Document:

Trust Indenture

    

    

    

    

    

    

    

    
      
        

      

    

    TRUST
      INDENTURE

    

    

    DATED
      AS
      OF THE 19TH
      DAY OF
      OCTOBER, 2006

    

    

    

    

    

    BETWEEN

    

    

    

    RED
      MILE
      ENTERTAINMENT INC.

    

    

    AND

    

    

    OLYMPIA
      TRUST COMPANY

    

    

    

    

    PROVIDING
      FOR THE ISSUE OF SENIOR SECURED CONVERTIBLE DEBENTURES

    

    

    
      
        

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    TABLE
      OF CONTENTS

    Page

     

    

      
        	
                ARTICLE
                  1
                  INTERPRETATION

              	 
	
                1.1 Definitions

              	
                1

              
	
                1.2 “Meaning
                  of “Outstanding”

              	
                5

              
	
                1.3 Interpretation

              	
                5

              
	
                1.4 Headings
                  Etc.

              	
                6

              
	
                1.5 Day
                  not a Business Day

              	
                6

              
	
                1.6 Applicable
                  Law

              	
                6

              
	
                1.7 Monetary
                  References

              	
                6

              
	
                1.8 Invalidity,
                  Etc.

              	
                6

              
	
                1.9 Time
                  of Essence

              	
                6

              
	
                1.10 Language

              	
                6

              
	
                1.11 Successors
                  and Assigns

              	
                6

              
	
                1.12 Beneficiaries
                  of Indenture

              	
                7

              
	
                1.13 Declaration
                  and Acceptance of Trust

              	
                7

              
	 	 
	
                ARTICLE
                  2
                  THE DEBENTURES

              	
                7

              
	
                2.1 Limit
                  of Debentures

              	
                7

              
	
                2.2 Terms
                  of Debentures of any Series

              	
                7

              
	
                2.3 Form
                  of Debentures

              	
                8

              
	
                2.4 Form
                  and Terms of Initial Debentures

              	
                9

              
	
                2.5 Certification
                  and Delivery of Additional Debentures

              	
                13

              
	
                2.6 Issue
                  of Global Debentures

              	
                15

              
	
                2.7 Execution
                  of Debentures

              	
                15

              
	
                2.8 Certification

              	
                15

              
	
                2.9 Mutilation,
                  Loss, Theft or Destruction

              	
                16

              
	
                2.10 Concerning
                  Interest

              	
                16

              
	
                2.11 Debentures
                  to Rank Pari
                  Passu

              	
                16

              
	
                2.12 Payments
                  of Amounts Due on Maturity

              	
                17

              
	
                2.13 Payments
                  of Amounts Due on Redemption

              	
                17

              
	
                2.14 Legend
                  on the Debentures

              	
                18

              
	
                2.15 Payment
                  of Interest

              	
                18

              
	
                2.16 Right
                  to Pay Interest in Common Shares

              	
                19

              
	
                2.17 Withholding
                  Tax

              	
                21

              
	 	 
	
                ARTICLE
                  3
                  REGISTRATION, TRANSFER, EXCHANGE AND OWNERSHIP

              	
                22

              
	
                3.1 Fully
                  Registered Debentures

              	
                22

              
	
                3.2 Global
                  Debentures

              	
                22

              
	
                3.3 Transferee
                  Entitled to Registration

              	
                24

              
	
                3.4 No
                  Notice of Trusts

              	
                24

              
	
                3.5 Registers
                  Open for Inspection

              	
                24

              
	
                3.6 Exchanges
                  of Debentures

              	
                24

              
	
                3.7 Closing
                  of Registers

              	
                25

              
	
                3.8 Charges
                  for Registration, Transfer and Exchange

              	
                25

              
	
                3.9 Ownership
                  of Debentures

              	
                25

              
	 	 
	
                ARTICLE
                  4
                  REDEMPTION, REPAYMENT AND PURCHASE OF DEBENTURES

              	
                26

              
	
                4.1 Applicability
                  of Article

              	
                26

              
	
                4.2 Partial
                  Redemption

              	
                26

              
	
                4.3 Notice
                  of Redemption

              	
                27

              
	
                4.4 Debentures
                  Due on Redemption Dates

              	
                27

              
	
                4.5 Deposit
                  of Redemption Monies or Common Shares

              	
                28

              
	
                4.6 Right
                  to Repay Redemption Price and Interest in Common Shares

              	
                28

              
	
                4.7 Failure
                  to Surrender Debentures Called for Redemption

              	
                30

              
	
                4.8 Cancellation
                  of Debentures Redeemed

              	
                30

              
	
                4.9 Right
                  to Repay Principal Amount and Interest in Common Shares

              	
                30

              

      

      

      ii

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      
        	
                ARTICLE
                  5
                  CONVERSION OF DEBENTURES

              	
                32

              
	
                5.1 Applicability
                  of Article 

              	
                32

              
	
                5.2 Notice
                  of Expiry of Conversion Privilege 

              	
                33

              
	
                5.3 Revival
                  of Right to Convert 

              	
                33

              
	
                5.4 Manner
                  of Exercise of Right to Convert

              	
                33

              
	
                5.5 Adjustment
                  of Conversion Price

              	
                34

              
	
                5.6 No
                  Requirement to Issue Fractional Common Shares

              	
                37

              
	
                5.7 Corporation
                  to Reserve Common Shares

              	
                37

              
	
                5.8 Cancellation
                  of Converted Debentures

              	
                37

              
	
                5.9 Certificate
                  as to Adjustment

              	
                38

              
	
                5.10 Notice
                  of Special Matters

              	
                38

              
	
                5.11 Protection
                  of Debenture Trustee

              	
                38

              
	 	 
	
                ARTICLE
                  6
                  COVENANTS OF THE CORPORATION

              	
                38

              
	
                6.1 To
                  Pay Principal, Premium (if any) and Interest, etc

              	
                39

              
	
                6.2 To
                  Pay Debenture Trustee’s Remuneration

              	
                39

              
	
                6.3 To
                  Give Notice of Default

              	
                39

              
	
                6.4 Preservation
                  of Existence, etc.

              	
                39

              
	
                6.5 Keeping
                  of Books

              	
                39

              
	
                6.6 To
                  Provide Financial Statements

              	
                39

              
	
                6.7 Perfection
                  of Security Interest

              	
                39

              
	
                6.8 No
                  Distributions on Common Shares if Event of Default

              	
                39

              
	
                6.9 Performance
                  of Covenants by Debenture Trustee

              	
                40

              
	
                6.10 Certificate
                  of Compliance

              	
                40

              
	 	 
	
                ARTICLE
                  7
                  DEFAULT

              	
                40

              
	
                7.1 Events
                  of Default

              	
                40

              
	
                7.2 Notice
                  of Events of Default

              	
                41

              
	
                7.3 Waiver
                  of Default

              	
                41

              
	
                7.4 Enforcement
                  by the Debenture Trustee

              	
                42

              
	
                7.5 No
                  Suits by Debentureholders

              	
                43

              
	
                7.6 Application
                  of Monies by Debenture Trustee

              	
                43

              
	
                7.7 Notice
                  of Payment by Debenture Trustee

              	
                44

              
	
                7.8 Debenture
                  Trustee May Demand Production of Debentures

              	
                44

              
	
                7.9 Remedies
                  Cumulative

              	
                44

              
	
                7.10 Judgment
                  Against the Corporation

              	
                45

              
	 	 
	
                ARTICLE
                  8
                  SATISFACTION AND DISCHARGE

              	
                45

              
	
                8.1 Cancellation
                  and Destruction

              	
                45

              
	
                8.2 Non-Presentation
                  of Debenture

              	
                45

              
	
                8.3 Repayment
                  of Unclaimed Monies or Common Shares

              	
                45

              
	
                8.4 Discharge

              	
                46

              
	
                8.5 Satisfaction

              	
                46

              
	
                8.6 Continuance
                  of Rights, Duties and Obligations

              	
                47

              
	 	 
	
                ARTICLE
                  9
                  SUCCESSORS

              	
                48

              
	
                9.1 Restrictions
                  on Amalgamation, Merger and Sale of Certain Assets, etc.

              	
                48

              
	
                9.2 Vesting
                  of Powers in Successor

              	
                49

              
	 	 
	
                ARTICLE
                  10
                  MEETINGS OF DEBENTUREHOLDERS

              	
                49

              
	
                10.1 Right
                  to Convene Meeting

              	
                49

              
	
                10.2 Notice
                  of Meetings

              	
                49

              
	
                10.3 Chairman

              	
                50

              
	
                10.4 Quorum

              	
                51

              
	
                10.5 Power
                  to Adjourn

              	
                51

              
	
                10.6 Show
                  of Hands

              	
                51

              

      

      iii

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

      
        	
                10.7 Poll

              	
                51

              
	
                10.8 Voting

              	
                51

              
	
                10.9 Proxies

              	
                52

              
	
                10.10
                  Persons Entitled to Attend Meeting

              	
                52
                  

              
	
                10.11
                  Powers Exercisable by Extraordinary Resolution

              	
                52

              
	
                10.12 Meaning
                  of “Extraordinary Resolution”

              	
                54

              
	
                10.13 Powers
                  Cumulative

              	
                55

              
	
                10.14 Minutes

              	
                55

              
	
                10.15 Instruments
                  in Writing

              	
                55

              
	
                10.16 Binding
                  Effect of Resolutions

              	
                55

              
	
                10.17 Evidence
                  of Rights Of Debentureholders

              	
                55

              
	
                10.18 Concerning
                  Serial Meetings

              	
                55

              
	 	 
	
                ARTICLE
                  11
                  NOTICES

              	
                56

              
	
                11.1 Notice
                  to Corporation

              	
                56

              
	
                11.2 Notice
                  to Debentureholders

              	
                56

              
	
                11.3 Notice
                  to Debenture Trustee

              	
                56

              
	
                11.4 Mail
                  Service Interruption

              	
                56

              
	 	 
	
                ARTICLE
                  12
                  CONCERNING THE DEBENTURE TRUSTEE

              	
                57

              
	
                12.1 No
                  Conflict of Interest

              	
                57

              
	
                12.2 Replacement
                  of Debenture Trustee

              	
                57

              
	
                12.3 Duties
                  and Obligations of Debenture Trustee

              	
                57

              
	
                12.4 Reliance
                  Upon Declarations, Opinions, etc.

              	
                58

              
	
                12.5 Evidence
                  and Authority to Debenture Trustee, Opinions, etc

              	
                58

              
	
                12.6 Officer’s
                  Certificates Evidence

              	
                59

              
	
                12.7 Experts,
                  Advisers and Agents

              	
                59

              
	
                12.8 Investment
                  of Monies Held by Debenture Trustee

              	
                59

              
	
                12.9 Debenture
                  Trustee Not Ordinarily Bound

              	
                60

              
	
                12.10 Debenture
                  Trustee Not Required to Give Security

              	
                60

              
	
                12.11 Debenture
                  Trustee Not Bound to Act on Corporation’s Request

              	
                60

              
	
                12.12 Conditions
                  Precedent to Debenture Trustee’s Obligations to Act
                  Hereunder

              	
                60

              
	
                12.13 Authority
                  to Carry on Business

              	
                61

              
	
                12.14 Compensation
                  and Indemnity

              	
                61

              
	
                12.15 Duties
                  as Security Trustee

              	
                62

              
	
                12.16 Acceptance
                  of Trust

              	
                62

              
	 	 
	
                ARTICLE
                  13
                  SUPPLEMENTAL INDENTURES

              	
                63

              
	
                13.1 Supplemental
                  Indentures

              	
                63

              
	 	 
	
                ARTICLE
                  14
                  EXECUTION AND FORMAL DATE

              	
                64

              
	
                14.1 Execution

              	
                64

              
	
                14.2 Formal
                  Date

              	
                64

              
	 	 
	
                SCHEDULE
                  A Form
                  of Debenture

              	 
	
                SCHEDULE
                  B Form
                  of Redemption Notice

              	 
	
                SCHEDULE
                  C Form
                  of Maturity Notice

              	 
	
                SCHEDULE
                  D Form
                  of Notice of Conversion

              	 
	
                SCHEDULE
                  E Form
                  of Share Interest Payment Notice

              	 
	
                SCHEDULE
                  F Form
                  of Security Agreement

              	 

      

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

    THIS
      INDENTURE made as of the 19th
      day of
      October, 2006.

     

    

    BETWEEN:

     

    RED
      MILE ENTERTAINMENT INC.,
      a
      corporation incorporated under the laws of the State of Delaware and having
      its
      head office in the State of California (hereinafter called the “Corporation”)

     

    -
      and
      -

     

    OLYMPIA
      TRUST COMPANY,
      a trust
      company incorporated under the laws of the
      Province of Alberta
      having
      an office in the City of Calgary
      in the Province of Alberta
      (hereinafter called the “Debenture
      Trustee”)

     

    WITNESSETH
      THAT:

     

    (b)  WHEREAS
      the
      Corporation deems it necessary for its financing purposes to create and issue
      the Debentures (as defined herein) to be created and issued in the manner
      hereinafter appearing;

     

    (c)  AND WHEREAS
      the
      Corporation is duly authorized to create and issue the Debentures to be issued
      as herein provided;

     

    (d)  AND WHEREAS,
      when
      certified by the Debenture Trustee and issued as provided in this Indenture,
      all
      necessary steps in relation to the Corporation have been duly enacted, passed
      and/or confirmed and other proceedings taken and conditions complied with to
      make the creation and issue of the Debentures proposed to be issued hereunder
      legal, valid and binding on the Corporation in accordance with the laws relating
      to the Corporation;

     

    (e)  AND WHEREAS
      the
      foregoing recitals are made as representations and statements of fact by the
      Corporation and not by the Debenture Trustee;

     

    (f)  NOW THEREFORE
      it
      is
      hereby covenanted, agreed and declared as follows:

     

     

    ARTICLE 1  

    INTERPRETATION

     

    
      	1.1  	
              Definitions

            

    

     

    In
      this
      Indenture and in the Debentures, unless there is something in the subject matter
      or context inconsistent therewith, the expressions following shall have the
      following meanings, namely:

     

    
      	(a)  	
              “this
                Indenture”,
                “this
                Trust Indenture”,
                “hereto”,
                “herein”,
                “hereby”,
                “hereunder”,
                “hereof’ and
                similar expressions refer to this Indenture and not to any particular
                Article, Section, subsection, clause, subdivision or other portion
                hereof
                and include any and every instrument supplemental or ancillary
                hereto;

            

    

     

    
      	(b)  	
              “Additional
                Debentures” means
                Debentures of any one or more series issued under this
                Indenture;

            

    

     

    
      	(c)  	
              “affiliate” means,
                in relation to a company, any company that is a subsidiary of such
                company
                or is a subsidiary of the same parent company or is controlled by
                the same
                person or company;

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    -
      2
      -

     

    
      	(d)  	
              “Applicable
                Securities Legislation” includes,
                collectively, all securities laws, rules, regulations, notices, policies
                and similar instruments in Canada and the United States applicable
                to the
                Corporation and to the distribution of Debentures in accordance with
                this
                Agreement;

            

    

     

    
      	(e)  	
              “Authorized Investments” has
                the meaning ascribed thereto in Section
                12.8;

            

    

     

    
      	(f)  	
              “Beneficial
                Holder” means
                any Person who holds a beneficial interest in a Global Debenture
                as shown
                on the books of the Depository or a Depository
                Participant;

            

    

     

    
      	(g)  	
               “Business Day” means
                any day other than a Saturday, Sunday or a statutory holiday in the
                City
                of Calgary,
                Alberta;

            

    

     

    
      	(h)  	
              “Change
                of Control” means
                the acquisition by any Person, or group of Persons acting jointly
                or in
                concert, of voting control of or direction over an aggregate of 50%
                or
                more of the outstanding Common Shares of the Corporation (after giving
                effect to the conversion or exchange of securities convertible into,
                exchangeable for or otherwise carrying the right to acquire Common
                Shares);

            

    

     

    
      	(i)  	
              “Change of
                Control Notice”
                has the meaning ascribed thereto in Section
                2.4(h);

            

    

     

    
      	(j)  	
              “Change
                of Control Redemption”
                has the meaning ascribed thereto in Section
                2.4(h);

            

    

     

    
      	(k)  	
              “Common
                Shares” means
                fully paid and non-assessable common shares of the Corporation, as
                such
                common shares are constituted on the date of execution and delivery
                of
                this Indenture; provided that in the event of a change, subdivision,
                re-division, reduction, combination, consolidation, reclassification
                or
                capital reorganization of the common shares or any, consolidation,
                amalgamation, arrangement, merger of the Corporation with or into
                another
                Person, or the, sale, conveyance or lease of the properties and assets
                of
                the Corporation as, or substantially as, an entirety to another Person
                or
                a liquidation, dissolution or winding-up of the Corporation or other
                similar transaction, or such successive changes, subdivisions,
                re-divisions, reductions, combinations or consolidations,
                reclassifications, capital reorganizations, consolidations, amalgamations,
                arrangements, mergers, sales, leases or conveyances or liquidations,
                dissolutions, windings-up or similar transactions, then, subject
                to
                adjustments, if any, having been made in accordance with the provisions
                of
                Section 5.5,
                “Common
                Shares”
                shall mean the common shares or other securities or property resulting
                from such change, subdivision, re-division, reduction, combination
                or
                consolidation, reclassification, capital reorganization, consolidation,
                amalgamation, arrangement, merger, sale, lease or conveyance or
                liquidation, dissolution, winding-up or similar
                transaction;

            

    

     

    
      	(l)  	
              “Conversion
                Price” means
                the price at which each Common Share may be issued upon conversion
                of the
                Debentures which are by their terms convertible in accordance with
                the
                provisions of Article 5 into fully-paid Common Shares, and without
                limiting the generality of the foregoing, the Conversion Price in
                effect
                on the date hereof for each Common Share to be issued on conversion
                of the
                Initial Debentures is $1.75;

            

    

     

    
      	(m)  	
              “Corporation”
                means Red Mile Entertainment Inc. and includes any successor corporation
                to or of the Corporation which shall have complied with the provisions
                of
                Article 9;

            

    

     

    
      	(n)  	
              “Corporation’s
                Auditors” or
                “Auditors of
                the Corporation” means
                a nationally recognized independent firm of accountants duly appointed
                as
                auditors of the Corporation;

            

    

     

    
      	(o)  	
              “Counsel”
                means a barrister or solicitor or firm of barristers or solicitors
                retained or employed by the Debenture Trustee or retained or employed
                by
                the Corporation;

            

    

     

    
      	(p)  	
              “Current
                Market Price” means
                the volume weighted average price per share for Common Shares on
                a
                Recognized Stock Exchange on which the Common Shares are listed for
                trading for 20 consecutive trading days ending on the trading day
                preceding the date of determination provided that if the Common Shares
                are
                not listed on a Recognized Stock Exchange then the Current Market
                Price
                for the purposes of Section 5.5 shall be $1.75;

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      - 3
        -

       

       

    

    
      	(q)  	
              “Date
                of Conversion” has
                the meaning ascribed thereto in Section
                5.4(b);

            

    

     

    
      	(r)  	
              “Debentures” means
                the debentures, notes or other evidences of indebtedness of the
                Corporation issued and certified hereunder, or deemed to be issued
                and
                certified hereunder, including, without limitation, the Initial
                Debentures, and for the time being outstanding, whether in definitive
                or
                interim form;

            

    

     

    
      	(s)  	
              “Debentureholders”
                or
                “holders”
                means the Persons for the time being entered in the register for
                Debentures as registered holders of Debentures payable to a named
                payee or
                any transferees of such Persons by endorsement or
                delivery;

            

    

     

    
      	(t)  	
              “Depository”
                means, with respect to the Debentures of any series issuable or issued
                in
                the form of one or more Global Debentures, the Person designated
                as
                depository by the Corporation pursuant to Section 3.2 until a successor
                depository shall have become such pursuant to the applicable provisions
                of
                this Indenture, and thereafter “Depository”
                shall mean each Person who is then a depository hereunder, and if
                at any
                time there is more than one such Person, “Depository”
                as
                used with respect to the Debentures of any series shall mean each
                depository with respect to the one or more Global Debentures of such
                series;

            

    

     

    
      	(u)  	
              “Depository Participant” means,
                for any Debentures, a broker, dealer, bank, other financial institution
                or
                other Person who participates directly in the book-entry registration
                and
                book-based securities transfer system administered by the Depository
                for
                such Debentures;

            

    

     

    
      	(v)  	
              “Event
                of Default” has
                the meaning ascribed thereto in Section
                7.1;

            

    

     

    
      	(w)  	
              “Extraordinary
                Resolution” has
                the meaning ascribed thereto in Section
                10.12;

            

    

     

    
      	(x)  	
              “Fully
                Registered Debentures”
                means Debentures registered as to both principal and
                interest;

            

    

     

    
      	(y)  	
              “generally
                accepted accounting principles” means
                generally accepted accounting principles in the United
                States;

            

    

     

    
      	(z)  	
              “Global
                Debenture” means
                a Debenture that is issued to and registered in the name of a Depository,
                or its nominee, pursuant to Section 2.6 for purposes of being held
                by or
                on behalf of the Depository as custodian for the Depository
                Participants;

            

    

     

    
      	(aa)  	
               “Initial
                Debentures” means
                the series of Debentures designated as “5.5%
                Senior Secured Convertible Debentures”
                and described in Section 2.4 including any Additional Debentures
                of such
                series issued hereunder;

            

    

     

    
      	(bb)  	
              “Interest
                Payment Date” means
                a date specified in a Debenture as the date on which an instalment
                of
                interest on such Debenture shall become due and
                payable;

            

    

     

    
      	(cc)  	
              "Issue
                Date"
                means the date of issuance of the any of Initial
                Debentures;

            

    

     

    
      	(dd)  	
              “Legended Debentures”
                means Debentures bearing the legends provided for in Section
                2.15;

            

    

     

    
      	(ee)  	
              “Maturity
                Account” means
                an account or accounts required to be established by the Corporation
                (and
                which shall be maintained by and subject to the control of the Debenture
                Trustee) for each series of Debentures pursuant to and in accordance
                with
                this Indenture;

            

    

     

    
      	(ff)  	
              “Maturity Date” has
                the meaning ascribed thereto in Section
                4.9(a);

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      - 4
        -

       

    

    
      	(gg)  	
              “Maturity Notice”
                has the meaning ascribed thereto in Section
                4.9(b);

            

    

     

    
      	(hh)  	
              “Offering” means
                the brokered private placement of the Initial
                Debentures;

            

    

     

    
      	(ii)  	
              “Offer” has
                the meaning ascribed thereto in Section
                2.4(h);

            

    

     

    
      	(jj)  	
              “Offer
                Price” has
                the meaning ascribed thereto in Section
                2.4(h);

            

    

     

    
      	(kk)  	
              “Officer’s
                Certificate” means
                a certificate of the Corporation signed by any one authorized officer
                or
                director of the Corporation in his or her capacity as an officer
                or
                director and not in his or her personal
                capacity;

            

    

     

    
      	(ll)  	
              “Periodic
                Offering” means
                an offering of Debentures of a series from time to time, the specific
                terms of which Debentures, including, without limitation, the rate
                or
                rates of interest, if any, thereon, the stated maturity or maturities
                thereof and the redemption provisions, if any, with respect thereto,
                are
                to be determined by the Corporation upon the issuance of such Debentures
                from time to time;

            

    

     

    
      	(mm)  	
              “Person” means
                any individual, partnership, limited partnership, association, body
                corporate, trust, joint venture, trustee, executor, administrator,
                legal
                representative, government, regulatory authority or other
                entity;

            

    

     

    
      	(nn)  	
              "Recognized
                Stock Exchange"
                means the American Stock Exchange, Nasdaq, New York Stock Exchange,
                Toronto Stock Exchange or TSX Venture Exchange or the OTC Bulletin
                Board
                provided, however, that the OTC Bulletin Board shall only qualify
                as a
                Recognized Stock Exchange in the event that the Common Shares are
                concurrently listed on the Toronto Stock Exchange or TSX Venture
                Exchange;
                

            

    

     

    
      	(oo)  	
              “Redemption
                Account”
                means an account or accounts required to be established by the Corporation
                (and which shall be maintained by and subject to the control of the
                Debenture Trustee) for each series of Debentures pursuant to and
                in
                accordance with this Indenture;

            

    

     

    
      	(pp)  	
              “Redemption
                Date” has
                the meaning attributed thereto in Section
                4.3;

            

    

     

    
      	(qq)  	
              “Redemption
                Notice” has
                the meaning attributed thereto in Section
                4.3;

            

    

     

    
      	(rr)  	
              “Redemption
                Price” means,
                in respect of a Debenture, the amount, excluding interest, payable
                on the
                Redemption Date fixed for such
                Debenture;

            

    

     

    
      	(ss)  	
              “Regulation
                S”
                means Regulation S adopted by the United States Securities and Exchange
                Commission under the 1933 Act;

            

    

     

    
      	(tt)  	
              “Security
                Agreement”
                means a security agreement in the form of Schedule F hereto by the
                Corporation in favor of the Debenture Trustee, as security trustee,
                for
                the benefit of the Debentureholders of the Initial
                Debentures;

            

    

     

    
      	(uu)  	
              “Share
                Interest Payment Notice”
                has the meaning attributed thereto in Section
                2.17(b)

            

    

     

    
      	(vv)  	
              “Share
                Interest Payment Right”
                has the meaning attributed thereto in Section 2.17
                (a)

            

    

     

    
      	(ww)  	
              “Share
                Redemption Right” has
                the meaning attributed thereto in Section
                4.6(a);

            

    

     

    
      	(xx)  	
              “Share
                Repayment Right” has
                the meaning attributed thereto in Section
                4.9(a);

            

    

     

    
      	(yy)  	
              “Subsidiary”
                means, in relation to the Corporation, any entity, including corporations,
                trusts, partnerships and limited partnerships, which are controlled,
                directly or indirectly, by the
                Corporation;

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      - 5-

       

    

    
      	(zz)  	
              “Time of
                Expiry” means
                the time of expiry of certain rights with respect to the conversion
                of
                Debentures under Article 5 which is to be set forth for each series
                of
                Debentures which by their terms are to be
                convertible;

            

    

     

    
      	(aaa)  	
              “trading
                day”
                means, with respect to the market for securities on which the Common
                Shares trade, any day on which such exchange or market is open for
                trading
                or quotation;

            

    

     

    
      	(bbb)  	
              “United
                States” means
                the United States of America, its territories and possessions, any
                state
                of the United States and the District of
                Columbia;

            

    

     

    
      	(ccc)  	
              “Written
                Direction of the Corporation” means
                an instrument in writing signed by any one authorized director or
                officer
                of the Corporation;

            

    

     

    
      	(ddd)  	
              “1933
                Act” means
                the United
                States Securities Act of
                1933, as amended; 

            

    

     

    
      	(eee)  	
              “90%
                Redemption Right”
                has the meaning ascribed thereto in Section 2.4(h);
                and

            

    

     

    
      	(fff)  	
              “$” means
                United States dollars.

            

    

     

    
      	2.2  	
              “Meaning
                of “Outstanding”

            

    

     

    Every
      Debenture certified and delivered by the Debenture Trustee hereunder shall
      be
      deemed to be outstanding until it is cancelled, converted, redeemed or
      repurchased or delivered to the Debenture Trustee for cancellation, conversion,
      redemption, repurchase or monies and/or Common Shares, as the case may be,
      for
      the payment thereof shall have been set aside under Section 8.2, provided
      that:

     

    
      	(a)  	
              Debentures
                which have been partially redeemed, purchased or converted shall
                be deemed
                to be outstanding only to the extent of the unredeemed, unpurchased
                or
                unconverted part of the principal amount
                thereof;

            

    

     

    
      	(b)  	
              when
                a new Debenture has been issued in substitution for a Debenture which
                has
                been lost, stolen or destroyed, only one of such Debentures shall
                be
                counted for the purpose of determining the aggregate principal amount
                of
                Debentures outstanding; and

            

    

     

    
      	(c)  	
              for
                the purposes of any provision of this Indenture entitling holders
                of
                outstanding Debentures to vote, sign consents, requisitions or other
                instruments or take any other action under this Indenture, or to
                constitute a quorum of any meeting of Debentureholders, Debentures
                owned
                directly or indirectly, legally or equitably, by the Corporation
                or any
                affiliate of the Corporation shall be disregarded except
                that:

            

    

     

    
      	(i)  	
              for
                the purpose of determining whether the Debenture Trustee shall be
                protected in relying on any such vote, consent, requisition or other
                instrument or action, or on the holders of Debentures present or
                represented at any meeting of Debentureholders, only the Debentures
                which
                the Debenture Trustee knows are so owned shall be so disregarded;
                and

            

    

     

    
      	(ii)  	
              Debentures
                so owned which have been pledged in good faith other than to the
                Corporation or any affiliate of the Corporation shall not be so
                disregarded if the pledgee shall establish to the satisfaction of
                the
                Debenture Trustee the pledgee’s
                right to vote such Debentures, sign consents, requisitions or other
                instruments or take such other actions in his or her discretion free
                from
                the control of the Corporation or a Subsidiary of the
                Corporation.

            

    

     

    
      	1.3  	
              Interpretation

            

    

     

    In
      this
      Indenture:

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      - 6-

       

    

    
      	(a)  	
              words
                importing the singular number or masculine gender shall include the
                plural
                number or the feminine or neuter genders, and vice
                versa;

            

    

     

    
      	(b)  	
              all
                references to Articles and Schedules refer, unless otherwise specified,
                to
                articles of and schedules to this
                Indenture;

            

    

     

    
      	(c)  	
              all
                references to Sections refer, unless otherwise specified, to sections,
                subsections or clauses of this Indenture;
                and

            

    

     

    
      	(d)  	
              words
                and terms denoting inclusiveness (such as “include”
                or
                “includes”
                or
                “including”),
                whether or not so stated, are not limited by and do not imply limitation
                of their context or the words or phrases which precede or succeed
                them.

            

    

     

    
      	1.4  	
              Headings
                Etc.

            

    

     

    The
      division of this Indenture into Articles and Sections, the provision of a Table
      of Contents and the insertion of headings are for convenience of reference
      only
      and shall not affect the construction or interpretation of this Indenture or
      of
      the Debentures.

     

    
      	1.5  	
              Day
                not a Business Day

            

    

     

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

     

    
      	1.6  	
              Applicable
                Law

            

    

     

    This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      Province of Alberta and the laws of Canada applicable therein. Each of the
      parties hereto irrevocably attorns to the exclusive jurisdiction of the courts
      of the Province of Alberta.

     

    
      	1.7  	
              Monetary
                References

            

    

     

    Whenever
      any amounts of money are referred to herein, such amounts shall be deemed to
      be
      in lawful money of the United States unless otherwise expressed.

     

    
      	1.8  	
              Invalidity,
                Etc.

            

    

     

    Any
      provision hereof which is prohibited or unenforceable shall be ineffective
      only
      to the extent of such prohibition or unenforceability, without invalidating
      the
      remaining provisions hereof

     

    
      	1.9  	
              Time
                of Essence

            

    

     

    Time
      shall be of the essence in this Indenture.

     

    
      	1.10  	
              Language

            

    

     

    The
      parties acknowledge that they have requested this Indenture and all documents,
      notices, correspondence and legal proceedings arising from this Indenture or
      relating hereto be drawn up in English.

