased, the Conversion Price will
forthwith be changed so as to decrease the Conversion Price to the Conversion
Price that would have been obtained if the adjustment to the Conversion Price
made under such subsections, as the case may be, with respect to such rights,
options or warrants had been made on the basis of the Rights Offering Price as
so decreased, provided that the terms of this subsection will not apply to any
decrease in the Rights Offering Price resulting from terms in any such rights,
options or warrants designed to prevent dilution except to the extent that the
resulting decrease in the Conversion Price under this subsection would be
greater than the decrease, if any, in the Conversion Price to be made under the
terms of this section by virtue of the occurrence of the event giving rise to
such decrease in the Rights Offering Price.




(6)        In
any case in which this section requires that an adjustment become effective
immediately after a record date for an event referred to herein, the Corporation
may defer, until the occurrence of such event, issuing to the Holder of any
Debenture Converted after such record date and before the occurrence of such
event the additional Common Shares issuable upon such Conversion by reason of
the adjustment required by such event; provided, however, that the Corporation
shall deliver to such Holder an appropriate instrument evidencing such Holder’s
right to receive such additional Common Shares upon the occurrence of such event
and the right to receive any distributions made on such additional Common Shares
declared in favour of holders of record of Common Shares on and after the Date
of Conversion or such later date on which such Holder would, but for the
provisions of this subsection, have become the holder of record of such
additional Common Shares pursuant to subsection 4.2(1).




4.4       Rules
Regarding Calculation of Adjustment of Conversion Price




For
the purposes of Section 4.3:




(1)        The
adjustments provided for in Section 4.3 are cumulative and will be computed to
the nearest one-tenth of one cent and will be made successively whenever an
event referred to therein occurs, subject to the remaining provisions of this
section.




A -
12


(2)        No
adjustment in the Conversion Price will be required unless such adjustment would
result in a change of at least 1% in the prevailing Conversion Price; provided,
however, that any adjustments which, except for the provisions of this
subsection would otherwise have been required to be made, will be carried
forward and taken into account in any subsequent adjustment.




(3)        No
adjustment in the Conversion Price will be made in respect of any event
described in Section 4.3 if Holders are entitled to participate in such event on
the same terms, mutatis
mutandis, as if they had converted their Debentures prior to or on the
effective date or record date of such event.  Any such participation
will be subject to the prior consent of each stock exchange on which the Common
Shares are listed or quoted for unlisted trading privileges, or were listed in
the year prior to the occurrence of the event described in this subsection, if
applicable.




(4)        If
at any time a dispute arises with respect to adjustments provided for in Section
4.3, subject to the prior written consent of the Principal Market, if
applicable, such dispute will be conclusively determined by the Corporation’s
auditors, or if they are unable or unwilling to act, by such other firm of
independent chartered accountants as may be selected by action of the
Corporation’s board of directors and any such determination will be binding upon
the Corporation, the Holders and shareholders of the Corporation; such auditors
or accountants will be given access to all necessary records of the
Corporation.




(5)        If
the Corporation sets a record date to determine the holders of Common Shares for
the purpose of entitling them to receive any dividend or distribution or sets a
record date to take any other action and thereafter and before the distribution
to such shareholders of any such dividend or distribution or the taking of any
other action, legally abandons its plan to pay or deliver such dividend or
distribution or take such other action, then no adjustment in the Conversion
Price shall be made.




(6)        In
the absence of a resolution of the Corporation’s board of directors fixing a
record date for a Special Distribution or Rights Offering, the Corporation shall
be deemed to have fixed as a record date therefor the date on which the Special
Distribution or Rights Offering is effected.




4.5      
No Requirement to Issue Fractional Shares or Warrants




The
Corporation shall not be required to issue fractional Common Shares upon the
Conversion of Debentures.  If more than one Debenture is surrendered
for Conversion at one time by the same Holder, the number of whole Common Shares
issuable upon Conversion thereof shall be computed on the basis of the aggregate
principal amount of the Debentures to be Converted. If any fractional interest
in a Common Share, as applicable, would, except for the provisions of this
section, be deliverable upon the Conversion of any principal amount of
Debentures, the Corporation shall, in lieu of delivering any certificate of such
fractional interest, satisfy such fractional interest by paying to the Holder of
such surrendered Debentures an amount in lawful money of Canada equal to the
value of such fractional interest based upon the Closing Market Price of the
Common Shares on the Business Day preceding the Date of Conversion.




