THIS SPECIAL WARRANT INDENTURE is made the 12th day of September, 2000.
BETWEEN:

          SPECTRUM SIGNAL PROCESSING INC., 200 - 2700
          Production Way, Burnaby, British Columbia, V5A 4X1

          (herein called the "Corporation")

                                                               OF THE FIRST PART

AND:

          MONTREAL TRUST COMPANY OF CANADA, of 3rd Floor,
          510 Burrard Street, Vancouver, British Columbia, V6C 3B9

          (herein called the "Trustee")

                                                              OF THE SECOND PART

          WHEREAS  the  Corporation  is  proposing  to create and issue  Special
Warrants in the manner herein set forth;  AND WHEREAS one Special  Warrant shall
entitle the holder  thereof to acquire  one Common  Share and one Warrant of the
Corporation,  subject to adjustment in certain  circumstances,  at no additional
cost upon the terms and conditions herein set forth;

          AND WHEREAS all acts and deeds  necessary have been done and performed
to make the Special Warrants when issued, as in this Indenture provided,  legal,
valid and binding  upon the  Corporation  with the  benefits  and subject to the
terms of this Indenture;

          NOW THEREFORE THIS INDENTURE  WITNESSETH that in  consideration of the
mutual  covenants and agreements of the parties  contained  herein,  the parties
hereto agree as follows:

                                   ARTICLE 1
                                 INTERPRETATION

1.1       Definitions

          In this Indenture,  including the recitals and schedules hereto and in
all indentures supplemental hereto:

          (a)  "Adjustment  Period" means the period from and including the date
               of issuance of the Special  Warrants up to and including the Time
               of Expiry;

          (b)  "Applicable  Legislation" means the provisions of the Company Act
               (British Columbia) as from time to time amended,  and any statute
               of Canada or a province  thereof,  and the regulations  under any

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                                      -2-


               such named or other statute,  relating to trust  indentures or to
               the  rights,   duties  and   obligations   of  trustees   and  of
               corporations  under  trust  indentures,  to the extent  that such
               provisions  are at the  time  in  force  and  applicable  to this
               Indenture;

          (c)  "Business  Day" means a day which is not  Saturday or Sunday or a
               statutory holiday in British Columbia or Ontario;

          (d)  "Common Shares" means fully paid and non-assessable common shares
               of the Corporation as presently constituted;

          (e)  "Corporation's  Auditors"  means a firm of chartered  accountants
               duly appointed as auditors of the Corporation;

          (f)  "Counsel"  means  a  barrister  or  solicitor  acceptable  to the
               Trustee;

          (g)  "Current Market Price" of the Common Shares at any date means the
               simple  average of the closing  trading  price per share for such
               shares for the 20 consecutive Trading Days immediately  preceding
               such date on The Toronto  Stock  Exchange or, if on such date the
               Common  Shares are not listed on The Toronto Stock  Exchange,  on
               such stock  exchange  upon  which  such  shares are listed and as
               selected by the directors (provided that if on any day in such 20
               Trading Day period no closing price per share is reported by such
               exchange,  the average of the reported closing bid and ask prices
               on such  exchange  shall be  deemed to be the  closing  price per
               share for such  day),  or, if such  shares  are not listed on any
               stock exchange,  then on such  over-the-counter  market as may be
               selected for such purpose by the directors;

          (h)  "Effective Date" means the date of this Indenture;

          (i)  "Equity  Shares"  means the  Common  Shares and any shares of any
               other class or series of the  Corporation  which may from time to
               time be authorized for issue if by their terms such shares confer
               on  the  holders   thereof  the  right  to   participate  in  the
               distribution   of  assets  upon  the  voluntary  or   involuntary
               liquidation,  dissolution or winding-up of the Corporation beyond
               a fixed sum or a fixed sum plus accrued dividends;

          (j)  "Exercise Date" means,  with respect to any Special Warrant,  the
               date on which  the  Warrant  Certificate  representing  a Special
               Warrant is surrendered  for exercise or otherwise  deemed to have
               been exercised in accordance with the provisions of Article 3;

          (k)  "Exercise  Period" means the period commencing on the Shareholder
               Approval Date and ending at the Time of Expiry;

          (l)  "Filing Jurisdictions" means each of the provinces in the Selling
               Jurisdictions where Special Warrants are sold;


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                                      -3-


          (m)  "Notice  of   Compliance"   means  notice  in  writing  from  the
               Corporation  to the Trustee to the effect that the  Qualification
               Date and the Shareholder Approval Date have occurred,  specifying
               whether there has been any  distribution  of the Common Shares in
               which the  Warrantholders  are  entitled  to  participate  or any
               adjustment to the number of Common  Shares and Warrants  issuable
               on  exercise  or  deemed  exercise  of the  Special  Warrants  as
               contemplated in Section 2.2 hereof;

          (n)  "Notice  of  Non-Compliance"  means  notice in  writing  from the
               Corporation  to the  Trustee  to the effect  that,  either of the
               Shareholder  Approval  Date  or the  Qualification  Date  has not
               occurred prior to the Retraction Time.

          (o)  "Notice of Shareholder Approval" means notice in writing from the
               Corporation  to the  Trustee to the effect  that the  Shareholder
               Approval Date has occurred.

          (p)  "Permitted Investments" means:

               (i)  obligations  of or guaranteed by the government of Canada or
                    any province of Canada;

               (ii) certificates  of deposits,  term deposit,  receipts,  bearer
                    deposit notes or bankers' acceptances issued or accepted by,
                    deposited placed with, or other obligations of or guaranteed
                    by any  Canadian  chartered  bank,  or any trust  company or
                    other financial  institution  incorporated under the laws of
                    Canada or of a  province  of  Canada,  the  short-term  debt
                    obligations of which are rated,  at the date of acquisition,
                    at least A 1 by  Canadian  Bond Rating  Service  Inc. or R 1
                    (middle) by Dominion Bond Rating Service Limited; and

               (iii)any  other  obligations  which  are  rated,  at the  date of
                    acquisition,  or  which  are  guaranteed  by  a  person  the
                    obligations of which are rated,  at the date of acquisition,
                    at least as highly as the levels  specified in clause (i) of
                    this definition;

          (q)  "person" means an individual, body corporate, partnership, trust,
               trustee,  executor,  administrator,  legal  representative or any
               unincorporated organization;

          (r)  "Prospectus"  means  a  (final)  prospectus  and  any  amendments
               thereto, to be filed with the Securities  Commissions  qualifying
               the distribution of the Common Shares and Warrants  issuable upon
               the exercise or deemed exercise of the Special Warrants;

          (s)  "Qualification  Date"  means the day on which a Receipt is issued
               for the Prospectus by the last of the Securities Commission to do
               so;

          (t)  "Receipt"  means a MMRS decision  document issued by or on behalf
               of a Securities  Commission for a Prospectus pursuant to National
               Policy  43 201  and a  receipt  issued  for a  Prospectus  by any
               Securities Commission that opts out of the MMRS system;


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                                      -4-


          (u)  "Regulation D" means Regulation D of the U.S. Securities Act;

          (v)  "Regulation S" means Regulation S of the U.S. Securities Act;

          (w)  "Restricted  Proceeds"  means an  amount  equal to the  aggregate
               purchase price for the Special Warrants issued by the Corporation
               hereunder;

          (x)  "Retraction Date" means January 10, 2001;

          (y)  "Retraction  Expiry  Time"  means  4:30  p.m.  Vancouver  time on
               January 17, 2001;

          (z)  "Retraction  Right"  means  the  right  of a  holder  of  Special
               Warrants  to compel the  Corporation  to  repurchase  the Special
               Warrants  represented by each Special Warrant Certificate for the
               Warrant  Purchase  Price  for each  Special  Warrant  repurchased
               together  with  accrued  interest  less  any  withholding  tax in
               circumstances  where the Qualification  Date does not occur prior
               to the Retraction Time;

          (aa) "Retraction   Time"  means  4:30  p.m.   Vancouver  time  on  the
               Retraction Date;

          (bb) "Securities  Commission"  means  the  securities  commissions  or
               similar regulatory authorities in the Filing Jurisdictions;

          (cc) "Securities  Laws" means the  applicable  securities  laws of the
               Provinces  of British  Columbia,  Ontario  and  Alberta,  and the
               respective  regulations  made  and  forms  prescribed  thereunder
               together with all  applicable  published  policy  statements  and
               blanket orders and rulings of the Securities Commission;

          (dd) "Selling  Jurisdictions" means the Provinces of British Columbia,
               Ontario and Alberta;

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

          (ff) "Shareholder  Approval Date" means the date the  Corporation  has
               received  shareholder  approval  for the  issuance  of the Common
               Shares  issuable  upon  exercise of the Special  Warrants and the
               Warrants in  accordance  with the  policies of the Toronto  Stock
               Exchange;

          (gg) "Special  Warrant  Purchase Price" means $4.25 in lawful money of
               Canada per Special Warrant;

          (hh) "Special  Warrants"  means warrants  issued by the Corporation in
               registered  form in accordance  with the terms and  conditions of
               this Indenture;

          (ii) "this Special Warrant  Indenture",  "this  Indenture",  "herein",
               "hereby" and similar expressions mean and refer to this Indenture
               and any indenture,  deed or instrument  supplemental  hereto; and
               the   expressions   "Article",   "Section",    "subsection"   and
               "paragraph"  followed by a number mean and refer to the specified
               article, section, subsection or paragraph of this Indenture;


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                                      -5-


          (jj) "Time of Expiry" means 4:30 p.m.,  Vancouver time, on the earlier
               of:

               (i)  the first business day after the Qualification Date; or

               (ii) the first  Business Day  following  the date which is twelve
                    (12) months after the Effective  Date,  provided that if the
                    Shareholder  Approval  Date  has  not  occurred  as  of  the
                    Qualification  Date,  the Time of Expiry  shall be 4:30 p.m.
                    Vancouver  time on the first Business Day following the date
                    which is twelve (12) months after the Effective Date;

          (kk) "Trading Day" means,  with respect to a stock exchange,  a day on
               which such exchange is open for the transaction of business;

          (ll) "Transfer  Agent" means the Transfer  Agent for the time being of
               the Common Shares;

          (mm) "U.S.  Securities Act" means the United States  Securities Act of
               1933, as amended;

          (nn) "Warrant"  means the one  common  share  purchase  warrant  to be
               issued  by the  Corporation  on  the  conversion  of one  Special
               Warrant,  in registered  form,  in accordance  with the terms and
               conditions  of  an  indenture  to be  entered  into  between  the
               Corporation and the Trustee.  Each whole warrant will entitle the
               holder to acquire  one Common  Share at any time on or before the
               first  Business  Day  following  the date which is eighteen  (18)
               months  after the date of issue of all  Warrants  at the  Warrant
               Exercise Price, subject to appropriate adjustments to such number
               and such  exercise  price in the event of,  among  other  things,
               certain issuances of securities by the Corporation and changes in
               capital  structure of the Corporation and will contain such other
               terms  and  conditions  as are  customarily  included  in such an
               indenture;

          (oo) "Warrant Agency" means the principal office of the Trustee in the
               City of Vancouver, British Columbia and Toronto, Ontario;

          (pp) "Warrant  Certificate" means a certificate issued on or after the
               Effective Date to evidence Special Warrants;

          (qq) "Warrant Exercise Price" means each Warrant's respective exercise
               price,  being $4.75 per Common  Share if  exercised  on or before
               4:30 p.m.,  Vancouver  time, on the first  Business Day following
               the date which is eighteen (18) months after the date of issue of
               the  Warrants,  in lawful money of Canada unless such price shall
               have been  adjusted  in  accordance  with the  provisions  of the
               Indenture governing the Warrants, in which case it shall mean the
               adjusted price then in effect;

          (rr) "Warrantholder"  means a holder of record of one or more  Special
               Warrants;


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                                      -6-


          (ss) "Warrantholders"  or "holders"  means the persons who,  after the
               Effective Date, are registered owners of Special Warrants;

          (tt) "Warrantholders'  Request"  means an instrument  signed in one or
               more  counterparts by  Warrantholders  entitled to acquire in the
               aggregate  not less  than 10% of the  aggregate  number of Common
               Shares which could be acquired  pursuant to all Special  Warrants
               then unexercised and outstanding,  requesting the Trustee to take
               some action or proceeding specified therein; and

          (uu) "written  order  of the  Corporation",  "written  request  of the
               Corporation",   "written   consent   of  the   Corporation"   and
               "certificate of the Corporation"  mean,  respectively,  a written
               order, request, consent and certificate signed in the name of the
               Corporation by its Chairman,  President,  a Vice-President,  or a
               director  and, in addition,  by its  Secretary,  Treasurer,  or a
               director, and may consist of one or more instruments so executed.

1.2       Gender and Number

          Unless  herein  otherwise  expressly  provided  or unless the  context
otherwise  requires,  words  importing the singular  include the plural and vice
versa and words importing  gender include all genders.

1.3       Interpretation  not Affected by Headings, Etc.

          The division of this Indenture into  Articles,  Sections,  subsections
and  paragraphs,  the  provision  of a table of contents  and the  insertion  of
headings  are for  convenience  of  reference  only and  shall  not  affect  the
construction or interpretation of this Indenture.

1.4       Day Not a Business Day

          In the event that any day on or before which any action is required to
be taken  hereunder is not a Business Day, then such action shall be required to
be taken at or before the requisite  time on the next  succeeding  day that is a
Business Day.

1.5       Time of the Essence

          Time shall be of the essence of this Indenture.

1.6       Currency

          Except as otherwise expressly provided,  all dollar amounts herein are
expressed in Canadian dollars.

1.7       Applicable Law This Indenture and the Warrant

          Certificates  shall be  construed in  accordance  with the laws of the
Province  of British  Columbia  and shall be treated in all  respects as British
Columbia contracts.


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                                      -7-


                                   ARTICLE 2
                           ISSUE OF SPECIAL WARRANTS

2.1       Issue of Special Warrants

          (a)  1,764,705  Special  Warrants,  entitling  the holders  thereof to
               acquire an  aggregate of 1,764,705  Common  Shares and  1,764,705
               Warrants,  subject to  adjustment  in  accordance  with Article 4
               hereof, are hereby created and authorized to be issued.