     

    
      	1.11  	
              Successors
                and
                Assigns

            

    

     

    All
      covenants and agreements in this Indenture by the Corporation shall bind its
      successors and assigns, whether expressed or not.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      - 7
        -

       

    

    
      	1.12  	
              Beneficiaries
                of Indenture

            

    

     

    Nothing
      in this Indenture or in the Debentures, express or implied, shall give to any
      Person, other than the parties hereto and their successors hereunder, any paying
      agent, the holders of Debentures, the Debenture Trustee and the holders of
      Common Shares (each such person being an intended third party beneficiary under
      this Indenture and the Debentures), any benefit or any legal or equitable right,
      remedy or claim under this Indenture or the Debentures. Nothing in this
      Indenture or the Debentures, express or implied, shall give to any holder of
      Debentures any rights belonging to the holders of Common Shares until such
      time
      as such Debentures are converted into Common Shares in accordance with the
      terms
      hereof.

     

    
      	1.13  	
              Declaration
                and Acceptance of Trust

            

    

     

    Subject
      to Article 12, the Debenture Trustee is hereby declared and hereby accepts
      the
      rights, duties and obligations prescribed or conferred upon it by the terms
      of
      this Indenture.

     

     

    ARTICLE 2  

    THE
      DEBENTURES

     

    
      	2.1  	
              Limit
                of Debentures

            

    

     

    The
      aggregate principal amount of Debentures authorized to be issued under this
      Indenture is unlimited, but Debentures may be issued only upon and subject
      to
      the conditions and limitations herein set forth.

     

    
      	2.2  	
              Terms
                of Debentures of any
                Series

            

    

     

    The
      Debentures may be issued in one or more series. There shall be established
      herein or in or pursuant to one or more indentures supplemental hereto, prior
      to
      the initial issuance of Debentures of any particular series:

     

    
      	(a)  	
              the
                designation of the Debentures of the series (which need not include
                the
                term “Debentures”),
                which shall distinguish the Debentures of the series from the Debentures
                of all other series:

            

    

     

    
      	(b)  	
              any
                limit upon the aggregate principal amount of the Debentures of the
                series
                that may be certified and delivered under this Indenture (except
                for
                Debentures certified and delivered upon registration of, transfer
                of,
                amendment of, or in exchange for, or in lieu of, other Debentures
                of the
                series pursuant to Sections 2.9, 2.10, 3.2, 3.3, and
                3.6);

            

    

     

    
      	(c)  	
              the
                date or dates on which the principal amount of the Debentures of
                the
                series is payable;

            

    

     

    
      	(d)  	
              the
                rate or rates at which the Debentures of the series shall bear interest,
                if any, the date or dates from which such interest shall accrue,
                on which
                such interest shall be payable and on which a record, if any, shall
                be
                taken for the determination of holders to whom such interest shall
                be
                payable and/or the method or methods by which such rate or rates
                or date
                or dates shall be determined;

            

    

     

    
      	(e)  	
              the
                place or places where the principal of and any interest on Debentures
                of
                the series shall be payable or where any Debentures of the series
                may be
                surrendered for registration of transfer or
                exchange;

            

    

     

    
      	(f)  	
              the
                right, if any, of the Corporation to redeem Debentures of the series,
                in
                whole or in part, at its option and the period or periods within
                which,
                the price or prices at which and any terms and conditions upon which,
                Debentures of the series may be so redeemed, pursuant to any sinking
                fund
                or otherwise;

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      - 8
        -

       

    

    
      	(g)  	
              the
                obligation, if any, of the Corporation to redeem, purchase or repay
                Debentures of the series pursuant to any mandatory redemption, sinking
                fund or analogous provisions or at the option of a holder thereof
                and the
                price or prices at which, the period or periods within which, the
                date or
                dates on which,
                and any terms and conditions upon which, Debentures of the series
                shall be
                redeemed, purchased or repaid, in whole or in part, pursuant to such
                obligations;

            

    

     

    
      	(h)  	
              if
                other than denominations of $1,000 and any integral multiple thereof
                the
                denominations in which Debentures of the series shall be
                issuable;

            

    

     

    
      	(i)  	
              any
                other events of default or covenants with respect to the Debentures
                of the
                series not otherwise described in this
                Indenture;

            

    

     

    
      	(j)  	
              whether
                and under what circumstances the Debentures of the series will be
                convertible into or exchangeable for securities of any
                Person;

            

    

     

    
      	(k)  	
              the
                form and terms of the Debentures of the
                series;

            

    

     

    
      	(l)  	
              if
                applicable, that the Debentures of the series shall be issuable in
                whole
                or in part as one or more Global Debentures and, in such case, the
                Depository or Depositories for such Global Debentures in whose name
                the
                Global Debentures will be registered, and any circumstances other
                than or
                in addition to those set forth in Section 2.9 or 3.2, as the case
                may be,
                in which any such Global Debenture may be exchanged for Fully Registered
                Debentures, or transferred to and registered in the name of a Person
                other
                than the Depository for such Global Debentures or a nominee
                thereof;

            

    

     

    
      	(m)  	
              if
                other than United States currency, the currency in which the Debentures
                of
                the series are issuable; and

            

    

     

    
      	(n)  	
              any
                other terms of the Debentures of the series (which terms shall not
                be
                inconsistent with the provisions of this
                Indenture).

            

    

     

    All
      Debentures of any one series shall be substantially identical, except as may
      otherwise be established herein or, to the extent permitted herein, by or
      pursuant to a resolution of the directors of the Corporation, or an Officer’s
      Certificate or in an indenture supplemental hereto. All Debentures of any one
      series need not be issued at the same time and may be issued from time to time,
      including pursuant to a Periodic Offering, consistent with the terms of this
      Indenture, if so provided herein, or, to the extent permitted herein, by or
      pursuant to such resolution of the directors of the Corporation, Officer’s
      Certificate or in an indenture supplemental hereto.

     

    
      	2.3  	
              Form
                of Debentures

            

    

     

    Except
      in
      respect of the Initial Debentures, the form of which is provided for herein,
      the
      Debentures of each series shall be substantially in such form or forms (not
      inconsistent with this Indenture) as shall be established herein or, to the
      extent permitted herein, by or pursuant to one or more resolutions of the
      directors of the Corporation (or to the extent established pursuant to, rather
      than set forth in, a resolution of the directors of the Corporation, in an
      Officer’s Certificate detailing such establishment) or in one or more indentures
      supplemental hereto, in each case with such appropriate insertions, omissions,
      substitutions and other variations as are required or permitted by this
      Indenture and may have imprinted or otherwise reproduced thereon such legend
      or
      legends or endorsements, not inconsistent with the provisions of this Indenture,
      as may be required to comply with any law (including Applicable Securities
      Legislation) or with any rules or regulations pursuant thereto, or with any
      rules or regulations of any securities exchange or securities regulatory
      authority or to conform to general usage, all as may be determined by the
      Debenture Trustee executing such Debentures, as conclusively evidenced by its
      execution of such Debentures.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    - 9
      -

     

    
       

    

    
      	2.4  	
              Form
                and Terms of Initial
                Debentures

            

    

     

    
      	(a)  	
              The
                first series of Debentures (the “Initial
                Debentures”)
                authorized
                for issue immediately shall be designated as “5.5%
                Senior Secured Convertible Debentures”
                and may be issued on one or more Issue
                Dates.

            

    

     

    
      	(b)  	
              The
                Initial Debentures shall be dated as of their respective Issue Dates,
                shall mature on the second anniversary of their respective Issue
                Dates and
                shall bear interest from the Issue Date at the rate of 5.5% per annum,
                non-compounded, payable in arrears in (with the exception of the
                first
                interest payment which will include interest from the Issue Date
                as set
                forth below) equal semi-annual payments on September 15 and March
                15 in
                each year, the first such payment to fall due on March 15, 2007 and
                the
                last such payment (representing interest payable from the last Interest
                Payment Date to, but excluding, the Maturity Date of the Initial
                Debentures) to fall due on the second anniversary of the Issue Date,
                payable after as well as before maturity and after as well as before
                default, with interest on amounts in default at the same rate. The
                first
                interest payment will include interest accrued from the Issue Date
                to, but
                excluding March 15, 2007. The Corporation may, at its option and
                subject
                to and in accordance with the provisions of Section 2.17 and subject
                to
                regulatory approval, elect to satisfy its obligation to pay all or
                any
                portion of any interest that becomes due on the Debentures by issuing
                and
                delivering to holders on the Interest Payment Date that number of
                Common
                Shares obtained by dividing such amount of interest by the Current
                Market
                Price of the Common Shares in effect on the Interest Payment
                Date.

            

    

     

    
      	(c)  	
              The
                Initial Debentures will be redeemable in accordance with the terms
                of
                Article 4, provided that the Initial Debentures will not be redeemable
                before the first anniversary of the Issue Date, except in the event
                of the
                satisfaction of certain conditions after a Change of Control has
                occurred
                as outlined herein. On and after the first anniversary of the Issue
                Date
                and prior to the Maturity Date of the Initial Debentures, the Initial
                Debentures may be redeemed at the option of the Corporation in whole
                or in
                part from time to time on notice as provided for in Section 4.3 provided
                that the Current Market Price of the Common Shares on the date on
                which
                notice of redemption is given is not less than $3.00 and the Corporation
                shall have provided to the Debenture Trustee an Officer’s
                Certificate confirming such Current Market Price. In such event,
                the
                Initial Debentures will be redeemable at a Redemption Price equal
                to 115%
                of the principal amount of Debentures and, in addition thereto, at
                the
                time of redemption, the Corporation shall pay to the holder accrued
                and
                unpaid interest up to but excluding the Redemption Date. The Redemption
                Notice for the Debentures shall be in the form of Schedule “B”.
                In connection with the redemption of the Initial Debentures, the
                Corporation may, at its option and subject to the provisions of Section
                4.6 and subject to regulatory approval, elect to satisfy its obligation
                to
                pay all or a portion of the aggregate of the Redemption Price of
                the
                Initial Debentures to be redeemed and any accrued and unpaid interest
                thereon up to but excluding the Redemption Date, by issuing and delivering
                to the holders of such Initial Debentures, such number of Common
                Shares as
                is obtained by dividing the aggregate of the outstanding principal
                amount
                of the Initial Debentures to be redeemed and any accrued and unpaid
                interest thereon by the Conversion Price in effect on the Redemption
                Date,
                provided that no fractional Common Shares will be issued on such
                redemption but in lieu thereof the Corporation shall satisfy such
                fractional interests by a cash payment equal to the Conversion Price
                of a
                fractional interest. If the Corporation elects to exercise such option,
                it
                shall so specify and provide details in the Redemption Notice.
                

            

    

     

    
      	(d)  	
              The
                Initial Debentures will be direct obligations of the Corporation
                secured
                against all of present and after acquired personal property of the
                Corporation to the extent a security interest in such collateral
                may be
                created and perfected under Article 9 of the New York Uniform Commercial
                Code (and as applicable the Delaware Uniform Commercial Code) provided
                however that the Corporation may factor or otherwise sell its accounts
                receivable in the ordinary course of business or secure such accounts
                receivable in priority to the Initial Debentures in favour of a third
                party lender.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      - 10
        -

       

    

    
      	(e)  	
              Upon
                and subject to the provisions and conditions of Article 5, the holder
                of
                each Initial Debenture shall have the right at such holder’s
                option, at any time following the first anniversary of the issue
                date and
                prior to the close of business on the earlier of the Maturity Date
                and the
                last Business Day immediately preceding the date specified by the
                Corporation for redemption of the Initial Debentures by notice to
                the
                holders of Initial Debentures in accordance with Sections 2.4(c)
                and 4.3
                (the earlier of which will be the “Time
                of Expiry” for
                the purposes of Article 5 in respect of the Initial Debentures),
                to
                convert any part, which is $1,000 or an integral multiple thereof,
                of the
                principal amount of such Debenture into Common Shares at the Conversion
                Price in effect on the Date of
                Conversion.

            

    

     

    
      	(f)  	The Conversion Price in effect on the date hereof
              for
              each Common Share to be issued upon the conversion of Initial Debentures
              is $1.75 such that approximately 571 Common Shares will be issued for
              each
              $1,000 principal amount of Initial Debentures so converted. No adjustment
              in the number of Common Shares to be issued upon conversion will be
              made
              for distributions (with a record date prior to the applicable Date
              of
              Conversion) on Common Shares issuable upon conversion or for interest
              accrued on the Initial Debentures which are surrendered for conversion;
              however, holders converting their Initial Debentures will receive all
              interest which has accrued to but excluding the Date of Conversion
              which
              has not been paid. The Conversion Price applicable to and the Common
              Shares, securities or other property receivable on the conversion of
              the
              Initial Debentures is subject to adjustment pursuant to the provisions
              of
              Section 5.5.

       

    

    
      	(g)  	Notwithstanding any other provisions of this Indenture,
              if an Initial Debenture is surrendered for conversion on an Interest
              Payment Date or during the five preceding Business Days to an Interest
              Payment Date, the Person or Persons entitled to receive Common Shares
              in
              respect of the Initial Debenture so surrendered for conversion shall
              not
              become the holder or holders of record of such Common Shares until
              the
              Business Day following such Interest Payment
              Date.

       

    

    
      	(h)  	
              On
                maturity of the Initial Debentures, the Corporation may, at its option
                and
                subject to the provisions of Section 4.9 and subject to regulatory
                approval, elect to satisfy its obligation to pay all or a portion
                of the
                aggregate principal amount of the Initial Debentures due on maturity
                and
                any accrued and unpaid interest thereon by issuing and delivering
                to such
                holders of Initial Debentures Common Shares pursuant to the provisions
                of
                Section 4.9. If the Corporation elects to exercise such option, it
                shall
                deliver a Maturity Notice to the Debenture Trustee and the holders
                of the
                Initial Debentures and provide the necessary
                details.

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      - 11-

       

    

    
      	(i)  	
              The
                Initial Debentures shall be issued as Fully Registered Debentures
                in
                denominations of $1,000 and integral multiples of $1,000. Each Initial
                Debenture and the certificate of the Debenture Trustee endorsed thereon
                shall be issued in substantially the form set out in Schedule A,
                with such
                insertions, omissions, substitutions or other variations as shall
                be
                required or permitted by this Indenture, and may have imprinted or
                otherwise reproduced thereon such legend or legends or endorsements,
                not
                inconsistent with the provisions of this Indenture, as may be required
                to
                comply with any law or with any rules or regulations pursuant thereto
                or
                with any rules or regulations of any securities exchange or securities
                regulatory authority or to conform with general usage, all as may
                be
                determined by the directors of the Corporation executing such Initial
                Debenture in accordance with Section 2.7 hereof; as conclusively
                evidenced
                by their execution of an Initial Debenture. Each Initial Debenture
                shall
                additionally bear such distinguishing letters and numbers as the
                Debenture
                Trustee shall approve. Notwithstanding the foregoing, an Initial
                Debenture
                may be in such other form or forms as from time to time may be approved
                by
                a resolution of the directors of the Corporation or as specified
                in an
                Officer’s
                Certificate.

            

    

     

    
      	(j)  	
              Within
                30 days following the occurrence of a Change of Control, and subject
                to
                the provisions and conditions of this Section 2.4(h) the Corporation
                shall
                be obligated to offer to purchase the then outstanding Initial Debentures
                (“Change
                of Control Redemption”).
                The terms and conditions of such obligation are set forth
                below:

            

    

     

    
      	(i)  	
              Within
                20 days following the occurrence of a Change of Control, the Corporation
                shall deliver to the Debenture Trustee, and the Debenture Trustee
                shall
                promptly deliver to the holders of the Initial Debentures a written
                notice
                stating that there has been a Change of Control and specifying the
                circumstances surrounding such event (a “Change
                of Control Notice”)
                together
                with an offer in writing (the “Offer”)
                to
                purchase all then outstanding Initial Debentures made in accordance
                with
                the requirements of Applicable Securities Legislation at a price
                equal to
                the greater of (i) 110% of the principal amount thereof plus accrued
                and
                unpaid interest, if any, on such Initial Debentures up to, but excluding,
                the date of acquisition by the Corporation or a related party of
                such
                Debentures, and (ii) an amount equal to the price per Common Share
                paid by
                the acquiring party pursuant to the event triggering such Change
                of
                Control multiplied by the number of Common Shares into which the
                Initial
                Debentures were convertible pursuant to the Conversion Price in effect
                as
                at the date of such Change of Control, plus accrued and unpaid interest,
                if any, on such Initial Debentures up to, but excluding, the date
                of
                acquisition by the Corporation or a related party of such Debentures
                (the
                “Offer
                Price”)
                which
                Offer shall, unless otherwise provided under Applicable Securities
                Legislation, be open for acceptance thereof for a period of not less
                than
                35 days and not more than 60 days and shall provide for payment to
                all
                Debenture holders who accept the Offer not later than the 60th day
                after
                the making of the Offer. The Change of Control Notice shall specify
                (i)
                the provision of the Indenture pursuant to which the Offer is being
                made
                and that all Initial Debentures validly tendered will be accepted
                for
                payment; (ii) the Offer Price and date of acquisition by the Corporation;
                (iii) that any Initial Debenture not tendered will continue to accrue
                interest in accordance with its terms; (iv) that any Initial Debenture
                accepted for payment pursuant to the Offer shall cease to accrue
                interest
                from and after the date of acquisition by the Corporation unless
                the
                Corporation defaults in the payment of the Offer Price; (v) that
                Debentureholders electing to have an Initial Debenture purchased
                pursuant
                to the Offer will be required to surrender the Initial Debenture
                to the
                Debenture Trustee at the address specified in the notice prior to
                the
                close of business on the Business Day immediately preceding the date
                of
                acquisition by the Corporation or, in the case of the Global Debenture,
                that the purchase will take place in such manner as may be agreed
                upon by
                the Depository, the Debenture Trustee and the Corporation and specified
                in
                the Offer; and (vi) that Debentureholders will be entitled to withdraw
                their election if the Debenture Trustee receives, not later than
                the close
                of business on the third Business Day immediately preceding the date
                of
                acquisition by the Corporation, a facsimile transmission or letter
                setting
                forth the name of such Debentureholders, the principal amount of
                Debentures delivered for purchase and a statement that such
                Debentureholder is withdrawing his or her election to have such Initial
                Debentures purchased.

            

    

     

    
      	(ii)  	
              If
                90% or more in aggregate principal amount of Initial Debentures
                outstanding on the date the Corporation provides the Change of Control
                Notice and the Offer to holders of the Initial Debentures have been
                tendered for purchase pursuant to the Offer on the expiration thereof;
                the
                Corporation has the right and obligation upon written notice provided
                to
                the Debenture Trustee within 10 days following the expiration of
                the
                Offer, to redeem and shall redeem all the Initial Debentures remaining
                outstanding on the expiration of the Offer at the Offer Price (the
                “90%
                Redemption Right”).

            

    

     

    
      	(iii)  	
              Upon
                receipt of written notice that the Corporation has exercised or is
                exercising the 90% Redemption Right and is acquiring the remaining
                Initial
                Debentures, the Debenture Trustee shall promptly provide written
                notice to
                each Debentureholder that did not previously accept the Offer
                that:

            

    

     

    
      	(A)  	
              the
                Corporation has exercised the 90% Redemption Right and is purchasing
                all
                outstanding Initial Debentures effective on the expiry of the Offer
                at the
                Offer Price, and shall include a calculation of the amount payable
                to such
                holder as payment of the Offer
                Price;

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
           

          - 12
            -

           

        

      

       

    

    
      	
              (B)  

            	
              each
                such holder must transfer their Initial Debentures to the Debenture
                Trustee on the same terms as those holders that accepted the Offer
                and
                must send their respective Initial Debentures, duly endorsed for
                transfer,
                to the Debenture Trustee within 10 days after the sending of such
                notice;
                and

            

    

     

    
      	(C)  	
              the
                rights of such holder under the terms of the Initial Debentures and
                this
                Indenture cease to be effective as of the date of expiry of the Offer
                provided the Corporation has, on or before the time of notifying
                the
                Debenture Trustee of the exercise of the 90% Redemption Right, paid
                the
                aggregate Offer Price to, or to the order of; the Debenture Trustee
                and
                thereafter the Initial Debentures shall not be considered to be
                outstanding and each holder thereof shall not have any right except
                to
                receive such holder’s Offer Price upon surrender and delivery of such
                holder’s Initial Debentures in accordance with the
                Indenture.

            

    

     

    The
      form
      of notice to be provided to each Debentureholder that did not previously accept
      the Offer shall be prepared by the Corporation or counsel to the Corporation,
      and the Debenture Trustee shall not be responsible for calculating any amount
      payable to such holders.

     

    
      	(iv)  	
              The
                Corporation shall, on or before 11:00 a.m. (Eastern time) on the
                date of
                the expiry of the Offer, deposit with the Debenture Trustee or any
                paying
                agent to the order of the Debenture Trustee by electronic transfer,
                such
                sums of money as may be sufficient to pay the aggregate Offer Price
                of the
                Initial Debentures to be purchased or redeemed by the Corporation
                on the
                expiry of the Offer. The Corporation shall also deposit with the
                Debenture
                Trustee a sum of money sufficient to pay any charges or expenses
                which may
                be incurred by the Debenture Trustee in connection with such purchase
                and/or redemption, as the case may be. Every such deposit shall be
                irrevocable. From the sums so deposited and pursuant to a Written
                Direction of the Corporation, the Debenture Trustee shall pay or
                cause to
                be paid to the holders of such Initial Debentures, the Offer Price
                to
                which they are entitled on the Corporation’s
                purchase or redemption. For greater certainty, the Corporation shall
                not
                be permitted to satisfy the Offer Price payable pursuant to an Offer
                or
                the exercise of the 90% Redemption Right through the issuance of
                Common
                Shares, however, in the event that the securities of the party acquiring
                Common Shares of the Corporation pursuant to the transaction triggering
                such Change of Control are listed and trading on a Recognized Stock
                Exchange, or such other stock exchange or market as may be agreed
                to by
                Extraordinary Resolution of the Debentureholders, the Offer Price
                payable
                pursuant to an Offer or the exercise of the 90% Redemption Right
                may be
                satisfied through the issuance of such listed securities at a price
                equal
                to the weighted average trading price of such securities on such
                Recognized Stock Exchange for the 20 trading days prior to the date
                of
                issuance.

            

    

     

    
      	(v)  	
              In
                the event that one or more of such Initial Debentures being purchased
                in
                accordance with this Section 2.4(h) becomes subject to purchase in
                part
                only, upon surrender of such Initial Debentures for payment of the
                Offer
                Price, the Corporation shall execute and the Debenture Trustee shall,
                pursuant to a Written Direction of the Corporation, certify and deliver
                without charge to the holder thereof or upon the holder’s
                order, one or more new Initial Debentures for the portion of the
                principal
                amount of the Initial Debentures not
                purchased.

            

    

     

    
      	(vi)  	
              Initial
                Debentures for which holders have accepted the Offer and Initial
                Debentures which the Corporation has elected to redeem in accordance
                with
                the Change of Control Redemption under this Section 2.4(h) shall
                become
                due and payable at the Offer Price on the date of expiry of the Offer
                or,
                where has Corporation has elected to redeem in accordance with the
                90%
                Redemption Right under this Section 2.4(h), on the date prescribed
                in the
                notice provided pursuant to subsection 2.4(h)(iii), in the same manner
                and
                with the same effect as if it were the date of maturity specified
                in such
                Initial Debentures, anything therein or herein to the contrary
                notwithstanding, and from and after such date of expiry of the Offer,
                if
                the money necessary to purchase or redeem the Initial Debentures
                shall
                have been deposited as provided in this Section 2.4(h) and affidavits
                or
                other proofs satisfactory to the Debenture Trustee as to the publication
                and/or mailing of such notices shall have been lodged with it, interest
                on
                the Initial Debentures shall cease. If any question shall arise as
                to
                whether any notice has been given as above provided and such deposit
                made,
                such question shall be decided by the Debenture Trustee whose decision
                shall be final and binding upon all parties in
                interest.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

      
        
           

          - 13
            -

           

        

      

    

    
      	(vii)  	
              In
                case the holder of any Initial Debenture to be purchased or redeemed
                in
                accordance with this Section 2.4(h) shall fail on or before the date
                specified in Section 2.4(h)(i) or Section 2.4(h)(vi), as applicable,
                so to
                surrender such holder’s
                Initial Debenture or shall not within such time accept payment of
                the
                monies payable, or give such receipt therefor, if any, as the Debenture
                Trustee may require, such monies may be set aside in trust, in the
                deposit
                department of the Debenture Trustee, and such setting aside shall
                for all
                purposes be deemed a payment to the Debentureholder of the sum so
                set
                aside and the Debentureholder shall have no other right except to
                receive
                payment of the monies so paid and deposited, upon surrender and delivery
                up of such holder’s
                Initial Debenture. In the event that any money required to be deposited
                hereunder with the Debenture Trustee or any depository or paying
                agent on
                account of principal, premium, if any, or interest, if any, on Initial
                Debentures issued hereunder shall remain so deposited for a period
                of six
                years from the date of expiry of the Offer, then such monies, together
                with any accumulated interest thereon, shall at the end of such period
                be
                paid over or delivered over by the Debenture Trustee or such depository
                or
                paying agent to the Corporation and the Debenture Trustee shall not
                be
                responsible to Debentureholders for any amounts owing to them.
                

            

    

     

    
      	(viii)  	
              Subject
                to the provisions above related to Initial Debentures purchased in
                part,
                all Initial Debentures redeemed and paid under this Section 2.4(h)
                shall
                forthwith be delivered to the Debenture Trustee and cancelled and
                no
                Initial Debentures shall be issued in substitution
                therefor.

            

    

     

    
      	(i)  	
              The
                Debenture Trustee shall be provided with the documents and instruments
                referred to in Sections 2.5(b), (c), (d), (e) and (f) with respect
                to the
                Initial Debentures prior to the issuance of the Initial
                Debentures.

            

    

     

    
      	2.5  	
              Certification
                and Delivery of Additional
                Debentures

            

    

     

    The
      Corporation may from time to time request the Debenture Trustee to certify
      and
      deliver Additional Debentures of any series by delivering to the Debenture
      Trustee the documents referred to below in this Section 2.5 whereupon the
      Debenture Trustee shall certify such Debentures and cause the same to be
      delivered in accordance with the Written Direction of the Corporation referred
      to below or pursuant to such procedures acceptable to the Debenture Trustee
      as
      may be specified from time to time by a Written Direction of the Corporation.
      The maturity date, issue date, interest rate (if any) and any other terms of
      the
      Debentures of such series shall be set forth in or determined by or pursuant
      to
      such Written Direction of the Corporation and such procedures. In certifying
      such Debentures, the Debenture Trustee shall be entitled to receive and shall
      be
      fully protected in relying upon, unless and until such documents have been
      superseded or revoked:

     

    
      	(a)  	
              an
                Officer’s
                Certificate and/or executed supplemental indenture by or pursuant
                to which
                the form and terms of such Additional Debentures were
                established;

            

    

     

    
      	(b)  	
              a
                Written Direction of the Corporation requesting certification and
                delivery
                of such Additional Debentures and setting forth delivery instructions,
                provided that, with respect to Debentures of a series subject to
                a
                Periodic Offering:

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

       

      
         

        
          
             

            - 14
              -

          

        

      

       

    

    
      	(i)  	
              such
                Written Direction of the Corporation may be delivered by the Corporation
                to the Debenture Trustee prior to the delivery to the Debenture Trustee
                of
                such Additional Debentures of such series for certification and
                delivery;

            

    

     

    
      	(ii)  	
              the
                Debenture Trustee shall certify and deliver Additional Debentures
                of such
                series for original issue from time to time, in an aggregate principal
                amount not exceeding the aggregate principal amount, if any, established
                for such series, pursuant to a Written Direction of the Corporation
                or
                pursuant to procedures acceptable to the Debenture Trustee as may
                be
                specified from time to time by a Written Direction of the
                Corporation;

            

    

     

    
      	(iii)  	
              the
                maturity date or dates, issue date or dates, interest rate or rates
                (if
                any) and any other terms of Additional Debentures of such series
                shall be
                determined by an executed supplemental indenture or by Written Direction
                of the Corporation or pursuant to such procedures;
                and

            

    

     

    
      	(iv)  	
              if
                provided for in such procedures, such Written Direction of the Corporation
                may authorize certification and delivery pursuant to electronic
                instructions from the Corporation;

            

    

     

    
      	(c)  	
              an
                opinion of Counsel to the Corporation that all legal requirements
                imposed
                by this Indenture in connection with the proposed issue of Additional
                Debentures have been complied with, subject to the delivery of certain
                documents or instruments specified in such
                opinion;

            

    

     

    
      	(d)  	
              an
                opinion of Counsel to the Corporation that:

            

    

     

    
      	(i)  	
              the
                Security Agreement entered into in favour of the Debenture Trustee
                in its
                capacity as Security Trustee on behalf of the holders of such Additional
                Debentures has been duly authorized, executed and delivered by the
                Corporation and constitutes legal, valid and binding obligations
                of the
                Corporation enforceable against the Corporation in accordance with
                its
                respective terms, except insofar as enforcement of the indemnification
                or
                contribution provisions hereof may be limited by applicable laws
                or
                principles of public policy and except further as to enforcement,
                to the
                availability of equitable remedies and limitations imposed by bankruptcy,
                insolvency or other laws affecting the rights of creditors generally
                and
                to general equitable principles;

            

    

     

    
      	(ii)  	
              the
                Security Agreement creates in favor of the Debenture Trustee for
                the
                benefit of the holders of such Additional Debentures, as security
                for the
                Obligations (as defined in the Security Agreement), a valid security
                interest in the Collateral (as defined in the Security Agreement)
                in which
                a security interest may be created under Article 9 of the Uniform
                Commercial Code of the State of New York (the “Article
                9 Collateral”);
                and

            

    

     

    
      	(iii)  	
              upon
                proper filing of a financing statement on Form UCC-1 in the form
                attached
                to the Security Agreement (the “Financing
                Statement”)
                with the Secretary of State of Delaware, the Debenture Trustee will
                have a
                perfected security interest in that portion of the Article 9 Collateral
                in
                which a security interest may be perfected by filing a Financing
                Statement
                under the Uniform Commercial Code of the State of New York and the
                Uniform
                Commercial Code of the State of
                Delaware;

            

    

     

    
      	(e)  	
              an
                Officer’s
                Certificate certifying that the Corporation is not in default under
                this
                Indenture, that the terms and conditions for the certification and
                delivery of Additional Debentures (including those set forth in Section
                12.5), have been complied with subject to the delivery of any documents
                or
                instruments specified in such Officer’s
                Certificate and that no Event of Default exists or will exist upon
                such
                certification and delivery; and

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      
        
           

          - 15
            -

        

      

    

     

    
      	(f)  	
              such
                other documents as the Debenture Trustee may reasonably
                request.