4.6       Corporation
to Reserve Shares




The
Corporation covenants that it will at all times reserve and keep available out
of its authorized Common Shares (if the number thereof is or becomes limited)
solely for the purpose of issue upon Conversion of Debentures as provided
herein, and conditionally issue to Holders who may exercise their Conversion
rights hereunder, such number of Common Shares as shall then be issuable upon
the Conversion of all outstanding Debenture. All Common Shares which shall be so
issuable shall be duly and validly issued as fully paid and
non-assessable.




A -
13


4.7       Cancellation
of Converted Debentures




All
Debentures Converted in whole or in part shall be forthwith cancelled by the
Corporation (with regard to the Debenture or portion thereof which has been
Converted) and, subject to subsection 4.2(3), no Debentures shall be issued in
substitution therefor.




4.8       Certificate
as to Adjustment




The
Corporation shall from time to time, immediately after the occurrence of any
event which requires an adjustment or readjustment as provided in Section 4.3,
deliver a certificate to the Holders specifying the nature of the event
requiring the same and the amount of the adjustment or readjustment necessitated
thereby and setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.  Except in respect of any
subdivision, redivision, reduction, combination or consolidation of the Common
Shares, the Corporation shall forthwith give notice to the Holders specifying
the event requiring such adjustment or readjustment and the amount thereof,
including the resulting Conversion Price; provided that if the Corporation has
given notice under Section 4.9 covering all the relevant facts in respect of
such event, no such notice need be given under this section.




4.9       Notice
of Special Matters




The
Corporation covenants that, so long as any Debentures remain outstanding, it
will give notice to the Holders of its intention to fix a record date for any
event referred to in subsections 4.3(1), (2), (3) or (4)  (other than
the subdivision, redivision, reduction, combination or consolidation of Common
Shares) or a cash dividend (other than a dividend paid in the ordinary course)
which may give rise to an adjustment in the Conversion Price, and such notice
shall specify the particulars of such event and the record date and the
effective date for such event; provided that the Corporation shall only be
required to specify in such notice such particulars of such event as shall have
been fixed and determined on the date on which such notice is
given.  Such notice shall be given not less than 14 days prior to the
applicable record date.




ARTICLE
5-  COVENANTS OF THE CORPORATION




5.1       General
Covenants




The
Corporation hereby covenants with the Holders as follows:




(a)
            the
      Corporation will duly and punctually pay or cause to be paid to every
      Holder the principal thereof and interest accrued on the Debentures (and,
      in case of default, interest on the amount in default) of which he is the
      Holder on the dates, at the places, and in the manner mentioned
      herein;




(b)
            at
      the request of a Holder, the Corporation will furnish to the Holders a
      copy of all financial statements, whether annual or interim, of the
      Corporation and the report, if any, of the Corporation’s auditors thereon
      and of all annual and other periodic reports of the Corporation furnished
      to its shareholders after the date hereof and prior to the Time of
      Expiry;




(c)
            the
      Corporation will duly and punctually perform and carry out all of the acts
      or things to be done by it, and perform all covenants required to be
      performed by it, as provided in this
Debenture;






A -
14




(d)
            upon
      the occurrence of an Event of Default, the Corporation shall permit a
      representative of the Holders to inspect the Collateral and the operations
      of the Corporation and for that purpose to enter to the Corporation’s
      premises and any other location where the Collateral may be situated
      during reasonable business hours and upon reasonable
    notice;




(e)
            the
      Corporation shall:




(i)         keep
proper books of accounts and records covering all of its business and affairs on
a current basis as well as accurate and complete records concerning the
Collateral;




(ii)        notify
the Holders promptly of any loss or damage to or any seizure of any significant
portion of the Collateral;




(iii)       furnish
the Holders with such information regarding the Collateral and its value and
location as the Holders may from time to time reasonably request;




(iv)       upon
the occurrence of an Event of Default, permit a representative of the Holders,
during reasonable business hours and upon reasonable notice, to inspect the
Corporation’s books of account, records and documents and to make copies,
extracts and summaries therefrom; and




(v)       
at any time after an Event of Default, permit the Holder or its representative
to make reasonable inquiries of third parties for the purpose of verification of
any of the foregoing; and




(f)
            the
      Corporation shall promptly notify the Holder in writing of the details
      of:




(i)         any
amendment to its articles, including by virtue of the filing of articles of
amalgamation, effecting a change in the Corporation’s name;