          (b)  The Warrant  Certificates  shall be substantially in the form set
               out in  Schedule  "A"  hereto,  shall be dated in  respect of any
               Warrant  Certificate as of the Effective Date in respect of those
               Special   Warrants   represented   by  the  Warrant   Certificate
               (including  all  replacements  issued  in  accordance  with  this
               Indenture), shall bear such distinguishing letters and numbers as
               the Corporation may, with the approval of the Trustee, prescribe,
               and shall be issuable in any denomination excluding fractions.

2.2       Form and Terms of Special Warrants

          (a)  One  Special  Warrant  authorized  to be issued  hereunder  shall
               entitle the holder  thereof to acquire,  in  accordance  with and
               subject  to the terms of  Article 3 hereof  and at no  additional
               cost to the holder one Common  Share and one  Warrant  subject to
               adjustment in accordance with Article 4 hereof;

          (b)  No fractional  Special Warrants,  Common Shares or Warrants shall
               be issued or otherwise provided for hereunder.

          (c)  The number of Common  Shares and  Warrants  which may be acquired
               pursuant to the Special  Warrants shall be adjusted in the events
               and in the manner specified in Article 4.

2.3       Warrantholder not a Shareholder

          Except as provided for in subsection 5.1(g), nothing in this Indenture
or in the holding of a Special Warrant itself evidenced by a Warrant Certificate
or otherwise,  shall,  in itself,  confer or be construed as  conferring  upon a
Warrantholder any right or interest  whatsoever as a Shareholder or as any other
shareholder of the Corporation, including, but not limited to, the right to vote
at, to receive notice of, or to attend,  meetings of  shareholders  or any other
proceedings  of the  Corporation,  or the right to receive  dividends  and other
distributions.

2.4       Special Warrants to Rank Pari Passu

          All Special Warrants shall rank pari passu, whatever may be the actual
date of issue of the same.


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                                      -8-


2.5       Signing of Warrant Certificates

          The  Warrant  Certificates  shall  be  signed  under  seal  by any one
director  or officer of the  Corporation.  The  signature  of such  director  or
officer may be  mechanically  reproduced in facsimile  and Warrant  Certificates
bearing such  facsimile  signature  shall be binding upon the  Corporation as if
they had been manually signed by such director or officer.  Notwithstanding that
any of the persons  whose manual or facsimile  signature  appears on any Warrant
Certificate as such director or officer may no longer hold office at the date of
such Warrant  Certificate or at the date of certification  or delivery  thereof,
any Warrant  Certificate  signed as aforesaid shall,  subject to Section 2.6, be
valid and binding upon the  Corporation and the holder thereof shall be entitled
to the benefits of this Indenture.

2.6       Countersignature by the Trustee

          (a)  No Warrant  Certificate  shall be issued or, if issued,  shall be
               valid for any purpose or entitle the holder to the benefit hereof
               until it has been  countersigned  by  manual  signature  by or on
               behalf  of  the  Trustee   substantially   in  the  form  of  the
               certificate   set  out  in   Schedule   "A"   hereto,   and  such
               countersignature  by the  Trustee  upon any  Warrant  Certificate
               shall be conclusive  evidence as against the Corporation that the
               Warrant  Certificate so certified has been duly issued  hereunder
               and that the holder is entitled to the benefits hereof.

          (b)  The  countersignature  of the  Trustee  on  Warrant  Certificates
               issued  hereunder shall not be construed as a  representation  or
               warranty by the Trustee as to the  validity of this  Indenture or
               the Warrant Certificates (except the due countersigning  thereof)
               and the Trustee shall in no respect be liable or  answerable  for
               the use made of the Warrant  Certificate or any of them or of the
               consideration therefor except as otherwise specified herein.

2.7       Issue in Substitution for Warrant Certificates Lost, Etc.

          (a)  In case any of the Warrant Certificates shall become mutilated or
               be  lost,  destroyed  or  stolen,  the  Corporation,  subject  to
               applicable  law,  shall issue and  thereupon  the  Trustee  shall
               certify and deliver,  a new Warrant  Certificate of like tenor as
               the one mutilated,  lost, destroyed or stolen in exchange for and
               in place  of and  upon  cancellation  of such  mutilated  Warrant
               Certificate,  or in lieu of and in  substitution  for such  lost,
               destroyed  or stolen  Warrant  Certificate,  and the  substituted
               Warrant  Certificate  shall be in a form  approved by the Trustee
               and shall be  entitled  to the  benefits  hereof  and shall  rank
               equally  in  accordance  with its  terms  and all  other  Warrant
               Certificates issued or to be issued hereunder.

          (b)  The applicant for the issue of a new Warrant Certificate pursuant
               to this Section 2.7 shall bear the cost of the issue  thereof and
               in case of loss,  destruction  or  theft  shall,  as a  condition
               precedent to the issue thereof, furnish to the Corporation and to
               the  Trustee  such   evidence  of  ownership  and  of  the  loss,
               destruction  or  theft  of  the  Warrant   Certificate  so  lost,
               destroyed or stolen as shall be  satisfactory  to the Corporation
               and to the Trustee in their sole  discretion,  and such applicant

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                                      -9-


               may also be required to furnish an  indemnity  and surety bond in
               amount and form  satisfactory  to the Corporation and the Trustee
               in their  discretion and shall pay the reasonable  charges of the
               Corporation and the Trustee in connection therewith.

2.8       Exchange of Warrant Certificates

          (a)  Warrant Certificates representing Special Warrants to acquire any
               specified  number  of  Common  Shares  and  Warrants,  may,  upon
               compliance with the reasonable  requirements  of the Trustee,  be
               exchanged for another Warrant Certificate or Warrant Certificates
               entitling the holder thereto to acquire in the aggregate the same
               number of Common Shares and Warrants as may be acquired under the
               Warrant Certificate or Warrant Certificates so exchanged.

          (b)  Warrant  Certificates may be exchanged only at the Warrant Agency
               or at any other place that is designated by the Corporation  with
               the approval of the Trustee. Any Warrant Certificate tendered for
               exchange shall be cancelled and surrendered to the Trustee at the
               Warrant Agency.

2.9       Charges for Exchange

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

2.10      Ownership of Special Warrants


          (a)  The   Corporation  and  the  Trustee  will  deem  and  treat  the
               registered  owner of any Special Warrant as the beneficial  owner
               thereof for all  purposes  and neither  the  Corporation  nor the
               Trustee shall be affected by any notice to the contrary.

          (b)  Subject to the provisions of this  Indenture and applicable  law,
               the Warrantholder  shall be entitled to the rights and privileges
               attaching to the Special  Warrants and the issue of Common Shares
               and  Warrants  by the  Corporation  upon the  exercise of Special
               Warrants by any  Warrantholder  in accordance  with the terms and
               conditions herein contained shall discharge all  responsibilities
               of the  Corporation  and the Trustee with respect to such Special
               Warrants  and neither the  Corporation  nor the Trustee  shall be
               bound to inquire into the title of any such holder.

2.11      Registration and Transfer

          (a)  The Corporation  will at all times cause to be kept by and at the
               office  of  the  Trustee  in the  cities  of  Vancouver,  British
               Columbia and Toronto, Ontario, and at such other place or places,
               if any, as may be designated by the Corporation with the approval
               of the  Trustee,  registers  in  which  names  and  addresses  of
               Warrantholders  and  particulars of the Special  Warrants held by
               them  will be  entered,  such  registration  to be  noted  on the
               Special Warrants by the Trustee or other registrar.


<PAGE>

                                      -10-


          (b)  No transfer of a Special Warrant will be valid unless made on one
               of the  registers  to be kept by and at the office of the Trustee
               in  the  cities  of  Vancouver,  British  Columbia  and  Toronto,
               Ontario,  or at such  other  place or places,  if any,  as may be
               designated by the  Corporation  with the approval of the Trustee,
               on  surrender  to the  Trustee of the  Warrant  Certificate  duly
               endorsed by, or accompanied by, a written  instrument of transfer
               in form  satisfactory  to the Trustee  executed by the registered
               holder  or  his   executors,   administrators,   or  other  legal
               representative  or  his  or  their  attorney  duly  appointed  by
               instrument in writing in form and execution  satisfactory  to the
               Trustee or other  registrar upon  compliance with such reasonable
               requirements  as the  Trustee  may  prescribe,  nor  unless  such
               transfer will have been noted on the Special Warrant  register by
               the Trustee or other registrar.

          (c)  The Special  Warrants may not be offered,  sold or transferred in
               the  United  States or to or from the  account  or  benefit  of a
               person in the United States unless an exemption from registration
               under the U.S.  Securities  Act and applicable  state  securities
               laws is  available  and the  Warrantholder  has  presented to the
               Corporation   evidence  of  the  availability  of  the  exemption
               satisfactory to the Corporation.

          (d)  The  registers  referred to in  subsection  2.11(a)  hereof will,
               during   business  hours,  be  open  to  the  inspection  of  the
               Corporation  and any person  designated  by it in writing and any
               Warrantholder  free of charge. In addition,  every registrar will
               from time to time when  requested to do so by the  Corporation or
               by the Trustee furnish the Corporation or the Trustee with a list
               of the names and  addresses of the  Warrantholders  whose Special
               Warrants are listed on the register  kept by such  registrar  and
               showing the number of Special Warrants  registered in the name of
               each such holder.

2.12      Legend Requirements

          The Trustee acknowledges that the Special Warrants,  Common Shares and
Warrants have not been  registered  under the U.S.  Securities Act. Each Special
Warrant  originally  issued to a person in the United States or transferred to a
person in the United States and all certificates  representing Common Shares and
Warrants  issued upon the exercise of such Special  Warrants in accordance  with
Article 3 hereof (and each Special Warrant certificate, Common Share certificate
or  Warrant  certificate  issued in  exchange  therefor  or in  substitution  on
transfer thereof) shall be overprinted with the following legend:

          THE SECURITIES  REPRESENTED  HEREBY HAVE NOT BEEN REGISTERED UNDER THE
          UNITED  STATES  SECURITIES  ACT OF 1933,  AS AMENDED (THE  "SECURITIES
          ACT") OR THE  SECURITIES  LAWS OF ANY  STATE.  THE HOLDER  HEREOF,  BY
          PURCHASING SUCH SECURITIES,  AGREES FOR THE BENEFIT OF THE CORPORATION

<PAGE>

                                      -11-


          THAT SUCH  SECURITIES  MAY BE OFFERED,  SOLD OR OTHERWISE  TRANSFERRED
          ONLY  (A)  TO  THE  CORPORATION  (B)  OUTSIDE  THE  UNITED  STATES  IN
          COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (C)
          IN  COMPLIANCE  WITH  THE  EXEMPTION  FROM   REGISTRATION   UNDER  THE
          SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER,  OR (D) IN COMPLIANCE
          WITH ANOTHER EXEMPTION FROM REGISTRATION AFTER PROVIDING AN OPINION OF
          COUNSEL SATISFACTORY TO THE CORPORATION TO EFFECT THAT REGISTRATION IS
          NOT REQUIRED.  DELIVERY OF THIS  CERTIFICATE MAY NOT CONSTITUTE  "GOOD
          DELIVERY' IN SETTLEMENT OF  TRANSACTIONS ON STOCK EXCHANGES IN CANADA.
          AT ANY TIME THE  CORPORATION  IS A  "FOREIGN  ISSUER"  AS  DEFINED  IN
          REGULATION S UNDER THE SECURITIES ACT, A NEW  CERTIFICATE,  BEARING NO
          LEGEND,  DELIVERY OF WHICH WILL  CONSTITUTE  "GOOD  DELIVERY",  MAY BE
          OBTAINED FROM  MONTREAL  TRUST COMPANY OF CANADA UPON DELIVERY OF THIS
          CERTIFICATE AND A DULY EXECUTED DECLARATION, IN A FORM SATISFACTORY TO
          MONTREAL  TRUST COMPANY OF CANADA AND THE  CORPORATION,  TO THE EFFECT
          THAT THE SALE OF THE  SECURITIES  REPRESENTED  HEREBY IS BEING MADE IN
          COMPLIANCE WITH RULE 904 OF REGULATIONS UNDER THE SECURITIES ACT;

provided,  that if the Common  Shares or Warrants  are being sold outside of the
United  States  in  compliance  with  Rule 904 of  Regulation  S under  the U.S.
Securities Act at the time that the Corporation is a "foreign issuer" as defined
in Rule 902 of  Regulation  S under the U.S.  Securities  Act, the legend may be
removed by providing a declaration  to the Transfer  Agent for the Common Shares
of the Corporation and the Warrant Agency for the Warrants,  in such form as the
Corporation  may  prescribe  from  time to time,  it being  understood  that the
Corporation  has instructed  Montreal Trust Company of Canada to accept the form
of  declaration  set forth  below,  but reserves the right to change the form of
declaration  to reflect  applicable  law or  practice  or to suspend  removal of
legends  if it  should  determine  that  such  removal  is not  consistent  with
applicable law:

          "The undersigned (a)  acknowledges  that the sale of the securities of
          Spectrum Signal  Processing Inc. to which this declaration  relates is
          being made in  reliance on Rule 904 of  Regulation  S under the United
          States Securities Act of 1933, as amended (the "U.S.  Securities Act")
          and (b) certifies that (1) the  undersigned is not an affiliate of the
          Corporation as that term is defined under the U.S. Securities Act, (2)
          the offer of such  securities  was not made to a person in the  United
          States and either  (A) at the time the buy order was  originated,  the
          buyer was  outside  the  United  States,  or the seller and any person
<PAGE>

                                      -12-


          acting on its behalf  reasonably  believed  that the buyer was outside
          the United  States or (B) the  transaction  was executed on or through
          the  facilities of The Toronto  Stock  Exchange and neither the seller
          nor any person  acting on its behalf  knows that the  transaction  has
          been  prearranged  with a buyer in the United States,  (3) neither the
          seller nor any affiliate of the seller nor any person acting on any of
          their  behalf  has  engaged  or will  engage in any  directed  selling
          efforts in the United States in connection  with the offer and sale of
          such securities,  (4) the sale is bona fide and not for the purpose of
          "washing off" the resale  restrictions  imposed because the securities
          are "restricted securities" (as that term is defined in Rule 144(a)(3)
          under the U.S.  Securities  Act),  (5) the  seller  does not intend to
          replace such securities with fungible unrestricted  securities and (6)
          the  contemplated  sale is not a  transaction,  or part of a series of
          transactions,  which, although in technical compliance with Regulation
          S, is part of a plan or scheme to evade the registration provisions of
          the U.S.  Securities Act. Terms used herein have the meanings given to
          them by Regulation S."