            

    

     

    

      	2.6  	
              Issue
                of Global Debentures

            

       

      	(a)  	
              The
                Corporation may specify that the Debentures of a series are to be
                issued
                in whole or in part, in the book-based or book-entry system, or as
                one or
                more Global Debentures registered in the name of a Depository, or
                its
                nominee, designated by the Corporation in the Written Direction of
                the
                Corporation delivered to the Debenture Trustee at the time of issue
                of
                such Debentures. In the event the Corporation specifies that the
                Debentures of a series are to be issued as a Global Debenture, the
                Corporation shall execute and the Debenture Trustee shall certify
                and
                deliver one or more Global Debentures that
                shall:

            

       

      	(i)  	
              represent
                an aggregate amount equal to the principal amount of the outstanding
                Debentures of such series to be represented by one or more Global
                Debentures;

            

       

      	(ii)  	
              be
                delivered by the Debenture Trustee to such Depository or pursuant
                to such
                Depository’s
                instructions; and

            

       

      	(iii)  	
              bear
                a legend substantially to the following
                effect:

            

       

      “This
        Debenture is a Global Debenture within the meaning of the Indenture herein
        referred to and is registered in the name of a Depository or a nominee thereof.
        This Debenture may not be transferred to or exchanged for Debentures registered
        in the name of any Person other than the Depository or a nominee thereof
        and no
        such transfer may be registered except in the limited circumstances described
        in
        the Indenture. Every Debenture authenticated and delivered upon registration
        of,
        transfer of, or in exchange for, or in lieu of, this Debenture shall be a
        Global
        Debenture subject to the foregoing, except in such limited circumstances
        described in the Indenture.”

       

      	(b)  	
              Each
                Depository designated for a Global Debenture must, at the time of
                its
                designation and at all times while it serves as such Depository,
                be a
                clearing agency registered or designated under the securities legislation
                of the jurisdiction where the Depository has its principal
                offices.

            

       

      	2.7  	
              Execution
                of Debentures

            

       

      All
        Debentures shall be signed (either manually or by facsimile signature) by
        any
        one director or officer of the Corporation, holding office at the time of
        signing. A facsimile signature upon a Debenture shall for all purposes of
        this
        Indenture be deemed to be the signature of the Person whose signature it
        purports to be. Notwithstanding that any Person whose signature, either manual
        or in facsimile, appears on a Debenture as a director or officer of the
        Corporation, may no longer hold such office at the date of the Debenture
        or at
        the date of the certification and delivery thereof, such Debenture shall
        be
        valid and binding upon the Corporation and entitled to the benefits of this
        Indenture.

       

      	2.8  	
              Certification

            

       

      No
        Debenture shall be issued or, if issued, shall be obligatory or shall entitle
        the holder to the benefits of this Indenture, until it has been manually
        certified by or on behalf of the Debenture Trustee substantially in the form
        set
        out in this Indenture, in the relevant supplemental indenture, or in some
        other
        form approved by the Debenture Trustee. Such certification on any Debenture
        shall be conclusive evidence that such Debenture is duly issued, is a valid
        obligation of the Corporation and the holder is entitled to the benefits
        described herein and therein.

       

            
        The certificate of the Debenture Trustee signed on the Debentures hereinafter
        mentioned, shall not be construed as a representation or warranty by the
        Debenture Trustee as to the validity of this Indenture or of the Debentures
        or
        as to the issuance of the Debentures and the Debenture Trustee shall in no
        respect be liable or answerable for the use made of the Debentures or any
        of
        them or the proceeds thereof. The certificate of the 

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
       

      
        
           

          - 16
            -

      

      Debenture
        Trustee signed on the Debentures shall, however, be a representation and
        warranty by the Debenture Trustee that the Debentures have been duly certified
        by or on behalf of the Debenture Trustee pursuant to the provisions of this
        Indenture.

       

      	2.9  	
              Mutilation,
                Loss, Theft or Destruction

            

       

      case
        any
        of the Debentures, whether a Global Debenture or a Fully Registered Debenture,
        issued hereunder shall become mutilated or be lost, stolen or destroyed,
        the
        Corporation, in its discretion, may issue, and thereupon the Debenture Trustee
        shall certify and deliver, a new Debenture upon surrender and cancellation
        of
        the mutilated Debenture, or in the case of a lost, stolen or destroyed
        Debenture, in lieu of and in substitution for the same, and the substituted
        Debenture shall be in a form approved by the Debenture Trustee and shall
        be
        entitled to the benefits of this Indenture and rank equally in accordance
        with
        its terms with all other Debentures issued or to be issued hereunder. In
        case of
        loss, theft or destruction the applicant for a substituted Debenture shall
        furnish to the Corporation and to the Debenture Trustee such evidence of
        the
        loss, theft or destruction of the Debenture as shall be satisfactory to them
        in
        their discretion and shall also furnish an indemnity and/ or bond in such
        form
        and amount as is satisfactory to the Corporation and the Debenture Trustee.
        The
        applicant shall pay all reasonable expenses incidental to the issuance of
        any
        substituted Debenture.

       

      	2.10  	
              Concerning
                Interest

            

       

      	i)  	
              Subject
                to Section 2.4(b) with respect to the calculation of interest in
                respect
                of the initial interest payment to be paid on the Initial Debentures,
                all
                Debentures issued hereunder, whether originally or upon exchange
                or in
                substitution for previously issued Debentures which are interest
                bearing,
                shall bear interest (i) from and including their issue date, or (ii)
                from
                and including the last Interest Payment Date to which interest shall
                have
                been paid or made available for payment on the outstanding Debentures
                of
                that series, whichever shall be the later, or, in respect of Debentures
                subject to a Periodic Offering, from and including their issue date
                or
                from and including the last Interest Payment Date to which interest
                shall
                have been paid or made available for payment on such Debentures,
                in all
                cases, to and excluding the next Interest Payment
                Date;

            

       

      	ii)  	
              Unless
                otherwise specifically provided in the terms of the Debentures of
                any
                series, interest for any period of less than six months shall be
                computed
                on the basis of a year of 365 days. Subject to Section 2.4(b) in
                respect
                of the method for calculating the amount of interest to be paid on
                the
                Initial Debentures on the first Interest Payment Date in respect
                thereof~
                with respect to any series of Debentures, whenever interest is computed
                on
                a basis of a year (the “deemed year”)
                which contains fewer days than the actual number of days in the calendar
                year of calculation, such rate of interest shall be expressed as
                a yearly
                rate by multiplying such rate of interest by the actual number of
                days in
                the calendar year of calculation and dividing it by the number of
                days in
                the deemed year.

            

       

      	2.11  	
              Debentures
                to Rank Pari
                Passu

            

       

      (a)  The
        Initial Debentures will be direct senior obligations of the Corporation secured
        against all present and after acquired property of the Corporation to the
        extent
        a security interest in such collateral may be created and perfected under
        Article 9 of the New York Uniform Commercial Code (and as applicable the
        Delaware Uniform Commercial Code), provided however that the Corporation
        may
        factor or otherwise sell its accounts receivable in the ordinary course of
        business or secure such accounts receivable in priority to the Initial
        Debentures in favour of a third party lender. Each Debenture of the same
        series
        of Debentures will rank pari
        passu with
        each
        other Debenture of the same series (regardless of their actual date or terms
        of
        issue) and, subject to statutory preferred exceptions, will rank senior to
        all
        other indebtedness and obligations of the Corporation except for sinking
        fund
        provisions (if any) applicable to different series of Debentures or other
        similar types of obligations of the Corporation. For greater certainty, the
        Initial Debentures will rank senior to all other Debentures issued
        hereunder.

       

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      
        
           

          - 17
            -

        

      

    

    

      	2.12  	
              Payments
                of Amounts Due on Maturity

            

       

      Except
        as
        may otherwise be provided herein or in any supplemental indenture in respect
        of
        any series of Debentures and subject to Section 4.9, payments of amounts
        due
        upon maturity of the Debentures will be made in the following manner. The
        Corporation will establish and maintain with the Debenture Trustee a Maturity
        Account for each series of Debentures. Each such Maturity Account shall be
        maintained by and be subject to the control of the Debenture Trustee for
        the
        purposes of this Indenture. On or before 11:00 a.m. (Eastern time) on the
        date
        that is two Business Days prior to each Maturity Date for Debentures outstanding
        from time to time under this Indenture, the Corporation will deliver to the
        Debenture Trustee funds for deposit in the applicable Maturity Account in
        an
        amount sufficient to pay the cash amount payable in respect of such Debentures
        (including the principal amount together with any accrued and unpaid interest
        thereon less any tax required by law to be withheld or deducted therefrom
        as
        instructed by the Corporation). The Debenture Trustee, on behalf of the
        Corporation, will, pursuant to a Written Direction of the Corporation, pay
        to
        each holder entitled to receive payment the principal amount of and premium
        (if
        any) and accrued and unpaid interest on the Debenture (less any tax required
        to
        be withheld or deducted therefrom as instructed by the Corporation), upon
        surrender of the Debenture at any branch of the Debenture Trustee designated
        for
        such purpose from time to time by the Corporation and the Debenture Trustee.
        The
        delivery of such funds to the Debenture Trustee for deposit to the applicable
        Maturity Account will satisfy and discharge the liability of the Corporation
        for
        the Debentures to which the delivery of funds relates to the extent of the
        amount delivered (plus the amount of any tax withheld or deducted as aforesaid
        as instructed by the Corporation) and such Debentures will thereafter to
        that
        extent not be considered as outstanding under this Indenture and such holder
        will have no other right in regard thereto other than to receive out of the
        money so delivered or made available the amount to which it is
        entitled.

       

      Payment
        of funds to the Debenture Trustee upon maturity of the Debentures shall be
        made
        by electronic transfer or pursuant to such other arrangements for the provision
        of funds as may be agreeable between the Corporation and the Debenture Trustee
        in order to effect such maturity payment hereunder. The Debenture Trustee
        shall
        disburse such maturity payments only upon receiving, at least two Business
        Days
        prior to each Maturity Date, funds in an amount sufficient for the maturity
        payment and a Written Direction of the Corporation directing such
        payment.

       

      	2.13 	
              Payments
                of Amounts Due on Redemption

            

       

      Except
        as
        may otherwise be provided herein or in any supplemental indenture in respect
        of
        any series of Debentures and subject to Section 4.6, payments of amounts
        due
        upon Redemption of the Debentures will be made in the following manner. The
        Corporation will establish and maintain with the Debenture Trustee a Redemption
        Account for each series of Debentures. Each such Redemption Account shall
        be
        maintained by and be subject to the control of the Debenture Trustee for
        the
        purposes of this Indenture. On or before 11:00 a.m. (Eastern time) on the
        second
        Business Day immediately prior to each Redemption Date for Debentures
        outstanding from time to time under this Indenture, the Corporation will
        deliver
        to the Debenture Trustee funds for deposit in the applicable Redemption Account
        in an amount sufficient to pay the cash amount payable in respect of such
        Debentures (including the principal amount together with any accrued and
        unpaid
        interest thereon less any tax required by law to be withheld or deducted
        therefrom as instructed by the Corporation). The Debenture Trustee, on behalf
        of
        the Corporation and pursuant to a Written Direction of the Corporation, will
        pay
        to each holder entitled to receive payment the principal amount of and (if
        any)
        and accrued and unpaid interest on the Debenture (less any tax required to
        be
        withheld or deducted therefrom as instructed by the Corporation), upon surrender
        of the Debenture at any branch of the Debenture Trustee designated for such
        purpose from time to time by the Corporation and the Debenture Trustee. The
        delivery of such funds to the Debenture Trustee for deposit to the applicable
        Redemption Account will satisfy and discharge the liability of the Corporation
        for the Debentures to which the delivery of funds relates to the extent of
        the
        amount delivered (plus the amount of any tax withheld or deducted as aforesaid
        as instructed by the Corporation) and such Debentures will thereafter to
        that
        extent not be considered as outstanding under this Indenture and such holder
        will have no other right in regard thereto other than to receive out of the
        money so delivered or made available the amount to which it is
        entitled.

       

          Payment
        of
        funds to the Debenture Trustee upon Redemption of the Debentures shall be
        made
        by electronic transfer or pursuant to such other arrangements for the provision
        of funds as may be agreeable between the Corporation and the Debenture Trustee
        in order to effect such Redemption payment hereunder. 

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      
        
           

          - 18
            -

        

      

    

    

      The
        Debenture Trustee shall disburse such Redemption payments only upon receiving,
        at least two Business Days prior to each Redemption Date, funds in an amount
        sufficient for the Redemption payment.

       

      	2.14 	
              Legend
                on the Debentures

            

       

      	(a)  	
              The
                Debentures have not been and will not be registered under the 1933
                Act.
                All Debentures issued and sold in reliance on exemptions available
                under
                the 1933 Act, as well as all Debentures and the Common Shares issuable
                upon conversion, redemption, maturity thereof or payment of interest
                issued in exchange for or in substitution of the foregoing securities,
                shall bear, unless otherwise directed by the Corporation acting upon
                an
                opinion of the Corporation’s
                counsel, the following legend (the “U.S.
                Legend”):

            

       

      THE
        SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
        THE
        SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND HAVE BEEN ISSUED IN RELIANCE
        ON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT PROVIDED BY
        REGULATION S PROMULGATED UNDER THE ACT. THE SECURITIES MAY NOT BE REOFFERED
        FOR
        SALE OR RESOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
        REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN EXEMPTION FROM THE
        REGISTRATION REQUIREMENTS OF THE ACT AFTER PROVIDING A LEGAL OPINION TO SUCH
        EFFECT IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION. HEDGING
        TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN
        COMPLIANCE WITH THE ACT.

       

      	(b)  	
              All
                Debentures issued and sold to holders resident in Canada in reliance
                on
                exemptions from prospectus requirements pursuant to Applicable Securities
                Legislation in Canada, as well as all Debentures and the Common Shares
                issuable upon conversion, redemption, maturity thereof or payment
                of
                interest issued in exchange for or in substitution of the foregoing
                securities, shall bear, unless otherwise directed by the Corporation
                acting upon an opinion of the Corporation’s
                counsel, the following legend (the “Canadian
                Legend”):

            

       

      UNLESS
        PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES REPRESENTED
        BY THIS CERTIFICATE SHALL NOT TRADE THESE SECURITIES BEFORE THE
        DATE
        THAT IS 4 MONTHS AND A DAY AFTER THE LATER OF [INSERT DISTRIBUTION DATE OF
        DEBENTURE]
        AND THE
        DATE THE CORPORATION BECAME A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY
        OF
        CANADA]. 

       

      	(c)  	
              Prior
                to the issuance of the Debentures, the Corporation shall notify the
                Debenture Trustee, in writing, concerning which Debentures are to
                bear the
                U.S. Legend and the Canadian Legend. The Debenture Trustee will thereafter
                maintain a list of all registered holders from time to time of Legended
                Debentures.

            

       

      	2.15  	
              Payment
                of Interest

            

      
         

        	(a)  	As interest becomes due on each Debenture (except
                on
                conversion or on redemption or repurchase, when interest may at the
                option
                of the Corporation be paid upon surrender of such Debenture) the
                Corporation, either directly or through the Debenture Trustee or
                any agent
                of the Debenture Trustee, shall send or forward by prepaid ordinary
                mail,
                electronic transfer of funds or such other means as may be agreed
                to by
                the Debenture Trustee, payment of such interest (less any tax required
                to
                be withheld therefrom as instructed by the Corporation) to the order
                of
                the registered holder of such Debenture appearing on the registers
                maintained by the Debenture Trustee at the close of business on the
                fifth
                Business Day prior to the 

         

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    
       

      
        
           

          - 19
            -

        

      

    

    

      	  	
              applicable
                Interest Payment Date and addressed to the holder at the
                holder’s
                last address appearing on the register (or, in the case of joint
                holders
                to the registered address of one of the joint holders), unless such
                holder
                otherwise directs. If payment is made by cheque, such cheque shall
                be
                forwarded at least three days prior to each date on which interest
                becomes
                due and if payment is made by other means (such as electronic transfer
                of
                funds, provided the Debenture Trustee must receive confirmation of
                receipt
                of funds prior to being able to wire funds to holders), such payment
                shall
                be made in a manner whereby the holder receives credit for such payment
                on
                the date such interest on such Debenture becomes due. The mailing
                of such
                cheque or the making of such payment by other means shall, to the
                extent
                of the sum represented thereby, plus the amount of any tax withheld
                as
                aforesaid, satisfy and discharge all liability for interest on such
                Debenture, unless in the case of payment by cheque, such cheque is
                not
                paid at par on presentation. In the event of non-receipt of any cheque
                for
                or other payment of interest by the Person to whom it is so sent
                as
                aforesaid, the Corporation will issue to such Person a replacement
                cheque
                or other payment for a like amount upon being furnished with such
                evidence
                of non-receipt as it shall reasonably require and upon being indemnified
                to its satisfaction. Notwithstanding the foregoing, if the Corporation
                is
                prevented by circumstances beyond its control (including, without
                limitation, any interruption in mail service) from making payment
                of any
                interest due on each Debenture in the manner provided above, the
                Corporation may make payment of such interest or make such interest
                available for payment in any other manner acceptable to the Debenture
                Trustee with the same effect as though payment had been made in the
                manner
                provided above. If payment is made through the Debenture Trustee,
                at least
                two Business Days prior to each Interest Payment Date or the date
                of
                mailing the cheques for the interest due on an Interest Payment Date,
                whichever is earlier, the Corporation shall deliver sufficient funds
                to
                the Debenture Trustee by electronic transfer or certified cheque
                or make
                such other arrangements for the provision of funds as may be agreeable
                between the Debenture Trustee and the Corporation in order to effect
                such
                interest payment hereunder. The Debenture Trustee shall disburse
                such
                interest payments only upon receiving, at least one Business Day
                prior to
                each such date, funds in an amount sufficient for the interest payment
                and
                a Written Direction of the Corporation. The Debenture Trustee shall
                have
                no obligation to disburse funds pursuant to this Section 2.16(a)
                unless it
                has received written confirmation satisfactory to it that the funds
                have
                been deposited with it in sufficient amount to pay in full all amounts
                due
                and payable with respect to such Interest Payment Date. The Debenture
                Trustee shall, if any funds are received by it in the form of uncertified
                cheques, be entitled to delay the time for release of such funds
                until
                such uncertified cheques shall be determined to have cleared the
                financial
                institution upon which the same are
                drawn.

            

       

      	(b)  	
              Notwithstanding
                Section 2.16(a), if a series of Debentures is represented by a Global
                Debenture, then all payments of interest on the Global Debenture
                shall be
                made by electronic funds transfer to the Depository or its nominee
                for
                subsequent payment to Beneficial Holders of interests in that Global
                Debenture, unless the Corporation and the Depository otherwise agree.
                None
                of the Corporation, the Debenture Trustee or any agent of the Debenture
                Trustee for any Debenture issued as a Global Debenture will be liable
                or
                responsible to any Person for any aspect of the records related to
                or
                payments made on account of beneficial interests in any Global Debenture
                or for maintaining, reviewing, or supervising any records relating
                to such
                beneficial interests.

            

       

      	2.16  	
              Right
                to Pay Interest in Common Shares

            

       

      	a)  	
              Subject
                to the other provisions of this Section 2.17 and receipt of any required
                regulatory approvals, the Corporation may, at its option, in exchange
                for
                or in lieu of paying in money any interest that becomes due on the
                Debentures, elect to so satisfy its obligation to pay all or any
                portion
                of such interest by issuing and delivering to holders on the Interest
                Payment Date that number of Common Shares obtained by dividing such
                amount
                of interest by the Current Market Price of the Common Shares in effect
                on
                the Interest Payment Date (the “Share
                Interest Payment Right”).
                The Debenture Trustee shall have no obligation to calculate or verify
                the
                Share Interest Payment Right.

            

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
         

        
          
             

            - 20
              -

            	(b)  	
                    The
                      Corporation shall exercise the Share Interest Payment Right
                      by so
                      specifying in the share interest payment notice to holders
                      of the
                      Debentures substantially in the form of Schedule “E”
                      (“Share
                      Interest Payment Notice”)
                      which shall be delivered to the Debenture Trustee and the holders
                      of
                      Debentures not more than 60 days and not less than 15 days
                      prior to the
                      applicable Interest Payment
                      Date.

                  

          

        

         

        	(c)  	
                The
                  Corporation’s
                  right to exercise the Share Interest Payment Right shall be conditional
                  upon the following conditions being met on the Business Day preceding
                  the
                  Interest Payment Date:

              

         

        	(i)  	
                the
                  issuance of the Common Shares on the exercise of the Share Interest
                  Payment Right shall be made in accordance with Applicable Securities
                  Legislation and such Common Shares shall be issued as Common
                  Shares;

              

         

        	(ii)  	
                the
                  Common Shares shall be listed on a Recognized Stock
                  Exchange;

              

         

        	(iii)  	
                the
                  Corporation being a reporting issuer in good standing under Applicable
                  Securities Legislation where the distribution of such Common Shares
                  occurs;

              

         

        	(iv)  	
                no
                  Event of Default shall have occurred and be
                  continuing;

              

         

        	(v)  	
                the
                  receipt of the Debenture Trustee of an Officers Certificate stating
                  that
                  conditions (i), (ii), (iii) and (iv) above have been satisfied
                  and setting
                  forth the number of Common Shares to be delivered in payment of
                  the Share
                  Interest Payment Right and the Current Market Price of the Common
                  Shares
                  on the Interest Payment Date; and

              

         

        	(vi)  	
                the
                  receipt by the Debenture Trustee of an opinion of Counsel to the
                  effect
                  that the issuance of such Common Shares has been duly authorized
                  by the
                  Corporation and, when issued and delivered pursuant to the terms
                  of this
                  Indenture in payment of such interest, will be validly issued as
                  fully
                  paid and non-assessable, that condition (i) and (iii) have been
                  satisfied
                  and that, relying exclusively on certificates of good standing
                  issued by
                  the relevant securities authorities, condition (iii) above is satisfied,
                  except that the opinion in respect of condition (iii) need not
                  be
                  expressed with respect to those provinces or territories where
                  certificates of good standing are not
                  issued.

              

        
           

          	  	
                  If
                    the foregoing conditions are not satisfied prior to 5:00 p.m.
                    (Eastern
                    time) on the Business Day immediately preceding the Interest
                    Payment Date,
                    the Corporation shall pay such interest in cash in accordance
                    with Section
                    2.16, unless the Debenture Trustee waives the conditions which
                    are not
                    satisfied.

                

           

        

         

        	(d)  	
                In
                  the event that the Corporation duly exercises its Share Interest
                  Payment
                  Right, the Corporation shall on or before 11:00 a.m. (Eastern time)
                  at
                  least two days prior to the Interest Payment Date, deliver to the
                  Debenture Trustee, for delivery to and on account of the holders,
                  the
                  Common Shares to which such holders are entitled. The Corporation
                  shall
                  also deposit with the Debenture Trustee a sum of money sufficient
                  to pay
                  any charges or expenses which may be incurred by the Debenture
                  Trustee in
                  connection with the Share Interest Repayment Right. From the certificates
                  so deposited in addition to any amounts payable by the Debenture
                  Trustee
                  pursuant to Section 2.16, the Debenture Trustee shall pay or cause
                  to be
                  paid, to the holders of such Debentures the interest on the Debentures
                  to
                  which they are respectively entitled on the Interest Payment Date
                  and
                  deliver to such holders the certificates to which such holders
                  are
                  entitled as directed by a Written Direction of the Corporation.
                  The
                  delivery of such certificates to the Debenture Trustee will satisfy
                  and
                  discharge the liability of the Corporation for the interest on
                  the
                  Debentures to which the delivery of certificates relates to the
                  extent of
                  the amount delivered (plus the amount of any applicable taxes in
                  accordance with this Section 2.17).

              

         

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    
       

      
        
           

          - 21
            -

        

      

    

     

    

      	(e)  	
              No
                fractional Common Shares shall be delivered upon the exercise of
                the Share
                Interest Payment Right but, in lieu thereof the Corporation shall
                pay to
                the Debenture Trustee for the account of the holders, at the time
                contemplated in Section 2.17(d), the cash equivalent thereof determined
                on
                the basis of the Current Market Price of the Common Shares on the
                Interest
                Payment Date (less any tax required to be
                deducted).

            

       

      	(f)  	
              A
                holder of Debentures shall be treated as the shareholder of record
                of the
                Common Shares issued on due exercise by the Corporation of its Share
                Interest Payment Right effective immediately after the close of business
                on the Interest Payment Date, and shall be entitled to all substitutions
                therefor, all income earned thereon or accretions thereto and all
                dividends or distributions (including share distributions and dividends
                or
                distributions in kind) thereon and arising thereafter, and in the
                event
                that the Debenture Trustee receives the same, it shall hold the same
                in
                trust for the benefit of such holder.

            

       

      	(g)  	
              The
                Corporation shall at all times reserve and keep available out of
                its
                authorized Common Shares (if the number thereon is or becomes limited),
                solely for the purpose of issue and delivery upon the exercise of
                the
                Corporation’s
                Share Interest Payment Right as provided herein, and shall issue
                to
                Debentureholders to whom Common Shares will be issued pursuant to
                exercise
                of the Share Interest Payment Right, such number of Common Shares
                as shall
                be issuable in such event. All Common Shares issued upon exercise
                of the
                Share Interest Payment Right shall be duly and validly issued as
                fully
                paid and non-assessable Common Shares.

            

       

      	(h)  	
              The
                Corporation shall comply with all Applicable Securities Legislation
                regulating the issue and delivery of Common Shares upon exercise
                of the
                Share Interest Payment Right and shall cause such Common Shares (i)
                to be
                listed and trading on each stock exchange on which the Common Shares
                are
                then listed, and (ii) to file a registration statement with the United
                States Securities and Exchange Commission, registering such Common
                Shares,
                as soon as possible and in any event within 45 days of the issuance
                thereof. 

            

       

      	(i)  	
              The
                Corporation shall from time to time promptly pay, or make provisions
                satisfactory to the Debenture Trustee for the payment of, all taxes
                and
                charges which may be imposed by the laws of the United States, Canada
                or
                any state, province or territory thereof (except income tax or withholding
                tax) which shall be payable with respect to the issuance or delivery
                of
                Common Shares to holders of Debentures upon exercise of the Share
                Interest
                Payment Right pursuant to the terms of the Debentures and of this
                Indenture.

            

       

      	2.17  	
              Withholding
                Tax

            

       

      For
        greater certainty, the Corporation will be entitled to deduct to and withhold
        or
        instruct the Debenture Trustee in writing to deduct and withhold any applicable
        taxes or similar charges (including interest, penalties or similar amounts
        in
        respect thereof) imposed or levied by or on behalf of the United States
        government, Canadian Government or of any province, state or territory thereof
        or any authority or agency therein or thereof having power to tax from any
        payment to be made on or in connection with the Debentures and, provided
        that
        the Corporation forthwith remits such withheld amount to such government,
        authority or agency and files all required forms in respect thereof and,
        at the
        same time, provides copies of such remittance and filing to the Debenture
        Trustee and the relevant Debentureholder, the amount of any such deduction
        or
        withholding will be considered an amount paid in satisfaction of the
        Corporation’s obligations under the Debentures and there is no obligation on the
        Corporation to gross-up amounts paid to a holder in respect of such deductions
        or withholdings. The Corporation shall provide the Debenture Trustee and
        the
        relevant Debentureholder with copies of receipts or other communications
        relating to the remittance of such withheld amount or the filing of such
        forms
        received from such government, authority or agency promptly after receipt
        thereof.

       

      The
        Debenture Trustee shall have no obligation to verify any payments under any
        provision of provincial, state, local or foreign tax law. The Debenture Trustee
        shall at all times be indemnified and held harmless by the Corporation from
        and
        against any personal liabilities of the Debenture Trustee incurred in connection
        with the failure of the Corporation or its agents, to report, remit or withhold
        taxes. This 

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      
        
           

          - 22
            -

        

      

    

    

      indemnification
        shall survive the resignation or removal of the Debenture Trustee and the
        termination of this Indenture solely to the extent that such liabilities
        have
        been incurred in connection with taxation years occurring during the term
        of
        this Indenture.

       

      ARTICLE 3  

      REGISTRATION,
        TRANSFER, EXCHANGE AND OWNERSHIP

       

      	3.1  	
              Fully
                Registered Debentures

            

       

      	(a)  	
              With
                respect to each series of Debentures issuable as Fully Registered
                Debentures, the Corporation shall cause to be kept by and at the
                principal
                office of the Debenture Trustee in Calgary,
                Alberta
                and by the Debenture Trustee or such other registrar as the Corporation,
                with the approval of the Debenture Trustee, may appoint at such other
                place or places, if any, as may be specified in the Debentures of
                such
                series or as the Corporation may designate with the approval of the
                Debenture Trustee, a register in which shall be entered the names
                and
                addresses of the holders of Fully Registered Debentures and particulars
                of
                the Debentures held by them respectively and of all transfers of
                Fully
                Registered Debentures, with a copy of each Registered Debenture
                outstanding. Such registration shall be noted on the Debentures by
                the
                Debenture Trustee or other registrar unless a new Debenture shall
                be
                issued upon such transfer.

            

       

      	(b)  	
              No
                transfer of a Fully Registered Debenture shall be valid unless made
                on
                such register referred to in Section 3.1(a) by the registered holder
                of
                such Debenture or such holder’s
                executors, administrators or other legal representatives or an attorney
                duly appointed by an instrument in writing in form and substance
                and
                execution satisfactory to the Debenture Trustee or other registrar
                upon
                surrender of the Debentures together with a duly executed form of
                transfer
                acceptable to the Debenture Trustee and upon compliance with such
                other
                reasonable requirements as the Debenture Trustee or other registrar
                may
                prescribe, nor unless the name of the transferee shall have been
                noted on
                the Debenture by the Debenture Trustee or other
                registrar.

            

       

      	3.2  	
              Global
                Debentures

            

       

      	(a)  	
              With
                respect to each series of Debentures issuable in whole or in part
                as one
                or more Global Debentures, the Corporation shall cause to be kept
                by and
                at the principal offices of the Debenture Trustee in Calgary,
                Alberta
                or
                such other registrar as the Corporation, with the approval of the
                Debenture Trustee, may appoint at such other place or places, if
                any, as
                the Corporation may designate with the approval of the Debenture
                Trustee,
                a register in which shall be entered the name and address of the
                holder of
                each such Global Debenture (being the Depository, or its nominee,
                for such
                Global Debenture) as holder thereof and particulars of the Global
                Debenture held by it, and of all transfers thereof. If any Debentures
                of
                such series are at any time not Global Debentures, the provisions
                of
                Section 3.1 shall govern with respect to registrations and transfers
                of
                such Debentures.

            

       

      	(b)  	
              Notwithstanding
                any other provision of this Indenture, a Global Debenture may not
                be
                transferred by the registered holder thereof and accordingly, no
                definitive certificates shall be issued to Beneficial Holders except
                in
                the following circumstances or as otherwise specified in a resolution
                of
                the directors of the Corporation, an Officer’s
                Certificate or supplemental indenture relating to a particular series
                of
                Debentures:

            

       

      	(i)  	
              Global
                Debentures may be transferred by a Depository to a nominee of such
                Depository or by a nominee of a Depository to such Depository or
                to
                another nominee of such Depository or by a Depository or its nominee
                to a
                successor Depository or its nominee;

            

       

      
        	(ii)  	Global Debentures may be transferred at any time
                after
                the Depository for such Global Debentures (i) has notified the Debenture
                Trustee, or the Corporation has notified the Debenture Trustee, that
                it is
                unwilling or unable to continue as 

         

      

       

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
       

      
        
           

          - 23
            -

          	 	
                  Depository
                    for such Global Debentures, or (ii) ceases to be eligible to
                    be a
                    Depository under Section 2.6(b), provided that at the time of
                    such
                    transfer the Corporation has not appointed a successor Depository
                    for such
                    Global Debentures;

                

        

      

       

      	(iii)  	
              Global
                Debentures may be transferred at any time after the Corporation has
                determined, in its sole discretion, to terminate the book-entry only
                registration system in respect of such Global Debentures and has
                communicated such determination to the Debenture Trustee in
                writing;

            

       

      	(iv)  	
              Global
                Debentures may be transferred at any time after the Debenture Trustee
                has
                determined that an Event of Default has occurred and is continuing
                with
                respect to the Debentures of the series issued as a Global Debenture,
                provided that Beneficial Holders representing, in the aggregate,
                not less
                than 25%
                of
                the aggregate principal amount of the Debentures of such series advise
                the
                Depository in writing, through the Depositary Participants, that
                the
                continuation of the book-entry only registration system for such
                series of
                Debentures is no longer in their best interest and also provided
                that at
                the time of such transfer the Debenture Trustee has not waived the
                Event
                of Default pursuant to Section 7.3;

            

       

      	(v)  	
              Global
                Debentures may be transferred if required by applicable law;
                or

            

       

      	(vi)  	
              Global
                Debentures may be transferred if the book-entry only registration
                system
                ceases to exist.