(ii)        any
claim, litigation or proceeding before any court, administrative board or other
tribunal which either does or could have a material adverse effect on the
Collateral or the Corporation;




(iii)       any
claim, lien, attachment, execution or other process or encumbrance made or
asserted against or with respect to the Collateral which either does or could
have material adverse effect on the validity or enforceability of the Security
Interest;




(iv)       any
transfer of the Corporation’s interest in the Collateral, whether or not
permitted hereunder; or




(v)       
any material loss of or damage to the Collateral, whether or not such loss or
damage is covered by insurance; and




(g)
            the
      Corporation shall keep the Collateral insured as would a reasonable
      prudent owner of similar property against loss or damage by fire, theft or
      other usual perils, in such amounts as would a reasonably prudent owner of
      similar property and with such insurers as the Holder may reasonably
      require from time to time.




A -
15


5.2       Specific
Covenants




The
Corporation hereby further covenants with the Holders that:




(a)
            all
      Common Shares which shall be issued upon a Conversion or payment of
      interest on the Debentures, shall be issued as fully paid and
      non-assessable in the capital of the
  Corporation;




(b)
            it
      will at all times maintain its corporate existence and will carry on and
      conduct its business in a proper and efficient manner; provided, however,
      that nothing herein contained shall prevent the Corporation from ceasing
      to operate any business or property if, in the opinion of its board of
      directors, it shall be advisable and in the best interests of the
      Corporation to do so;




(c)
            it
      will use its best efforts to maintain the listing of the Common Shares
      (including the Common Shares issuable pursuant to the terms of the
      Debentures) on or through the TSX or another recognized Canadian stock
      exchange;




(d)
            it
      will use its best efforts to maintain its status as a reporting issuer in
      each of the Provinces of Ontario, British Columbia, and Alberta not in
      default;




(e)
            it
      will at all times, so long as any Debentures remain outstanding and may be
      Converted, keep open the register of Debentures and the transfer registers
      for the Common Shares and will not take any action which would have the
      effect of preventing the Holders from Converting any of the Debentures or
      receiving any of the Common Shares upon such
  Conversion;




(f)
            it
      will make all requisite filings, including filings with appropriate
      securities commissions and stock exchanges, in connection with the
      creation and sale of the Debentures, the Conversion of the Debentures and
      the issue of the underlying Common
Shares;




(g)
            generally,
      it will well and truly perform and carry out all of the acts or things to
      be done by it as provided herein;
and




(h)
            it
      will use its best efforts to comply with, satisfy and fulfil promptly all
      prerequisites, conditions and requirements imposed by or arising out of
      legal, regulatory and administrative requirements applicable to the
      Corporation with respect to the consummation of the transactions
      contemplated hereby, including filing or causing to be filed all
      documents, certificates, opinions, forms or undertakings required to be
      filed by the Corporation in connection with the purchase and sale of the
      Debentures and the issuance of the Common Shares in accordance with the
      terms of the Debentures and the listing and posting for trading of such
      Common Shares on the TSX or another recognized Canadian stock exchange, as
      applicable.




5.3       Performance
of Covenants by the Registered Holder




The
Registered Holder may, in its sole discretion and upon notice to the
Corporation, perform any covenant of the Corporation under this Debenture that
the Corporation fails to perform and that the Registered Holder is capable of
performing, including any covenant the performance of which requires the payment
of money; provided that the Registered Holder will not be obligated to perform
any such covenant on behalf of the Corporation.  No such performance
by the Registered Holder will require the Registered Holder further to perform
the Corporation’s covenants nor relieve the Corporation from any default or
operate as a derogation of the rights and remedies of the Registered Holder
under this Debenture.  The Corporation agrees to indemnify and to
reimburse the Registered Holder for all costs and expenses incurred by the
Registered Holder in connection with the performance by it of any such covenant,
and all such costs and expenses shall be payable by the Corporation to the
Registered Holder on demand, shall bear interest at the highest rate per annum
borne by any of the Obligations, calculated and compounded monthly, and shall
(with all such interests) be added and form part of the
Obligations.




A -
16


ARTICLE
6-  SECURITY INTEREST




6.1       Grant
of Security Interest




As
continuing collateral security for the due and timely payment and performance by
the Corporation of the Obligations, the Corporation shall grant to
the  Holders the General Security Agreement.