2.13      Certain Transfers

          (a)  If the  Warrant  Certificates  tendered  for  transfer  bears the
               legend set forth in Section  2.12  hereof the  Trustee  shall not
               issue or register a Warrant  Certificate for the Special Warrants
               represented thereby in the name of or for the benefit of a person
               outside  the  United  States  until  the  Trustee   receives  the
               declaration referred to in Section 2.12.

          (b)  If the  transferee of a Special  Warrant is in the United States,
               the  Warrant  Certificate  issued  to such  transferee  shall  be
               overprinted  with the legend set forth in Section  2.12,  and the
               requirement  of  Section  2.12  related to  legending  the Common
               Shares and Warrants upon exercise of the Special  Warrants  shall
               also apply, unless the Corporation receives an opinion of counsel
               in form  and  substance  satisfactory  to it that  no  legend  is
               required.

                             ARTICLE 3 EXERCISE OF
                                SPECIAL WARRANTS

3.1       Notice of Compliance or Non Compliance

          Upon occurrence of the Qualification Date and the Shareholder Approval
Date prior to the Retraction Time, the Corporation  shall forthwith,  and in any
event  not  later  than the  first  business  day  thereafter,  give a Notice of
Compliance to the Trustee. In the event that either of the Qualification Date or
the Shareholder Approval Date has not occurred prior to the Retraction Time, the
Corporation shall forthwith,  and in any event not later than the first business
day thereafter,  give a Notice of Non-Compliance  to the Trustee.

3.2       Notice of Qualification Date

          Upon  receipt by the  Trustee of a Notice of  Compliance,  the Trustee
shall  forthwith  give  notice  to  the   Warrantholders   specifying  that  the
Qualification  Date has occurred prior to the Retraction Time and specifying the

<PAGE>

                                      -13-


remainder  of the  Exercise  Period.  If the  Trustee  has  received a Notice of
Non-Compliance, the Trustee shall forthwith, and in any event not later than the
first business day thereafter, give notice to the Warrantholders specifying that
the  Qualification  Date and/or the  Shareholder  Approval Date has not occurred
prior to the Retraction Time and that the  Warrantholders  are entitled pursuant
to Section 3.6 to surrender their Warrant Certificates to the Trustee and obtain
repayment  of the Special  Warrant  Purchase  Price per Special  Warrant for the
Special  Warrants  represented by their Warrant  Certificate  surrendered to the
Trustee together with interest earned thereon less any withholding tax by way of
repurchase  of  such  Special   Warrants  and  receive  a  Warrant   Certificate
representing  the balance of the Special  Warrants  represented by their Warrant
Certificate  which were not so repurchased  and, in addition,  the Trustee shall
specify the Retraction Expiry Time.

3.3       Right to Exercise

          Upon and subject to the provisions and conditions of this Article, the
holder of a Special  Warrant  may, at his  option,  at any time and from time to
time after the Shareholder Approval Date and up to the Time of Expiry,  exercise
the right to acquire one Common Share and one Warrant for each  Special  Warrant
held  (subject to  adjustment  as provided in Article 4) without  payment of any
consideration  by completing the Notice of Exercise  attached to the Certificate
and delivering it and the Certificate to the Trustee at its principal  office in
the city of Vancouver,  British  Columbia or Toronto,  Ontario,  or at any other
place or places that may be designated by the  Corporation  with the approval of
the Trustee.

3.4       Deemed Exercise

          Any Special Warrant not exercised  pursuant to subsection 3.3 prior to
the Time of Expiry will be deemed to have been  exercised by the holder  thereof
and  surrendered  (without  any further  action on the part of the holder or the
Corporation)  immediately  prior to the  Time of  Expiry,  provided  that if the
Shareholder  Approval  Date has not  occurred  prior to the Time of  Expiry  any
Special Warrants then outstanding will be deemed to have been retracted  without
any further action on the part of the holder or the  Corporation,  whereupon the
holders will be entitled to receive by the fifth Business Day following the Time
of Expiry an amount equal to the Special Warrant Purchase Price for each Special
Warrant so retracted  together with interest  earned thereon in accordance  with
Section 6.4 hereof from the date  hereof to and  including  the Time of Expiry;.

3.5       Exercise after Non-Compliance

          If the Qualification Date does not occur prior to the Retraction Time,
but the Shareholder  Approval Date has occurred,  the holder of Special Warrants
may  nevertheless  exercise his Special  Warrants not otherwise  surrendered for
retraction  during the remainder of the Exercise Period.  Any such exercise,  or
any deemed  exercise  pursuant to Section  3.4  hereof,  shall be subject to the
holder  providing  such  assurances  and executing such documents as may, in the
reasonable  opinion of the  Corporation  or the  Trustee,  be required to ensure
compliance with applicable Securities Laws.


<PAGE>

                                      -14-


3.6       Repayment after Non-Compliance

          If the  Qualification  Date and/or the Shareholder  Approval Date does
not occur prior to the Retraction Time, a holder of Special Warrants may, during
the period  commencing on the first Business Day after the  Retraction  Date and
ending at the Retraction  Expiry Time,  elect to exercise,  in whole or in part,
his Retraction Right. Such election may only be made by the holder  surrendering
the Warrant  Certificate  representing his Special Warrants,  with Part B of the
Notice of Exercise  attached  thereto  having been completed and executed by the
holder, to the Trustee at its principal office in the city of Vancouver, British
Columbia  or  Toronto,  Ontario  or at any  other  place or  places  that may be
designated by the  Corporation  with the approval of the Trustee,  whereupon the
holder will be entitled to receive,  by the fifth  Business  Day  following  the
Retraction  Expiry Time, an amount equal to the Special  Warrant  Purchase Price
for that number of the Special  Warrants  represented  by the  holder's  Warrant
Certificate so surrendered for repurchase  together with interest earned thereon
in accordance  with Section 6.4 hereof from the date hereof to and including the
Retraction Expiry Time and to have a new Warrant Certificate issued representing
the balance of the Special Warrants of the holder.  Warrant  Certificates  shall
only be deemed to have been  surrendered for repurchase  upon personal  delivery
thereof  to or,  if sent by mail or other  means of  transmission,  upon  actual
receipt by the Trustee at one of the offices specified in this Section.

3.7       Effect of Exercise or Deemed Exercise of Special Warrants

          (a)  Upon the  exercise or deemed  exercise  of the  Special  Warrants
               pursuant  to the  provisions  of  Sections  3.3  or  3.4  hereof,
               respectively,  the Common  Shares and Warrants  thereby  issuable
               shall be deemed to have been issued and the Warrant  Certificates
               cancelled and the person or persons to whom such  securities  are
               to be issued  shall be deemed to have become the holder of record
               of such Common  Shares and Warrants on the  Exercise  Date unless
               the registers of the Corporation shall be closed on such date, in
               which case the Common Shares and Warrants 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 and Warrants on
               the date on which such registers are reopened.

          (b)  As  promptly  as possible  after the  Exercise  Date of a Special
               Warrant as aforesaid, the Corporation shall cause to be delivered
               to the person or persons in whose name or names the Common Shares
               and  Warrants  have been issued at the address  specified  in the
               register  maintained by the Trustee or, if otherwise specified in
               writing,  cause to be  delivered to such person or persons at the
               Warrant Agency, certificates for the appropriate number of Common
               Shares and Warrants so issued and shall,  if applicable,  deliver
               to  the   Warrantholder   a  Warrant   Certificate   or   Warrant
               Certificates  representing  the balance of the  Special  Warrants
               remaining after such partial exercise.

3.8       Securities Restrictions

          (a)  Notwithstanding  anything  herein  contained,  Common  Shares and
               Warrants  will  only  be  issued  upon  exercise  of the  Special
               Warrants in compliance with the Securities Laws of any applicable

<PAGE>

                                      -15-


               jurisdiction,   and  without   limiting  the  generality  of  the
               foregoing,  in the event that the Special  Warrants are exercised
               pursuant to Section 3.3 or deemed to have been exercised pursuant
               to  Section  3.4  prior  to the  issuance  of a  receipt  for the
               Prospectus   by  each   of  the   Securities   Commissions,   the
               certificates  representing the Common Shares and Warrants thereby
               issued will bear such legend as may, in the opinion of Counsel to
               the  Corporation,  acting  reasonably,  be  necessary in order to
               avoid a  violation  of any  Securities  Laws of any  province  in
               Canada,  the United States or any other jurisdiction or to comply
               with the  requirements  of any stock exchange on which the Common
               Shares and Warrants are listed, provided that if, at any time, in
               the opinion of Counsel to the  Corporation,  such  legends are no
               longer  necessary in order to avoid a violation of any such laws,
               or the holder of any such legended  certificate,  at the holder's
               expense,  provides the Corporation with evidence  satisfactory in
               form and substance to the Corporation,  acting reasonably, (which
               may   include  an  opinion   of  counsel   satisfactory   to  the
               Corporation),  to the effect that such holder is entitled to sell
               or  otherwise  transfer  such  Common  Shares and  Warrants  in a
               transaction in which such legends are not required, such legended
               certificate  may thereafter be surrendered to the  Corporation in
               exchange for a certificate which does not bear such legend.

          (b)  Special  Warrants may not be exercised in the United States or by
               or  on  behalf  of a  person  in  the  United  States,  nor  will
               certificates  for  Common  Shares  and  Warrants   issuable  upon
               exercise of Special  Warrants be  registered  or  delivered to an
               address in the United States without  registration under the U.S.
               Securities Act and the securities laws of all applicable  states,
               unless  an  exemption  from   registration   is  available.   The
               Corporation may, at its option,  require an opinion of counsel or
               other  evidence  in  form  and  substance   satisfactory  to  the
               Corporation,  acting  reasonably,  as to the  availability of the
               exemption.

                                   ARTICLE 4
               ADJUSTMENT OF NUMBER OF COMMON SHARES AND WARRANTS

4.1       Adjustment of Number of Common Shares and Warrants

          The acquisition  rights in effect at any date attaching to the Special
Warrants shall be subject to adjustment from time to time as follows:

          (a)  if and whenever at any time from the date hereof and prior to the
               Time of Expiry, the Corporation shall:

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

               (ii) reduce, combine or consolidate its outstanding Common Shares
                    into a smaller number of shares, or

               (iii)issue   Common   Shares  or   securities   exchangeable   or
                    convertible to Common Shares  ("Convertible  Securities") to
                    the holders of all or  substantially  all of the outstanding
                    Common   Shares  by  way  of  a  stock   dividend  or  other
                    distribution;


<PAGE>

                                      -16-


               the number of Common  Shares and Warrants  obtainable  under each
               Special  Warrant  shall each be  adjusted  immediately  after the
               effective date of the events referred to in (i) and (ii) above or
               the  record  date  for the  issue  of the  Common  Shares  of the
               Convertible  Securities referred to in (iii) above by multiplying
               the number of Common Shares and Warrants  theretofore  obtainable
               on the  exercise of the  Special  Warrants by a fraction of which
               the  numerator  shall  be  the  total  number  of  Common  Shares
               outstanding  immediately  after  such date or, in the case of the
               issue of convertible securities the total number of Common Shares
               outstanding  immediately after such date plus the total number of
               Common  Shares  issuable  upon  conversion  or  exchange  of such
               convertible  securities  and the  denominator  shall be the total
               number of Common  Shares  outstanding  immediately  prior to such
               date. Such  adjustment  shall be made  successively  whenever any
               event referred to in this subsection shall occur and any issue of
               Common  Shares  or  convertible  securities  by  way  of a  stock
               dividend  is deemed to have  occurred on the record date for such
               dividend for the purpose of calculating the number of outstanding
               common shares under this subsection;

          (b)  if and whenever at any time from the date hereof and prior to the
               Time of Expiry,  there is a reclassification  or redesignation of
               the Common Shares or a capital  reorganization of the Corporation
               other than as described in subsection  4.1(a) or a consolidation,
               arrangement,  amalgamation or merger of the  Corporation  with or
               into  any  other  body  corporate,  trust,  partnership  or other
               entity, or a sale or conveyance of the property and assets of the
               Corporation as an entirety or substantially as an entirety to any
               other body  corporate,  trust,  partnership or other entity,  any
               Warrantholder  who has not  exercised  his  right of  acquisition
               prior   to  the   effective   date  of   such   reclassification,
               redesignation,     capital     reorganization,     consolidation,
               arrangement,  amalgamation,  merger, sale or conveyance, upon the
               exercise of such right  thereafter,  shall be entitled to receive
               and shall  accept,  in lieu of the  number of Common  Shares  and
               Warrants  then sought to be acquired by him, the number of shares
               or other securities or property of the Corporation or of the body
               corporate, trust, partnership or other entity resulting from such
               merger, amalgamation,  arrangement, or consolidation, or to which
               such sale or  conveyance  may be made,  as the case may be,  that
               such  Warrantholder  would have been  entitled to receive on such
               reclassification,    redesignation,    capital    reorganization,
               consolidation,   arrangement,   amalgamation,   merger,  sale  or
               conveyance, if, on the record date or the effective date thereof,
               as the case may be,  the  Warrantholder  had been the  registered
               holder of the  number of Common  Shares and  Warrants  receivable
               upon the exercise of Special  Warrants  then held.  If determined
               appropriate  by the Trustee to give effect to or to evidence  the
               provisions  of  this  subsection  4.1(b),  the  Corporation,  its
               successor, or such purchasing body corporate,  partnership, trust
               or  other  entity,  as  the  case  may  be,  shall,  prior  to or
               contemporaneously with any such reclassification,  redesignation,
               capital reorganization, consolidation, amalgamation, arrangement,
               merger,  sale or conveyance,  enter into an indenture which shall
               provide,  to the  extent  possible,  for the  application  of the