            

       

                  Fully
        Registered
        Debentures issued pursuant to this Section 3.2(b) shall be registered in
        such
        names and in such denominations as the Depository, pursuant to instructions
        from
        its Depository Participants or otherwise shall instruct the Debenture Trustee
        provided that the aggregate principal amount of definitive Debentures is
        equal
        to the principal amount of the Global Debenture so exchanged. The Debenture
        Trustee shall deliver such Debentures to or as directed by the Persons in
        whose
        names such Debentures are so registered. Upon exchange of a Global Debenture
        for
        Debentures in definitive form such Global Debentures shall be cancelled by
        the
        Debenture Trustee.

       

      	(c)  	
              With
                respect to the Global Debentures, unless and until definitive certificates
                have been issued to Beneficial Holders pursuant to subsection
                3.2(b):

            

       

      	(i)  	
              the
                Corporation and the Debenture Trustee may deal with the Depository
                for all
                purposes (including paying interest on the Debentures) as the sole
                holder
                of such series of Debentures and the authorized representative of
                the
                Beneficial Holders;

            

       

      	(ii)  	
              the
                rights of the Beneficial Holders shall be exercised only through
                the
                Depository and shall be limited to those established by law and agreements
                between such Beneficial Holders and the Depository or the Depository
                Participants;

            

       

      	(iii)  	
              the
                Depository will make book entry transfers among the Depository
                Participants; and

            

       

      	(iv)  	
              whenever
                this Indenture requires or permits actions to be taken based upon
                instructions or directions of Debentureholders evidencing a specified
                percentage of the outstanding Debentures, the Depository shall be
                deemed
                to be counted in that percentage only to the extent that it has received
                instructions to such effect from the Beneficial Holders or the Depository
                Participants, and has delivered such instructions to the Debenture
                Trustee.

            

      
         

        	(d)  	Whenever a notice or other communication is required
                to
                be provided to Debentureholders, unless and until definitive
                certificate(s) have been issued to Beneficial Holders pursuant to
                this
                Section 3.2, the Debenture Trustee shall provide all such notices
                and
                communications to

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      
        
           

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            -

        

      

    

    

      	  	
              the
                Depository and the Depository shall deliver such notices and
                communications to such Beneficial Holders in accordance with Applicable
                Securities Legislation. Upon the termination of the book-entry only
                registration system on the occurrence of one of the conditions specified
                in Section 3.2(b) with respect to a series of Debentures issued hereunder,
                the Debenture Trustee shall notify all applicable Beneficial Holders,
                through the Depository, of the availability of definitive Debenture
                certificates. Upon surrender by the Depository of the certificate(s)
                representing the Global Debentures and receipt of new registration
                instructions from the Depository, the Debenture Trustee shall deliver
                the
                definitive Debenture certificates for such Debentures to the holders
                thereof in accordance with the new registration instructions and
                thereafter, the registration and transfer of such Debentures will
                be
                governed by Section 3.1 and the remaining Sections of this Article
                3.

            

       

      	(e)  	
              Notwithstanding
                anything herein or in the terms of the Debentures to the contrary,
                neither
                the Corporation nor the Debenture Trustee nor any agent thereof shall
                have
                any responsibility or liability for (i) the records maintained by
                any
                Depository relating to any ownership or any other interests in the
                Debentures or the depository system maintained by such Depository,
                or
                payment made on account of any ownership interest or any other interest
                of
                any Person in any Global Debenture (other than the applicable Depository
                or its nominee), (ii) for maintaining, supervising or reviewing any
                records of any Depository or any Depository Participant relating
                to any
                such interest, or (iii) any advice or representation made or given
                by any
                Depository and relating to the rules and regulations of any Depository
                or
                any action to be taken by any Depository on its own direction or
                at the
                discretion of any of its participants.

            

       

      	3.3  	
              Transferee
                Entitled to Registration

            

       

      The
        transferee of a Debenture shall be entitled, after the appropriate form of
        transfer is lodged with the Debenture Trustee or other registrar and upon
        compliance with all other conditions in that regard required by this Indenture
        or by law, to be entered on the register as the owner of such Debenture free
        from all equities or rights of set-off or counterclaim between the Corporation
        and the transferor or any previous holder of such Debenture, save in respect
        of
        equities of which the Corporation is required to take notice by statute or
        by
        order of a court of competent jurisdiction.

       

      	3.4  	
              No
                Notice of
                Trusts

            

       

      Neither
        the Corporation nor the Debenture Trustee nor any registrar shall be bound
        to
        take notice of or see to the execution of any trust (other than the trust
        created by this Indenture) whether express, implied or constructive, in respect
        of any Debenture, and subject to Section 3.2(b) in respect of a Global
        Debenture, may transfer the same on the direction of the Person registered
        as
        the holder thereof whether named as trustee or otherwise, as though that
        Person
        were the Beneficial Holder thereof.

       

      	3.5  	
              Registers
                Open for Inspection

            

       

      The
        registers referred to in Sections 3.1 and 3.2 shall at all reasonable times
        be
        open for inspection by the Corporation, the Debenture Trustee or any
        Debentureholder. Every registrar, including the Debenture Trustee, shall
        from
        time to time when requested so to do by the Corporation or by the Debenture
        Trustee, in writing, furnish the Corporation or the Debenture Trustee, as
        the
        case may be, with a list of names and addresses of holders of registered
        Debentures entered on the register kept by them and showing the principal
        amount
        and serial numbers of the Debentures held by each such holder, provided the
        Debenture Trustee shall be entitled to charge a reasonable fee to provide
        such a
        list.

       

      	3.6  	
              Exchanges
                of Debentures

            

      

        	(a)  	 Subject to Section 3.7, Debentures in any
                authorized form or denomination, other than Global Debentures, may
                be
                exchanged for Debentures in any other authorized form or denomination,
                of
                the same series and date of maturity, bearing the same interest rate
                and
                of the same aggregate principal amount as the Debentures so
                exchanged.

      

       

             

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      
        
           

          - 25
            -

        

      

    

     

    

      	(b)  	
              In
                respect of exchanges of Debentures permitted by Section 3.6(a), Debentures
                of any series may be exchanged only at the principal offices of the
                Debenture Trustee in the City of Calgary,
                Alberta
                or
                at such other place or places, if any, as may be specified in the
                Debentures of such series and at such other place or places as may
                from
                time to time be designated by the Corporation with the approval of
                the
                Debenture Trustee. Any Debentures tendered for exchange shall be
                surrendered to the Debenture Trustee. The Corporation shall execute
                and
                the Debenture Trustee shall certify all Debentures necessary to carry
                out
                exchanges as aforesaid. All Debentures surrendered for exchange shall
                be
                cancelled.

            

       

      	(c)  	
              Debentures
                issued in exchange for Debentures which at the time of such issue
                have
                been selected or called for redemption at a later date shall be deemed
                to
                have been selected or called for redemption in the same manner and
                shall
                have noted thereon a statement to that
                effect.

            

       

      	3.7  	
              Closing
                of Registers

            

       

      	(a)  	
              Neither
                the Corporation nor the Debenture Trustee nor any other registrar
                shall be
                required to:

            

       

      	(i)  	
              make
                transfers or exchanges of, or convert any Fully Registered Debentures
                on
                any Interest Payment Date for such Debentures or during the five
                preceding
                Business Days;

            

       

      	(ii)  	
              make
                transfers or exchanges of, or convert any Debentures on the day of
                any
                selection by the Debenture Trustee of Debentures to be redeemed or
                during
                the five preceding Business Days; or

            

       

      	(iii)  	
              make
                exchanges of any Debentures which will have been selected or called
                for
                redemption unless upon due presentation thereof for redemption such
                Debentures shall not be redeemed.

            

       

      	(b)  	
              Subject
                to any restriction herein provided, the Corporation with the approval
                of
                the Debenture Trustee may at any time close any register for any
                series of
                Debentures, other than those kept at the principal offices of the
                Debenture Trustee in Calgary,
                Alberta,
                and transfer the registration of any Debentures registered thereon
                to
                another register (which may be an existing register) and thereafter
                such
                Debentures shall be deemed to be registered on such other-register.
                Notice
                of such transfer shall be given to the holders of such
                Debentures.

            

       

      	3.8 	
              Charges
                for Registration, Transfer and
                Exchange

            

       

      For
        each
        Debenture exchanged, registered, transferred or discharged from registration,
        the Debenture Trustee or other registrar, except as otherwise herein provided,
        may make a reasonable charge for its services and in addition may charge
        a
        reasonable sum for each new Debenture issued (such amounts to be agreed upon
        from time to time by the Debenture Trustee and the Corporation), and payment
        of
        such charges and reimbursement of the Debenture Trustee or other registrar
        for
        any stamp taxes or governmental or other charges required to be paid shall
        be
        made by the party requesting such exchange, registration, transfer or discharge
        from registration as a condition precedent thereto. Notwithstanding the
        foregoing provisions, no charge shall be made to a Debentureholder
        hereunder:

       

      	(a)  	
              for
                any exchange of a Global Debenture as contemplated in Section 3.2(b);
                or

            

       

      	(b)  	
              for
                any exchange of any Debenture resulting from a partial redemption
                under
                Section 4.2, a partial purchase under Section 4.9 or a partial conversion
                under Section 5.4.

            

       

      	3.9  	
              Ownership
                of Debentures

            

       

      
        	(a)  	
                
                  Unless
                    otherwise required by law, the Person in whose name any registered
                    Debenture is registered shall for all the purposes of this Indenture
                    be
                    and be deemed to be the owner

                

              

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      
         

        
          
             

            - 26
              -

          

        

      

      

        	 	
                thereof
                  and payment of or on account of the principal of and premium, if
                  any, on
                  such Debenture and interest thereon (including any Global Debenture)
                  shall
                  be made to such registered holder.

              

         

        	(b) 	
                The
                  registered holder for the time being of any registered Debenture
                  shall be
                  entitled to the principal, premium, if any, and/or interest evidenced
                  by
                  such Debenture free from all equities or rights of set-off or counterclaim
                  between the Corporation and the original or any intermediate holder
                  thereof and all Persons may act accordingly and the receipt of
                  any such
                  registered holder (including by the Depository or its nominee in
                  the case
                  of a Global Indenture) for any such principal, premium or interest
                  shall
                  be a good discharge to the Corporation and/or the Debenture Trustee
                  and
                  any registrar for the same and none of the Corporation, the Debenture
                  Trustee nor any other registrar shall be bound to inquire into
                  the title
                  of any such registered holder.

              

         

        	(c) 	
                Where
                  Debentures are registered in more than one name, the principal,
                  premium,
                  if any, and interest from time to time payable in respect thereof
                  may be
                  paid to the order of all such holders, failing written instructions
                  from
                  them to the contrary, and the receipt of any one of such holders
                  therefor
                  shall be a valid discharge, to the Debenture Trustee, any registrar
                  and to
                  the Corporation.

              

         

        	(d) 	
                In
                  the case of the death of one or more joint holders of any Fully
                  Registered
                  Debenture, the principal, premium, if any, and interest from time
                  to time
                  payable thereon may be paid to the order of the survivor or survivors
                  of
                  such registered holders and the receipt of any such survivor or
                  survivors
                  therefor shall be a valid discharge to the Debenture Trustee and
                  any
                  registrar and to the Corporation.

              

         

         

        ARTICLE 4  

        REDEMPTION,
          REPAYMENT AND PURCHASE OF DEBENTURES

         

        	4.1  	
                Applicability
                  of Article

              

         

        Subject
          to regulatory approval, the Corporation shall have the right at its option
          to
          redeem, either in whole at any time or in part from time to time after
          the first
          anniversary of the Issue Date and before the Maturity Date, either by payment
          of
          money, by issuance of Common Shares as provided in Section 4.6 or any
          combination thereof, any Debentures issued hereunder of any series which
          by
          their terms are made so redeemable together with any accrued and unpaid
          interest
          thereon (subject, however, to any applicable restriction on the redemption
          of
          Debentures of such series) at such rate or rates of premium, if any, and
          on such
          date or dates and in accordance with such other provisions as shall have
          been
          determined at the time of issue of such Debentures and as shall have been
          expressed in this Indenture, in the Debentures, in an Officer’s Certificate, or
          in a supplemental indenture authorizing or providing for the issue thereof,
          or
          in the case of Additional Debentures issued pursuant to a Periodic Offering,
          in
          the Written Direction of the Corporation requesting the certification and
          delivery thereof. Subject to regulatory approval, the Corporation shall
          also
          have the right at its option to repay, either in whole or in part, on maturity,
          either by payment of money in accordance with Section 2.13, by issuance
          of
          Common Shares as provided in Section 4.9 or any combination thereof, any
          Debentures issued hereunder of any series which by their terms are made
          so
          repayable on maturity together with any accrued and unpaid interest thereon
          (subject however, to any applicable restriction on the repayment of the
          principal amount of the Debentures of such series) at such rate or rates
          of
          premium, if any, and on such date or dates and in accordance with such
          other
          provisions as shall have been determined at the time of issue of such Debenture
          and shall have been expressed in this Indenture, in the Debentures, in
          an
          Officer’s Certificate, or in a supplemental indenture authorizing or providing
          for the issue thereof, or in the case of Additional Debentures issued pursuant
          to a Periodic Offering, in the Written Direction of the Corporation requesting
          the certification and delivery thereof.

         

        	4.2  	
                Partial
                  Redemption

              

         

               
If
          less than all the Debentures of any series for the time being outstanding
          are at
          any time to be redeemed, or if a portion of the Debentures being redeemed
          are
          being redeemed for cash and a portion of such 

      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
         

        
          
             

            - 27
              -

        

        Debentures
          are being redeemed by the payment of Common Shares pursuant to Section
          4.6, the
          Debentures will redeemed by the Corporation on a pro rata basis to the
          nearest
          multiple of $1,000 in accordance with the principal amount of the Debentures
          registered in the name of each holder. Unless otherwise specifically provided
          in
          the terms of any series of Debentures, no Debenture shall be redeemed in
          part
          unless the principal amount redeemed is $1,000 or a multiple thereof. In
          the
          event that one or more of such Debentures becomes subject to redemption
          in part
          only, upon surrender of any such Debentures for payment of the Redemption
          Price,
          together with accrued and unpaid interest to but excluding the Redemption
          Date,
          the Corporation shall execute and the Debenture Trustee shall certify and
          deliver without charge to the holder thereof or upon the holder’s order one or
          more new Debentures for the unredeemed part of the principal amount of
          the
          Debenture or Debentures so surrendered or, with respect to a Global Debenture,
          the Depository shall make notations on the Global Debenture of the principal
          amount thereof so redeemed which notation shall be authenticated by the
          Debenture Trustee. Unless the context otherwise requires, the terms “Debenture”
or “Debentures” as used in this Article 4 shall be deemed to mean or include any
          part of the principal amount of any Debenture which in accordance with
          the
          foregoing provisions has become subject to redemption.

         

        	4.3  	
                Notice
                  of Redemption

              

         

        Notice
          of
          redemption substantially in the form of Schedule “B” (the “Redemption Notice”)
          of any
          series of Debentures shall be given to the Debenture Trustee and the holders
          of
          the Debentures so to be redeemed not more than 60 days nor less than 15
          days
          prior to the date fixed for redemption (the “Redemption Date”)
          in the
          manner provided in Section 11.2. Every Redemption Notice shall specify
          the
          aggregate principal amount of Debentures called for redemption, the Redemption
          Date, the Redemption Price and the amount of the accrued and unpaid interest
          to
          be paid thereon to but excluding the Redemption Date and the places of
          payment
          and shall state that interest upon the principal amount of Debentures called
          for
          redemption shall cease to be payable from and after the Redemption Date.
          In
          addition, unless all the outstanding Debentures are to be redeemed for
          cash, the
          Redemption Notice shall specify:

         

        	(a)  	
                the
                  distinguishing letters and numbers of the registered Debentures
                  which are
                  to be redeemed for cash and which are to be redeemed for other
                  consideration (or of such Debentures which as are registered in
                  the name
                  of such Debentureholder);

              

         

        	(b)  	
                in
                  the case of a published notice, the distinguishing letters and
                  numbers of
                  the Debentures which are to be redeemed for cash and which are
                  to be
                  redeemed for other consideration or, if such Debentures are selected
                  by
                  terminal digit or other similar system, such particulars as may
                  be
                  sufficient to identify the Debentures so
                  selected;

              

         

        	(c)  	
                in
                  the case of a Global Debenture, that the redemption will take place
                  in
                  such manner as may be agreed upon by the Depository, the Debenture
                  Trustee
                  and the Corporation; and

              

         

        	(d)  	
                in
                  all cases, the principal amounts of such Debentures or, if any
                  such
                  Debenture is to be redeemed in part only, the principal amount
                  of such
                  part.

              

         

        In
          the
          event that all Debentures to be redeemed are registered Debentures, publication
          shall not be required.

         

        	4.4  	
                Debentures
                  Due on Redemption Dates

              

         

        Notice
          having been given as aforesaid, all of the Debentures so called for redemption
          shall thereupon be and become due and payable at the Redemption Price,
          together
          with accrued and unpaid interest to but excluding the Redemption Date,
          on the
          Redemption Date specified in such notice, in the same manner and with the
          same
          effect as if it were the Maturity Date specified in such Debentures, anything
          therein or herein to the contrary notwithstanding, and from and after such
          Redemption Date, if the monies necessary to redeem, or the Common Shares
          to be
          issued to redeem, such Debentures shall have been deposited as provided
          in
          Section 4.5 and affidavits or other proof satisfactory to the Debenture
          Trustee
          as to the publication and/or mailing of such Redemption Notices shall have
          been
          lodged with it, interest upon the Debentures shall cease. If any question
          shall
          arise as to whether any notice has been given as provided in Section 4.3
          and
          such deposit made, such question shall be decided by the Debenture Trustee
          whose
          decision shall be final and binding upon all parties in interest. The Debenture
          Trustee shall have no obligation to verify or calculate the Redemption
          Price.

      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
         

        
          
             

            - 28
              -

          

        

      

      

        	4.5  	
                Deposit
                  of Redemption Monies or Common
                  Shares

              

         

        Redemption
          of Debentures shall be provided for by the Corporation depositing with
          the
          Debenture Trustee or any paying agent to the order of the Debenture Trustee,
          on
          or before 11:00 am. (Eastern time) on the second Business Day prior to
          the
          Redemption Date specified in such Redemption Notice, such sums of money,
          or
          certificates representing such Common Shares, or both, as the case may
          be, as is
          sufficient to pay the Redemption Price of the Debentures so called for
          redemption, plus such sum of money, or certificates representing Common
          Shares,
          or both, as the case may be, as is sufficient to pay accrued and unpaid
          interest
          thereon up to but excluding the Redemption Date. The Corporation shall
          also
          deposit with the Debenture Trustee a sum of money sufficient to pay any
          charges
          or expenses which may be incurred by the Debenture Trustee in connection
          with
          such redemption. Every such deposit shall be irrevocable. From the sums
          so
          deposited, or certificates so deposited, or both, the Debenture Trustee
          shall
          pay or cause to be paid, or issue or cause to be issued, (i) in the case
          of a
          Global Debenture, to the Depository upon the Depository making the appropriate
          notation in respect of the principal amount of the Debentures so redeemed,
          which
          notation shall be authenticated by the Debenture Trustee or (ii) in the
          case of
          Fully Registered Debentures to the holders of such Debentures so called
          for
          redemption, upon surrender of such Debentures, the Redemption Price and
          interest
          (if any, net of applicable withholding taxes as instructed by the Corporation)
          to which they are respectively entitled on redemption.

         

        Payment
          of funds to the Debenture Trustee shall be made by electronic transfer
          or
          pursuant to such other arrangements for the provision of funds as may be
          agreeable between the Debenture Trustee and the Corporation in order to
          effect
          such redemption payment hereunder. The Debenture Trustee shall disburse
          such
          redemption proceeds only upon receiving, at least two Business Days prior
          to
          each Redemption Date, funds in an amount sufficient to pay the aggregate
          Redemption Price that is payable in cash and the aggregate amount of interest
          (if any) payable on redemption. The Debenture Trustee shall have no obligation
          to disburse funds pursuant to this Section 4.5 unless it has received written
          confirmation satisfactory to it that the funds have been deposited with
          it in
          sufficient amount to pay the aggregate Redemption Price that is payable
          in cash
          and the aggregate amount of interest (if any) payable on redemption.

         

        	4.6  	
                Right
                  to Repay Redemption Price and Interest in Common
                  Shares

              

         

        	(a)  	
                Subject
                  to the other provisions of this Section 4.6 and receipt of any
                  required
                  regulatory approvals, the Corporation may, at its option, in exchange
                  for
                  or in lieu of paying in money the Redemption Price and any accrued
                  and
                  unpaid interest thereon up to but excluding the Redemption Date,
                  elect to
                  satisfy its obligation to pay all or any portion of the Redemption
                  Price
                  and any accrued and unpaid interest thereon by issuing and delivering
                  to
                  holders on the Redemption Date that number of Common Shares obtained
                  by
                  dividing the aggregate of the Redemption Price and any accrued
                  and unpaid
                  interest on the outstanding Debentures which are to be redeemed
                  by the
                  then Current Market Price of the Common Shares in effect on the
                  Redemption
                  Date (the “Share
                  Redemption Right”).
                  The Debenture Trustee shall have no obligation to calculate or
                  verify the
                  Share Redemption Right.

              

         

        	(b)  	
                The
                  Corporation shall exercise the Share Redemption Right by so specifying
                  in
                  the Redemption Notice which shall be delivered to the Debenture
                  Trustee
                  and the holders of Debentures not more than 60 days and not less
                  than 15
                  days prior to the Redemption Date. The Redemption Notice shall
                  also
                  specify the aggregate principal amount of Debentures in respect
                  of which
                  it is exercising the Share Redemption
                  Right.

              

         

        	(c)  	
                The
                  Corporation’s
                  right to exercise the Share Redemption Right shall be conditional
                  upon the
                  following conditions being met on the Business Day preceding the
                  Redemption Date:

              

         

        	(i)  	
                the
                  issuance of the Common Shares on the exercise of the Share Redemption
                  Right shall be made in accordance with Applicable Securities Legislation
                  and such Common Shares shall be issued as Common
                  Shares;

              

         

        	(ii)  	
                the
                  Common Shares shall be listed on a Recognized Stock
                  Exchange;

              

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          
             

            - 29
              -

          

        

         

         

        	(iii)  	
                the
                  Corporation being a reporting issuer in good standing under Applicable
                  Securities Legislation where the distribution of such Common Shares
                  occurs;

              

         

        	(iv)  	
                no
                  Event of Default shall have occurred and be continuing;
                  

              

         

        	(v)  	
                the
                  receipt by the Debenture Trustee of an Officer’s
                  Certificate stating that conditions (i), (ii), (iii) and (iv) above
                  have
                  been satisfied and setting forth the number of Common Shares to
                  be
                  delivered for each $1,000 principal amount of Debentures and the
                  Current
                  Market Price of the Common Shares on the Redemption Date;
                  and

              

         

        	(vi)  	
                the
                  receipt by the Debenture Trustee of an opinion of Counsel to the
                  effect
                  that the issuance of such Common Shares have been duly authorized
                  by the
                  Corporation and, when issued and delivered pursuant to the terms
                  of this
                  Indenture in payment of the Redemption Price, and any accrued and
                  unpaid
                  interest, will be validly issued as fully paid and non-assessable,
                  that
                  conditions (i) and (iii) above have been satisfied and that, relying
                  exclusively on certificates of good standing issued by the relevant
                  securities authorities, condition (iii) above is satisfied, except
                  that
                  the opinion in respect of condition (iii) need not be expressed
                  with
                  respect to those provinces or territories where certificates are
                  not
                  issued.

              

         

        If
          the
          foregoing conditions are not satisfied prior to the 5:00 p.m. (Eastern
          time) on
          the Business Day immediately preceding the Redemption Date, the Corporation
          shall pay the Redemption Price and any accrued and unpaid interest in cash
          in
          accordance with Section 4.5 unless the Debenture Trustee waives the conditions
          which are not satisfied.

         

        	(d)  	
                In
                  the event that the Corporation duly exercises its Share Redemption
                  Right,
                  the Corporation shall on or before 11:00 am. (Eastern time) on
                  the
                  Redemption Date, deliver to the Debenture Trustee, for delivery
                  to and on
                  account of the holders of Debentures, upon the due presentation
                  and
                  surrender of the Debentures, the Common Shares to which such holders
                  are
                  entitled.

              

         

        	(e)  	
                No
                  fractional Common Shares shall be delivered upon the exercise of
                  the Share
                  Redemption Right but, in lieu thereof, the Corporation shall pay
                  to the
                  Debenture Trustee for the account of the holders, at the time contemplated
                  in Section 4.6(d), the cash equivalent thereof determined on the
                  basis of
                  the Current Market Price of the Common Shares on the Redemption
                  Date (less
                  any tax required to be deducted, if any).

              

         

        	(f)  	
                A
                  holder of Debentures shall be treated as the shareholder of record
                  of the
                  Common Shares issued on due exercise by the Corporation of its
                  Share
                  Redemption Right effective immediately after the close of business
                  on the
                  Redemption Date, and shall be entitled to all substitutions therefor,
                  all
                  income earned thereon or accretions thereto and all dividends or
                  distributions (including share dividends and dividends or distributions
                  in
                  kind) thereon and arising thereafter, and in the event that the
                  Debenture
                  Trustee receives the same, it shall hold the same in trust for
                  the benefit
                  of such holder.

              

         

        	(g)  	
                The
                  Corporation shall at all times reserve and keep available out of
                  its
                  authorized Common Shares (if the number thereof is or becomes limited),
                  solely for the purpose of issue and delivery upon the exercise
                  of the
                  Corporation’s
                  Share Redemption Right as provided herein, and shall issue to
                  Debentureholders to whom Common Shares will be issued pursuant
                  to exercise
                  of the Share Redemption Right, such number of Common Shares as
                  shall be
                  issuable in such event. All Common Shares which shall be so issuable
                  shall
                  be duly and validly issued as fully paid and
                  non-assessable.

              

         

        
          	(h)  	The Corporation shall comply with all Applicable
                  Securities Legislation regulating the issue and delivery of Common
                  Shares
                  upon exercise of the Share Interest Payment Right and shall cause
                  such
                  Common Shares (i) to be listed and trading on each stock exchange
                  on which
                  the 

           

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        
           

          
            
               

              - 30
                -

            

          

        

        

          	 	
                  Common
                    Shares are then listed, and (ii) to file a registration statement
                    with the
                    United States Securities and Exchange Commission, registering
                    such Common
                    Shares, as soon as possible and in any event within 45 days of
                    the
                    issuance thereof. 

                

           

          	i)  	
                  The
                    Corporation shall from time to time promptly pay, or make provision
                    satisfactory to the Debenture Trustee for the payment of, all
                    taxes and
                    charges which may be imposed by the laws of the United States
                    or any state
                    or territory thereof (except income tax or, withholding tax which
                    shall be
                    payable with respect to the issuance or delivery of Common Shares
                    to
                    holders of Debentures) upon exercise of the Share Redemption
                    Right
                    pursuant to the terms of the Debentures and of this
                    Indenture.

                

           

          	4.7  	
                  Failure
                    to Surrender Debentures Called for
                    Redemption

                

           

          In
            case
            the holder of any Debenture so called for redemption shall fail on or
            before the
            Redemption Date so to surrender such holder’s Debenture, or shall not within
            such time accept payment of the redemption monies payable, or take delivery
            of
            certificates representing such Common Shares issuable in respect thereof,
            or
            give such receipt therefor, if any, as the Debenture Trustee may require,
            such
            redemption monies may be set aside in trust with or without interest,
            or such
            certificates may be held in trust, in the deposit department of the Debenture
            Trustee, and such setting aside shall for all purposes be deemed a payment
            to
            the Debentureholder of the sum or Common Shares so set aside and, to
            that
            extent, the Debenture shall thereafter not be considered as outstanding
            hereunder and the Debentureholder shall have no other right except to
            receive
            payment out of the monies so paid and deposited, or take delivery of
            the
            certificates so deposited, or both, upon surrender and delivery up of
            such
            holder’s Debenture of the Redemption Price, as the case may be, of such
            Debenture plus any accrued but unpaid interest thereon to but excluding
            the
            Redemption Date. In the event that any money, or certificates for Common
            Shares,
            required to be deposited hereunder with the Debenture Trustee or any
            depository
            or paying agent on account of Redemption Price, or interest, if any,
            on
            Debentures issued hereunder shall remain so deposited for a period of
            six years
            from the Redemption Date, then such monies or certificates for Common
            Shares,
            together with any accumulated interest thereon or any distribution paid
            thereon,
            shall at the end of such period be paid over or delivered over by the
            Debenture
            Trustee or such Depository or paying agent to the Corporation on its
            demand, and
            thereupon the Debenture Trustee shall not be responsible to Debentureholders
            for
            any amounts owing to them and subject to applicable law, thereafter the
            holder
            of a Debenture in respect of which such money was so repaid to the Corporation
            shall have no rights in respect thereof except to obtain payment of the
            money or
            certificates due from the Corporation, subject to any limitation period
            provided
            by the laws of Alberta.

           

          	4.8  	
                  Cancellation
                    of Debentures Redeemed

                

           

          Subject
            to the provisions of Sections 4.2 and 4.7 as to Debentures redeemed or
            purchased
            in part, all Debentures redeemed and paid under this Article 4 shall
            forthwith
            be delivered to the Debenture Trustee and cancelled and no Debentures
            shall be
            issued in substitution therefor.

           

          	4.9  	
                  Right
                    to Repay Principal Amount and Interest in Common
                    Shares

                

           

          	(a)  	
                  Subject
                    to the other provisions of this Section 4.9 and receipt of any
                    required
                    regulatory approvals, the Corporation may, at its option, in
                    exchange for
                    or in lieu of paying in money the principal amount due on maturity
                    and any
                    accrued and unpaid interest thereon up to but excluding the Maturity
                    Date,
                    elect to satisfy its obligation to repay all or any portion of
                    the
                    principal amount of the Debentures outstanding and any accrued
                    and unpaid
                    interest thereon by issuing and delivering to holders on the
                    date of
                    maturity of such Debentures (the “Maturity Date”)
                    that number of Common Shares obtained by dividing the aggregate
                    of the
                    principal amount of the Debentures and any accrued and unpaid
                    interest
                    thereon the Current Market Price of the Common Shares in effect
                    on the
                    Maturity Date (the “Share
                    Repayment Right”).
                    The Debenture Trustee shall have no obligation to calculate or
                    verify the
                    Share Repayment Right.