ARTICLE
7-  RESTRICTIONS ON DISPOSITIONS OF COLLATERAL




7.1       General
Restrictions




Except
as herein expressly provided, the Corporation shall not, without the prior
written consent of the Holder:




(a)
            create,
      allow to be created, assume or suffer to exist any encumbrance upon the
      Collateral ranking or purporting to rank in priority to or pari passu with
      the Security Interest other than the Permitted Security
      Interests;




(b)
            sell,
      lease, assign or otherwise dispose of or deal with the Collateral;
      or




(c)
            release,
      surrender or abandon possession of the
  Collateral.




7.2       Permitted
Dispositions




This
Debenture and the Security Interest shall in no way hinder or prevent the
Corporation, without the prior written consent of the Holder, at any time or
from time to time until an Event of Default shall have occurred and the Security
Interest shall become enforceable:




(a)
            from
      collecting and, where necessary, enforcing the collection of any and all
      amounts due or to become due to the Corporation under any account;
      or




(b)
            from
      selling, leasing, licensing, consigning or otherwise disposing of
      inventory or of any obsolete, worn out, damaged or otherwise unsuitable
      equipment forming part of the Collateral in the ordinary course of the
      Corporation’s business and for the purpose of carrying on the
      same.




ARTICLE
8-  NOTICES




8.1       Notice
to the Corporation




Any
notice to the Corporation under the provisions of this Debenture shall be valid
and effective if delivered personally to, or if given by registered mail,
postage prepaid, addressed to, the Corporation at its offices in 302 The East
Mall, Suite 300, Toronto, Ontario, M9B 6C7 Attention: Tam Nguyen, telecopier no.
(416) 640-0412, and shall be deemed to have been given on the date of delivery
or on the fifth Business Day after such letter has been mailed, as the case may
be.  The Corporation may from time to time notify the Holders of a
change in address which thereafter, until changed by further notice, shall be
the address of the Corporation for all purposes of the Debentures.




A -
17


8.2       Notice
to Holder




Except
as otherwise expressly provided herein, all notices to be given hereunder with
respect to the Debentures shall be valid and effective if such notice is
delivered personally or, subject to Section 8.3, sent by first class mail,
postage prepaid, addressed to such Holders at their post office addresses
appearing in any of the registers hereinbefore mentioned.  Any notice
so delivered or sent by mail shall be deemed to have been given on the day upon
which it is delivered or on the fifth Business Day after such letter has been
mailed, as the case may be.  Any accidental error, omission or failure
in giving or in delivering or mailing any such notice or the non-receipt of any
such notice by any Holder shall not invalidate or otherwise prejudicially affect
any action or proceeding founded thereon.




8.3       Mail
Service Interruption




If,
by reason of any actual or threatened interruption of mail service due to
strike, lock-out or otherwise, any notice to be given to the Holders or to the
Corporation would be unlikely to reach its destination in a timely manner, such
notice shall be valid and effective only if delivered personally in accordance
with Sections 8.1 or 8.2, as the case may be.




ARTICLE
9-  SUCCESSOR CORPORATIONS




9.1       Certain
Requirements




The
Corporation shall not enter into any transaction (whether by way of
reconstruction, reorganization, consolidation, amalgamation, merger, transfer,
sale, lease or otherwise) whereby all or substantially all of its undertaking,
property and assets would become the property of any other person or, in the
case of such amalgamation or merger, of the continuing company resulting
therefrom unless, and may do so if:




(i)           such
other person or continuing corporation is a corporation (herein called the
“Successor Corporation”)
incorporated under the laws of Canada or any province thereof;




(ii)           the
Successor Corporation shall execute, prior to, contemporaneously with or
forthwith after the consummation of such transaction an instrument supplemental
hereto and such other instruments as are necessary or advisable to evidence the
assumption by the Successor Corporation of the liability for the due and
punctual payment of all amounts outstanding and payable hereunder from time to
time and the covenant of the Successor Corporation to pay the same and its
agreement to observe and perform all of the covenants and obligations of the
Corporation under this Debenture;




(iii)           such
transaction shall, to the satisfaction of the Holders acting reasonably, be upon
such terms as substantially to preserve and not to impair in any material
respect the rights and powers of the Holders hereunder; and




A -
18


(iv)           no
condition or state of facts shall exist as to the Corporation or the Successor
Corporation, either at the time of or immediately before or after the
consummation of any such transaction and after giving full effect thereto or
immediately after the Successor Corporation complying with the provisions of
clause (b) above, that constitutes or would constitute after notice or lapse of
time or both, an Event of Default.