<PAGE>

                                      -17-


               provisions set forth in this Indenture with respect to the rights
               and interests  thereafter of the  Warrantholders  to the end that
               the  provisions  set  forth in this  Indenture  shall  thereafter
               correspondingly  be made applicable,  as nearly as may reasonably
               be, with respect to any shares,  other  securities or property to
               which  a  Warrantholder  is  entitled  on  the  exercise  of  his
               acquisition rights thereafter. Any indenture entered into between
               the Corporation and the Trustee pursuant to the provision of this
               subsection 4.1(b) shall be a supplemental  indenture entered into
               pursuant to the  provisions  of Article 9 hereof.  Any  indenture
               entered  into  between  the  Corporation,  any  successor  to the
               Corporation or such purchasing body corporate, partnership, trust
               or other  entity and the Trustee  shall  provide for  adjustments
               which shall be as nearly  equivalent as may be practicable to the
               adjustments provided in this Section 4.1 and which shall apply to
               successive     reclassifications,     redesignations,     capital
               reorganizations,   consolidations,  arrangements,  amalgamations,
               mergers, sales or conveyances;

          (c)  if and whenever at any time from the date hereof and prior to the
               Time of Expiry,  the Corporation  shall fix a record date for the
               issuance of rights,  options or warrants to all or  substantially
               all the  holders of the Common  Shares  pursuant  to which  those
               holders are  entitled to  subscribe  for,  purchase or  otherwise
               acquire Common Shares or securities  converted into Common Shares
               (the "Convertible  Securities")  within a period of not more than
               45 days  from such  record  date at a price  per  share,  or at a
               conversion  price  per  share,  of less  than 95% of the  Current
               Market Price on such record date (any such issuance  being herein
               called a "Rights Offering" and Common Shares that may be acquired
               in exercise of the Rights  Offering,  or upon  conversion  of the
               Convertible  Securities  offered  by the Rights  Offering,  being
               herein called the "Offered Shares"),  the number of Common Shares
               and  Warrants  obtainable  under each  Special  Warrant  shall be
               adjusted  effective  immediately after the applicable record date
               by   multiplying   the  number  of  Common  Shares  and  Warrants
               theretofore obtainable on the exercise of the Special Warrants by
               a fraction:

               (i)  the numerator of which shall be the sum of (a) the number of
                    Common Shares Shares outstanding on the record date plus (b)
                    the number of Offered Shares offered  pursuant to the Rights
                    Offering or the maximum  number of Offered Shares into which
                    the Convertible Securities so offered pursuant to the Rights
                    Offering may be; and

               (ii) the denominator of which shall be the sum of:

                    A.   the number of Common Shares  outstanding  on the record
                         date; and

                    B.   the number  arrived  at when (I) either the  product of
                         (a) the number of Offered Shares so offered and (b) the
                         price at which those shares are offered, or the product
                         of (c) the conversion  price thereof and (d) the number
                         of Offered  Shares  for or into  which the  Convertible
                         Securities so offered  pursuant to the Rights  Offering

<PAGE>

                                      -18-


                         may be  converted,  as the case may be, is  divided  by
                         (II) the  Current  Market  Price of the  Shares  on the
                         record date.

               Any  Offered  Shares  owned  by or held  for the  account  of the
               Company or a subsidiary  of the Company shall be deemed not to be
               outstanding for the purpose of any such  computation;  if all the
               rights,  options or warrants  are not so issued or if all rights,
               options or warrants  are not  exercised  prior to the  expiration
               thereof,  the  number of Common  Shares and  Warrants  obtainable
               under each Special  Warrant  shall be readjusted to the number of
               Common Shares and Warrants  obtainable under each Special Warrant
               in effect immediately prior to the record date, and the number of
               Common Shares and Warrants  obtainable under each Special Warrant
               shall be further adjusted based upon the number of Offered Shares
               (or  Convertible  Securities  that are  convertible  into Offered
               Shares)  actually  delivered  upon the  exercise  of the  rights,
               options or warrants, as the case may be, but subject to any other
               adjustment  required  hereunder  by reason  of any event  arising
               after that record date;

          (d)  in any  case  in  which  this  Article  4 shall  require  that an
               adjustment shall 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
               Special  Warrant  exercised after such record date and before the
               occurrence  of  such  event  the  additional  Common  Shares  and
               Warrants  issuable upon such exercise by reason of the adjustment
               required by such event before giving  effect to such  adjustment;
               provided,  however,  that the  Corporation  shall deliver to such
               holder an appropriate  instrument  evidencing such holder's right
               to receive such  additional  Common  Shares and Warrants upon the
               occurrence of the event  requiring such  adjustment and the right
               to  receive  any  distributions  made on such  additional  Common
               Shares and  Warrants  which may be acquired  upon the exercise of
               Special  Warrants  declared  in  favour of  holders  of record of
               Common Shares and Warrants on and after the Exercise Date or such
               later date as such holder would,  but for the  provisions of this
               subsection  (d),  have  become  the  holder  of  record  of  such
               additional  Common  Shares and Warrants  pursuant to Section 4.1;
               and

          (e)  the  adjustments  provided for in this Article 4 in the number of
               Common Shares and Warrants and classes of securities which are to
               be received on the exercise of Special Warrants,  are cumulative.
               After any  adjustment  pursuant to this  Section  4.1,  the terms
               "Common Shares" and "Warrants" where used in this Indenture shall
               be interpreted to mean  securities of any class or classes which,
               as a result of such adjustment and all prior adjustments pursuant
               to this  Section 4.1,  the  Warrantholder  is entitled to receive
               upon the  exercise  of his  Special  Warrant,  and the  number of
               Common  Shares  and  Warrants  indicated  by  any  exercise  made
               pursuant to a Special  Warrant shall be  interpreted  to mean the
               number  of  Common  Shares  and  Warrants  or other  property  or
               securities a Warrantholder is entitled to receive, as a result of
               such  adjustment  and  all  prior  adjustments  pursuant  to this
               Section 4.1, upon the full exercise of a Special Warrant.


<PAGE>

                                      -19-


4.2       Entitlement to Common Shares and Warrants on Exercise of Special
          Warrant

          All shares of any class, or other  securities which a Warrantholder is
at the time in  question  entitled  to receive on the  exercise  of his  Special
Warrant, whether or not as a result of adjustments made pursuant to this Section
shall, for the purposes of the interpretation of this Indenture, be deemed to be
shares and other  securities  which such  Warrantholder  is  entitled to acquire
pursuant to such Special Warrant.

4.3       Determination by Corporation's Auditors

          In the event of any question  arising with respect to the  adjustments
provided for in this Article 4 such question shall be conclusively determined by
the Corporation's auditors who shall have access to all necessary records of the
Corporation,  and such determination shall be binding upon the Corporation,  the
Trustee, all Warrantholders and all other persons interested therein.

4.4       Proceedings Prior to any Action Requiring Adjustment

          As a  condition  precedent  to the  taking of any action  which  would
require an adjustment in any of the  acquisition  rights  pursuant to any of the
Special  Warrants,  including the number of Common Shares and Warrants which are
to be  received  upon the  exercise  thereof,  the  Corporation  shall  take any
corporate  action  which may, in the opinion of counsel,  be  necessary in order
that the Corporation has unissued and reserved in its authorized capital and may
validly and legally issue as fully paid and  non-assessable all the shares which
the  holders  of such  Special  Warrants  are  entitled  to  receive on the full
exercise thereof in accordance with the provisions hereof.

4.5       Additional Adjustments

          If and whenever at anytime during the Exercise Period, the Corporation
shall take any action  affecting  or relating to the Common  Shares or Warrants,
other than any action  described  in this  Article,  which in the opinion of the
directors,  acting reasonably and in good faith, would prejudicially  affect the
rights  of any  Warrantholders,  the  acquisition  rights  in effect at any date
attaching  to the Special  Warrants  will be adjusted by the  directors  in such
manner, if any, and at such time, as the directors may, acting reasonably and in
good  faith,   determine  to  be  equitable   in  the   circumstances   to  such
Warrantholders.

4.6       Certificate of Adjustment

          The  Corporation  shall  from  time  to  time  immediately  after  the
occurrence of any event which requires an adjustment or readjustment as provided
in Article 4, deliver a certificate of the Corporation to the Trustee specifying
the  nature of the event  requiring  the same and the  amount of the  adjustment
necessitated  thereby  and  setting  forth in  reasonable  detail  the method of
calculation and the facts upon which such calculation is based.

4.7       Protection of Trustee

          The Trustee:


<PAGE>

                                      -20-


          (a)  shall not at any time be under any duty or  responsibility to any
               Warrantholder  to  determine  whether  any facts  exist which may
               require  any  adjustment  contemplated  by  Section  4.1 or  with
               respect to the nature or extent of any such adjustment when made,
               or with respect to the method employed in making the same;

          (b)  shall not be  accountable  with  respect to the validity or value
               (or the kind or amount) of any Common  Shares and  Warrants or of
               any shares or other  securities or property which may at any time
               be issued or delivered upon the exercise of the rights  attaching
               to any Special Warrant;

          (c)  shall not be  responsible  for any failure of the  Corporation to
               issue,   transfer  or  deliver  Common  Shares  and  Warrants  or
               certificates  for the same  upon  the  surrender  of any  Special
               Warrants  for the  purpose of the  exercise  of such rights or to
               comply with any of the covenants contained in this Article 4; and

          (d)  shall not incur any liability or responsibility whatever or be in
               any way  responsible  for the  consequences  of any breach on the
               part of the Corporation of any of the representations, warranties
               or  covenants  herein  contained  or of any acts of the agents or
               servants of the Corporation.

                                   ARTICLE 5
                    RIGHTS OF THE CORPORATION AND COVENANTS

5.1       General Covenants

          The Corporation covenants with the Trustee that so long as any Special
Warrants remain outstanding:

          (a)  it will reserve and keep available a sufficient  number of Common
               Shares for the purpose of enabling it to satisfy its  obligations
               to issue Common Shares upon the exercise of the Special  Warrants
               and the Warrants.

          (b)  it  will  cause  the  Common  Shares  and  the  Warrants  and the
               certificates  representing  the same from  time to time  acquired
               pursuant  to the  exercise  of the  Special  Warrants  to be duly
               issued and delivered in accordance with the Warrant  Certificates
               and the terms hereof;

          (c)  all Common  Shares  which  shall be issued  upon  exercise of the
               right  to  acquire   provided  for  herein  and  in  the  Warrant
               Certificates  and  in  the  Warrants  shall  be  fully  paid  and
               non-assessable;

          (d)  it will use its best efforts to maintain its corporate existence,
               carry  on  and  conduct  its  business  in a  prudent  manner  in
               accordance  with industry  standards and good business  practice,
               keep or cause to be kept  proper  books of account in  accordance
               with applicable law, and, if and whenever  required in writing by
               the Trustee, file with the Trustee copies of all annual financial
               statements of the Corporation  furnished to  shareholders  during
               the term of this Indenture;


<PAGE>

                                      -21-


          (e)  it will use its best efforts to ensure that all Common  Shares of
               the  Corporation  outstanding  or  issuable  from  time  to  time
               continue  to be  listed on the  Toronto  Stock  Exchange,  NASDAQ
               National  Market and such other  exchange or  electronic  trading
               facility satisfactory to the directors of the Corporation;

          (f)  it will make all requisite  filings under  applicable  securities
               legislation  including  those  necessary  to  remain a  reporting
               issuer not in default in the  Provinces  of British  Columbia and
               Ontario until fifteen  business days following the earlier of the
               Qualification   Date  and  the   Retraction   Date  and,  if  the
               Qualification  Date has not occurred by the  Retraction  Date, it
               will use its reasonable  best efforts to maintain that status for
               a period of one year from the date hereof;

          (g)  it will as soon as  practicable  file with and use its reasonable
               commercial  efforts  to  obtain a Receipt  on or before  120 days
               after  the  Closing  Date  from  or on  behalf  of  each  of  the
               Securities  Commissions  for the Prospectus so that the resale of
               Common Shares and Warrants  issuable upon exercise of the Special
               Warrants  and the Common  Shares  issuable  upon  exercise of the
               Warrants will not be subject to the prospectus  requirements  nor
               any "hold period" under applicable securities legislation in such
               Filing Jurisdictions (except that it is not required to take such
               steps  solely to enable a resale of Common  Shares  and  Warrants
               from the holdings of a "control person", as defined in applicable
               securities   laws,  if  a  "hold   period"  would   otherwise  be
               applicable);

          (h)  it will send written  notice to the Trustee and to each holder of
               Special  Warrants of the issuance of the Receipts  referred to in
               subsection  5.1(g),  together  with  a copy  of  the  Prospectus,
               specifying the date on which the Special  Warrants expire and, in
               the  case of the  Trustee,  copies  of the  receipts,  as soon as
               practicable  but, in any event,  not later than two Business Days
               after the latest  date on which such a receipt is issued by or on
               behalf of any of the  Securities  Commissions,  such notice to be
               sent by mail to the  addresses of such  holders  appearing in the
               register of the Warrantholders maintained by the Trustee;

          (i)  if  the   Corporation   pays  a  dividend   or  makes  any  other
               distribution in cash or property or securities of the Corporation
               (including  rights,  options or warrants to acquire Common Shares
               or securities  convertible into or exchangeable for Common Shares
               and  including  evidences of its  indebtedness)  to  Shareholders
               prior to the Expiry Date, the Corporation agrees that it will pay
               the same amount of such dividend or make the same distribution to
               the  Warrantholders,  as if they were  holders of such  number of
               Common Shares which such  Warrantholders  are entitled to acquire
               upon the exercise of the Special  Warrants.  The Corporation will
               mail a notice to each holder of Special  Warrants  specifying the
               particulars  of  such  payment  or  distribution  within  two (2)
               Business Days of such payment or distribution;

          (j)  if the  Corporation  shall not have  received  a receipt  for the
               Prospectus  on or before 120 days  after the  Closing  Date,  the
               Corporation  will continue,  until such time as the Common Shares
               and Warrants issuable upon the exercise or deemed exercise of the
               Special Warrants are not subject to a statutory "hold period"

<PAGE>

                                      -22-


               under applicable securities laws in the Filing Jurisdictions,  to
               use its reasonable commercial efforts to obtain a Receipt for the
               Prospectus from each of the Securities Commissions;

          (k)  it will  provide to  Warrantholders  copies of all  documentation
               required to be provided by applicable  law to registered  holders
               of  Common  Shares,  as if such  Warrantholders  were  registered
               shareholders of the Corporation; and

          (l)  generally,  it will well and truly  perform  and carry out all of
               the  acts  or  things  to  be  done  by it as  provided  in  this
               Indenture.