                

           

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

           

          
            
               

              - 31
                -

            

          

           

           

           

          	(b)  	
                  The
                    Corporation shall exercise the Share Repayment Right by so specifying
                    in a
                    maturity notice to holders of the Debentures substantially in
                    the form of
                    Schedule “C”
                    (the “Maturity Notice”),
                    which shall be delivered to the Debenture Trustee and the holders
                    of
                    Debentures not more than 60 days and not less than 15 days prior
                    to the
                    Maturity Date.

                

           

          	(c)  	
                  The
                    Corporation’s
                    right to exercise the Share Repayment Right shall be conditional
                    upon the
                    following conditions being met on the Business Day preceding
                    the Maturity
                    Date:

                

           

          	(i)  	
                  the
                    issuance of the Common Shares on the exercise of the Share Repayment
                    Right
                    shall be made in accordance with Applicable Securities Legislation
                    and
                    such Common Shares shall be issued as Common
                    Shares;

                

           

          	(ii)  	
                  the
                    Common Shares shall be listed on a Recognized Stock
                    Exchange;

                

           

          	(iii)  	
                  the
                    Corporation being a reporting issuer in good standing under Applicable
                    Securities Legislation where the distribution of such Common
                    Shares
                    occurs;

                

           

          	(iv)  	
                  no
                    Event of Default shall have occurred and be
                    continuing;

                

           

          	(v)  	
                  the
                    receipt by the Debenture Trustee of an Officer’s
                    Certificate stating that conditions (i), (ii), (iii) and (iv)
                    above have
                    been satisfied and setting forth the number of Common Shares
                    to be
                    delivered for each $1,000 principal amount of Debentures and
                    the Current
                    Market Price of the Common Shares on the Maturity Date;
                    and

                

           

          	(vi)  	
                  the
                    receipt by the Debenture Trustee of an opinion of Counsel to
                    the effect
                    that such Common Shares have been duly authorized by the Corporation
                    and,
                    when issued and delivered pursuant to the terms of this Indenture
                    in
                    payment of the principal amount of the Debentures outstanding,
                    and any
                    accrued and unpaid interest, will be validly issued as fully
                    paid and
                    non-assessable, that conditions (i) and (iii) above have been
                    satisfied
                    and that, relying exclusively on certificates of good standing
                    issued by
                    the relevant securities authorities, condition (iii) above is
                    satisfied,
                    except that the opinion in respect of condition (iii) need not
                    be
                    expressed with respect to those provinces or territories where
                    certificates of good standing are not
                    issued.

                

           

          If
            the
            foregoing conditions are not satisfied prior to 5:00 p.m. (Eastern time)
            on the
            Business Day immediately preceding the Maturity Date, the Corporation
            shall pay
            the principal amount of the Debentures outstanding, and any accrued and
            unpaid
            interest, in cash in accordance with Section 2.13, unless the Debenture
            Trusteewaives the conditions which are not satisfied.

           

          	(d)  	
                  In
                    the event that the Corporation duly exercises its Share Repayment
                    Right,
                    the Corporation shall on or before 11:00 a.m. (Eastern time)
                    on the
                    Maturity Date, deliver to the Debenture Trustee, for delivery
                    to and on
                    account of the holders, upon the due presentation and surrender
                    of the
                    Debentures, the Common Shares to which such holders are entitled.
                    The
                    Corporation shall also deposit with the Debenture Trustee a sum
                    of money
                    sufficient to pay any charges or expenses which may be incurred
                    by the
                    Debenture Trustee in connection with the Share Repayment Right.
                    From the
                    certificates so deposited in addition to any amounts payable
                    by the
                    Debenture Trustee pursuant to Section 2.13, the Debenture Trustee
                    shall
                    pay or cause to be paid, to the holders of such Debentures, upon
                    surrender
                    of such Debentures, the principal amount of, premium (if any)
                    and any
                    interest on the Debentures to which they are respectively entitled
                    on the
                    Maturity Date and deliver to such holders the certificates to
                    which such
                    holders are entitled. The delivery of such certificates to the
                    Debenture
                    Trustee will satisfy and discharge the liability of the Corporation
                    for
                    the Debentures to which the delivery of certificates relates
                    to the extent
                    of the amount delivered (plus the amount of any applicable taxes)
                    and such
                    Debentures will thereafter to that extent not be considered as
                    outstanding
                    under this Indenture and such holder will have no other right
                    in regard
                    thereto other than to receive out of the certificates so delivered,
                    the
                    certificate(s) to which it is entitled.

                

           

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

           

          
            
               

              - 32
                -

            

          

           

           

           

          	(e)  	
                  No
                    fractional Common Shares shall be delivered upon the exercise
                    of the Share
                    Repayment Right but, in lieu thereof the Corporation shall pay
                    to the
                    Debenture Trustee for the account of the holders, at the time
                    contemplated
                    in Section 4.9(d), the cash equivalent thereof determined on
                    the basis of
                    the Current Market Price of the Common Shares on the Maturity
                    Date (less
                    any tax required to be deducted, if any).

                

           

          	(f)  	
                  A
                    holder of Debentures shall be treated as the shareholder of record
                    of the
                    Common Shares issued on due exercise by the Corporation of its
                    Share
                    Repayment Right effective immediately after the close of business
                    on the
                    Maturity Date, and shall be entitled to all substitutions therefor,
                    all
                    income earned thereon or accretions thereto and all dividends
                    or
                    distributions (including share distributions and dividends or
                    distributions in kind) thereon and arising thereafter, and in
                    the event
                    that the Debenture Trustee receives the same, it shall hold the
                    same in
                    trust for the benefit of such holder.

                

           

          	(g)  	
                  The
                    Corporation shall at all times reserve and keep available out
                    of its
                    authorized Common Shares (if the number thereof is or becomes
                    limited),
                    solely for the purpose of issue and delivery upon the exercise
                    of the
                    Corporation’s
                    Share Repayment Right as provided herein, and shall issue to
                    Debentureholders to whom Common Shares will be issued pursuant
                    to exercise
                    of the Share Repayment Right, such number of Common Shares as
                    shall be
                    issuable in such event. All Common Shares issued upon exercise
                    of the
                    Share Repayment Right shall be duly and validly issued as fully
                    paid and
                    non-assessable Common Shares.

                

           

          	(h)  	
                  The
                    Corporation shall comply with all Applicable Securities Legislation
                    regulating the issue and delivery of Common Shares upon exercise
                    of the
                    Share Interest Payment Right and shall cause such Common Shares
                    (i) to be
                    listed and trading on each stock exchange on which the Common
                    Shares are
                    then listed, and (ii) to file a registration statement with the
                    United
                    States Securities and Exchange Commission, registering such Common
                    Shares,
                    as soon as possible and in any event within 45 days of the issuance
                    thereof. 

                

           

          	(i)  	
                  The
                    Corporation shall from time to time promptly pay, or make provision
                    satisfactory to the Debenture Trustee for the payment of, all
                    taxes and
                    charges which may be imposed by the laws of the United States
                    or any state
                    or territory thereof (except income tax or withholding tax) which
                    shall be
                    payable with respect to the issuance or delivery of Common Shares
                    to
                    holders of Debentures upon exercise of the Share Repayment Right
                    pursuant
                    to the terms of the Debentures and of this
                    Indenture.

                

           

           

          ARTICLE 5  

          CONVERSION
            OF DEBENTURES

           

          	5.1  	
                  Applicability
                    of Article

                

           

          (a)  Any
            Debentures issued hereunder of any series which by their terms are convertible
            (subject, however, to any applicable restriction on the conversion of
            Debentures
            of such series) will be convertible into Common Shares, at such conversion
            rate
            or rates, and on such date or dates and in accordance with such other
            provisions
            as shall have been determined at the time of issue of such Debentures
            and shall
            have been expressed in this Indenture, in such Debentures, in an Officer’s
            Certificate, or in a supplemental indenture authorizing or providing
            for the
            issue thereof. 

           

          (b)  Such
            right of conversion shall extend only to the maximum number of whole
            Common
            Shares into which the aggregate principal amount of the Debenture or
            Debentures
            surrendered for conversion at any one time by the holder thereof may
            be
            converted. Fractional interests in Common Shares shall be adjusted for
            in the
            manner provided in Section 5.6.

           

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

          
             

            
              
                 

                - 33
                  -

              

            

          

           

          	5.2  	
                  Notice
                    of Expiry of Conversion
                    Privilege

                

           

          Notice
            of
            the expiry of the conversion privileges of the Debentures shall be given
            by or
            on behalf of the Corporation, not more than 60 days and not less than
            30 days
            prior to the date fixed for the Time of Expiry, in the manner provided
            in
            Section 11.2.

           

          	5.3  	
                  Revival
                    of Right to Convert

                

           

          If
            the
            redemption of any Debenture called for redemption by the Corporation
            is not made
            or the payment of the purchase price of any Debenture which has been
            tendered in
            acceptance of an offer by the Corporation to purchase Debentures for
            cancellation is not made, in the case of a redemption upon due surrender
            of such
            Debenture or in the case of a purchase on the date on which such purchase
            is
            required to be made, as the case may be, then, provided the Time of Expiry
            has
            not passed, the right to convert such Debentures shall revive and continue
            as if
            such Debenture had not been called for redemption or tendered in acceptance
            of
            the Corporation’s offer, respectively.

           

          	5.4  	
                  Manner
                    of Exercise of Right to Convert

                

           

          	(a)  	
                  The
                    holder of a Debenture desiring to convert such Debenture in whole
                    or in
                    part into Common Shares shall surrender such Debenture to the
                    Debenture
                    Trustee at its principal office in Calgary,
                    Alberta together
                    with the conversion notice in the form attached hereto as Schedule
                    “D”
                    or
                    any other written notice in a form satisfactory to the Debenture
                    Trustee,
                    in either case duly executed by the holder or his executors or
                    administrators or other legal representatives or his or her or
                    their
                    attorney duly appointed by an instrument in writing in form and
                    executed
                    in a manner satisfactory to the Debenture Trustee, exercising
                    his or her
                    right to convert such Debenture in accordance with the provisions
                    of this
                    Article; provided that with respect to a Global Debenture, the
                    obligation
                    to surrender a Debenture to the Debenture Trustee shall be satisfied
                    if
                    the Debenture Trustee makes notation on the Global Debenture
                    of the
                    principal amount thereof so converted and the Debenture Trustee
                    is
                    provided with all other documentation which it may request. Thereupon
                    such
                    Debentureholder or, subject to payment of all applicable stamp
                    or security
                    transfer taxes and withholding taxes or other governmental charges
                    and
                    compliance with all reasonable requirements of the Debenture
                    Trustee, his
                    or her nominee(s) or assignee(s) shall be entitled to be entered
                    in the
                    books of the Corporation as at the Date of Conversion (or such
                    later date
                      as is specified in Section 5.4(b)) as the holder of the number
                    of Common
                    Shares into which such Debenture is convertible in accordance
                    with the
                    provisions of this Article 5 and, as soon as practicable thereafter,
                    the
                    Corporation shall deliver to such Debentureholder or, subject
                    as
                    aforesaid, his or her nominee(s) or assignee(s), a certificate
                    or
                    certificates for such Common Shares and make or cause to be made
                    any
                    payment of interest to which such holder is entitled in accordance
                    with
                    Section 5.4(e) hereof.

                

           

          	(b)  	
                  For
                    the purposes of this Article, a Debenture shall be deemed to
                    be
                    surrendered for conversion on the date (the “Date of Conversion”)
                    on which it is so surrendered when the register of the Debenture
                    Trustee
                    is open and in accordance with the provisions of this Article
                    6 or, in the
                    case of a Global Debenture which the Debenture Trustee received
                    notice of
                    and all necessary documentation in respect of the exercise of
                    the
                    conversion rights and, in the case of a Debenture so surrendered
                    by post
                    or other means of transmission, on the date on which it is received
                    by the
                    Debenture Trustee at its office specified in Section 5.4(a);
                    provided that
                    if a Debenture is surrendered for conversion on a day on which
                    the
                    register of Common Shares is closed, the Person or Persons entitled
                    to
                    receive Common Shares shall become the holder or holders of record
                    of such
                    Common Shares as at the date on which such register is next
                    reopened.

                

           

          	(c)  	
                  Any
                    part, being $1,000 or an integral multiple thereof, of a Debenture
                    in a
                    denomination in excess of $1,000 may be converted as provided
                    in this
                    Article 5 and all references in this Indenture to conversion
                    of Debentures
                    shall be deemed to include conversion of such
                    part.

                

           

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

          
             

            
              
                 

                - 34
                  -

              

            

          

           

           

          	(d)  	
                  Upon
                    a holder of any Debenture exercising his or her right of conversion
                    in
                    respect of only a part of the Debenture and surrendering such
                    Debenture to
                    the Debenture Trustee, in accordance with Section 5.4(a) the
                    Debenture
                    Trustee shall cancel the same and shall without charge forthwith
                    certify
                    and deliver to the holder a new Debenture or Debentures in an
                    aggregate
                    principal amount equal to the unconverted part of the principal
                    amount of
                    the Debenture so surrendered or, with respect to a Global Debenture,
                    the
                    Debenture Trustee shall make notations on the Global Debenture
                    of the
                    principal amount thereof so converted.

                

           

          	(e)  	
                  The
                    holder of a Debenture surrendered for conversion in accordance
                    with this
                    Section 5.4 shall be entitled (subject to any applicable restriction
                    on
                    the right to receive interest on conversion of Debentures of
                    any series)
                    to receive accrued and unpaid interest in respect thereof up
                    to but
                    excluding the Date of Conversion and the Common Shares issued
                    upon such
                    conversion shall rank only in respect of distributions or dividends
                    declared in favour of shareholders of record on and after the
                    Date of
                    Conversion or such later date as such holder shall become the
                    holder of
                    record of such Common Shares pursuant to Section 5.4(b), from
                    which
                    applicable date they will for all purposes be and be deemed to
                    be issued
                    and outstanding as fully paid and non-assessable Common
                    Shares.

                

           

          	(f)  	
                  Upon
                    conversion of any Debentures held in book-entry only form, the
                    Depository
                    shall make notations on the Global Debentures of the principal
                    amount of
                    Debentures so converted, which notations shall be authenticated
                    by the
                    Debenture Trustee, and the Corporation and the Debenture Trustee
                    shall
                    cause to be deposited with the Depository the Common Shares into
                    which the
                    Debentures have been converted.

                

           

          	5.5  	
                  Adjustment
                    of Conversion Price

                

           

          The
            Conversion Price in effect at any date shall be subject to adjustment
            from time
            to time as set forth below.

           

          	(a)  	
                  If
                    and whenever at any time prior to the Time of Expiry the Corporation
                    shall
                    (i) subdivide or re-divide the outstanding Common Shares into
                    a greater
                    number of shares, (ii) reduce, combine or consolidate the outstanding
                    Common Shares into a smaller number of shares, or (iii) issue
                    Common
                    Shares (or securities convertible into or exchangeable for Common
                    Shares)
                    to the holders of all or substantially all of the outstanding
                    Common
                    Shares by way of a dividend or distribution (other than the issue
                    of
                    Common Shares (or securities convertible into or exchangeable
                    for Common
                    Shares) to holders of Common Shares who have elected to receive
                    dividends
                    or distributions in the form of securities of the Corporation
                    in lieu of
                    cash dividends or cash distributions paid in the ordinary course
                    on the
                    securities of the Corporation), the Conversion Price in effect
                    on the
                    effective date of such subdivision, re-division, reduction, combination
                    or
                    consolidation or on the record date for such issue of Common
                    Shares by way
                    of a dividend or distribution, as the case may be, in the case
                    of any of
                    the events referred to in (i), (ii) and (iii) above, shall be
                    adjusted
                    immediately so that it shall equal the price determined by multiplying
                    the
                    Conversion Price in effect on the date immediately preceding
                    the effective
                    date of such event by a fraction, the numerator of which shall
                    be the
                    total number of Common Shares outstanding on such date before
                    giving
                    effect to any event referred to in any of (i), (ii) or (iii)
                    above and the
                    denominator of which shall be the total number of Common Shares
                    outstanding immediately after giving effect to such event. Such
                    adjustment
                    shall be made successively whenever any event referred to in
                    this Section
                    5.5(a) shall occur. Any such issue of Common Shares by way of
                    a dividend
                    or distribution shall be deemed to have been made on the record
                    date for
                    the dividend or distribution for the purpose of calculating the
                    number of
                    outstanding Common Shares under subsections (b) and (c) of this
                    Section
                    5.5.

                

           

          
             

            	(b)  	If and whenever at any time prior to the Time
                    of Expiry
                    the Corporation shall fix a record date for the issuance of options,
                    rights or warrants to all or substantially all the holders of
                    its
                    outstanding Common Shares entitling them, for a period expiring
                    not more
                    than 45 days after such record date, to subscribe for or purchase
                    Common
                    Shares (or securities convertible into or exchangeable for Common
                    Shares)
                    at a price per share (or having a conversion or

             

          

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

          
             

            
              
                 

                - 35
                  -

              

            

          

        

      

      

        	  	
                exchange
                  price per share) less than 95% of the Current Market Price of a
                  Common
                  Share on such record date, the Conversion Price shall be adjusted
                  immediately after such record date so that it shall equal the price
                  determined by multiplying the Conversion Price in effect on such
                  record
                  date by a fraction, of which the numerator shall be the total number
                  of
                  Common Shares outstanding on such record date plus a number of
                  Common
                  Shares equal to the quotient obtained by dividing the aggregate
                  price of
                  the total number of additional Common Shares offered for subscription
                  or
                  purchase (or the aggregate conversion or exchange price of the
                  convertible
                  securities so offered) by such Current Market Price per Common
                  Share, and
                  of which the denominator shall be the total number of Common Shares
                  outstanding on such record date plus the total number of additional
                  Common
                  Shares offered for subscription or purchase (or into which the
                  convertible
                  securities so offered are convertible). Such adjustment shall be
                  made
                  successively whenever such a record date is fixed. To the extent
                  that any
                  such options, rights or warrants are not so issued or any such
                  options,
                  rights or warrants are not exercised prior to the expiration thereof,
                  the
                  Conversion Price shall be re-adjusted to the Conversion Price which
                  would
                  then be in effect if such record date had not been fixed or to
                  the
                  Conversion Price which would then be in effect if only the number
                  of
                  Common Shares (or securities convertible into Common Shares) actually
                  issued upon the exercise of such options, rights or warrants were
                  included
                  in such fraction, as the case maybe.

              

         

        	(c)  	
                If
                  and whenever at any time prior to the Time of Expiry the Corporation
                  shall
                  fix a record date for the making of a distribution to all or substantially
                  all the holders of its outstanding Common Shares of (i) shares
                  of any
                  class other than Common Shares and other than shares distributed
                  to
                  holders of Common Shares who have elected to receive dividends
                  or
                  distributions in the form of such shares in lieu of dividends or
                  distributions paid in the ordinary course, (ii) rights, options
                  or
                  warrants (excluding rights, options or warrants entitling the holders
                  thereof for a period of not more than 45 days to subscribe for
                  or purchase
                  Common Shares or securities convertible into or exchangeable for
                  Common
                  Shares), (iii) evidences of its indebtedness, or (iv) assets (excluding
                  dividends or distributions paid in the ordinary course) then, in
                  each such
                  case, the Conversion Price shall be adjusted immediately after
                  such record
                  date so that it shall equal the price determined by multiplying
                  the
                  Conversion Price in effect on such record date by a fraction, of
                  which the
                  numerator shall be the total number of Common Shares outstanding
                  on such
                  record date multiplied by the Current Market Price per Common Share
                  on
                  such record date, less the fair market value as determined by the
                  directors of the Corporation, but subject to the prior written
                  consent of
                  any stock exchange or over the counter market on which the Common
                  Shares
                  may be listed or if not listed with the approval of the Debenture
                  Trustee,
                  which determination shall be conclusive) of such shares or rights,
                  options
                  or warrants or evidences of indebtedness or assets so distributed,
                  and of
                  which the denominator shall be the total number of Common Shares
                  outstanding on such record date multiplied by such Current Market
                  Price
                  per Common Share. Such adjustment shall be made successively whenever
                  such
                  a record date is fixed. To the extent that such distribution is
                  not so
                  made, the Conversion Price shall be re-adjusted to the Conversion
                  Price
                  which would then be in effect if such record date had not been
                  fixed or to
                  the Conversion Price which would then be in effect if only such
                  shares or
                  rights, options or warrants or evidences of indebtedness or assets
                  actually distributed were included in such fraction, as the case
                  may be.
                  In clause (iv) of this subsection (c), the term “dividends
                  or distributions paid in the ordinary course”
                  shall include the value of any securities or other property or
                  assets
                  distributed in lieu of cash dividends or distributions paid in
                  the
                  ordinary course at the option of
                  shareholders.

              

         

        
          	(d)  	
                  If
                    and whenever at any time prior to the Time of Expiry, there is
                    a
                    reclassification of the Common Shares or a capital reorganization
                    of the
                    Corporation other than as described in Section 5.5(a) or a consolidation,
                    amalgamation, arrangement or merger of the Corporation with or
                    into any
                    other Person or a sale, conveyance or lease of the properties
                    and assets
                    of the Corporation as an entirety or substantially as an entirety
                    to any
                    other Person or a liquidation, dissolution or winding-up or other
                    similar
                    transaction of the Corporation, any holder of a Debenture who
                    has not
                    exercised its right of conversion prior to the effective date
                    of such
                    reclassification, capital reorganization, consolidation, amalgamation,
                    arrangement or merger, sale, conveyance or lease or liquidation,
                    dissolution or winding-up or other
                    similar

                

           

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        
           

          
            
               

              - 36
                -

            

          

        

        

          	 	
                  transaction,
                    upon the exercise of such right thereafter, shall be entitled
                    to receive
                    and shall accept, in lieu of the number of Common Shares then
                    sought to be
                    acquired by it, the number of common shares, shares or other
                    securities or
                    property of the Corporation or of the Person resulting from such
                    reclassification, capital reorganization, merger, amalgamation,
                    arrangement or consolidation, or to which such sale, conveyance
                    or lease
                    may be made or which holders of Common Shares receive pursuant
                    to such
                    liquidation, dissolution or winding-up or other similar transaction,
                    as
                    the case may be, that such holder of a Debenture would have been
                    entitled
                    to receive on such reclassification, capital reorganization,
                    consolidation, amalgamation, arrangement or merger, sale, conveyance
                    or
                    lease or liquidation, dissolution or winding-up or other similar
                    transaction, if, on the record date or the effective date thereof,
                    as the
                    case may be, the holder had been the registered holder of the
                    number of
                    Common Shares sought to be acquired by it and to which it was
                    entitled to
                    acquire upon the exercise of the conversion right. If determined
                    appropriate by the directors of Corporation, to give effect to
                    or to
                    evidence the provisions of this Section 5.5(d), the Corporation,
                    its
                    successor, or such purchasing Person, as the case may be, shall,
                    prior to
                    or contemporaneously with any such reclassification, capital
                    reorganization, consolidation, amalgamation, arrangement, merger,
                    sale,
                    conveyance or lease or liquidation, dissolution or winding-up
                    or other
                    similar transaction, enter into an indenture which shall provide,
                    to the
                    extent possible, for the application of the provisions set forth
                    in this
                    Indenture with respect to the rights and interests thereafter
                    of the
                    holder of Debentures 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 common shares, shares
                    or other
                    securities or property to which a holder of Debentures is entitled
                    on the
                    exercise of its conversion rights thereafter. Any indenture entered
                    into
                    between the Corporation and the Debenture Trustee pursuant to
                    the
                    provisions of this Section 5.5(d), shall be a supplemental indenture
                    entered into pursuant to the provisions of Article 14. Any indenture
                    entered into between the Corporation, any successor to the Corporation
                    or
                    such purchasing Person or other entity and the Debenture Trustee
                    shall
                    provide for adjustments which shall be as nearly equivalent as
                    may be
                    practicable to the adjustments provided in this Section 5.5(d),
                    and which
                    shall apply to successive reclassifications, capital reorganizations,
                    amalgamations, consolidations, arrangements, mergers, sales,
                    conveyances,
                    leases, liquidations, dissolutions, winding-ups or other similar
                    transactions.

                

           

          	(e)  	
                  In
                    any case in which this Section 5.5 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 Debenture converted after such record
                    date
                    and before the occurrence of such event the additional Common
                    Shares
                    issuable upon such conversion by reason of the adjustment required
                    by such
                    event; provided, however, that the Corporation shall deliver
                    to such
                    holder an appropriate instrument evidencing such holder’s
                    right to receive such additional Common Shares upon the occurrence
                    of the
                    event requiring such adjustment and the right to receive any
                    distributions
                    made on such additional Common Shares declared in favour of holders
                    of
                    record of Common Shares on and after the Date of Conversion or
                    such later
                    date as such holder would, but for the provisions of this Section
                    5.5(e),
                    have become the holder of record of such additional Common Shares
                    pursuant
                    to Section 5.4(b).

                

           

          	(f) 	
                  The
                    adjustments provided for in this Section 5.5 are cumulative and
                    shall
                    apply to successive subdivisions, re-divisions, reductions, combinations,
                    consolidations, distributions, issues or other events resulting
                    in any
                    adjustment under the provisions of this Section 5.5, provided
                    that,
                    notwithstanding any other provision of this Section 5.5, no adjustment
                    of
                    the Conversion Price shall be required unless such adjustment
                    would
                    require an increase or decrease of at least 1% in the Conversion
                    Price
                    then in effect; provided however, that any adjustments which
                    by reason of
                    this Section 5.5(f) are not required to be made shall be carried
                    forward
                    and taken into account in any subsequent
                    adjustment.

                

           

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

          
             

            
              
                 

                - 37
                  -

              

            

          

           

          	(g)  	
                  In
                    the event of any question arising with respect to the adjustments
                    provided
                    in this Section 5.5, such question shall be conclusively determined
                    by a
                    firm of accountants appointed by the Corporation and acceptable
                    to the
                    Debenture Trustee (who may be the Corporation’s
                    Auditors); such firm shall have access to all necessary records
                    of the
                    Corporation and such determination shall be binding upon the
                    Corporation,
                    the Debenture Trustee, and the
                    Debentureholders.

                

           

          	(h)  	
                  In
                    case the Corporation shall take any action affecting the Common
                    Shares
                    other than action described in this Section 5.5, which in the
                    opinion of
                    the directors of the Corporation, would materially affect the
                    rights of
                    Debentureholders, the Conversion Price shall be adjusted in such
                    manner
                    and at such time, by action of the directors of the Corporation
                    as the
                    directors of the Corporation, in their sole discretion may determine
                    to be
                    equitable in the circumstances. Failure of such directors to
                    make such an
                    adjustment shall be conclusive evidence that they have determined
                    that it
                    is equitable to make no adjustment in the circumstances. For
                    greater
                    certainty, no adjustment shall be made to the Conversion Price
                    as a result
                    of the issuance of Common Shares issued (i) upon the conversion
                    of
                    Debentures, (ii) upon the exercise of outstanding stock options
                    granted
                    pursuant to the stock option plan of the Corporation, (iii) pursuant
                    to
                    the proposed acquisition of IR Gurus or Evolved Games by the
                    Corporation
                    and (iv) upon the issuance of additional securities of the Corporation
                    in
                    a subsequent financing.

                

           

          	(i)  	
                  No
                    adjustment in the Conversion Price shall be made in respect of
                    any event
                    described in Sections 5.5(a), 5.5(b) or 5.5(c) other than the
                    events
                    described in Sections 5.5(a)(i) or 5.5(a)(ii) if the holders
                    of the
                    Debentures are entitled to participate in such event on the same
                    terms
                    mutatis mutandis as if they had converted their Debentures prior
                    to the
                    effective date or record date, as the case may be, of such
                    event.

                

           

          	(j) 	
                  Except
                    as stated above in this Section 5.5, no adjustment will be made
                    in the
                    Conversion Price for any Debentures as a result of the issuance
                    of Common
                    Shares at less than the Current Market Price for such Common
                    Shares on the
                    date of issuance or the then applicable Conversion
                    Price.

                

           

          	5.6  	
                  No
                    Requirement to Issue Fractional Common
                    Shares

                

           

          The
            Corporation shall not be required to issue fractional Common Shares upon
            the
            conversion of Debentures pursuant to this Article 5. If more than one
            Debenture
            shall be surrendered for conversion at one time by the same holder, the
            number
            of whole Common Shares issuable upon conversion thereof shall be computed
            on the
            basis of the aggregate principal amount of such Debentures to be converted.
            If
            any fractional interest in a Common Share would, except for the provisions
            of
            this Section 5.6, be deliverable upon the conversion of any principal
            amount of
            Debentures, the Corporation shall, in lieu of delivering any Common Share
            certificate representing such fractional interest, make a cash payment
            to the
            holder of such Debenture of an amount equal to the fractional interest
            of such
            Common Share which would have been issuable multiplied by the Current
            Market
            Price on the Conversion Date.

           

          	5.7  	
                  Corporation
                    to Reserve Common Shares

                

           

          The
            Corporation covenants with the Debenture Trustee that it will at all
            times
            reserve and keep available out of its authorized Common Shares, solely
            for the
            purpose of issue upon conversion of Debentures as provided in this Article
            5,
            and conditionally allot to Debentureholders who may exercise their conversion
            rights hereunder, such number of Common Shares as shall then be issuable
            upon
            the conversion of all outstanding Debentures. The Corporation covenants
            with the
            Debenture Trustee that all Common Shares which shall be so issuable shall
            be
            duly and validly issued as fully-paid and non-assessable.

           

          	5.8  	
                  Cancellation
                    of Converted Debentures

                

           

          Except
            as
            set forth in Section 5.4(f), all Debentures converted in part, all Debentures
            converted in whole or in part under the provisions of this Article 5
            shall be
            forthwith delivered to and cancelled by the Debenture Trustee and no
            Debenture
            shall be issued in substitution therefor.

           

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

          
             

            
              
                 

                - 38
                  -

              

            

          

           

          	5.9  	
                  Certificate
                    as to Adjustment

                

           

          The
            Corporation shall from time to time immediately after the occurrence
            of any
            event which requires an adjustment or readjustment as provided in Section
            5.5,
            deliver an Officer’s Certificate to the Debenture 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, which certificate and the
            amount of
            the adjustment specified therein shall be verified by an opinion of a
            firm of
            accountants appointed by the Corporation and acceptable to the Debenture
            Trustee
            (who may be the Corporation’s Auditors) and shall be conclusive and binding on
            all parties in interest. When so verified, the Corporation shall, except
            in
            respect of any subdivision, re-division, reduction, combination or consolidation
            of the Common Shares referred to in Sections 5.5(a)(i) or 5.5(a)(ii)
            forthwith
            give notice to the Debentureholders in the manner provided in Section
            11.2
            specifying the event requiring such adjustment or readjustment and the
            results
            thereof, including the resulting Conversion Price; provided that, if
            the
            Corporation has previously given notice under this Section 5.9 covering
            all the
            relevant facts in respect of such event and if the Debenture Trustee
            approves,
            no such notice need be given under this Section 5.9.