9.2       Vesting
of Powers in Successor




Whenever
the conditions of Section 9.1 shall have been duly observed and performed, the
Holders shall execute and deliver the supplemental instrument provided for in
Section 9.1 and thereupon the Successor Corporation shall be bound by the
covenants and obligations of the Corporation under this Debenture and shall
possess and from time to time exercise each and every power of the Corporation
under this Debenture in the name of the Corporation or otherwise, and any act or
proceeding by any provision of this Debenture required to be done or performed
by any directors or officers of the Corporation may be done and performed with
like force and effect by the directors or officers of the Successor
Corporation.









ARTICLE
10-  GENERAL PROVISIONS




10.1     Further
Assurances




The
Corporation shall do, execute, acknowledge and deliver or cause to be done,
executed, acknowledged and delivered, such further acts, deeds, mortgages,
transfers, assurances or other documents as the Registered Holder shall
reasonably require to give effect to or preserve and perfect the Security
Interest in the Collateral intended to be granted to the Registered Holder
hereunder, under the General Security Agreement, or any security interest the
Corporation may hereafter grant or become bound to grant to the Registered
Holder for the purpose of accomplishing and effecting the intention of this
Debenture.  The Corporation hereby irrevocably appoints the Registered
Holder to be the attorney of the Corporation, coupled with an interest, with
full power of substitution, for and in the name of the Corporation to execute
and to do any deeds, documents, transfers, demands, assignments, assurance,
consents and things which the Corporation is obliged to sign, execute or do
hereunder.




10.2     Term




This
Debenture shall become effective according to its terms immediately upon the
execution hereof by the Corporation and shall continue as security for the
Obligations until all of the Obligations are paid and performed in full and this
Debenture is terminated.




10.3     Non-Substitution




This
Debenture and the Security Interest are in addition to and not in substitution
for any other agreement made between the Registered Holder and the Corporation
or any other security granted by the Corporation to the Registered Holder
whether before or after the execution of this Debenture.




A -
19


10.4     No
Merger




Neither
the taking of any action suit or proceeding, judicial or extra-judicial nor the
exercise of any power of seizure or disposition shall extinguish the liability
of the Corporation to pay and perform the Obligations nor shall the acceptance
of any payment or alternate security constitute or create any
novation.  No covenant, representation or warranty of the Corporation
herein shall merge in any judgment.




10.5     Entire
Agreement




There
are no representations, agreements, warranties, conditions, covenants or terms,
express or implied, collateral or otherwise, affecting this Debenture or the
Security Interest or the Corporation’s obligations and liabilities hereunder
other than express herein.




10.6     Time
of Essence




Time
shall be of the essence in this Debenture in all respects.




10.7     Disclosure
of Information re Corporation




The
Corporation agrees that the Registered Holder may provide from time to time such
information concerning this Debenture, the Collateral and the Obligations to
such persons as the Registered Holder in good faith believes are entitled to the
same under the PPSA.




A -
20


EXHIBIT
“1”




FORM
OF TRANSFER




Re:  Series
(K) Convertible NORTHCORE TECHNOLOGIES INC.  due June___,
2009




For
value received, the undersigned hereby assigns and transfers unto




______________________________________
of _____________________________________ $  of the principal amount of
the within Debenture registered in the name of the undersigned on the books of
NORTHCORE TECHNOLOGIES INC. (the “Corporation”) including the
rights thereunder to the accrued and unpaid interest on such principal amount
and hereby irrevocably constitutes and appoints ____________________________
attorney to transfer the said Debenture on the books of the Corporation with
full powers of substitution in the premises.




DATED_____________
in the presence of __________________________.




Signed:
___________________________________







EXHIBIT
“2”




FORM
OF ELECTION OF CONVERSION PRIVILEGE




TO:      NORTHCORE
TECHNOLOGIES INC.


RE:
            Series
      (K) Convertible Debenture of NORTHCORE TECHNOLOGIES INC. due June ___,
      2009





The
undersigned hereby irrevocably elects to convert $1,000 or any integral multiple
thereof principal amount of the within Debenture into Common Shares of the
Corporation at the Conversion Price in accordance with the Terms and Conditions
of the Debenture.  Please issue share certificates for the Common
Shares and Warrants comprising such Units as follows:




Principal
amount converted: $ _____________________________




($1,000
or integral multiple thereof only)




Name:
            ____________________________________




Address:
            ____________________________________




____________________________________




Date:                ____________________________________




Signed:              ____________________________________