5.2       Trustee's Remuneration and Expenses

          The Corporation covenants that it will pay to the Trustee from time to
time  reasonable  remuneration  for  its  services  hereunder  and  will  pay or
reimburse   the  Trustee   upon  its  request  for  all   reasonable   expenses,
disbursements and advances incurred or made by the Trustee in the administration
or execution of the trusts hereby created (including the reasonable compensation
and the  disbursements  of its counsel and all other advisers and assistants not
regularly in its employ) both before any default  hereunder and thereafter until
all duties of the Trustee hereunder shall be finally and fully performed, except
any such expense,  disbursement  or advance as may arise from the  negligence or
bad faith of the Trustee.

5.3       Performance of Covenants by Trustee

          If the  Corporation  shall  fail  to  perform  any  of  its  covenants
contained in this Warrant  Indenture,  the Trustee may notify the Warrantholders
of such failure on the part of the  Corporation or may itself perform any of the
said  covenants  capable  of  being  performed  by it,  but  shall  be  under no
obligation  to perform said  covenants or to notify the  Warrantholders  of such
performance  or  non-performance  by it. All sums  expended  or  advanced by the
Trustee in so doing  shall be  repayable  as  provided  in Section  5.2. No such
performance, expenditure or advance by the Trustee shall relieve the Corporation
of any default  hereunder or of its continuing  obligations  under the covenants
herein contained.

                                   ARTICLE 6
                         ESCROW OF RESTRICTED PROCEEDS

6.1       Deposit of Restricted Proceeds in Escrow

          The  Corporation  agrees to cause to be deposited  on its behalf,  the
Restricted Proceeds in escrow with the Trustee and hereby irrevocably authorizes
and  instructs  the Trustee to retain the  Restricted  Proceeds in trust for the
benefit  of the  Corporation  and the  Warrantholders  upon and  subject  to the
following   irrevocable   authorizations  and  instructions  to  deal  with  the
Restricted Proceeds in accordance with the provisions of this Article.


<PAGE>

                                      -23-


6.2      Investment of Funds

          The Restricted Proceeds deposited with the Trustee hereunder,  pending
any release or application thereof as required in accordance with the provisions
of this Article, shall be held in the Trustee's trust account or invested by the
Trustee in its name in Permitted  Investments in accordance  with any directions
of the Corporation  from time to time given to the Trustee or, in the absence of
any such directions,  shall be invested by the Trustee in its name in accordance
with Section 10.4.

6.3       Release of Funds to the Corporation

          If  the  Trustee  has  received  from  the  Corporation  a  Notice  of
Compliance  prior  to  the  Retraction  Time,  the  Trustee  shall  pay  to  the
Corporation  forthwith  and in any event not later than five Business Days after
receipt of a Notice of Compliance an amount equal to the Restricted Proceeds and
all interest  earned  thereon while the monies were held by the Trustee less any
amounts paid or to be paid to the Trustee in accordance with Section 5.2.

6.4       Surrender of Special Warrants for Repayment

          If  the  Trustee  has  received  from  the  Corporation  a  Notice  of
Non-Compliance,  the Trustee  shall  forthwith,  and in any event not later than
five Business Days following the Retraction Expiry Time, pay:

          (a)  to Warrantholders who have elected in accordance with Section 3.6
               hereof to require  the  Corporation  to  repurchase  the  Special
               Warrants  represented by each Warrant  Certificate  the aggregate
               Warrant Purchase Price for those Special Warrants as are required
               to be repurchased  together with their proportionate share of the
               interest earned thereon less any withholding tax; and

          (b)  to the  Corporation  an amount equal to the  Restricted  Proceeds
               together with all interest  earned  thereon while the monies were
               held  by the  Trustee  less  the  aggregate  amounts  paid to the
               Warrantholders  pursuant to subsection  6.4(a) above and less any
               amounts  paid or to be  paid to the  Trustee  under  Section  5.2
               hereof less any withholding tax.

6.5       Deemed Surrender of Special Warrants for Repayment

          If the Trustee has not received a Notice of Shareholder Approval prior
to the Time of Expiry,  the Trustee shall forthwith,  and in any event not later
than five Business  Days  following the Expiry Time,  pay to  Warrantholders  in
respect of any Special Warrant then  outstanding the aggregate  Warrant Purchase
Price for their Special Warrants together with their proportionate shares of the
interest  earned  thereon less any  withholding  tax proved that no such payment
shall be made to the  Corporation  unless and until the Trustee  has  received a
Notice of Shareholder Approval.


<PAGE>

                                      -24-


6.6       Method of Repayment

          No later than the fifth Business Day after the Retraction Expiry Time,
the Trustee will mail to each  Warrantholder  who has elected in accordance with
Section 3.6 hereof to require the Corporation to repurchase the Special Warrants
represented by each Warrant  Certificate the holder of such Special Warrant,  or
to such person as such holder may otherwise  specify by written  notice given to
the  Trustee  prior to such  mailing,  at the  address of such  holder or, if so
specified,  of such  person,  or, if  specified  by written  notice given to the
Trustee  prior to such  mailing,  will  deliver to such  holder or person at the
place where such Warrant  Certificate was surrendered,  a cheque made payable to
the order of such  holder or, if so  specified,  such  person in the  applicable
amount as determined in accordance  with Section 6.4,  whichever is  applicable,
plus an amount (less any tax required to be withheld therefrom) equal to the pro
rata portion of the interest  earned on the Restricted  Proceeds with respect to
such Special Warrants as were repurchased from the date hereof to the Retraction
Expiry Date. Any payment made in accordance  with the provisions of this section
shall, to the extent of the sum represented  thereby (plus the amount of any tax
so  withheld),  satisfy and  discharge  all  liability of the  Corporation  with
respect to such payment,  unless such cheque is not paid at par on presentation.
In the event of  non-receipt  of any such  cheque by the person to whom it is so
sent as aforesaid, or the loss or destruction thereof, the Trustee will issue to
such person a  replacement  cheque for a like amount upon being  furnished  with
such evidence of non-receipt, loss or destruction and with such indemnity as the
Trustee may reasonably require.

                                   ARTICLE 7
                                  ENFORCEMENT

7.1       Suits by Warrantholders

          All or any of the rights  conferred upon any  Warrantholder  by any of
the terms of the Warrant  Certificates  or of the Indenture,  or of both, may be
enforced by the  Warrantholder by appropriate  proceedings but without prejudice
to the right  which is hereby  conferred  upon the Trustee to proceed in its own
name to enforce each and all of the provisions  herein contained for the benefit
of the Warrantholders.

7.2       Limitation of Liability

          The obligations  hereunder are not personally  binding upon, nor shall
resort hereunder be had to, the private property of any of the past,  present or
future directors or shareholders of the Corporation or any successor corporation
or any of the past,  present  or  future  officers,  employees  or agents of the
Corporation  or  any  successor  corporation,  but  only  the  property  of  the
Corporation or any successor corporation shall be bound in respect hereof.

7.3       Waiver of Default

          Upon the happening of any default hereunder:

          (a)  the  holders of not less than 75% of the  Special  Warrants  then
               outstanding   shall  have  power  (in   addition  to  the  powers
               exercisable  by  extraordinary  resolution as provided in Section
               8.10) by  requisition in writing to instruct the Trustee to waive

<PAGE>

                                      -25-


               any default  hereunder and the Trustee shall  thereupon waive the
               default upon such terms and  conditions as shall be prescribed in
               such requisition; or

          (b)  the Trustee shall have power to waive any default  hereunder upon
               such terms and conditions as the Trustee may deem advisable,  if,
               in the Trustee's opinion based on the advice of Counsel, the same
               shall have been cured or adequate provision made therefor;

provided  that no delay or omission of the Trustee or of the  Warrantholders  to
exercise  any right or power  accruing  upon any default  shall  impair any such
right  or power or shall be  construed  to be a waiver  of any such  default  or
acquiescence  therein and provided further that no act or omission either of the
Trustee  or of the  Warrantholders  shall  extend  to or be taken in any  manner
whatsoever to affect any subsequent  default  hereunder or the rights  resulting
therefrom.

                                   ARTICLE 8
                           MEETINGS OF WARRANTHOLDERS

8.1       Right to Convene Meetings

          The  Trustee  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
and upon being  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,  convene a meeting of the Warrantholders.  In the event
of the Trustee  failing to convene a meeting  within seven days after receipt of
such written  request of the  Corporation  or such  Warrantholders'  Request and
indemnity   and  funding   given  as   aforesaid,   the   Corporation   or  such
Warrantholders, as the case may be, may convene such meeting. Every such meeting
shall be held in the City of Vancouver,  British Columbia or at such other place
as may be approved or determined by the Trustee.

8.2       Notice

          At  least   fourteen  (14)  days'  prior  notice  of  any  meeting  of
Warrantholders  shall be given to the  Warrantholders in the manner provided for
in Section  10.2 and a copy of such notice  shall be sent by mail to the Trustee
(unless  the  meeting has been  called by the  Trustee)  and to the  Corporation
(unless the meeting has been called by the Corporation). Such notice shall state
the time when and the place where the meeting is to be held, shall state briefly
the general  nature of the business to be  transacted  thereat and shall contain
such information as is reasonably necessary to enable the Warrantholders to make
a reasoned  decision on the matter,  but it shall not be necessary  for any such
notice  to set out the  terms of any  resolution  to be  proposed  or any of the
provisions of this Article 8.

8.3       Chairman

          An individual (who need not be a Warrantholder)  designated in writing
by the Trustee  shall be chairman  of the  meeting  and if no  individual  is so
designated,  or if the individual so designated is not present within 15 minutes
from the time fixed for the holding of the meeting,  the Warrantholders  present
in person or by proxy shall choose some individual present to be chairman.


<PAGE>

                                      -26-


8.4       Quorum

          Subject to the  provisions  of  Section  8.11,  at any  meeting of the
Warrantholders a quorum shall consist of Warrantholders  present in person or by
proxy and  entitled  to acquire at least 25% of the  aggregate  number of Common
Shares  which could be acquired  pursuant  to all the then  outstanding  Special
Warrants.  If a quorum  of the  Warrantholders  shall not be  present  within 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 unless a quorum be present at the  commencement of business.  At the
adjourned meeting the Warrantholders  present in person or by proxy shall form a
quorum and may  transact  the  business  for which the  meeting  was  originally
convened,  notwithstanding that they may not be entitled to acquire at least 25%
of the aggregate  number of Common Shares which may be acquired  pursuant to all
then outstanding Special Warrants.

8.5       Power to Adjourn

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

8.6       Show of Hands

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

8.7       Poll and Voting

          On every extraordinary resolution, and on any other question submitted
to a meeting and after a vote by show of hands when  demanded by the chairman or
by one or more of the  Warrantholders  acting in person or by proxy and entitled
to acquire in the aggregate at least 5% of the aggregate number of Common Shares
which could be acquired pursuant to all the Special Warrants then outstanding, 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

<PAGE>

                                      -27-


appointed by  instrument  in writing shall be entitled to one vote in respect of
each whole Common Share which he is entitled to acquire  pursuant to the Special
Warrant or Special Warrants then held or represented by him. A proxy need not be
a Warrantholder.  The chairman of any meeting shall be entitled,  both on a show
of hands and on a poll, to vote in respect of the Special Warrants, if any, held
or represented by him.

8.8       Regulations

          The Trustee, or the Corporation with the approval of the Trustee,  may
from time to time make and from time to time vary such  regulations  as it shall
think fit for:

          (a)  the  setting of the record  date for a meeting for the purpose of
               determining  Warrantholders  entitled to receive notice of and to
               vote at a meeting;

          (b)  the issue of voting  certificates  by any bank,  trust company or
               other  depository  satisfactory  to the Trustee  stating that the
               Warrant  Certificates  specified therein have been deposited with
               it by a named  person and will remain on deposit  until after the
               meeting,  which  voting  certificates  shall  entitle the persons
               named  therein to be present and vote at any such  meeting and at
               any  adjournment  thereof  or to  appoint a proxy or  proxies  to
               represent  them and vote for them at any such  meeting and at any
               adjournment  thereof in the same  manner and with the same effect
               as though the persons so named in such voting  certificates  were
               the actual bearers of the Warrant Certificates specified therein;

          (c)  the deposit of voting  certificates  and  instruments  appointing
               proxies at such place and time as the Trustee, the Corporation or
               the Warrantholders convening the meeting, as the case may be, may
               in the notice convening the meeting direct;

          (d)  the deposit of voting  certificates  and  instruments  appointing
               proxies at some approved  place or places other than the place at
               which the meeting is to be held and enabling  particulars of such
               instruments appointing proxies to be mailed, cabled,  telegraphed
               or sent by other  means of  electronic  transmission  before  the
               meeting to the  Corporation  or to the Trustee 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;

          (e)  the form of the instrument of proxy; and

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

          Any  regulations  so made shall be binding and effective and the votes
given in accordance therewith shall be valid and shall be counted.  Save as such
regulations may provide, 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  8.9),  shall be  Warrantholders  or their
counsel, or proxies of Warrantholders.


<PAGE>

                                      -280


8.9       Corporation and Trustee may be Represented

          The Corporation  and the Trustee,  by their  respective  directors and
officers, and the counsel for the Corporation and for the Trustee may attend any
meeting of the  Warrantholders,  but shall have no vote as such  unless in their
capacity as a Warrantholder.