           

          	5.10  	
                  Notice
                    of Special Matters

                

           

          The
            Corporation covenants with the Debenture Trustee that so long as any
            Debenture
            remains outstanding, it will give notice to the Debenture Trustee, and
            to the
            Debentureholders in the manner provided in Section 11.2, of its intention
            to fix
            a record date for any event referred to in Sections 5.5(a), (b) or (c)
            (other
            than the subdivision, re-division, reduction, combination or consolidation
            of
            its Common Shares referred to in Sections 5.5(a)(i) or 5.5(a)(ii) which
            may give
            rise to an adjustment in the Conversion Price, and, in each case, such
            notice
            shall specify the particulars of such event and the record date and the
            effective date for such event; provided that the Corporation shall only
            be
            required to specify in such notice such particulars of such event as
            shall have
            been fixed and determined on the date on which such notice is given.
            Such notice
            shall be given not less than fourteen (14) days in each case prior to
            such
            applicable record date.

           

          	5.11  	
                  Protection
                    of Debenture Trustee

                

           

          Subject
            to Section 12.3, the Debenture Trustee:

           

          	(a)  	
                  shall
                    not at any time be under any duty or responsibility to any Debentureholder
                    to determine whether any facts exist which may require any adjustment
                    in
                    the Conversion Price, 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 responsible for calculating or verifying applicable conversion
                    rates with respect to the Debentures;

                

           

          	(c)  	
                  shall
                    not be accountable with respect to the validity or value (or
                    the kind or
                    amount) of any Common Shares or of any shares or other securities
                    or
                    property which may at any time be issued or delivered upon the
                    conversion
                    of any Debenture; and

                

           

          	(d)  	
                  shall
                    not be responsible for any failure of the Corporation to make
                    any cash
                    payment or to issue, transfer or deliver Common Shares, share
                    certificates
                    upon the surrender of any Debenture for the purpose of conversion,
                    or to
                    comply with any of the covenants contained in this Article
                    5.

                

           

           

          ARTICLE 6  

          COVENANTS
            OF THE CORPORATION

           

          The
            Corporation hereby covenants and agrees with the Debenture Trustee for
            the
            benefit of the Debenture Trustee and the Debentureholders, that so long
            as any
            Debentures remain outstanding:

           

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

          
             

            
              
                 

                - 39
                  -

                 

              

            

          

          	6.1  	
                  To
                    Pay Principal, Premium (if any) and Interest,
                    etc.

                

           

          The
            Corporation will duly and punctually pay or cause to be paid to every
            Debentureholder all amounts payable in respect of the Debentures of which
            it is
            the holder including the principal of, premium (if any) and interest
            accrued on
            the Debentures and/or if, applicable, the Redemption Price and the Offer
            Price
            on the dates, at the places and in the manner described herein and in
            the
            Debentures.

           

          	6.2 	
                  To
                    Pay Debenture Trustee’s
                    Remuneration

                

           

          The
            Corporation will pay the Debenture Trustee reasonable remuneration for
            its
            services as Debenture Trustee hereunder and will repay to the Debenture
            Trustee
            on demand all monies which shall have been paid by the Debenture Trustee
            in
            connection with the execution of the trusts hereby created and such monies
            including the Debenture Trustee’s remuneration, shall be payable out of any
            funds coming into the possession of the Debenture Trustee in priority
            to payment
            of any principal of the Debentures or interest thereon. Such remuneration
            shall
            continue to be payable until the trusts hereof be finally wound up and
            whether
            or not the trusts of this Indenture shall be in the course of administration
            by
            or under the direction of a court of competent jurisdiction.

           

          	6.3  	
                  To
                    Give Notice of Default

                

           

          The
            Corporation shall notify the Debenture Trustee in writing immediately
            upon
            obtaining knowledge of any default or Event of Default hereunder.

           

          	6.4  	
                  Preservation
                    of Existence, etc.

                

           

          Subject
            to the express provisions hereof, the Corporation will carry on and conduct
            its
            activities, and cause its Subsidiaries to carry on and conduct their
            businesses,
            in a proper and business-like manner and in material compliance with
            applicable
            laws, and will do or cause to be done all things necessary to maintain
            its
            existence.

           

          	6.5  	
                  Keeping
                    of Books

                

           

          The
            Corporation will keep or cause to be kept proper books of record and
            account, in
            accordance with U.S. generally accepted accounting principles.

           

          	6.6  	
                  To
                    Provide Financial Statements

                

           

          The
            Corporation will furnish to the Debenture Trustee and to each holder
            of
            Debentures a copy of all consolidated financial statements of the Corporation,
            whether annual or interim and the report, if any, of the Corporation’s auditors
            thereon and all annual or periodic financial reports of the Corporation,
            which
            are furnished to the holders of Common Shares promptly upon the distribution
            thereof to the holders of the Common Shares, provided that the Corporation
            shall
            not be required to furnish such statements and reports where holders
            of
            Debentures have elected not to receive them in accordance with applicable
            securities laws.

           

          	6.7  	
                  Perfection
                    of Security Interest

                

           

          The
            Corporation shall file or cause to be filed the financing statements
            contemplated in Section 8(b) of the Security Agreement and provide a
            copy
            thereof to the Debenture Trustee and shall promptly execute and deliver
            all
            further instruments and documents, and take all further action, that
            may be
            necessary or that the Debenture Trustee may reasonably request, in order
            to
            perfect and protect the security interest granted by the Corporation
            pursuant to
            this Indenture and the Security Agreement.

           

          	6.8  	
                  No
                    Distributions on Common Shares if Event of
                    Default

                

           

                
            The Corporation shall not declare or make any distribution to the holders
            of its
            issued and outstanding Common Shares after the occurrence of a default
            or an
            Event of Default unless and until such default shall have been cured
            or waived
            or shall have ceased to exist. In addition, the Corporation shall not
            declare
            any

        

      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
         

        
          
             

            - 40
              -

          

        

      

      

        distribution
          to the holders of its issued and outstanding Common Shares if at the time
          the
          directors of the Corporation or a committee thereof resolves to make the
          said
          declaration, the Corporation has actual knowledge that the paying of said
          distribution on the applicable distribution payment date will result in
          a
          default or an Event of Default.

         

        	6.9  	
                Performance
                  of Covenants by Debenture
                  Trustee

              

         

        If
          the
          Corporation shall fail to perform any of its covenants contained in this
          Indenture, the Debenture Trustee may notify the Debentureholders of such
          failure
          on the part of the Corporation or may itself perform any of the covenants
          capable of being performed by it, but shall be under no obligation to do
          so or
          to notify the Debentureholders. All sums so expended or advanced by the
          Debenture Trustee shall be repayable as provided in Section 6.2. No such
          performance, expenditure or advance by the Debenture Trustee shall be deemed
          to
          relieve the Corporation of any default hereunder. 

         

        	6.10  	
                Certificate
                  of Compliance

              

         

        The
          Corporation shall deliver to the Debenture Trustee, within 120 days after
          the
          end of each calendar year and at any such other time as may be requested
          in
          writing by the Debenture Trustee, an Officer’s Certificate as to the knowledge
          of such officer of the Corporation who executes the Officer’s Certificate of the
          Corporation’s compliance with all conditions and covenants in this Indenture
          certifying that after reasonable investigation and inquiry, the Corporation
          has
          complied with all covenants, conditions or other requirements contained
          in this
          Indenture, the non-compliance of which could, with the giving of notice,
          lapse
          of time or otherwise, constitute and Event of Default hereunder, or if
          such is
          not the case, setting forth with reasonable particulars the circumstances
          of any
          failure to comply and steps taken or proposed to be taken to eliminate
          such
          circumstances and remedy such Event of Default, as the case may be.

         

        ARTICLE 7

        DEFAULT

         

        	7.1  	
                Events
                  of Default

              

         

        Each
          of
          the following events constitutes, and is herein referred to as, an “Event of
          Default”:

         

        	(a)  	
                failure
                  for 15 days to pay interest on the Debentures when due and
                  payable;

              

         

        	(b)  	
                failure
                  to pay principal or premium, if any, on the Debentures when due
                  whether at
                  maturity, upon redemption, by declaration or
                  otherwise;

              

         

        	(c)  	
                failure
                  to make an Offer when required as a result of a Change of Control
                  or
                  failure to pay the Offer Price when due and
                  payable;

              

         

        	(d)  	
                default
                  in the observance or performance of any material covenant or condition
                  in
                  the Indenture or the Security Agreement by the Corporation for
                  a period of
                  30 days;

              

         

        	(e)  	
                except
                  in respect of the granting of priority interests to accounts receivable,
                  as contemplated herein, the granting by the Corporation of any
                  security
                  interest in respect of its assets ranking in priority to the security
                  interest granted in favour of the Debenture Trustee, for and on
                  behalf of
                  the Debentureholders, pursuant to the Security
                  Agreement;

              

         

        	(f)  	
                if
                  a decree or order of a court having jurisdiction is entered adjudging
                  the
                  Corporation a bankrupt or insolvent under any applicable bankruptcy,
                  insolvency or analogous laws, or issuing sequestration or process
                  of
                  execution against, or against any substantial part of, the property
                  of the
                  Corporation, or appointing a receiver of, or of any substantial
                  part of,
                  the property of the Corporation or ordering the winding-up or liquidation
                  of its affairs, and any such decree or order continues unstayed
                  and in
                  effect for a period of 60 days; 

              

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          
             

            - 41
              -

          

        

         

         

        	(g)  	
                if
                  the Corporation institutes proceedings to be adjudicated a bankrupt
                  or
                  insolvent, or consents to the institution of bankruptcy or insolvency
                  proceedings against it under any applicable bankruptcy, insolvency
                  or
                  analogous laws, or consents to the filing of any such petition
                  or appoints
                  or consents to the appointment of a receiver of, or of any substantial
                  part of, the property of the Corporation or makes a general assignment
                  for
                  the benefit of creditors, or admits in writing its inability to
                  pay its
                  debts generally as they become due;

              

         

        	(h) 	
                an
                  encumbrancer taking possession of or appointing a receiver for
                  all or
                  substantially all property of the
                  Corporation;

              

         

        	(i)  	
                if
                  a resolution is passed for the winding-up or liquidation of the
                  Corporation except in the course of carrying out or pursuant to
                  a
                  transaction in respect of which the conditions of Section 9.1 are
                  duly
                  observed and performed; or

              

         

        	(j)  	
                if,
                  after the date of this Indenture, any proceedings with respect
                  to the
                  Corporation are taken with respect to a compromise or arrangement,
                  with
                  respect to creditors of the Corporation generally, under the applicable
                  legislation of any jurisdiction.

              

         

        Upon
          the
          occurrence of any Event of Default, the Debenture Trustee shall notify
          the
          Debentureholders and in accordance with Section 7.2 and shall, upon receipt
          of a
          request in writing signed by the holders of not less than 25% in principal
          amount of the Debentures then outstanding, subject to the provisions of
          Section
          7.3, by notice in writing to the Corporation declare the principal of,
          premium,
          if any, and interest on all Debentures then outstanding and all other monies
          outstanding hereunder to be due and payable and the same shall forthwith
          become
          immediately due and payable to the Debenture Trustee and the Corporation
          shall
          forthwith pay to the Debenture Trustee for the benefit of the Debentureholders
          such principal, premium, if any, accrued and unpaid interest and interest
          on
          amounts in default on the Debentures and all other monies outstanding hereunder,
          together with subsequent interest at the rate borne by the Debentures on
          such
          principal, interest and such other monies from the date of such declaration
          until payment is received by the Debenture Trustee, such subsequent interest
          to
          be payable at the times and places and in the monies mentioned in and according
          to the tenor of the Debentures. Such payment when made shall be deemed
          to have
          been made in discharge of the Corporation’s obligations hereunder and any monies
          so received by the Debenture Trustee shall be applied in the manner provided
          in
          Section 7.6. In addition and without limitation to the foregoing, upon
          the
          occurrence of any Event of Default, the Debenture Trustee may, in its
          discretion, exercise all of its rights and remedies under the Security
          Agreement, including Section 19 thereof.

         

        	7.2  	
                Notice
                  of Events of Default

              

         

        If
          an
          Event of Default shall occur and be continuing the Debenture Trustee shall,
          within 30 days after it receives written notice of the occurrence (or otherwise
          becomes aware) of such Event of Default, give notice of such Event of Default
          to
          the Debentureholders in the manner provided in Section 11.2.

         

        Where
          notice of the occurrence of any Event of Default is given by the Debenture
          Trustee under this Section 7.2 and the Event of Default is thereafter cured,
          the
          Debenture Trustee shall, within 20 calendar days after becoming aware of
          the
          curing of the Event of Default give notice to the Debentureholders in the
          manner
          provided in Section 11.2 that the Event of Default is no longer continuing
          and
          shall so advise the Corporation in writing in the manner provided by Section
          11.1.

         

        	7.3  	
                Waiver
                  of Default

              

         

        Upon
          the
          happening of any Event of Default hereunder:

         

        
          	(a)  	
                  the
                    holders of the Debentures shall have the
                    power (in addition to the powers exercisable by Extraordinary
                    Resolution
                    as hereinafter provided) by requisition in writing by the holders
                    of more
                    than 50% of the principal amount of Debentures then outstanding,
                    to
                    instruct the Debenture Trustee to waive any Event of Default
                    and to cancel
                    any declaration made by the Debenture Trustee pursuant to Section
                    7.1 and
                    the Debenture Trustee shall thereupon waive the Event of Default
                    and
                    cancel such declaration, or either, upon such terms and conditions
                    as

                

           

        

         

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    
       

      
        
           

          - 42
            -

        

      

    

    

      	(b)  	
              shall
                be prescribed in such requisition; provided that notwithstanding
                the
                foregoing if the Event of Default has occurred by reason of the
                non-observance or non-performance by the Corporation of any covenant
                applicable only to one or more series of Debentures, then the holders
                of
                more than 50% of the principal amount of the outstanding Debentures
                of
                that series shall be entitled to exercise the foregoing power and
                the
                Debenture Trustee shall so act and it shall not be necessary to obtain
                a
                waiver from the holders of any other series of Debentures;
                and

            

       

      	(c) 	
              the
                Debenture Trustee, so long as it has not become bound to declare
                the
                principal of, premium (if any), and interest on the Debentures then
                outstanding to be due and payable, or to obtain or enforce payment
                of the
                same, shall have power to waive any Event of Default if, in the Debenture
                Trustee’s
                opinion, the same shall have been cured or adequate satisfaction
                made
                therefor, and in such event to cancel any such declaration theretofore
                made by the Debenture Trustee in the exercise of its discretion,
                upon such
                terms and conditions as the Debenture Trustee may deem
                advisable.

            

       

      No
        such
        act or omission either of the Debenture Trustee or of the Debentureholders
        shall
        extend to or be taken in any manner whatsoever to affect any subsequent Event
        of
        Default or the rights resulting therefrom.

       

      	7.4  	
              Enforcement
                by the Debenture Trustee

            

       

      Subject
        to the provisions of Section 7.3 and to the provisions of any Extraordinary
        Resolution that may be passed by the Debentureholders, if the Corporation
        shall
        fail to pay to the Debenture Trustee, forthwith after the same shall have
        been
        declared to be due and payable under Section 7.1, the principal of, premium
        (if
        any) and interest on all Debentures then outstanding, together with any other
        amounts due hereunder, the Debenture Trustee may in its discretion and shall
        upon receipt of a request in writing signed by the holders of not less than
        25%
        in principal amount of the Debentures then outstanding and upon being funded
        and
        indemnified to its reasonable satisfaction against all costs, expenses and
        liabilities to be incurred, proceed in its name as trustee hereunder to obtain
        or enforce payment of such principal of, premium (if any) and interest on
        all
        the Debentures then outstanding together with any other amounts due hereunder
        by
        such proceedings authorized by this Indenture or by law or equity as the
        Debenture Trustee in such request shall have been directed to take, or if
        such
        request contains no such direction, or if the Debenture Trustee shall act
        without such request, then by such proceedings authorized by this Indenture
        or
        by suit at law or in equity as the Debenture Trustee shall deem
        expedient.

       

      The
        Debenture Trustee shall be entitled and empowered, either in its own name
        or as
        Debenture Trustee of an express trust, or as attorney-in-fact for the holders
        of
        the Debentures, or in any one or more of such capacities, to file such proof
        of
        debt, amendment of proof of debt, claim, petition or other document as may
        be
        necessary or advisable in order to have the claims of the Debenture Trustee
        and
        of the holders of the Debentures allowed in any insolvency, bankruptcy,
        liquidation or other judicial proceedings relative to the Corporation or
        its
        creditors or relative to or affecting the Corporation’s property. The Debenture
        Trustee is hereby irrevocably appointed (and the successive respective holders
        of the Debentures by taking and holding the same shall be conclusively deemed
        to
        have so appointed the Debenture Trustee) the true and lawful attorney-in-fact
        of
        the respective holders of the Debentures with authority to make and file
        in the
        respective names of the holders of the Debentures or on behalf of the holders
        of
        the Debentures as a class, subject to deduction from any such claims of the
        amounts of any claims filed by any of the holders of the Debentures themselves,
        any proof of debt, amendment of proof of debt, claim, petition or other document
        in any such proceedings and to receive payment of any sums becoming
        distributable on account thereof, and to execute any such other papers and
        documents and to do and perform any and all such acts and things for and
        on
        behalf of such holders of the Debentures, as may be necessary or advisable
        in
        the opinion of the Debenture Trustee, in order to have the respective claims
        of
        the Debenture Trustee and of the holders of the Debentures against the
        Corporation or its property allowed in any such proceeding, and to receive
        payment of or on account of such claims; provided, however, that subject
        to
        Section 7.3, nothing contained in this Indenture shall be deemed to give
        to the
        Debenture Trustee, unless so authorized by Extraordinary Resolution, any
        right
        to accept or consent to any plan of reorganization or otherwise by action
        of any
        character in such proceeding to waive or change in any way any right of any
        Debentureholder.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
         

        
          
             

            - 43
              -

          

        

      

       

      The
        Debenture Trustee shall also have the power at any time and from time to
        time to
        institute and to maintain such suits and proceedings as it may be advised
        shall
        be necessary or advisable to preserve and protect its interests and the
        interests of the Debentureholders.

       

      All
        rights of action hereunder may be enforced by the Debenture Trustee without
        the
        possession of any of the Debentures or the production thereof on the trial
        or
        other proceedings relating thereto. Any such suit or proceeding instituted
        by
        the Debenture Trustee shall be brought in the name of the Debenture Trustee
        as
        trustee of an express trust, and any recovery of judgment shall be for the
        rateable benefit of the holders of the Debentures subject to the provisions
        of
        this Indenture. In any proceeding brought by the Debenture Trustee (and also
        any
        proceeding in which a declaratory judgment of a court may be sought as to
        the
        interpretation or construction of any provision of this Indenture, to which
        the
        Debenture Trustee shall be a party) the Debenture Trustee shall be held to
        represent all the holders of the Debentures, and it shall not be necessary
        to
        make any holders of the Debentures parties to any such proceeding.

       

      In
        addition and without limitation to the foregoing or the terms of the Security
        Agreement, upon the occurrence of any Event of Default, subject to the
        provisions of Section 7.3 and to the provisions of any Extraordinary Resolution
        that may be passed by the Debentureholders, the Debenture Trustee may, in
        its
        discretion, exercise all of its rights and remedies under the Security
        Agreement, including those expressly set forth in Section 19 thereof which
        remedies include: exercising and enforcing any and all rights and remedies
        available upon default to a secured party under the Uniform Commercial Code;
        the
        right to enter upon and into and take possession of all or such part or parts
        of
        the properties of the Corporation; selling the collateral in one or more
        parcels
        at public or private sale, at any of the Debenture Trustee’s offices or
        elsewhere, for cash, on credit, or for future delivery, and upon such other
        terms as the Debenture Trustee may reasonably believe are commercially
        reasonable; and using, without charge, all of the Corporation’s
        property.

       

      	7.5  	
              No
                Suits by Debentureholders

            

       

      No
        holder
        of any Debenture shall have any right to institute any action, suit or
        proceeding at law or in equity for the purpose of enforcing payment of the
        principal of, premium (if any) or interest on the Debentures or for the
        execution of any trust or power hereunder or for the appointment of a liquidator
        or receiver or to have the Corporation wound up or to file or prove a claim
        in
        any liquidation or bankruptcy proceeding or for any other remedy hereunder,
        unless: (a) such holder shall previously have given to the Debenture Trustee
        written notice of the happening of an Event of Default hereunder; and (b)
        the
        Debentureholders by Extraordinary Resolution or by written instrument signed
        by
        the holders of at least 25% in principal amount of the Debentures then
        outstanding shall have made a request to the Debenture Trustee and the Debenture
        Trustee shall have been afforded reasonable opportunity either itself to
        proceed
        to exercise the powers hereinbefore granted or to institute an action, suit
        or
        proceeding in its name for such purpose; and (c) the Debentureholders or
        any of
        them shall have furnished to the Debenture Trustee, when so requested by
        the
        Debenture Trustee, sufficient funds and security and indemnity satisfactory
        to
        it against the costs, expenses and liabilities to be incurred therein or
        thereby; and (d) the Debenture Trustee shall be entitled to act and shall
        have
        failed to act within a reasonable time after such notification, request and
        offer of indemnity and such notification, request and offer of indemnity
        are
        hereby declared in every such case, at the option of the Debenture Trustee,
        to
        be conditions precedent to any such proceeding or for any other remedy hereunder
        by or on behalf of the holder of any Debentures.

       

      	7.6  	
              Application
                of Monies by Debenture Trustee

            

       

      	(a)  	
              Except
                as herein otherwise expressly provided, any monies received by the
                Debenture Trustee from the Corporation or upon the exercise of rights
                under the Security Agreement pursuant to the foregoing provisions
                of this
                Article 7, or as a result of legal or other proceedings or from any
                trustee in bankruptcy or liquidator of the Corporation or otherwise
                under
                the Security Agreement, shall be applied, together with any other
                monies
                in the hands of the Debenture Trustee available for such purpose,
                as
                follows:

            

       

      	(i)  	
              first,
                in payment or in reimbursement to the Debenture Trustee of its
                compensation, costs, charges, expenses, borrowings, advances or other
                monies furnished or provided by or at the instance of the Debenture
                Trustee in or about the execution of its trusts under, or otherwise
                in
                relation to, this Indenture, with interest thereon as herein
                provided;

            

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
         

        
          
             

            - 44
              -

          

        

      

       

      	(ii)  	
              second,
                but subject as hereinafter in this Section 7.6 provided, in payment,
                rateably and proportionately to the holders of Debentures, of the
                principal of, premium (if any) and accrued and unpaid interest and
                interest on amounts in default on the Debentures which shall then
                be
                outstanding in the priority of principal first and then premium and
                then
                accrued and unpaid interest and interest on amounts in default unless
                otherwise directed by Extraordinary Resolution and in that case in
                such
                order or priority as between principal, premium (if any) and interest
                as
                may be directed by such resolution; and

            

       

      	(iii)  	
              third,
                in payment of the surplus, if any, of such monies to the Corporation
                or
                its assigns;

            

       

      	(iv)  	
              provided,
                however, that no payment shall be made pursuant to clause (ii) above
                in
                respect of the principal of, premium (if any) or interest on any
                Debenture
                held, directly or indirectly, by or for the benefit of the Corporation
                or
                any affiliate (other than any Debenture pledged for value and in
                good
                faith to a Person other than the Corporation or any affiliate but
                only to
                the extent of such Person’s
                interest therein) except subject to the prior payment in full of
                the
                principal, premium (if any) and interest (if any) on all Debentures
                which
                are not so held.

            

       

      	(b)  	
              The
                Debenture Trustee shall not be bound to apply or make any partial
                or
                interim payment of any monies coming into its hands if the amount
                so
                received by it, after reserving thereout such amount as the Debenture
                Trustee may think necessary to provide for the payments mentioned
                in
                Section 7.6(a), is insufficient to make a distribution of at least
                2% of
                the aggregate principal amount of the outstanding Debentures, but
                it may
                retain the money so received by it and invest or deposit the same
                as
                provided in Section 12.9 until the money or the investments representing
                the same, with the income derived therefrom, together with any other
                monies for the time being under its control shall be sufficient for
                the
                said purpose or until it shall consider it advisable to apply the
                same in
                the manner hereinbefore set forth. The foregoing shall not, however,
                apply
                to a final payment in distribution
                hereunder.

            

       

      	7.7  	
              Notice
                of Payment by Debenture Trustee

            

       

      Not
        less
        than 15 days notice shall be given in the manner provided in Section 11.2
        by the
        Debenture Trustee to the Debentureholders of any payment to be made under
        this
        Article 7. Such notice shall state the time when and place where such payment
        is
        to be made and also the liability under this Indenture to which it is to
        be
        applied. After the day so fixed, unless payment shall have been duly demanded
        and have been refused, the Debentureholders will be entitled to interest
        only on
        the balance (if any) of the principal monies, premium (if any) and interest
        due
        (if any) to them, respectively, on the Debentures, after deduction of the
        respective amounts payable in respect thereof on the day so fixed.

       

      	7.8  	
              Debenture
                Trustee May Demand Production of
                Debentures

            

       

      The
        Debenture Trustee shall have the right to demand production of the Debentures
        in
        respect of which any payment of principal, interest or premium required by
        this
        Article 7 is made and may cause to be endorsed on the same a memorandum of
        the
        amount so paid and the date of payment, but the Debenture Trustee may, in
        its
        discretion, dispense with such production and endorsement, upon such indemnity
        being given to it and to the Corporation as the Debenture Trustee shall deem
        sufficient.

       

      	7.9  	
              Remedies
                Cumulative

            

       

      No
        remedy
        herein conferred upon or reserved to the Debenture Trustee, or upon or to
        the
        holders of Debentures or under the Security Agreement, is intended to be
        exclusive of any other remedy, but each and every such remedy shall be
        cumulative and shall be in addition to every other remedy given hereunder
        or now
        existing or hereafter to exist by law or by statute.

       

      
        
          
          

        

        
          
          

          
            

          

        

         

        
          
             

            
              
                 

                - 45
                  -

              

            

          

        

         

      

      	7.10  	
              Judgment
                Against the Corporation

            

       

      The
        Corporation covenants and agrees with the Debenture Trustee that, in case
        of any
        judicial or other proceedings to enforce the rights of the Debentureholders,
        judgment may be rendered against it in favour of the Debentureholders or
        in
        favour of the Debenture Trustee, as trustee for the Debentureholders, for
        any
        amount which may remain due in respect of the Debentures and premium (if
        any)
        and the interest thereon and any other monies owing hereunder.

       

      ARTICLE 8  

      SATISFACTION
        AND DISCHARGE

       

      	8.1  	
              Cancellation
                and Destruction

            

       

      All
        Debentures shall forthwith after payment thereof, whether on the Maturity
        Date,
        Redemption Date, the date of a Change of Control or on any other payment
        date,
        be delivered to the Debenture Trustee and cancelled by it. All Debentures
        cancelled or required to be cancelled under this or any other provision of
        this
        Indenture shall be destroyed by the Debenture Trustee and, if required by
        the
        Corporation, the Debenture Trustee shall furnish to it a destruction certificate
        setting out the designating numbers of the Debentures so destroyed.

       

      	8.2  	
              Non-Presentation
                of Debentures

            

       

      In
        case
        the holder of any Debenture shall fail to present the same for payment on
        the
        date on which the principal, premium (if any) or the interest thereon or
        represented thereby becomes payable either at maturity or otherwise or shall
        not
        accept payment on account thereof and give such receipt therefor, if any,
        as the
        Debenture Trustee may require:

       

      	(a)  	
              the
                Corporation shall be entitled to pay or deliver to the Debenture
                Trustee
                and direct it to set aside; or

            

       

      	(b)  	
              in
                respect of monies or Common Shares in the hands of the Debenture
                Trustee
                which may or should be applied to the payment of the Debentures,
                the
                Corporation shall be entitled to direct the Debenture Trustee to
                set
                aside; or

            

       

      	(c)  	
              if
                the redemption was pursuant to notice given by the Debenture Trustee,
                the
                Debenture Trustee may itself set aside;

            

       

      the
        principal, premium (if any) or the interest, as the case may be, on such
        holder’s Debentures in trust to be paid to the holder of such Debenture upon due
        presentation or surrender thereof in accordance with the provisions of this
        Indenture; and thereupon the principal, premium (if any) or the interest
        payable
        on or represented by each Debenture in respect whereof such monies or Common
        Shares, if applicable, have been set aside shall be deemed to have been paid
        and
        the holder thereof shall thereafter have no right in respect thereof except
        that
        of receiving delivery and payment of the monies or Common Shares, if applicable,
        so set aside by the Debenture Trustee upon due presentation and surrender
        thereof, subject always to the provisions of Section 8.3.

       

      	8.3  	
              Repayment
                of Unclaimed Monies or Common
                Shares

            

       

             
        Subject to applicable law, any monies or Common Shares, if applicable, set
        aside
        under Section 8.2 and not claimed by and paid to holders of Debentures as
        provided in Section 8.2 within six years after the date of such setting aside
        shall be repaid and delivered to the Corporation by the Debenture Trustee
        and
        thereupon the Debenture Trustee shall be released from all further liability
        with respect to such monies or Common Shares, if applicable, and thereafter
        the
        holders of the Debentures in respect of which such monies or Common Shares,
        if
        applicable, were so repaid to the Corporation shall have no rights in respect
        thereof except to obtain payment and delivery of the monies or Common Shares,
        if
        applicable, from the Corporation subject to any limitation provided by the
        laws
        of the Province of Alberta. Notwithstanding the foregoing, the Debenture
        Trustee
        will, pursuant to a written direction of the Corporation, pay any remaining
        funds prior to the expiry of 

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    
      
         

        
          
             

            - 46
              -

             

          

        

      

    

    six
      years
      after the setting aside described in Section 8.2 to the Corporation upon receipt
      from the Corporation, or one of its Subsidiaries (on behalf of the Corporation),
      of an uncontested letter of credit from a U.S. federally chartered bank in
      an
      amount equal to or in excess of the amount of the remaining funds. If the
      remaining funds are paid to the Corporation prior to the expiry of six years
      after such setting aside, the Corporation shall reimburse the Debenture Trustee
      for any amounts so set aside which are required to be paid by the Debenture
      Trustee to a holder of a Debenture after the date of such payment of the
      remaining funds to the Corporation but prior to six years after such setting
      aside.

    
       

      	8.4  	
              Discharge

            

       

      The
        Debenture Trustee shall at the written request of the Corporation release
        and
        discharge this Indenture and execute and deliver such instruments as it shall
        be
        advised by Counsel are requisite for that purpose and to release the Corporation
        from its covenants herein contained (other than the provisions relating to
        the
        indemnification of the Debenture Trustee), upon proof being given to the
        reasonable satisfaction of the Debenture Trustee that the principal of, premium
        (if any) and interest (including interest on amounts in default, if any),
        on all
        the Debentures and all other monies payable hereunder have been paid or
        satisfied or that all the Debentures having matured or having been duly called
        for redemption, payment of the principal of, premium (if any) and interest
        (including interest on amounts in default, if any) on such Debentures and
        of all
        other monies payable hereunder has been duly and effectually provided for
        in
        accordance with the provisions hereof.

       

      	8.5  	
              Satisfaction

            

       

      	(a)  	
              The
                Corporation shall be deemed to have fully paid, satisfied and discharged
                all of the outstanding Debentures or all of the outstanding Debentures
                of
                any series and the Debenture Trustee, at the expense of the Corporation,
                shall execute and deliver proper instruments acknowledging the full
                payment, satisfaction and discharge of such Debentures, when, with
                respect
                to all of the outstanding Debentures or all of the outstanding Debentures
                of any series, as applicable, either:

            

       

      	(i)  	
              the
                Corporation has deposited or caused to be deposited with the Debenture
                Trustee as trust funds or property in trust for the purpose of making
                payment on or conversion of such Debentures, an amount in money or
                Common
                Shares, if applicable, sufficient to pay, satisfy and discharge the
                entire
                amount of principal, premium, if any, and interest, if any, on the
                Debentures to the Maturity Date, or any repayment date or Redemption
                Dates
                or Dates of Conversion, as the case may be, of such Debentures;
                or

            

       

      	(ii)  	
              the
                Corporation has deposited or caused to be deposited with the Debenture
                Trustee as trust property in trust for the purpose of making payment
                on
                such Debentures:

            

       

      	(A)  	
              if
                the Debentures are issued in U.S.dollars, such amount in U.S. dollars
                of
                direct obligations of, or obligations the principal and interest
                of which
                are guaranteed by, the Government of the United States or Common
                Shares,
                if applicable; or

            

       

      	(B)  	
              if
                the Debentures are issued in a currency or currency unit other than
                U.S.
                dollars, cash in the currency or currency unit in which the Debentures
                are
                payable and/or such amount in such currency or currency unit of direct
                obligations of, or obligations the principal and interest of which
                are
                guaranteed by, the government that issued the currency or currency
                unit in
                which the Debentures are payable or Common Shares, if
                applicable;

            

       

      
         

        	 	
                as
                  will, together with the income to accrue thereon, be sufficient
                  to pay and
                  discharge the entire amount of principal, premium, if any and accrued
                  and
                  unpaid interest to the Maturity Date, Redemption Date or any repayment
                  date, as the case may be, of all such
                  Debentures;

              

         

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
           

          
            
               

              - 47
                -

            

          

        

      

      (b)  and
        in
        either event:

       

      	(iii)  	
              the
                Corporation has paid, caused to be paid or made provisions to the
                satisfaction of the Debenture Trustee for the payment of all other
                sums
                payable with respect to all of such Debentures (together with all
                applicable expenses of the Debenture Trustee in connection with the
                payment of such Debentures); and

            

       

      	(iv)  	
              the
                Corporation has delivered to the Debenture Trustee an Officer’s
                Certificate stating that all conditions precedent herein provided
                relating
                to the payment, satisfaction and discharge of all such Debentures
                have
                been complied with.

            

      
        
           

          	 	
                  Any
                    deposits with the Debenture Trustee referred to in this Section
                    8.5 shall
                    be irrevocable, subject to Section 8.6, and shall be made under
                    the terms
                    of an escrow and/or trust agreement in form and substance satisfactory
                    to
                    the Debenture Trustee and which provides for the due and punctual
                    payment
                    of the principal of, and interest and premium, if any, and all
                    other
                    amounts owing on the Debentures being
                    satisfied.

                

           

        

      

      	(b)  	
              Upon
                the satisfaction of the conditions set forth in this Section 8.5
                with
                respect to all the outstanding Debentures, or all the outstanding
                Debentures of any series, as applicable, the terms and conditions
                of such
                Debentures, including the terms and conditions with respect thereto
                set
                forth in this Indenture (other than those contained in Article 2,
                Article
                4, Article 5, Section 7.4 and Article 9 and the provisions of Article
                1
                pertaining to the foregoing provisions) shall no longer be binding
                upon or
                applicable to the Corporation.

            

       

      	(c)  	
              Any
                funds or obligations deposited with the Debenture Trustee pursuant
                to this
                Section 8.5 shall be denominated in the currency or denomination
                of the
                Debentures in respect of which such deposit is
                made.

            

       

      	(d)  	
              If
                the Debenture Trustee is unable to apply any money or securities
                in
                accordance with this Section 8.5 by reason of any legal proceeding
                or any
                order or judgment of any court or governmental authority enjoining,
                restraining or otherwise prohibiting such application, the
                Corporation’s
                obligations under this Indenture and the affected Debentures shall
                be
                revived and reinstated as though no money or securities had been
                deposited
                pursuant to this Section 8.5 until such time as the Debenture Trustee
                is
                permitted to apply all such money or securities in accordance with
                this
                Section 8.5, provided that if the Corporation has made any payment
                in
                respect of principal, premium or interest on Debentures or, as applicable,
                other amounts because of the reinstatement of its obligations, the
                rights
                of the Corporation shall be subrogated to the rights of the holders
                of
                such Debentures to receive such payment from the money or securities
                held
                by the Debenture Trustee.

            

       

      	8.6  	
              Continuance
                of Rights, Duties and
                Obligations

            

       

      	(a)  	
              Where
                trust funds or trust property have been deposited pursuant to Section
                8.5,
                the holders of Debentures and the Corporation shall continue to have
                and
                be subject to their respective rights, duties and obligations under
                Article 2, Article 4, Article 5and Article 9 and the provisions of
                Article
                1 pertaining to the foregoing.

            

       

      	(b)  	
              In
                the event that, after the deposit of trust funds or trust property
                pursuant to Section 8.5 in respect of a series of Debentures (the
                “Defeased Debentures”),
                any holder of any of the Defeased Debentures from time to time converts
                its Debentures to Common Shares or other securities of the Corporation
                in
                accordance with Subsection 2.4(f), Article 5 or any other provision
                of
                this Indenture, the Debenture Trustee shall upon receipt of a Written
                Direction of the Corporation return to the Corporation the proportionate
                amount of the funds or other trust property deposited with the Debenture
                Trustee pursuant to Section 8.5 in respect of the Defeased Debentures
                which is applicable to the Defeased Debentures so converted (which
                amount
                shall be based on the applicable principal amount of the Defeased
                Debentures being converted in relation to the aggregate outstanding
                principal amount of all the Defeased
                Debentures).

            

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
           

          
            
               

              - 48
                -

               

            

          

        

      

      	(c)  	
              In
                the event that, after the deposit of trust funds or trust property
                pursuant to Section 8.5, the Corporation is required to make an Offer
                to
                purchase any outstanding Debentures pursuant to Subsection 2.4(h)
                in
                relation to Initial Debentures or to make an offer to purchase Debentures
                pursuant to any other similar provisions relating to any other series
                of
                Debentures, the Corporation shall be entitled to use any trust money
                or
                trust property deposited with the Debenture Trustee pursuant to Section
                8.5 for the purpose of paying to any holders of Defeased Debentures
                who
                have accepted any such offer of the Corporation the total Offer Price
                payable to such holders in respect of such Offer in respect of Initial
                Debentures (or the total offer price payable in respect of an offer
                relating to any other series of Debentures). Upon receipt of a Written
                Direction from the Corporation, the Debenture Trustee shall be entitled
                to
                pay to such holder from such trust money or trust property deposited
                with
                the Debenture Trustee pursuant to Section 8.5 in respect of the Defeased
                Debentures the amount which is applicable to the Defeased Debentures
                held
                by such holders who have accepted any such offer (which amount shall
                be
                based on the applicable principal amount of the Defeased Debentures
                held
                by accepting offerees in relation to the aggregate outstanding principal
                amount of all the Defeased Debentures).

            

       

      ARTICLE
        9  

      SUCCESSORS

       

      	9.1  	
              Restrictions
                on Amalgamation, Merger and Sale of Certain Assets,
                etc.

            

       

      Subject
        to the provisions of Article 10, the Corporation shall not enter into any
        transaction or series of transactions whereby all or substantially all of
        its
        undertaking, property or assets would become the property of any other Person
        (herein called a “Successor”)
        whether by way of reorganization, consolidation, amalgamation, arrangement,
        merger, conveyance, lease, sale or otherwise, unless:

       

      	(a)  	
              prior
                to or contemporaneously with the consummation of such transaction
                the
                Corporation and the Successor shall have executed such instruments
                and
                done such things as, in the opinion of Counsel, are necessary or
                advisable
                to establish that upon the consummation of such
                transaction:

            

       

      	(i)  	
              the
                Successor will have assumed by way of supplemental indenture all
                the
                covenants and obligations of the Corporation under this Indenture
                and the
                Security Agreement in respect of the Debentures;
                

            

       

      	(ii)  	
              the
                Debentures will be valid and binding obligations of the Successor
                entitling the holders thereof, as against the Successor, to all the
                rights
                of Debentureholders under this Indenture;

            

       

      	(iii)  	
              the
                Successor is a corporation, partnership, limited liability company
                or
                trust organized or existing under the laws of a state of the United
                States
                or such other jurisdiction as may be approved by an Extraordinary
                Resolution of the Debentureholders; and

            

       

      	(iv)  	
              the
                Successor shall consent to the jurisdiction of the courts of the
                Province
                of Alberta, in respect of the Indenture, and the State of New York,
                in
                respect of the Security Agreement, and or such other jurisdictions
                as may
                be approved by an Extraordinary Resolution of the
                Debentureholders;

            

       

      	(b)  	
              such
                transaction, in the opinion of Counsel, shall be on such terms as
                to
                substantially preserve and not impair any of the rights and powers
                of the
                Debenture Trustee or of the Debentureholders
                hereunder;

            

       

      
        	(c)  	
                no
                  condition or event shall exist as to the
                  Corporation (at the time of such transaction) or the Successor
                  (immediately after such transaction) and after giving full effect
                  thereto
                  or immediately after the Successor shall become liable to pay the
                  principal monies, premium, if 

              

         

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    
      
         

        
          
             

            - 49
              -

          

        

      

    

    

      	  	
              any,
                interest and other monies due or which may become due hereunder,
                which
                constitutes or would with the giving of notice or lapse of time constitute
                an Event of Default hereunder; and

            

       

      	(d)  	
              the
                Corporation shall have delivered to the Debenture Trustee an
                Officer’s
                Certificate confirming that all requirements of this Article 9 have
                been
                complied with in respect of such transaction or series of
                transactions.

            

       

      	9.2  	
              Vesting
                of Powers in Successor

            

       

      Whenever
        the conditions of Section 9.1 shall have been duly observed and performed,
        any
        Successor formed by or resulting from such transaction or series of transactions
        shall succeed to, and be substituted for, and may exercise every right and
        power
        of the Corporation under this Indenture with the same effect as though the
        Successor had been named as the Corporation herein and thereafter, except
        in the
        case of a lease or other similar disposition of property to the Successor,
        the
        Corporation shall be relieved of all obligations and covenants under this
        Indenture and the Debentures forthwith upon the Corporation delivering to
        the
        Debenture Trustee an opinion of Counsel to the effect that the transaction
        or
        series of transactions shall not result in any material adverse tax consequences
        to the Corporation or the Successor. The Debenture Trustee will, at the expense
        of the Successor, execute any documents which it may be advised by Counsel
        are
        necessary or advisable for effecting or evidencing such release and
        discharge.

       

       

      ARTICLE 10  

      MEETINGS
        OF DEBENTUREHOLDERS

       

      	10.1  	
              Right
                to Convene Meeting

            

       

      The
        Corporation may at any time and from time to time, and the Debenture Trustee
        shall, on receipt of a written request of the Corporation or a written request
        signed by the holders of not less than 25% of the principal amount of the
        Debentures then outstanding and upon receiving funding and being indemnified
        to
        its reasonable satisfaction by the Corporation or by the Debentureholders
        signing such request against the costs which may be incurred in connection
        with
        the calling and holding of such meeting, convene a meeting of the
        Debentureholders. In the event of the Debenture Trustee failing, within 30
        days
        after receipt of any such request and such funding of indemnity, to give
        notice
        convening a meeting, the Corporation or such Debentureholders, as the case
        may
        be, may convene such meeting. Every such meeting shall be held in the City
        of
Calgary,
        Alberta or
        at
        such other place as may be approved or determined by the Debenture
        Trustee.

       

      	10.2  	
              Notice
                of Meetings

            

       

      	(a)  	
              At
                least 21 days’
                and not more than 60 days’
                notice of any meeting shall be given to the Debentureholders in the
                manner
                provided in Section 11.2 and a copy of such notice shall be sent
                by post
                to the Debenture Trustee in the manner provided by Section 11.3, unless
                the meeting has been called by it. Such notice shall state the time
                when
                and the place where the meeting is to be held and shall state briefly
                the
                general nature of the business to be transacted thereat and 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 9. The accidental
                omission to give notice of a meeting to any holder of Debentures
                shall not
                invalidate any resolution passed at any such meeting. A holder may
                waive
                notice of a meeting either before or after the
                meeting.

            

       

      	(b)  	
              If
                the business to be transacted at any meeting by Extraordinary Resolution
                or otherwise, or any action to be taken or power exercised by instrument
                in writing under Section 10.15, especially affects the rights of
                holders
                of Debentures of one or more series in a manner or to an extent differing
                in any material way from that in or to which the rights of holders
                of
                Debentures of any other series are affected (determined as provided
                in
                Sections 10.2(c) and (d)), then:

            

       

      
        	(i)  	a reference to such fact, indicating each series
                of
                Debentures in the opinion of the Debenture Trustee so especially
                affected
                (hereinafter referred to as the “especially affected series”) shall be
                made in the notice of such meeting, and in any such case
                

         

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
           

          
            
               

              - 50
                -

            

          

        

      

      

        	(ii)  	
                the
                  meeting shall be and be deemed to be and is herein referred to
                  as a
                  “Serial
                  Meeting”;
                  and

              

         

        	(iii)  	
                the
                  holders of Debentures of an especially affected series shall not
                  be bound
                  by any action taken at a Serial Meeting or by instrument in writing
                  under
                  Section 10.15 unless in addition to compliance with the other provisions
                  of this Article 9:

              

         

        	(A)  	
                at
                  such Serial Meeting: (I) there are Debentureholders present in
                  person or
                  by proxy and representing at least 25% in principal amount of the
                  Debentures then outstanding of such series, subject to the provisions
                  of
                  this Article 9 as to quorum at adjourned meetings; and (II) the
                  resolution
                  is passed by the affirmative vote of the holders of more than 50%
                  (or in
                  the case of an Extraordinary Resolution not less than 66 2/3%)
                  of the
                  principal amount of the Debentures of such series then outstanding
                  voted
                  on the resolution; or

              

         

        	(B)  	
                in
                  the case of action taken or power exercised by instrument in writing
                  under
                  Section 10.15, such instrument is signed in one or more counterparts
                  by
                  the holders of not less than 66 2/3% in principal amount of the
                  Debentures
                  of such series then outstanding.

              

         

        	(c)  	
                Subject
                  to Section 10.2(d), the determination as to whether any business
                  to be
                  transacted at a meeting of Debentureholders, or any action to be
                  taken or
                  power to be exercised by instrument in writing under Section 10.15,
                  especially affects the rights of the Debentureholders of one or
                  more
                  series in a manner or to an extent differing in any material way
                  from that
                  in or to which it affects the rights of Debentureholders of any
                  other
                  series (and is therefore an especially affected series) shall be
                  determined by an opinion of Counsel, which shall be binding on
                  all
                  Debentureholders, the Debenture Trustee and the Corporation for
                  all
                  purposes hereof.

              

         

        	(d)  	
                A
                  proposal:

              

         

        	(i)  	
                to
                  extend the Maturity Date of Debentures of any particular series
                  or to
                  reduce the principal amount thereof, the rate of interest or redemption
                  premium thereon or to impair any conversion right
                  thereof,

              

         

        	(ii)  	
                to
                  modify or terminate any covenant or agreement which by its terms
                  is
                  effective only so long as Debentures of a particular series are
                  outstanding; or

              

         

        	(iii)  	
                to
                  reduce with respect to Debentureholders of any particular series
                  any
                  percentage stated in this Section 10.2 or Sections 10.4, 10.12
                  and
                  10.15;

              

         

        shall
          be
          deemed to especially affect the rights of the Debentureholders of such
          series in
          a manner differing in a material way from that in which it affects the
          rights of
          holders of Debentures of any other series, whether or not a similar extension,
          reduction, modification or termination is proposed with respect to Debentures
          of
          any or all other series.

         

        	10.3  	
                Chairman

              

         

        An
          individual, who need not be a Debentureholder, nominated in writing by
          the
          Corporation (if the Corporation convenes the meeting) or chosen by a majority
          of
          the Debentureholders present in person or by proxy at the meeting (in any
          other
          case) shall be chairman of the meeting and if no individual is so nominated
          by
          the Corporation or if the individual so nominated is not present within
          15
          minutes from the time fixed for the holding of the meeting, a majority
          of the
          Debentureholders present in person or by proxy shall choose some individual
          present to be chairman.

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        
          
             

            
              
                 

                - 51
                  -

                 

              

            

          

        

        	10.4  	
                Quorum

              

         

        Subject
          to the provisions of Section 10.12, at any meeting of the Debentureholders
          a
          quorum shall consist of one or more Debentureholders present in person
          or by
          proxy and representing at least 25% in principal amount of the outstanding
          Debentures and, if the meeting is a Serial Meeting, at least 25% of the
          Debentures then outstanding of each especially affected series. If a quorum
          of
          the Debentureholders shall not be present within 30 minutes from the time
          fixed
          for holding any meeting, the meeting, if summoned by the Debentureholders
          or
          pursuant to a request of the Debentureholders, shall be dissolved, but
          in any
          other case the meeting shall be adjourned and reconvened on the same day
          in the
          next week (unless such day is not a Business Day in which case it shall
          be
          adjourned and reconvened on the next following Business Day thereafter)
          at the
          same time and place and no notice shall be required to be given in respect
          of
          such adjourned meeting. At the reconvened meeting, the Debentureholders
          present
          in person or by proxy shall, subject to the provisions of Section 10.12,
          constitute a quorum and may transact the business for which the meeting
          was
          originally convened notwithstanding that they may not represent 25% of
          the
          principal amount of the outstanding Debentures or of the Debentures then
          outstanding of each especially affected series. Any business may be brought
          before or dealt with at a reconvened meeting which might have been brought
          before or dealt with at the original meeting in accordance with the notice
          calling the same. No business shall be transacted at any meeting unless
          the
          required quorum be present at the commencement of business.

         

        	10.5  	
                Power
                  to Adjourn

              

         

        The
          chairman of any meeting at which a quorum of the Debentureholders is present
          may, with the consent of the holders of a majority in principal amount
          of the
          Debentures represented thereat, adjourn any such meeting and no notice
          of such
          adjournment need be given except such notice, if any, as the meeting may
          prescribe.

         

        	10.6 	
                Show
                  of Hands

              

         

        Every
          question submitted to a meeting shall, subject to Section 10.7, be decided
          in
          the first place by a majority of the votes given on a show of hands except
          that
          votes on Extraordinary Resolutions 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. The chairman
          of
          any meeting shall be entitled, both on a show of hands and on a poll, to
          vote in
          respect of the Debentures, if any, held by him or which are represented
          by a
          proxy given in his favour.

         

        	10.7  	
                Poll

              

         

        On
          every
          Extraordinary Resolution, and on any other question submitted to a meeting
          when
          demanded by the chairman or by one or more Debentureholders or proxies
          for
          Debentureholders, a poll shall be taken in such manner and either at once
          or
          after an adjournment as the chairman shall direct. Questions other than
          Extraordinary Resolutions shall, if a poll be taken, be decided by the
          votes of
          the holders of a majority in principal amount of the Debentures and of
          each
          especially affected series, if applicable, represented at the meeting and
          voted
          on the poll.

         

        	10.8  	
                Voting

              

         

        On
          a show
          of hands every Person who is present and entitled to vote, whether as a
          Debentureholder or as proxy for one or more Debentureholders or both, shall
          have
          one vote. On a poll, each Debentureholder present in person or represented
          by a
          proxy duly appointed by an instrument in writing shall be entitled to one
          vote
          in respect of each $1,000 principal amount of Debentures of which he shall
          then
          be the holder. In the case of any Debenture denominated in a currency or
          currency unit other than U.S. dollars, the principal amount thereof for
          these
          purposes shall be computed in U.S. dollars on the basis of the conversion
          of the
          principal amount thereof at the applicable spot buying rate of exchange
          for such
          other currency or currency unit as reported by the Federal Reserve bank
          of New
          York at 12:00 noon (New York time) on the Business Day next preceding the
          meeting. Any fractional amounts resulting from such conversion shall be
          rounded
          to the nearest $1,000. A proxy need not be a Debentureholder. In the case
          of
          joint holders of a Debenture, any one of them present in person or by proxy
          at
          the meeting may vote in the absence of the other or others but in case
          more

      

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
         

        
          
             

            - 52
              -

          

        

      

    

    

      than
        one
        of them be present in person or by proxy, they shall vote together in respect
        of
        the Debentures of which they are joint holders.

       

      	10.9  	
              Proxies

            

       

      A
        Debentureholder may be present and vote at any meeting of Debentureholders
        by an
        authorized representative. The Corporation (in case it convenes the meeting)
        or
        the Debenture Trustee (in any other case) for the purpose of enabling the
        Debentureholders to be present and vote at any meeting without producing
        their
        Debentures, and of enabling them to be present and vote at any such meeting
        by
        proxy and of lodging instruments appointing such proxies at some place other
        than the place where the meeting is to be held, may from time to time make
        and
        vary such regulations as it shall think fit providing for and governing any
        or
        all of the following matters:

       

      	(a)  	
              the
                form of the instrument appointing a proxy, which shall be in writing,
                and
                the manner in which the same shall be executed and the production
                of the
                authority of any Person signing on behalf of a
                Debentureholder;

            

       

      	(b)  	
              the
                deposit of instruments appointing proxies at such place as the Debenture
                Trustee, the Corporation or the Debentureholder convening the meeting,
                as
                the case may be, may, in the notice convening the meeting, direct
                and the
                time, if any, before the holding of the meeting or any adjournment
                thereof
                by which the same must be deposited; and

            

       

      	(c)  	
              the
                deposit of 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,
                faxed, or
                sent by other electronic means before the meeting to the Corporation
                -or
                to the Debenture 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.

            

       

      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 the holders of any Debentures, or as entitled to vote or be present at
        the
        meeting in respect thereof, shall be Debentureholders and their authorized
        representatives and Persons whom Debentureholders have by instrument in writing
        duly appointed as their proxies.

       

      	10.10  	
              Persons
                Entitled to Attend Meetings

            

       

      The
        Corporation and the Debenture Trustee, by their respective trustees, officers
        and directors, the Auditors of the Corporation and the legal advisers of
        the
        Corporation, the Debenture Trustee or any Debentureholder may attend any
        meeting
        of the Debentureholders, but shall have no vote as such.

       

      	10.11 	
              Powers
                Exercisable by Extraordinary
                Resolution

            

       

      In
        addition to the powers conferred upon them by any other provisions of this
        Indenture or by law, a meeting of the Debentureholders shall have the following
        powers exercisable from time to time by Extraordinary Resolution:

       

      	(a)  	
              power
                to authorize the Debenture Trustee to grant extensions of time for
                payment
                of any principal, premium or interest on the Debentures, whether
                or not
                the principal, premium, or interest, the payment of which is extended,
                is
                at the time due or overdue;

            

       

      	(b)  	
              power
                to sanction any modification, abrogation, alteration, compromise
                or
                arrangement of the rights of the Debentureholders or the Debenture
                Trustee
                against the Corporation, or against its property, whether such rights
                arise under this Indenture or the Debentures or
                otherwise;

            

       

      
        	(c)  	
                power
                  to assent to any modification of or change in or addition to or
                  omission
                  from the provisions contained in this Indenture or any Debenture
                  which
                  shall be agreed to by the 

              

         

      

       

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
         

        
          
             

            - 53
              -

          

        

      

    

    

      	  	
              Corporation
                and to authorize the Debenture Trustee to concur in and execute any
                indenture supplemental hereto embodying any modification, change,
                addition
                or omission;

            

       

      	(d) 	
              power
                to sanction any scheme for the reconstruction, reorganization or
                recapitalization of the Corporation or for the consolidation, amalgamation
                or merger of the Corporation with any other Person or for the sale,
                leasing, transfer or other disposition of all or substantially all
                of the
                undertaking, property and assets of the Corporation or any part thereof,
                provided that no such sanction shall be necessary in respect of any
                such
                transaction if the provisions of Section 9.1 shall have been complied
                with;

            

       

      	(e) 	
              power
                to direct or authorize the Debenture Trustee to exercise any power,
                right,
                remedy or authority given to it by this Indenture in any manner specified
                in any such Extraordinary Resolution or to refrain from exercising
                any
                such power, right, remedy or authority;

            

       

      	(f) 	
              power
                to waive, and direct the Debenture Trustee to waive, any default
                hereunder
                and/or cancel any declaration made by the Debenture Trustee pursuant
                to
                Section 7.1 either unconditionally or upon any condition specified
                in such
                Extraordinary Resolution;

            

       

      	(g) 	
              power
                to restrain any Debentureholder from taking or instituting any suit,
                action or proceeding for the purpose of enforcing payment of the
                principal, premium or interest on the Debentures, or for the execution
                of
                any trust or power hereunder;

            

       

      	(h) 	
              power
                to direct any Debentureholder who, as such, has brought any action,
                suit
                or proceeding to stay or discontinue or otherwise deal with the same
                upon
                payment, if the taking of such suit, action or proceeding shall have
                been
                permitted by Section 7.5, of the costs, charges and expenses reasonably
                and properly incurred by such Debentureholder in connection
                therewith;

            

       

      	(i) 	
              power
                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;

            

       

      	(j) 	
              power
                to appoint a committee with power and authority (subject to such
                limitations, if any, as may be prescribed in the resolution) to exercise,
                and to direct the Debenture Trustee to exercise, on behalf of the
                Debentureholders, such of the powers of the Debentureholders as are
                exercisable by Extraordinary Resolution or other resolution as shall
                be
                included in the resolution appointing the committee. The resolution
                making
                such appointment may provide for payment of the expenses and disbursements
                of and compensation to such committee. Such committee shall consist
                of
                such number of individuals as shall be prescribed in the resolution
                appointing it and the members need not be themselves Debentureholders.
                Every such committee may elect its chairman and may make regulations
                respecting its quorum, the calling of its meetings, the filling of
                vacancies occurring in its number and its procedure generally. Such
                regulations may provide that the committee may act at a meeting at
                which a
                quorum is present or may act by minutes signed by the number of members
                thereof necessary to constitute a quorum. All acts of any such committee
                within the authority delegated to it shall be binding upon all
                Debentureholders. Neither the committee nor any member thereof shall
                be
                liable for any loss arising from or in connection with any action
                taken or
                omitted to be taken by them in good
                faith;

            

       

      	(k)	
              power
                to remove the Debenture Trustee from office and to appoint a new
                Debenture
                Trustee or Debenture Trustees provided that no such removal shall
                be
                effective unless and until a new Debenture Trustee or Debenture Trustees
                shall have become bound by this
                Indenture;

            

       

      	(l)	
              power
                to sanction the exchange of the Debentures for or the conversion
                thereof
                into units, bonds, debentures or other securities or obligations
                of the
                Corporation or of any other person formed or to be
                formed;

            

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
           

          
            
               

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      	(m) 	
              power
                to authorize the distribution in specie of any shares or securities
                received pursuant to a transaction authorized under the provisions
                of
                Section 10.11(1);

            

       

      	(n) 	
              power
                to require the Debenture Trustee to exercise any power, right or
                remedy or
                authority given to it by this Indenture in any manner specified in
                such
                Extraordinary Resolution, or to refrain from exercising any such
                power,
                right, remedy or authority;

            

       

      	(o) 	
              power
                to sanction any modification, abrogation, alteration, compromise
                or
                arrangement of the rights of the Debentureholders against the Corporation,
                or against its property, whether such rights arise under this Indenture
                or
                the Debentures or otherwise; and

            

       

      	(p) 	
              power
                to amend, alter or repeal any Extraordinary Resolution previously
                passed
                or sanctioned by the Debentureholders or by any committee appointed
                pursuant to Section 10.11(j).

            

       

      	10.12  	
              Meaning
                of “Extraordinary
                Resolution”

            

       

      	(a)  	
              The
                expression “Extraordinary
                Resolution”
                when used in this Indenture means, subject as hereinafter in this
                Article
                provided, a resolution proposed to be passed as an Extraordinary
                Resolution at a meeting of Debentureholders (including a reconvened
                meeting) duly convened for the purpose and held in accordance with
                the
                provisions of this Article at which the holders of not less than
                25% of
                the principal amount of the Debentures then outstanding, and if the
                meeting is a Serial Meeting, at which holders of not less than 25%
                of the
                principal amount of the Debentures then outstanding of each especially
                affected series, are present in person or by proxy and passed by
                the
                affirmative votes of the holders of not less than 66 2/3% of the
                principal
                amount of the Debentures, and if the meeting is a Serial Meeting
                by the
                affirmative vote of the holders of not less than 66 2/3% of each
                especially affected series, in each case present or represented by
                proxy
                at the meeting and voted upon on a poll on such
                resolution.

            

       

      	(b)  	
              If,
                at any such meeting, the holders of not less than 25% of the principal
                amount of the Debentures then outstanding and, if the meeting is
                a Serial
                Meeting, 25% of the principal amount of the Debentures then outstanding
                of
                each especially affected series, in each case are not present in
                person or
                by proxy within 30 minutes after the time appointed for the meeting,
                then
                the meeting, if convened by or on the requisition of Debentureholders,
                shall be dissolved but in any other case it shall stand adjourned
                and
                shall be reconvened to such date, being not less than 14 nor more
                than 60
                days later, and at such place and time as may be appointed by the
                chairman. Not less than 10 days notice shall be given of the time
                and
                place of such reconvened meeting in the manner provided in Section
                11.2.
                Such notice shall state that at the reconvened meeting the
                Debentureholders present in person or by proxy shall form a quorum.
                At the
                reconvened meeting the Debentureholders 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 reconvened
                meeting and passed thereat by the affirmative vote of holders of
                not less
                than 66 2/3% of the principal amount of the Debentures and, if the
                meeting
                is a Serial Meeting, by the affirmative vote of the holders of not
                less
                than 66 2/3% of the principal amount of the Debentures of each especially
                affected series, in each case present or represented by proxy at
                the
                meeting and voted upon on a poll shall be an Extraordinary Resolution
                within the meaning of this Indenture, notwithstanding that the holders
                of
                not less than 25% in principal amount of the Debentures then outstanding,
                and if the meeting is a Serial Meeting, holders of not less than
                25% of
                the principal amount of the Debentures then outstanding of each especially
                affected series, 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.

            

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
         

        
          
             

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      	10.13  	
              Powers
                Cumulative

            

       

      Any
        one
        or more of the powers in this Indenture stated to be exercisable by the
        Debentureholders by Extraordinary Resolution or otherwise may be exercised
        from
        time to time and the exercise of any one or more of such powers from time
        to
        time shall not be deemed to exhaust the rights of the Debentureholders to
        exercise the same or any other such power or powers thereafter from time
        to
        time.

       

      	10.14  	
              Minutes

            

       

      Minutes
        of all resolutions and proceedings at every meeting as aforesaid shall be
        made
        and duly entered in books to be from time to time provided for that purpose
        by a
        party appointed for such purpose by the Corporation, at the expense of the
        Corporation, and any such minutes as aforesaid, if signed by the chairman
        of the
        meeting at which such resolutions were passed or proceedings had, or by the
        chairman of the next succeeding meeting of the Debentureholders, 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 held and convened, and all
        resolutions passed thereat or proceedings taken thereat to have been duly
        passed
        and taken.