8.10      Powers Exercisable by Extraordinary Resolution

          In  addition  to all  other  powers  conferred  upon them by any other
provisions of this Indenture or by law, the  Warrantholders  at a meeting shall,
subject to the provisions of Section 8.11, have the power, exercisable from time
to time by extraordinary resolution:

          (a)  to agree to any modification,  abrogation, alteration, compromise
               or arrangement of the rights of  Warrantholders or the Trustee in
               its   capacity  as  trustee   hereunder   or  on  behalf  of  the
               Warrantholders  against the Corporation whether such rights arise
               under this Indenture or the Warrant Certificates or otherwise;

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

          (c)  to direct or to  authorize  the  Trustee  to  enforce  any of the
               covenants  on the  part  of the  Corporation  contained  in  this
               Indenture  or the Warrant  Certificates  or to enforce any of the
               rights of the  Warrantholders  in any  manner  specified  in such
               extraordinary  resolution  or to refrain from  enforcing any such
               covenant or right;

          (d)  to waive,  and to direct the Trustee to waive, any default on the
               part of the  Corporation in complying with any provisions of this
               Indenture or the Warrant  Certificates either  unconditionally or
               upon any conditions specified in such extraordinary resolution;

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

          (f)  except as contemplated in subsection 8.10(e) above, to direct any
               Warrantholder  who,  as such,  has  brought  any suit,  action or
               proceeding  to stay or to  discontinue  or otherwise to deal with
               the  same  upon  payment  of  the  costs,  charges  and  expenses
               reasonably  and  properly  incurred  by  such   Warrantholder  in
               connection therewith;

          (g)  to  assent  to any  change  in or  omission  from the  provisions
               contained in the Warrant  Certificates  and this Indenture or any
               ancillary or  supplemental  instrument  which may be agreed to by
               the  Corporation,  and to authorize  the Trustee to concur in and
               execute any  ancillary or  supplemental  indenture  embodying the
               change or omission;


<PAGE>

                                      -29-


          (h)  with the consent of the Corporation, to remove the Trustee or its
               successor  in office and to appoint a new  trustee or trustees to
               take the place of the Trustee so removed; and

          (i)  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 holders of any shares or other securities
               of the Corporation.

8.11      Meaning of Extraordinary Resolution

          (a)  The  expression  "extraordinary  resolution"  when  used  in this
               Indenture means,  subject as hereinafter provided in this Section
               8.11 and in Section  8.14, a resolution  proposed at a meeting of
               Warrantholders  duly  convened  for  that  purpose  and  held  in
               accordance  with the  provisions of this Article 8 at which there
               are  present  in person or by proxy  Warrantholders  entitled  to
               acquire  at least 51% of the  aggregate  number of Common  Shares
               which  may be  acquired  pursuant  to all  the  then  outstanding
               Special   Warrants  and  passed  by  the  affirmative   votes  of
               Warrantholders  entitled  to  acquire  not  less  than 75% of the
               aggregate number of Common Shares which may be acquired  pursuant
               to all the then outstanding  Special 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 entitled to acquire at
               least 51% of the  aggregate  number of Common Shares which may be
               acquired  pursuant to all the then  outstanding  Special Warrants
               are not present in person or by proxy within 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 15 or more than 60 days  later,  and to
               such place and time as may be appointed by the chairman. Not less
               than ten days' prior  notice shall be given of the time and place
               of such adjourned  meeting in the manner  provided for in Section
               11.2.  Such notice shall state that at the adjourned  meeting the
               Warrantholders  present  in  person  or by  proxy  did not form a
               quorum but it shall not be  necessary  to set forth the  purposes
               for  which  the  meeting  was  originally  called  or  any  other
               particulars.  At the adjourned meeting the Warrantholders present
               in person or by proxy  shall form a quorum and may  transact  the
               business  for which the meeting  was  originally  convened  and a
               resolution  proposed at such adjourned  meeting and passed by the
               requisite  vote as provided  in  subsection  8.11(a)  shall be an
               extraordinary  resolution  within the  meaning of this  Indenture
               notwithstanding that Warrantholders  entitled to acquire at least
               51% of  the  aggregate  number  of  Common  Shares  which  may be
               acquired  pursuant to all the then  outstanding  Special Warrants
               are not present in person or 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.


<PAGE>

                                      -30-


8.12      Powers Cumulative

          Any one or more of the powers or any combination of the powers in this
Indenture  stated  to be  exercisable  by the  Warrantholders  by  extraordinary
resolution or otherwise  may be exercised  from time to time and the exercise of
any one or more of such  powers or any  combination  of powers from time to time
shall not be deemed to exhaust the right of the  Warrantholders to exercise such
power or powers or combination of powers then or thereafter from time to time.

8.13      Minutes

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

8.14      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 8 may also be
taken and  exercised by  Warrantholders  entitled to acquire at least 75% of the
aggregate number of Common Shares which may be acquired pursuant to all the then
outstanding  Special  Warrants by an instrument in writing signed in one or more
counterparts by such  Warrantholders  in person or by attorney duly appointed in
writing,  provided that such  instrument  was  submitted to, and the  expression
"extraordinary  resolution"  when  used  in  this  Indenture  shall  include  an
instrument so signed.

8.15      Binding Effect of Resolutions

          Every  resolution  and  every   extraordinary   resolution  passed  in
accordance with the provisions of this Article 8 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  8.14  shall be binding  upon all the  Warrantholders,
whether  signatories  thereto or not, and each and every  Warrantholder  and the
Trustee  (subject to the provisions  for indemnity  herein  contained)  shall be
bound to give effect  accordingly  to every such  resolution  and  instrument in
writing.

8.16      Holdings by Corporation Disregarded

          In determining  whether  Warrantholders  holding Warrant  Certificates
evidencing the  entitlement to acquire the required  number of Common Shares are
present at a meeting of  Warrantholders  for the purpose of determining a quorum
or  have   concurred  in  any   consent,   waiver,   extraordinary   resolution,
Warrantholders'  Request or other action under this Indenture,  Special Warrants
owned  legally or  beneficially  by the  Corporation  or any  subsidiary  of the
Corporation  shall be disregarded  in accordance  with the provisions of Section
11.7.


<PAGE>

                                      -31-


                                   ARTICLE 9
                            SUPPLEMENTAL INDENTURES

9.1       Provision for Supplemental Indentures for Certain Purposes

          From time to time the  Corporation  (when  authorized by action by the
directors)  and the Trustee  may,  subject to the  provisions  hereof,  and they
shall,  when so directed in accordance with the provisions  hereof,  execute and
deliver by their proper officers, indentures or instruments supplemental hereto,
which  thereafter  shall  form  part  hereof,  for any one or more or all of the
following purposes:

          (a)  setting forth any  adjustments  resulting from the application of
               the provisions of Article 4;

          (b)  adding to the  provisions  hereof such  additional  covenants and
               enforcement  provisions  as,  in  the  opinion  of  counsel,  are
               necessary or advisable in the  premises,  provided  that the same
               are not in the opinion of the  Trustee,  based upon the advice of
               counsel, prejudicial to the interests of the Warrantholders;

          (c)  giving effect to any extraordinary  resolution passed as provided
               in Article 8;

          (d)  making such  provisions not  inconsistent  with this Indenture as
               may  be  necessary  or  desirable  with  respect  to  matters  or
               questions  arising  hereunder  or for the purpose of  obtaining a
               listing  or  quotation  of the  Special  Warrants  on  any  stock
               exchange,  provided that such  provisions are not, in the opinion
               of the Trustee based upon the advice of counsel,  prejudicial  to
               the interests of the Warrantholders;

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

          (f)  modifying  any of the  provisions  of this  Indenture,  including
               relieving the Corporation from any of the obligations, conditions
               or restrictions herein contained, provided that such modification
               or relief shall be or become  operative or effective  only if, in
               the opinion of the Trustee based upon the advice of counsel, such
               modification  or relief in no way prejudices any of the rights of
               the  Warrantholders or of the Trustee,  and provided further that
               the Trustee may in its sole discretion  decline to enter into any
               such supplemental  indenture which in its opinion, based upon the
               advice of  counsel,  may not afford  adequate  protection  to the
               Trustee when the same shall become operative; and

          (g)  for any other  purpose  not  inconsistent  with the terms of this
               Indenture,  including  the  correction  or  rectification  of any
               ambiguities,   defective  or  inconsistent  provisions,   errors,
               mistakes   or   omissions   herein  or  any  deed  or   indenture
               supplemental or ancillary hereto, provided that in the opinion of
               the  Trustee  based upon the advice of counsel  the rights of the
               Trustee  and of  the  Warrantholders  are  in no  way  prejudiced
               thereby.


<PAGE>

                                      -32-


9.2       Amending Adjustment Provisions

          From time to time the  Corporation  (when  authorized by action by the
directors)  and the  Trustee  may  modify  the  adjustments  resulting  from the
application of the provisions of Article 4, if such  modification is required as
a result of any approval of the Toronto Stock Exchange and the  Corporation  and
the Trustee may execute and deliver such documents as may be necessary to effect
the modifications.

9.3       Successor Corporations

          In the case of the consolidation,  amalgamation, merger or transfer of
the undertaking or assets of the Corporation as an entirety or  substantially as
an entirety to another  corporation  ("successor  corporation"),  the  successor
corporation resulting from such consolidation,  amalgamation, merger or transfer
(if not the  Corporation)  shall expressly  assume,  by  supplemental  indenture
satisfactory  in form to the Trustee and executed and delivered by the successor
corporation to the Trustee,  the due and punctual  performance and observance of
each and every  covenant  and  condition of this  Indenture to be performed  and
observed by the Corporation.

                                   ARTICLE 10
                             CONCERNING THE TRUSTEE

10.1      Trust Indenture Legislation

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

          (b)  The  Corporation  and the  Trustee  agree that each will,  at all
               times in  relation to this  Indenture  and any action to be taken
               hereunder,  observe  and  comply  with  and  be  entitled  to the
               benefits of Applicable Legislation.

10.2      Rights and Duties of Trustee

          (a)  In the exercise of the rights and duties  prescribed or conferred
               by the terms of this  Indenture,  the Trustee shall exercise that
               degree of care,  diligence  and skill that a  reasonably  prudent
               trustee would exercise in comparable circumstances.  No provision
               of this Indenture  shall be construed to relieve the Trustee from
               liability for its own negligent action, its own negligent failure
               to act or its own wilful misconduct or bad faith.

          (b)  The  obligation  of the Trustee to commence or continue  any act,
               action or  proceeding  for the purpose of enforcing any rights of
               the Trustee or the Warrantholders  hereunder shall be conditional
               upon the  Warrantholders  furnishing,  when required by notice by
               the Trustee, sufficient funds to commence


<PAGE>

                                      -33-


               or to continue such act,  action or  proceeding  and an indemnity
               reasonably  satisfactory  to the  Trustee to protect  and to hold
               harmless the Trustee against the costs,  charges and expenses and
               liabilities to be incurred thereby and any loss and damage it may
               suffer by reason  thereof.  None of the  provisions  contained in
               this Indenture shall require the Trustee to expend or to risk its
               own  funds or  otherwise  to  incur  financial  liability  in the
               performance of any of its duties or in the exercise of any of its
               rights or powers unless indemnified and funded as aforesaid.

          (c)  The  Trustee  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 Trustee the Special  Warrants held by them, for which Special
               Warrants the Trustee shall issue receipts.

          (d)  Every  provision of this Indenture that by its terms relieves the
               Trustee of  liability  or entitles  it to rely upon any  evidence
               submitted  to it is  subject  to  the  provisions  of  Applicable
               Legislation, of this Section 10.2 and of Section 10.3.

10.3      Evidence, Experts and Advisers

          (a)  In  addition to the  reports,  certificates,  opinions  and other
               evidence  required  by  this  Indenture,  the  Corporation  shall
               furnish to the Trustee  such  additional  evidence of  compliance
               with any provision hereof, and in such form, as may be prescribed
               by  Applicable  Legislation  or as  the  Trustee  may  reasonably
               require by written notice to the Corporation.

          (b)  In the exercise of its rights and duties  hereunder,  the Trustee
               may, if it is acting in good  faith,  rely as to the truth of the
               statements  and  the  accuracy  of  the  opinions   expressed  in
               statutory  declarations,  opinions,  reports,  written  requests,
               consents,  or  orders  of the  Corporation,  certificates  of the
               Corporation or other evidence  furnished to the Trustee  pursuant
               to any provision hereof or of Applicable  Legislation or pursuant
               to a request of the Trustee, provided that such evidence complies
               with Applicable  Legislation  that the Trustee  examines the same
               and  determines  that such evidence  complies with the applicable
               requirements of this Indenture.

          (c)  Whenever  it is provided in this  Indenture  or under  Applicable
               Legislation  that the Corporation  shall deposit with the Trustee
               resolutions, certificates, reports, opinions, requests, orders or
               other documents, it is intended that the trust, accuracy and good
               faith on the  effective  date  thereof and the facts and opinions
               stated in all such  documents  so  deposited  shall,  in each and
               every  such case,  be  conditions  precedent  to the right of the
               Corporation  to have  the  Trustee  take the  action  to be based
               thereon.

          (d)  The  Trustee  may  employ or retain  such  counsel,  accountants,
               appraisers  or other  experts or  advisers  as it may  reasonably
               require for the purpose of 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 shall
               not be  responsible  for any misconduct or negligence on the part
               of any such experts or advisers who have been  appointed with due
               care by the Trustee.


<PAGE>

                                      -34-


10.4      Documents, Monies, etc. held by Trustee

          Any securities,  documents of title or other  instruments  that may at
any time be held by the  Trustee  subject to the trusts  hereof may be placed in
the deposit vaults or trust accounts of the Trustee or of any Canadian  Schedule
"A"  chartered  bank or deposited  for  safekeeping  with any such bank.  Unless
herein otherwise expressly provided,  any monies so held pending the application
or withdrawal thereof under any provisions of this Indenture may be deposited in
the name of the Trustee in any Canadian  Schedule "A" chartered bank at the rate
of interest  (if any) then  current on similar  deposits or, with the consent of
the  Corporation,  may be invested in  securities  issued or  guaranteed  by the
Government of Canada or a province  thereof or in obligations  maturing not more
than  one year  from  the  date of  investment,  of any  Canadian  Schedule  "A"
chartered  bank.  Unless  the  Corporation  shall be in default  hereunder,  all
interest or other income received by the Trustee in respect of such deposits and
investments shall belong to the Corporation.

10.5      Actions by Trustee to Protect Interest

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

10.6      Trustee not Required to Give Security

          The  Trustee  shall not be  required  to give any bond or  security in
respect of the execution of the trusts and powers of this Indenture or otherwise
in respect of the premises.

10.7      Protection of Trustee

          By way of supplement  to the  provisions of any law for the time being
relating to Trustees it is expressly declared and agreed as follows:

          (a)  the  Trustee  shall  not  be  liable  for  or by  reason  of  any
               statements  of  fact or  recitals  in  this  Indenture  or in the
               Warrant  Certificates  (except the  representation  contained  in
               Section  10.9 or in the  signature  of the Trustee on the Warrant
               Certificates)  or be  required  to verify the same,  but all such
               statements  or recitals are and shall be deemed to be made by the
               Corporation;

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

          (c)  the  Trustee  shall not be bound to give  notice to any person or
               persons of the execution hereof;


<PAGE>

                                      -35-


          (d)  the  Trustee  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 of the  covenants
               herein  contained  or of any  acts  of any  directors,  officers,
               employees, agents or servants of the Corporation; and

          (e)  the  Trustee  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 Trustee 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  Trustee  may  for  all  purposes
               hereunder  conclusively assume that no default by the Corporation
               hereunder has occurred.  The giving of any notice shall in no way
               limit the  discretion of the Trustee  hereunder as to whether any
               action  is  required  to be  taken  in  respect  of  any  default
               hereunder.

10.8      Replacement of Trustee; Successor by Merger

          (a)  The  Trustee  may  resign  its trust and be  discharged  from all
               further duties and liabilities hereunder, subject to this Section
               10.8, by giving to the  Corporation  not less than 90 days' prior
               notice in writing or such shorter prior notice as the Corporation
               may accept as sufficient.  The  Warrantholders  by  extraordinary
               resolution  shall have  power at any time to remove the  existing
               Trustee and to appoint a new trustee. In the event of the Trustee
               resigning  or being  removed  as  aforesaid  or being  dissolved,
               becoming  bankrupt,  going into liquidation or otherwise becoming
               incapable of acting  hereunder,  the Corporation  shall forthwith
               appoint a new  trustee  unless a new  trustee  has  already  been
               appointed by the Warrantholders;  failing such appointment by the
               Corporation,  the retiring Trustee or any Warrantholder may apply
               to a justice  of the  Supreme  Court of the  Province  of British
               Columbia,  on such notice as such  justice  may  direct,  for the
               appointment of a new trustee; but any new trustee so appointed by
               the  Corporation  or by the Court  shall be subject to removal as
               aforesaid by the Warrantholders.  Any new trustee appointed under
               any  provision  of  this  Section  10.8  shall  be a  corporation
               authorized  to carry on the  business  of a trust  company in the
               Province of British  Columbia and, if required by the  Applicable
               Legislation for any other provinces,  in such other provinces. On
               any such  appointment  the new  trustee  shall be vested with the
               same powers,  rights,  duties and  responsibilities  as if it had
               been originally named herein as Trustee hereunder.

          (b)  Upon the  appointment  of a successor  trustee,  the  Corporation
               shall promptly  notify the  Warrantholders  thereof in the manner
               provided for in Article 11 hereof.

          (c)  Any  corporation  into or with which the Trustee may be merged or
               consolidated  or  amalgamated,   or  any  corporation   resulting
               therefrom  to  which  the  Trustee  shall  be  a  party,  or  any
               corporation succeeding to the trust business of the Trustee shall
               be the successor to the Trustee hereunder without any further act
               on its part or any of the  parties  hereto,  provided  that  such
               corporation  would be  eligible  for  appointment  as a successor
               trustee under subsection 10.8(a).


<PAGE>

                                      -36-


          (d)  Any Warrant  Certificates  countersigned  but not  delivered by a
               predecessor trustee may be countersigned by the successor trustee
               in the name of the predecessor or successor trustee.

10.9      Conflict of Interest

          (a)  The Trustee  represents  to the  Corporation  that at the time of
               execution  and delivery  hereof no material  conflict of interest
               exists  between its role as a trustee  hereunder  and its role in
               any other  capacity  and  agrees  that in the event of a material
               conflict of interest  arising  hereafter it will,  within 90 days
               after   ascertaining  that  it  has  such  material  conflict  of
               interest, either eliminate the same or assign its trust hereunder
               to a successor  trustee  approved by the  Corporation and meeting
               the requirements set forth in subsection 10.8(a). Notwithstanding
               the foregoing  provisions of this subsection 10.9(a), if any such
               material  conflict of interest  exists or hereafter  shall exist,
               the validity and enforceability of this Indenture and the Warrant
               Certificates  shall not be affected in any manner  whatsoever  by
               reason thereof.

          (b)  Subject to subsection  10.9(a),  the Trustee,  in its personal or
               any other capacity,  may buy, lend upon and deal in securities of
               the  Corporation  and  generally  may  contract  and  enter  into
               financial  transactions with the Corporation or any subsidiary of
               the  Corporation  without  being liable to account for any profit
               made thereby.

10.10     Acceptance of Trust

          The Trustee hereby  accepts the trusts in this Indenture  declared and
provided for and agrees to perform the same upon the terms and conditions herein
set forth and agrees to hold all rights, interests and benefits contained herein
for and on behalf of those persons who become  holders of Special  Warrants from
time to time issued pursuant to this Indenture.

10.11     Trustee not to be Appointed Receiver

          The  Trustee  and any  person  related  to the  Trustee  shall  not be
appointed a receiver, a receiver and manager or liquidator of all or any part of
the assets or undertaking of the Corporation.

10.12     Indemnification

          Without  limiting any protection or indemnity of the Trustee under any
other provision  hereof,  or otherwise at law, the Corporation  hereby agrees to
indemnify   and  hold  harmless  the  Trustee  from  and  against  any  and  all
liabilities, losses, damages, penalties, claims, actions, suits, costs, expenses
and disbursements, including reasonable legal or advisor fees and disbursements,
of whatever kind and nature which may at any time be imposed on,  incurred by or
asserted  against the Trustee in connection  with the  performance of its duties
and  obligations  hereunder,  other  than  such  liabilities,  losses,  damages,

<PAGE>

                                      -37-


penalties,  claims, actions, suits, costs, expenses and disbursements arising by
reason of the negligence or fraud of the Trustee.  This provision  shall survive
the resignation or removal of the Trustee,  or the termination of the Indenture.
The Trustee  shall not be under any  obligation  to  prosecute  or to defend any
action or suit in  respect  of the  relationship  which,  in the  opinion of its
counsel,  may involve it in expense or liability,  unless the Corporation shall,
so often as  required,  furnish  the Trustee  with  satisfactory  indemnity  and
funding against such expense or liability.

                                   ARTICLE 11
                                    GENERAL

11.1      Notice to the Corporation and the Trustee

          (a)  Unless  herein  otherwise  expressly  provided,  any notice to be
               given hereunder to the Corporation or the Trustee shall be deemed
               to be validly given if delivered or if sent by registered letter,
               postage prepaid:

                if to the Corporation:

                Spectrum Signal Processing Inc.
                200 - 2700 Production Way
                Burnaby, B.C.
                V5A 4X1

                Attention:  Pascal Spothelfer

                if to the Trustee:

                Montreal Trust Company of Canada
                3rd Floor, 510 Burrard Street,
                Vancouver, British Columbia,
                V6C 3B9

                Attention:  Corporate Trust Department

and any such notice  delivered in accordance  with the foregoing shall be deemed
to have  been  received  on the date of  delivery  or, if  mailed,  on the fifth
Business Day following the date of the postmark on such notice.

          (b)  The Corporation or the Trustee, as the case may be, may from time
               to time  notify the other in the manner  provided  in  subsection
               11.1(a) of a change of address which,  from the effective date of
               such  notice  and  until  changed  by like  notice,  shall be the
               address of the  Corporation  or the Trustee,  as the case may be,
               for all  purposes  of this  Indenture.  A copy of any  notice  of
               change of address given  pursuant to subsection  11.1(b) shall be
               sent to the  Warrant  Agency,  where it shall  be  available  for
               inspection by Warrantholders during normal business hours.


<PAGE>

                                      -38-


          (c)  If, by reason of a strike, lockout or other work stoppage, actual
               or threatened, involving postal employees, any notice to be given
               to the Trustee or to the Corporation  hereunder could  reasonably
               be  considered  unlikely  to reach its  destination,  such notice
               shall be valid and effective only if it is delivered to the named
               officer  of the  party  to  which it is  addressed  or,  if it is
               delivered to such party at the  appropriate  address  provided in
               subsection 11.1(a), by cable,  telegram,  telex or other means of
               prepaid, transmitted and recorded communication.

11.2      Notice to Warrantholders

          (a)  Any notice to the  Warrantholders  under the  provisions  of this
               Indenture shall be valid and effective if sent by telegram, telex
               or  telecopier  or letter or circular  through the ordinary  post
               addressed  to  such  holders  at  their  post  office   addresses
               appearing on the  register  hereinbefore  mentioned  and shall be
               deemed to have been effectively given on the date of delivery or,
               if mailed,  five Business Days  following  actual  posting of the
               notice.

          (b)  If, by reason of a strike, lockout or other work stoppage, actual
               or threatened, involving postal employees, any notice to be given
               to the  Warrantholders  hereunder could  reasonably be considered
               unlikely to reach its destination, such notice shall be valid and
               effective   only   if  it  is   delivered   personally   to  such
               Warrantholders   or  if   delivered   to  the  address  for  such
               Warrantholders  contained  in the  register  of Special  Warrants
               maintained  by the Trustee,  by cable,  telegram,  telex or other
               means of prepaid, transmitted and recorded communication.

11.3      Ownership of Special Warrants

          The  Corporation  and the  Trustee  may deem and treat the  registered
owner of any Warrant  Certificate as the absolute  owner of the Special  Warrant
represented thereby for all purposes,  and the Corporation and the Trustee shall
not be affected by any notice or  knowledge  to the  contrary  except  where the
Corporation  or the Trustee is required to take notice by statute or by order of
a court of  competent  jurisdiction.  A  Warrantholder  shall be entitled to the
rights evidenced by such Warrant Certificate free from all equities or rights of
set  off or  counterclaim  between  the  Corporation  and  the  original  or any
intermediate  holder thereof and all persons may act accordingly and the receipt
of any such  Warrantholder  for the  Common  Shares  and  Warrants  which may be
acquired  pursuant  thereto shall be a good discharge to the Corporation and the
Trustee for the same and neither the  Corporation nor the Trustee shall be bound
to inquire into the title of any such holder except where the Corporation or the
Trustee  is  required  to take  notice  by  statute  or by  order  of a court of
competent jurisdiction.

11.4      Counterparts

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


<PAGE>

11.5      Satisfaction and Discharge of Indenture

          On the earlier of:

          (a)  the date by which  there has been  delivered  to the  Trustee for
               exercise,  surrender for  cancellation or destruction all Special
               Warrant Certificates theretofore certified hereunder; or

          (b)  the Time of Expiry;

and if all certificates representing the Common Shares and Warrants to be issued
in  compliance  with the  provisions  hereof  have  been  issued  and  delivered
hereunder or to the Trustee in  accordance  with such  provisions  and all other
obligations of the  Corporation  to the  Warrantholders  in connection  with the
exercise or deemed  exercise of the Special  Warrants have bee  satisfied,  this
Indenture  will cease to be of further  effect and, on demand of and at the cost
and expense of the  Corporation  and on delivery to the Trustee 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
Trustee  of the  fees,  expenses  and any  other  amount  whatsoever  and  other
remuneration  payable to the Trustee hereunder,  the Trustee will execute proper
instruments acknowledging satisfaction of and discharging this Indenture.

11.6      Provisions of Indentures and Special Warrants for the Sole Benefit of
          Parties and Warrantholders

          Nothing in this Indenture or in the Warrant Certificates, expressed or
implied, shall 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
or therein  contained,  all such  covenants  and  provisions  being for the sole
benefit of the parties hereto and the Warrantholders.

11.7       Special Warrants Owned by the Corporation or its Subsidiaries -
           Certificate to be Provided

          For the purpose of disregarding  any Special Warrants owned legally or
beneficially  by the Corporation or any subsidiary of the Corporation in Section
8.16,  the  Corporation  shall  provide  to the  Trustee,  from time to time,  a
certificate of the Corporation setting forth as at the date of such certificate:

          (a)  the  names  (other  than  the  name  of the  Corporation)  of the
               registered holders of Special Warrants which, to the knowledge of
               the  Corporation,  are  owned by or held for the  account  of the
               Corporation or any Subsidiary of the Corporation; and

          (b)  the number of Special  Warrants owned legally or  beneficially by
               the Corporation or any subsidiary of the Corporation;

and the Trustee,  in making the  computations in Section 8.16, shall be entitled
to rely on such certificate without more.


<PAGE>

                                      -40-


11.       Further Assurance

11.1      The parties will execute and deliver all such further documents, do or
cause to be done all such  further  acts and things,  and give all such  further
assurances as may be necessary to give full effect to the  provisions and intent
of this agreement.

IN WITNESS  WHEREOF the parties hereto have executed this Indenture  under their
respective corporate seals and the hands of their proper officers in that behalf
as of the date first above written.

SPECTRUM SIGNAL PROCESSING INC.

Per "Pascal Spothelfer"
         Authorized Signatory

MONTREAL TRUST COMPANY OF CANADA


Per "Nicole Clement"
         Authorized Signatory

Per. "Georgia Stavridis"
         Authorized Signatory


<PAGE>

                                  SCHEDULE "A"

                              TO A SPECIAL WARRANT
                INDENTURE MADE AS OF SEPTEMBER 12, 2000 BETWEEN
                        SPECTRUM SIGNAL PROCESSING INC.
                AND MONTREAL TRUST COMPANY OF CANADA, AS TRUSTEE

THE SPECIAL  WARRANTS  REPRESENTED  BY THIS  CERTIFICATE  WILL BE VOID AND OF NO
VALUE  UPON  EXERCISE  PURSUANT  TO THE  SPECIAL  WARRANT  INDENTURE  MADE AS OF
SEPTEMBER ___, 2000.

THE  SECURITIES  REPRESENTED  BY THIS  CERTIFICATE  ARE SUBJECT TO A HOLD PERIOD
EXPIRING SEPTEMBER 12, 2001, AND MAY NOT BE TRADED IN BRITISH COLUMBIA UNTIL THE
EXPIRY OF THE HOLD PERIOD,  EXCEPT AS PERMITTED BY THE  SECURITIES  ACT (BRITISH
COLUMBIA) AND REGULATIONS MADE UNDER THE ACT.


                                SPECIAL WARRANT
                                                              SEPTEMBER 12, 2000
                        SPECTRUM SIGNAL PROCESSING INC.
       (Incorporated under the laws of the Province of British Columbia)

                           200 - 2700 Production Way
                                 Burnaby, B.C.
                                    V5A 4X1

SPECIAL WARRANT                         _______ SPECIAL  WARRANTS each 1 special
CERTIFICATE NO. __________              warrant  entitling the holder to acquire
                                        1 Common Share and 1 Warrant



          THIS IS TO  CERTIFY  THAT  _____________________  (herein  called  the
"holder"), of __________________________________,  is entitled to acquire in the
manner herein provided,  subject to the restrictions  herein  contained,  on the
Exercise  Date,  the  number  of fully  paid and  non-assessable  common  shares
("Common  Shares") and Warrants  without nominal or par value of SPECTRUM SIGNAL
PROCESSING INC. ("the Corporation") as set forth above.

          The Special  Warrants  represented  by this  Warrant  Certificate  are
issued  under and pursuant to a special  warrant  indenture  (herein  called the
"Indenture")  made as of September 12, 2000 between the Corporation and Montreal
Trust Company of Canada (the  "Trustee") to which  Indenture and any instruments
supplemental  thereto  reference  is hereby made for a full  description  of the
rights of the holders of the Special  Warrants and the terms and conditions upon
which the  Special  Warrants  are, or are to be,  issued,  held,  exchanged  and
surrendered,  all to the same effect as if the  provisions  of the Indenture and
all instruments  supplemental thereto were herein set forth, and to all of which
provisions the holder of these Special  Warrants by acceptance  hereof  assents.
Capitalized  terms used in this Warrant  Certificate  and not otherwise  defined
shall have the meanings ascribed to them in the Indenture.


<PAGE>

                                      -2-


          The Exercise Period shall be the period  commencing on the Shareholder
Approval Date and ending at the Time of Expiry. The Time of Expiry shall be 4:30
p.m.  (Vancouver  time) on the  earlier of the first  Business  Day  immediately
following the  Qualification  Date and September 13, 2001,  provided that if the
Shareholder Approval Date has not occurred as of the Qualification Date the Time
of Expiry shall be September 13, 2001. The Indenture  defines the  Qualification
Date as the day a  receipt  is issued  for a final  prospectus  relating  to the
distribution  of the Common  Shares and  Warrants  upon the  exercise  or deemed
exercise  of the  Special  Warrants  by the  last of the  securities  regulatory
authorities to do so.

          The  holder  of the  Special  Warrants  represented  by  this  Warrant
Certificate may elect to exercise all or any of the Special Warrants represented
by this Warrant Certificate during the Exercise Period by:

          (a)  duly  completing  and executing the exercise form attached to and
               forming part of this Warrant Certificate; and

          (b)  surrendering  this  Warrant  Certificate  to the  Trustee  at the
               principal  office  of  the  Trustee  in  any  of  the  cities  of
               Vancouver, British Columbia or Toronto, Ontario;

and  shall be  entitled  to  receive,  subject  to the  terms of the  Indenture,
certificates  representing  the Common  Shares and Warrants  issuable  upon such
exercise, as promptly as possible, after the date of surrender to the Trustee of
this Warrant Certificate.

          If the  Qualification  Date has not occurred on or before  January 10,
2001, the holder of the Special Warrants represented by this Warrant Certificate
may, at any time after January 10, 2001 and prior to the Retraction Expiry Time,
elect  to have  repurchased  all of the  Special  Warrants  represented  by this
Certificate for an amount equal to the original price of the Special Warrants so
repurchased, together with interest, as provided in the Indenture and to receive
a Warrant Certificate  representing the balance of the holder's Special Warrants
by:

          (a)  duly  completing  and  executing  Part  B of  the  exercise  form
               attached to and forming part of this Warrant Certificate; and

          (b)  surrendering  this  Warrant  Certificate  to the  Trustee  at the
               principal  office  of  the  Trustee  in  any  of  the  cities  of
               Vancouver, British Columbia or Toronto, Ontario,

and shall be entitled to receive,  subject to the terms of the  Indenture,  such
repayment and new Warrant  Certificate  representing  the balance of the Special
Warrants  after  such  repayment,  forthwith,  and in any event not later than 5
Business Days after the Retraction Expiry Time.

          The Indenture  provides for adjustments to the right of  subscription,
including  the  amount  of and class and kind of  securities  or other  property
issuable upon exercise,  upon the happening of certain stated events,  including
the subdivision or consolidation of the Common Shares,  certain distributions of
Common  Shares  or  securities  convertible  into  Common  Shares  or  of  other
securities or assets of the Corporation,  certain offerings of rights,  warrants
or options, and certain capital  reorganizations and for payment of an amount to
compensate for dividends paid on Common Shares.


<PAGE>

                                      -3-


          If,  immediately  prior to the Time of Expiry,  the  Special  Warrants
represented by this Warrant  Certificate  have not been  exercised,  the Special
Warrants  represented hereby shall at that time be deemed to have been exercised
and  surrendered by the holder thereof without any further action on the part of
the holder,  provided  that if the  Shareholder  Approval  Date has not occurred
prior to the Time of Expiry and the Special Warrants represented by this Warrant
Certificate  have not been exercised,  the Special Warrants  represented  hereby
shall at that  time be  deemed to have been  retracted  and  surrendered  by the
holder  thereof  without  any  further  action on the part of the holder and the
holder shall be entitled to receive,  subject to the terms of the Indenture,  an
amount  equal to the  original  price of the Special  Warrants  so  repurchased,
together with interest, as provided in the Indenture no later than five Business
Days after the Expiry Time.

          If the Special  Warrants  represented by this Warrant  Certificate are
exercised or are deemed to be exercised by the holder,  notwithstanding that the
Qualification Date has not occurred, the Corporation will be entitled to refuse,
and to direct the  Trustee to refuse,  to issue any Common  Shares and  Warrants
thereafter  issuable if the issuance of such Common  Shares and  Warrants  would
constitute a violation of the securities laws of any jurisdiction.

          The holder of this Warrant  Certificate  may upon surrender  hereof to
the Trustee at its principal  transfer office in any of the cities of Vancouver,
British  Columbia and Toronto,  Ontario,  exchange this Warrant  Certificate for
other Warrant  Certificates  evidencing Special Warrants entitling the holder to
receive in the aggregate the same number of Common Shares and Warrants as may be
acquired pursuant to the Special Warrants evidenced by this Warrant Certificate.

          The  holding  of  the  Special  Warrants  evidenced  by  this  Warrant
Certificate  shall  not  constitute  the  holder  hereof  a  shareholder  of the
Corporation  or entitle the holder to any right or  interest in respect  thereof
except as herein and in the Indenture expressly provided.

          The Special Warrants evidenced by this Warrant Certificate may only be
transferred  in accordance  with  applicable  securities  laws, the rules of any
stock  exchanges on which the Common  Shares are then listed and upon  executing
the transfer form appended hereto and,  subject  thereto,  may be transferred on
the register of Special  Warrants of the Corporation  kept at the offices of the
Trustee  by the  holder  hereof  or his  legal  representative  of this or their
attorney  duly  appointed  by an  instrument  in writing  in form and  execution
satisfactory to the Trustee only upon compliance with the conditions  prescribed
in the Indenture and upon compliance  with such  reasonable  requirements as the
Trustee may prescribe.

          This Warrant Certificate shall not be valid for any purpose whatsoever
unless and until it has been countersigned by or on behalf of the Trustee.

          Time shall be of the essence hereof.

          IN WITNESS WHEREOF the undersigned has caused this Warrant Certificate
to be duly executed as of the _____ day of September, 2000.


<PAGE>

                                      -4-


SPECTRUM SIGNAL PROCESSING INC.


By:_____________________________

                             TRUSTEE'S CERTIFICATE

This Special Warrant is one of the Special Warrants dated September 12, 2000,
referred to in the Special Warrant Indenture within mentioned.

MONTREAL TRUST COMPANY OF CANADA


By:_____________________________
      Authorized Officer


<PAGE>

                          TRANSFER OF SPECIAL WARRANTS

          FOR  VALUE  RECEIVED,   the  undersigned  hereby  sells,  assigns  and
transfers  unto______________________________________________,  (Name  /Address)
the Special  Warrants  registered in the name of the undersigned  represented by
the within certificate.

          DATED this _______ day of __________________, 200___.

______________________________      _____________________________
Signature Guarantee                 (Signature of Warrantholder)

Note The  signature  of the  person  signing  this  transfer  must be  signature
     guaranteed by a Bank or Trust Company, or Medallion  Guaranteed by a member
     of an acceptable Medallion Guarantee Program.


<PAGE>

EXERCISE FORM

TO       SPECTRUM SIGNAL PROCESSING INC.

AND TO:  MONTREAL TRUST COMPANY OF CANADA

COMPLETE PART A OR PART B* AND SIGN ON PAGE 2

*PART B MAY ONLY BE SELECTED IF THE  QUALIFICATION  DATE HAS NOT  OCCURRED ON OR
BEFORE JANUARY 10, 2001.

PART A -        The undersigned  holder of Special Warrants hereby exercises in
                respect of ________________ Special Warrants the right provided
                for in the Special  Warrants to receive  ______________  Common
                Shares  and   ______________   Warrants  of   Spectrum   Signal
                Processing Inc. issuable pursuant to the Special Warrants.

The  undersigned  acknowledges  that the  certificates  representing  the Common
Shares and Warrants to be issued  hereunder  shall bear the following  legend if
issued to a person in the United States on to a U.S.  Person (as those terms are
defined in  Regulation  S under the United  States  Securities  Act of 1933,  as
amended):

     THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
     STATES  SECURITIES  ACT OF 1933, AS AMENDED (THE  "SECURITIES  ACT") OR THE
     SECURITIES  LAWS OF ANY  STATE.  THE  HOLDER  HEREOF,  BY  PURCHASING  SUCH
     SECURITIES,  AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES
     MAY BE OFFERED,  SOLD OR OTHERWISE  TRANSFERRED ONLY (A) TO THE CORPORATION
     (B) OUTSIDE THE UNITED STATES IN  COMPLIANCE  WITH RULE 904 OF REGULATION S
     UNDER  THE  SECURITIES  ACT,  (C) IN  COMPLIANCE  WITH THE  EXEMPTION  FROM
     REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER,  OR
     (D) IN COMPLIANCE WITH ANOTHER EXEMPTION FROM REGISTRATION  AFTER PROVIDING
     AN  OPINION OF  COUNSEL  SATISFACTORY  TO THE  CORPORATION  TO EFFECT  THAT
     REGISTRATION  IS  NOT  REQUIRED.  DELIVERY  OF  THIS  CERTIFICATE  MAY  NOT
     CONSTITUTE "GOOD DELIVERY' IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES
     IN CANADA.  AT ANY TIME THE CORPORATION IS A "FOREIGN ISSUER" AS DEFINED IN
     REGULATION  S UNDER THE  SECURITIES  ACT,  A NEW  CERTIFICATE,  BEARING  NO
     LEGEND, DELIVERY OF WHICH WILL CONSTITUTE "GOOD DELIVERY",  MAY BE OBTAINED
     FROM MONTREAL TRUST COMPANY OF CANADA UPON DELIVERY OF THIS CERTIFICATE AND
     A DULY  EXECUTED  DECLARATION,  IN A FORM  SATISFACTORY  TO MONTREAL  TRUST
     COMPANY OF CANADA AND THE  CORPORATION,  TO THE EFFECT THAT THE SALE OF THE
     SECURITIES  REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE 904 OF
     REGULATION S UNDER THE SECURITIES ACT.


<PAGE>

                                      -2-


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

Name(s) in Full            Address(es)               Number(s) of Common Shares
                                                     and Warrants

_______________________    _______________________   _______________________

_______________________    _______________________   _______________________

(Please print in full the name in which the  certificates  are to be issued.  If
any of the  securities  are to be issued to a person or  persons  other than the
Warrantholder,  the  Transfer of Special  Warrants  should be  endorsed  and the
Warrantholder  must pay to the Trustee all  eligible  transfer or taxes or other
government charges.)

PART B -        REPURCHASE BY  CORPORATION  OF PORTION OF SPECIAL  WARRANTS AND
                ISSUANCE  OF  CERTIFICATE   REPRESENTING   BALANCE  OF  SPECIAL
                WARRANTS

          The undersigned  holder of Special Warrants hereby exercises the right
provided for in the Special Warrants to:

          (i)  require  the  Corporation  to  repurchase  the  Special  Warrants
               evidenced by this Certificate; and

          (ii) receive a  Certificate  representing  the  balance of the Special
               Warrants evidenced by this Certificate.

          The undersigned hereby elects to require the Corporation to repurchase
________________  Special Warrants and irrevocably  directs that the payment for
repurchase of such Special Warrants be made payable as follows:

         Name: ________________________________________________________________

         Address in Full: _____________________________________________________

                          _____________________________________________________

         Telephone No.:   _____________________________________________________

          The  undersigned  hereby  irrevocably  directs  that  the  Certificate
representing the balance of the Special  Warrants  evidenced by this Certificate
be issued and delivered as follows:

         Name(s) in Full        Address(es)

         ____________________   _______________________________________________

         ____________________   _______________________________________________

         ____________________   _______________________________________________

(Please print in full the name in which the certificate is to be issued.  If any
of the  securities  are to be  issued  to a person  or  persons  other  than the
Warrantholder,  the  Transfer of Special  Warrants  should be  endorsed  and the
Warrantholder  must pay to the Trustee all  eligible  transfer or taxes or other
government charges.)