       

      	10.15  	
              Instruments
                in Writing

            

       

      All
        actions which may be taken and all powers that may be exercised by the
        Debentureholders
        at a
        meeting held as hereinbefore in this Article 10 provided may also be taken
        and
        exercised by the holders of 66 2/3% of the principal amount of all the
        outstanding Debentures and, if the meeting at which such actions might be
        taken
        would be a Serial Meeting, by the holders of 66 2/3% of the principal amount
        of
        the Debentures then outstanding of each especially affected series, by an
        instrument in writing signed in one or more counterparts and the expression
        “Extraordinary Resolution” when used in this Indenture shall include an
        instrument so signed.

       

      	10.16  	
              Binding
                Effect of Resolutions

            

       

      Every
        resolution and every Extraordinary Resolution passed in accordance with the
        provisions of this Article 10 at a meeting of Debentureholders shall be binding
        upon all the Debentureholders, whether present at or absent from such meeting,
        and every instrument in writing signed by Debentureholders in accordance
        with
        Section 10.15 shall be binding upon all the Debentureholders, whether
        signatories thereto or not, and each and every Debentureholder and the Debenture
        Trustee (subject to the provisions for its indemnity herein contained) shall
        be
        bound to give effect accordingly to every such resolution, Extraordinary
        Resolution and instrument in writing.

       

      	10.17 	
              Evidence
                of Rights Of Debentureholders

            

       

      	(a) 	
              Any
                request, direction, notice, consent or other instrument which this
                Indenture may require or permit to be signed or executed by the
                Debentureholders may be in any number of concurrent instruments of
                similar
                tenor signed or executed by such
                Debentureholders.

            

       

      	(b) 	
              The
                Debenture Trustee may, in its discretion, require proof of execution
                in
                cases where it deems proof desirable and may accept such proof as
                it shall
                consider proper.

            

       

      	10.18  	
              Concerning
                Serial Meetings

            

       

      Subject
        to Section 10.2(d), if in the opinion of Counsel any business to be transacted
        at any meeting, or any action to be taken or power to be exercised by instrument
        in writing under Section 10.15, does not adversely affect the rights of the
        holders of Debentures of one or more series, the provisions of this Article
        10
        shall apply as if the Debentures of such series were not outstanding and
        no
        notice of any such meeting need be given to the holders of Debentures of
        such
        series. Without limiting the generality of the foregoing, a proposal to modify
        or terminate any covenant or agreement which is effective only so long as
        Debentures of a particular series are outstanding shall be deemed not to
        adversely affect the rights of the holders of Debentures of any other
        series.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
           

          
            
               

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      ARTICLE 11

      NOTICES

       

      	11.1  	
              Notice
                to Corporation

            

       

      Any
        notice to the Corporation under the provisions of this Indenture shall
        be valid
        and
        effective if delivered to the Corporation at: 4000
        Bridgeway, Suite 101, Sausalito, California 94965,
        Attention: President, or if given by registered letter, postage prepaid,
        to such
        offices and so addressed and if mailed, shall be deemed to have been effectively
        given three days following the mailing thereof. The Corporation may from
        time to
        time notify the Debenture Trustee in writing of a change of address which
        thereafter, until changed by like notice, shall be the address of the
        Corporation for all purposes of this Indenture. 

       

      	11.2  	
              Notice
                to Debentureholders

            

       

      All
        notices to be given hereunder with respect to the Debentures shall be deemed
        to
        be validly given to the holders thereof if sent by first class mail, postage
        prepaid, by letter or circular addressed to such holders at their post office
        addresses appearing in any of the registers hereinbefore mentioned and shall
        be
        deemed to have been effectively given three days following the day of mailing.
        Accidental error or omission in giving notice or accidental failure to mail
        notice to any Debentureholder shall not invalidate any action or proceeding
        founded thereon.

       

      If
        any
        notice given in accordance with the foregoing paragraph would be unlikely
        to
        reach the Debentureholders to whom it is addressed in the ordinary course
        of
        post by reason of an interruption in mail service, whether at the place of
        dispatch or receipt or both, the Corporation shall give such notice by
        publication at least once in the City of Calgary (or in such of those cities
        as,
        in the opinion of the Debenture Trustee, is sufficient in the particular
        circumstances), each such publication to be made in a daily newspaper of
        general
        circulation in the designated city.

       

      Any
        notice given to Debentureholders by publication shall be deemed to have been
        given on the day on which publication shall have been effected at least once
        in
        each of the newspapers in which publication was required.

       

      All
        notices with respect to any Debenture may be given to whichever one of the
        holders thereof (if more than one) is named first in the registers hereinbefore
        mentioned, and any notice so given shall be sufficient notice to all holders
        of
        such Debenture.

       

      	11.3  	
              Notice
                to Debenture Trustee

            

       

      Any
        notice to the Debenture Trustee under the provisions of this Indenture shall
        be
        valid and effective if delivered to the Debenture Trustee(by certified postage
        or overnight mail) at its principal office in the City of Calgary,
        Alberta
        at
2300,
        125
        - 9 Avenue S.E., Calgary, AB T2G 0P6,
        Attention: Manager, Corporate Trust or if given by registered letter, postage
        prepaid, to such office and so addressed and, if mailed, shall be deemed
        to have
        been effectively given three days following the mailing thereof.

       

      	11.4  	
              Mail
                Service Interruption

            

       

       If
        by
        reason of any interruption of mail service, actual or threatened, any notice
        to
        be given to the Debenture Trustee would reasonably be unlikely to reach its
        destination by the time notice by mail is deemed to have been given pursuant
        to
        Section 11.3, such notice shall be valid and effective only if delivered
        at the
        appropriate address in accordance with Section 11.3.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
           

          
            
               

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      ARTICLE 12  

      CONCERNING
        THE DEBENTURE TRUSTEE

       

      	12.1  	
              No
                Conflict of Interest

            

       

      The
        Debenture Trustee represents to the Corporation that at the date of execution
        and delivery by it of this Indenture there exists no material conflict of
        interest in the role of the Debenture Trustee as a fiduciary hereunder but
        if,
        notwithstanding the provisions of this Section 12.1, such a material conflict
        of
        interest exists, or hereafter arises, the validity and enforceability of
        this
        Indenture, and the Debentures issued hereunder, shall not be affected in
        any
        manner whatsoever by reason only that such material conflict of interest
        exists
        or arises but the Debenture Trustee shall, within 30 days after ascertaining
        that it has a material conflict of interest, either eliminate such material
        conflict of interest or resign in the manner and with the effect specified
        in
        Section 12.2.

       

      Subject
        to the preceding paragraph, the Debenture 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 business transactions with the Corporation
        or any of its affiliates without being liable to account for any profit made
        thereby.

       

      	12.2  	
              Replacement
                of Debenture Trustee

            

       

      The
        Debenture Trustee may resign its trust and be discharged from all further
        duties
        and liabilities hereunder by giving to the Corporation 90 days notice in
        writing
        or such shorter notice as the Corporation may accept as sufficient. If at
        any
        time a material conflict of interest exists in the Debenture Trustee’s role as a
        fiduciary hereunder the Debenture Trustee shall, within 30 days after
        ascertaining that such a material conflict of interest exists, either eliminate
        such material conflict of interest or resign in the manner and with the effect
        specified in this Section 12.2. The validity and enforceability of this
        Indenture and of the Debentures issued hereunder shall not be affected in
        any
        manner whatsoever by reason only that such a material conflict of interest
        exists. In the event of the Debenture Trustee resigning or being removed
        or
        being dissolved, becoming bankrupt, going into liquidation or otherwise becoming
        incapable of acting hereunder, the Corporation shall forthwith appoint a
        new
        Debenture Trustee unless a new Debenture Trustee has already been appointed
        by
        the Debentureholders. Failing such appointment by the Corporation, the retiring
        Debenture Trustee or any Debentureholder may apply to an applicable court
        in the
        Province of Alberta, on such notice as such court may direct at the
        Corporation’s expense, for the appointment of a new Debenture Trustee but any
        new Debenture Trustee so appointed by the Corporation or by such court shall
        be
        subject to removal as aforesaid by the Debentureholders and the appointment
        of
        such new Debenture Trustee shall be effective only upon such new Debenture
        Trustee becoming bound by this Indenture. On any new appointment the new
        Debenture Trustee shall be vested with the same powers, rights, duties and
        responsibilities as if it had been originally named herein as Debenture
        Trustee.

       

      Any
        company into which the Debenture Trustee may be merged or, with or to which
        it
        may be consolidated or amalgamated, or any company resulting from any merger,
        consolidation or amalgamation to which the Debenture Trustee shall be a party,
        shall be the successor trustee under this Indenture without the execution
        of any
        instrument or any further act. Nevertheless, upon the written request of
        the
        successor Debenture Trustee or of the Corporation, the Debenture Trustee
        ceasing
        to act shall execute and deliver an instrument assigning and transferring
        to
        such successor Debenture Trustee, upon the trusts herein expressed, all the
        rights, powers and trusts of the Debenture Trustee so ceasing to act, and
        shall
        duly assign, transfer and deliver all property and money held by such Debenture
        Trustee to the successor Debenture Trustee so appointed in its place. Should
        any
        deed, conveyance or instrument in writing from the Corporation be required
        by
        any new Debenture Trustee for more fully and certainly vesting in and confirming
        to it such estates, properties, rights, powers and trusts, then any and all
        such
        deeds, conveyances and instruments in writing shall on request of said new
        Debenture Trustee, be made, executed, acknowledged and delivered by the
        Corporation.

       

      	12.3  	
              Duties
                and Obligations of Debenture
                Trustee

            

       

            
        In the exercise of the rights, duties and obligations prescribed or conferred
        by
        the terms of this Indenture, the Debenture Trustee shall act honestly and
        in
        good faith and exercise that degree of care, diligence and skill that a
        reasonably prudent trustee would exercise in comparable circumstances. The
        Debenture Trustee may use its own judgment in the performance of its duties
        as
        trustee, but at any time it may apply to the 

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
         

        
          
             

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      Corporation
        or to the Debenture Trustee's counsel , for instructions or advice, and the
        Corporation will fully protect and hold the Debenture Trustee harmless from
        all
        liability for any action taken, or not taken, by the Debenture Trustee in
        accordance with or pursuant to such instructions or advice that may be given
        to
        it.

       

      The
        duties and obligations of the Debenture Trustee shall be determined solely
        by
        the provisions hereof and, accordingly, the Debenture Trustee shall not be
        responsible except for the performance of such duties and obligations as
        it has
        undertaken herein.

       

      The
        Debenture Trustee may delegate to any person the performance of any of the
        powers vested in it by this Indenture and any such delegation may be made
        upon
        such terms and conditions and subject to such regulations as the Debenture
        Trustee may think to be in the interests of the Debentureholders.

       

      	12.4  	
              Reliance
                Upon Declarations, Opinions,
                etc.

            

       

      In
        the
        exercise of its rights, duties and obligations hereunder the Debenture Trustee
        may, if acting in good faith, rely, as to the truth of the statements and
        accuracy of the opinions expressed therein, upon statutory declarations,
        opinions, reports or certificates furnished pursuant to any covenant, condition
        or requirement of this Indenture or required by the Debenture Trustee to
        be
        furnished to it in the exercise of its rights and duties hereunder, if the
        Debenture Trustee examines such statutory declarations, opinions, reports
        or
        certificates and determines that they comply with Section 12.5, if applicable,
        and with any other applicable requirements of this Indenture. The Debenture
        Trustee may nevertheless, in its discretion, require further proof in cases
        where it deems further proof desirable. Without restricting the foregoing,
        the
        Debenture Trustee may rely on an opinion of Counsel satisfactory o the Debenture
        Trustee notwithstanding that it is delivered by a solicitor or firm which
        acts
        as solicitors for the Corporation.

       

      The
        Debenture Trustee shall have no obligation to ensure or verify compliance
        with
        any applicable laws or regulatory requirements on the issue or transfer of
        any
        Debentures or Common Shares provided such issue or transfer is effected in
        accordance with the terms of this Indenture. The Debenture Trustee shall
        be
        entitled to process all transfers, redemptions and conversions upon the
        presumption that such transfer, redemption or conversion is permissible pursuant
        to all applicable laws and regulatory requirements if such transfer, redemption
        or conversion is effected in accordance with the terms of this Indenture.
        The
        Debenture Trustee shall have no obligation to ensure that legends appearing
        on
        the Debentures or Common Shares comply with regulatory requirements or
        securities laws of any applicable jurisdiction.

       

      	12.5  	
              Evidence
                and Authority to Debenture Trustee, Opinions,
                etc.

            

       

      The
        Corporation shall furnish to the Debenture Trustee evidence of compliance
        with
        the conditions precedent provided for in this Indenture relating to any action
        or step required or permitted to be taken by the Corporation or the Debenture
        Trustee under this Indenture or as a result of any obligation imposed under
        this
        Indenture, including without limitation, the certification and delivery of
        Debentures hereunder, the satisfaction and discharge of this Indenture and
        the
        taking of any other action to be taken by the Debenture Trustee at the request
        of or on the application of the Corporation, forthwith if and when (a) such
        evidence is required by any other Section of this Indenture to be furnished
        to
        the Debenture Trustee in accordance with the terms of this Section 12.5 or
        (b)
        at any other time at the request of the Debenture Trustee. Such evidence
        of
        compliance shall consist of:

       

      	(a)  	
              a
                certificate made by any one trustee of the Corporation or officer
                or
                director of the Corporation, stating that any such condition precedent
                has
                been complied with in accordance with the terms of this
                Indenture;

            

       

      	(b)  	
              in
                the case of a condition precedent compliance with which is, by the
                terms
                of this Indenture, made subject to review or examination by a solicitor,
                an opinion of Counsel that such condition precedent has been complied
                with
                in accordance with the terms of this Indenture;
                and

            

       

      
        	(c)  	
                in
                  the case of any such condition precedent compliance with which
                  is subject
                  to review or examination by auditors or accountants, an opinion
                  or report
                  of the Auditors of the

              

         

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
         

        
          
             

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              Corporation
                whom the Debenture Trustee for such purposes hereby approves, that
                such
                condition precedent has been complied with in accordance with the
                terms of
                this Indenture.

            

       

      Whenever
        such evidence relates to a matter other than the certificates and delivery
        of
        Debentures and the satisfaction and discharge of this Indenture, and except
        as
        otherwise specifically provided herein, such evidence may consist of a report
        or
        opinion of any solicitor, auditor, accountant, engineer or appraiser or any
        other Person whose qualifications give authority to a statement made by him,
        provided that if such report or opinion is furnished by a trustee, officer
        or
        employee of the Corporation it shall be in the form of a statutory declaration.
        Such evidence shall be, so far as appropriate, in accordance with the
        immediately preceding paragraph of this Section.

       

      Each
        statutory declaration, certificate, opinion or report with respect to compliance
        with a condition precedent provided for in the Indenture shall include (a)
        a
        statement by the Person giving the evidence that he has read and is familiar
        with those provisions of this Indenture relating to the condition precedent
        in
        question, (b) a brief statement of the nature and scope of the examination
        or
        investigation upon which the statements or opinions contained in such evidence
        are based, (c) a statement that, in the belief of the Person giving such
        evidence, he has made such examination or investigation as is necessary to
        enable him to make the statements or give the opinions contained or expressed
        therein, and (d) a statement whether in the opinion of such Person the
        conditions precedent in question have been complied with or
        satisfied.

       

      The
        Corporation shall, two business days prior to each Interest Payment Date,
        furnish to the Debenture Trustee its certificate that the Corporation has
        complied with all covenants, conditions or other requirements contained in
        this
        Indenture, the non-compliance with which would, with the giving of notice
        or the
        lapse of time, or both, or otherwise, constitute an Event of Default, or
        if such
        is not the case, specifying the covenant, condition or other requirement
        which
        has not been complied with and giving particulars of such non-compliance.
        

       

      	12.6  	
              Officer’s
                Certificates Evidence

            

       

      Except
        as
        otherwise specifically provided or prescribed by this Indenture, whenever
        in the
        administration of the provisions of this Indenture the Debenture Trustee
        shall
        deem it necessary or desirable that a matter be proved or established prior
        to
        taking or omitting any action hereunder, the Debenture Trustee, if acting
        in
        good faith, may rely upon an Officer’s Certificate.

       

      	12.7  	
              Experts,
                Advisers and Agents

            

       

      The
        Debenture Trustee may:

       

      	(a)  	
              employ
                or retain and act and rely on the opinion or advice of or information
                obtained from any solicitor, auditor, valuer, engineer, surveyor,
                appraiser or other expert, whether obtained by the Debenture Trustee
                or by
                the Corporation, or otherwise, and shall not be liable for acting,
                or
                refusing to act, in good faith on any such opinion or advice and
                may pay
                proper and reasonable compensation for all such legal and other advice
                or
                assistance as aforesaid; and

            

       

      	(b)  	
              employ
                such agents and other assistants as it may reasonably require for
                the
                proper discharge of its duties hereunder, and may pay reasonable
                remuneration for all services performed for it (and shall be entitled
                to
                receive reasonable remuneration for all services performed by it)
                in the
                discharge of the trusts hereof and compensation for all disbursements,
                costs and expenses made or incurred by it in the discharge of its
                duties
                hereunder and in the management of the trusts hereof and any solicitors
                employed or consulted by the Debenture Trustee may, but need not
                be,
                solicitors for the Corporation.

            

       

      	12.8  	
              Investment
                of Monies Held by Debenture
                Trustee

            

       

            
        Unless otherwise provided in this Indenture, any monies held by the Debenture
        Trustee, which, under the trusts of this Indenture, may or ought to be invested
        or which may be on deposit with the Debenture Trustee or which may be in
        the
        hands of the Debenture Trustee, may be invested and reinvested in the name
        or
        under

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
           

          
            
               

              - 60
                -

            

          

        

      

      

        the
          control of the Debenture Trustee in securities in which trustees are authorized
          to invest trust monies under applicable legislation, provided that such
          securities are expressed to mature within two years or such shorter period
          selected to facilitate any payments expected to be made under this Indenture
          (“Authorized
          Investments”),
          after
          their purchase by the Debenture Trustee, and unless and until the Debenture
          Trustee shall have declared the principal of, premium (if any) and interest
          on
          the Debentures to be due and payable, the Debenture Trustee shall so invest
          such
          monies at the written direction of the Corporation given in a reasonably
          timely
          manner. 

         

        The
          Debenture Trustee shall not be held liable for any losses incurred in the
          investment of any funds in Authorized Investments, other than in the event
          of
          the gross negligence, fraud or willful misconduct of the Debenture
          Trustee.

         

        Unless
          and until the Debenture Trustee shall have declared the principal of, premium
          (if any) and interest on the Debentures to be due and payable, the Debenture
          Trustee shall pay over to the Corporation all interest received by the
          Debenture
          Trustee in respect of any Authorized Investments made pursuant to the provisions
          of this Section.

         

        	12.9  	
                Debenture
                  Trustee Not Ordinarily Bound

              

         

        Except
          as
          provided in Section 7.2 and as otherwise specifically provided herein,
          the
          Debenture Trustee shall not, subject to Section 12.3, be bound to give
          notice to
          any Person of the execution hereof, nor to do, observe or perform or see
          to the
          observance or performance by the Corporation of any of the obligations
          herein
          imposed upon the Corporation or of the covenants on the part of the Corporation
          herein contained, nor in any way to supervise or interfere with the conduct
          of
          the Corporation’s business, unless the Debenture Trustee shall have been
          required to do so in writing by the holders of not less than 25% of the
          aggregate principal amount of the Debentures then outstanding or by any
          Extraordinary Resolution of the Debentureholders passed in accordance with
          the
          provisions contained in Article 10, and then only after it shall have been
          funded and indemnified to its satisfaction against all actions, proceedings,
          claims and demands to which it may render itself liable and all costs,
          charges,
          damages and expenses which it may incur by so doing.

         

        	12.10  	
                Debenture
                  Trustee Not Required to Give
                  Security

              

         

        The
          Debenture 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.

         

        	12.11  	
                Debenture
                  Trustee Not Bound to Act on Corporation’s
                  Request

              

         

        Except
          as
          in this Indenture otherwise specifically provided, the Debenture Trustee
          shall
          not be bound to act in accordance with any direction or request of or on
          behalf
          of the Corporation until a duly authenticated copy of the instrument or
          resolution containing such direction or request shall have been delivered
          to the
          Debenture Trustee, and the Debenture Trustee shall be empowered to act
          upon any
          such copy purporting to be authenticated and believed by the Debenture
          Trustee
          to be genuine.

         

        	12.12  	
                Conditions
                  Precedent to Debenture Trustee’s
                  Obligations to Act Hereunder

              

         

        The
          obligation of the Debenture Trustee to commence or continue any act, action
          or
          proceeding for the purpose of enforcing the rights of the Debenture Trustee
          and
          of the Debentureholders hereunder shall be conditional upon the Debentureholders
          furnishing when required by notice in writing by the Debenture Trustee,
          sufficient funds to commence or continue such act, action or proceeding
          and
          indemnity reasonably satisfactory to the Debenture Trustee to protect and
          hold
          harmless the Debenture 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 Debenture
          Trustee
          to expend or risk its own funds or otherwise incur financial liability
          in the
          performance of any of its duties or in the exercise of any of its rights
          or
          powers unless indemnified as aforesaid.

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        
          
             

            
              
                 

                - 61
                  -

              

            

          

        

         

        The
          Debenture Trustee may, before commencing or at any time during the continuance
          of any such act, action or proceeding require the Debentureholders at whose
          instance it is acting to deposit with the Debenture Trustee the Debentures
          held
          by them for which Debentures the Debenture Trustee shall issue
          receipts.

         

        Except
          as
          provided specifically herein, the Debenture Trustee shall not be bound
          to give
          any notice or do or take any act, action or proceeding by virtue of the
          powers
          conferred on it hereby unless and until it shall have been required so
          to do
          under the terms hereof and provided with such evidence of compliance with
          every
          covenant, condition or other requirement specified herein, to be furnished
          to
          the Debenture Trustee in connection with such notice, act, action or proceeding
          or in connection with the exercise of its rights and duties hereunder and
          such
          other evidence of compliance with the provisions of this Indenture as the
          Debenture Trustee may reasonably require.

         

        Except
          as
          provided specifically herein, the Debenture Trustee shall not be bound
          to do,
          observe or perform or see to the observance or performance by the Corporation
          of
          any of the obligations herein imposed upon the Corporation or of the covenants
          on the part of the Corporation herein contained, nor in any way to supervise
          or
          interfere with the conduct of the Corporation's business, unless the Debenture
          Trustee shall have been required to do so by a resolution of Debentureholders
          passed in accordance with the provisions contained herein.

         

        The
          Debenture Trustee shall not be required to take notice of any Event of
          Default
          hereunder, unless and until notified in writing of such Event of Default,
          which
          notice shall distinctly specify the Event of Default desired to be brought
          to
          the attention of the Debenture Trustee, and, in the absence of any such
          notice,
          the Debenture Trustee may for all purposes of this Indenture conclusively
          assume
          that no Event of Default has occurred. No such notice shall in any way
          limit the
          discretion herein given to the Debenture Trustee to determine whether or
          not the
          Debenture Trustee shall take action with respect to any Event of
          Default.

         

        	12.13  	
                Authority
                  to Carry on Business

              

         

        The
          Debenture Trustee represents to the Corporation that at the date of execution
          and delivery by it of this Indenture it is authorized to carry on the business
          of a trust company in the Province of Alberta and to perform its obligations
          hereunder, but if, notwithstanding the provisions of this Section 12.13,
          it
          ceases to be so authorized, the validity and enforceability of this Indenture
          and the securities issued hereunder shall not be affected in any manner
          whatsoever by reason only of such event but the Debenture Trustee shall,
          within
          90 days after ceasing to be authorized to carry on the business, either
          become
          so authorized or resign in the manner and with the effect specified in
          Section
          12.2. The Corporation acknowledges that the Debenture Trustee is not authorized
          to carry on business as a trust company in the United States and confirm
          that
          the trust governed by this Indenture is formed pursuant to the laws of
          the
          Province of Alberta.

         

        	12.14 	
                Compensation
                  and Indemnity

              

         

        	(a) 	
                The
                  Corporation shall pay to the Debenture Trustee from time to time
                  compensation for its services hereunder as agreed separately by
                  the
                  Corporation and the Debenture Trustee, and shall pay or reimburse
                  the
                  Debenture Trustee upon its request for all reasonable expenses,
                  disbursements and advances incurred or made by the Debenture Trustee
                  in
                  the administration or execution of its duties under this Indenture
                  and the
                  Security Agreement (including the reasonable and documented compensation
                  and 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 Debenture Trustee under this Indenture
                  shall be
                  finally and fully performed. The Debenture Trustee’s
                  compensation shall not be limited by any law on compensation of
                  a trustee
                  of an express trust.

              

         

        
           

          	(b) 	
                  The
                    Corporation hereby indemnifies and saves harmless the Debenture
                    Trustee
                    and its directors, officers, employees and agents from and against
                    any and
                    all loss, damages, charges, expenses, claims, demands, actions
                    or
                    liability whatsoever which may be brought against the Debenture
                    Trustee or
                    which it may suffer or incur as a result of or arising out of
                    the
                    performance of its duties and obligations hereunder or as security
                    trustee
                    under the Security Agreement save only in the event of the gross
                    negligence, fraud or wilful misconduct of the

                

           

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        
          
             

            
              
                 

                - 62
                  -

              

            

          

        

        

          	  	
                  Debenture
                    Trustee. This indemnity will survive the termination or discharge
                    of this
                    Indenture and the Security Agreement and the resignation or removal
                    of the
                    Debenture Trustee. The Debenture Trustee shall notify the Corporation
                    promptly of any claim for which it may seek indemnity provided
                    that the
                    failure to provide such notice shall in no way impair this indemnity.
                    The
                    Corporation shall defend the claim and the Debenture Trustee
                    shall
                    co-operate (at the expense of the Corporation) in the defense.
                    The
                    Debenture Trustee may have separate counsel and the Corporation
                    shall pay
                    the reasonable fees and expenses of such Counsel. The Corporation
                    need not
                    pay for any settlement made without its consent, which consent
                    must not be
                    unreasonably withheld. This indemnity shall survive the resignation
                    or
                    removal of the Debenture Trustee or the discharge of this Indenture
                    or the
                    Security Agreement.

                

           

          	(c)  	
                  The
                    Corporation need not reimburse any expense or indemnify against
                    any loss
                    or liability incurred by the Debenture Trustee through gross
                    negligence,
                    fraud or wilful misconduct as finally determined by a court of
                    competent
                    jurisdiction.

                

           

          	12.15  	
                  Duties
                    as Security Trustee

                

           

          The
            powers conferred on the Debenture Trustee (as security trustee under
            the
            Security Agreement) are solely to protect its interest and the interests
            of the
            Debentureholders in the Collateral (as defined in the Security Agreement)
            and
            shall not impose any duty upon it to exercise any such powers. Except
            for (a)
            the safe custody of any Collateral in its possession, (b) the accounting
            for
            monies actually received by it hereunder, and (c) any duty expressly
            imposed on
            the Debenture Trustee by applicable laws with respect to any Collateral
            that has
            not been waived by the Corporation hereunder, the Debenture Trustee shall
            have
            no duty with respect to any Collateral and no implied duties or obligations
            shall be read into this Agreement against the Debenture Trustee. Without
            limiting the generality of the foregoing, the Debenture Trustee shall
            have no
            duty, as to any Collateral, for (i) ascertaining or taking action with
            respect
            to calls, conversions, exchanges, maturities, tenders or other matters
            relative
            to any Collateral, (ii) taking any necessary steps to preserve rights
            against
            any parties with respect to any Collateral or (iii) taking any action
            to protect
            against any diminution in value of the Collateral, whether or not the
            Debenture
            Trustee has or is deemed to have knowledge of such matters, or as to
            the taking
            of any necessary steps to preserve rights against any Persons or any
            other
            rights pertaining to any Collateral but, in each case, the Debenture
            Trustee may
            do so and all expenses reasonably incurred in connection therewith shall
            be part
            of the Obligations (as defined in the Security Agreement). The Debenture
            Trustee
            shall be deemed to have exercised reasonable care in the safekeeping
            of any
            Collateral in its possession if such Collateral is accorded treatment
            substantially equal to the safekeeping which the Debenture Trustee accords
            its
            own property of like kind. The Debenture Trustee will take action in
            the nature
            of exchanges, conversions, redemptions, tenders and the like requested
            in
            writing by the Corporation with respect to the Collateral in the Debenture
            Trustee’s possession if the Debenture Trustee in its reasonable judgment
            determines that such action will not impair the Security Interest or
            the value
            of the Collateral, but a failure of the Debenture Trustee to comply with
            any
            such request shall not of itself be deemed a failure to exercise reasonable
            care. Notwithstanding anything to the contrary contained herein or in
            the
            Security Agreement, the Debenture Trustee is irrevocably authorized by
            each
            Debentureholder (without any further requirement of notice to or consent
            of any
            such Debentureholder) to take any action requested by the Corporation
            to release
            the Collateral to the extent necessary to permit consummation of the
            transactions contemplated in Section 27 of the Security Agreement. Nothing
            herein contained shall impose upon the Debenture Trustee any obligation
            to see
            to, or to require evidence of, the registration or filing (or renewal
            thereof)
            of the Security Agreement or any instrument ancillary or supplemental
            hereto

           

          

          	12.16  	
                  Acceptance
                    of Trust

                

           

          The
            Debenture 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 to hold all rights, privileges and benefits conferred hereby
            and
            by law in trust for the various Persons who shall from time to time be
            Debentureholders, subject to all the terms and conditions herein set
            forth. The
            Debenture Trustee shall only be liable for its own gross negligence,
            willful
            misconduct or fraud and shall not be liable for any act or default on
            the part
            of any agent employed by it or for having permitted any agent to receive
            and
            retain any monies payable to the Debenture Trustee provided that any
            such agent
            or employee is appointed, employed or retained in accordance with the
            obligations of the Debenture Trustee pursuant to Section 12.3.

           

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

          
            
               

              
                
                   

                  - 63
                    -

                   

                

              

            

          

          ARTICLE 13  

          SUPPLEMENTAL
            INDENTURES

           

          	13.1	
                  Supplemental
                    Indentures

                

           

          From
            time
            to time the Debenture Trustee and, when authorized by a resolution of
            the
            directors of the Corporation, the Corporation, may, and they shall when
            required
            by this Indenture, execute, acknowledge and deliver by their proper officers
            deeds or indentures supplemental hereto which thereafter shall form part
            hereof,
            for any one or more of the following purposes:

           

          	(a)  	
                  providing
                    for the issuance of Additional Debentures under this
                    Indenture;

                

           

          	(b)  	
                  changing
                    or eliminating any restrictions on the payment of the principal
                    of or the
                    premium, if any, on the Debentures provided that in the opinion
                    of the
                    Debenture Trustee (relying upon an opinion of Counsel) the rights
                    of the
                    Debentureholders are in no way prejudiced
                    thereby;

                

           

          	(c)   	
                  adding
                    to the covenants of the Corporation herein contained for the
                    protection of
                    the Debentureholders, or of the Debentures of any series, or
                    providing for
                    events of default, in addition to those herein
                    specified;

                

           

          	(d)  	
                  making
                    such provisions not inconsistent with this Indenture as may be
                    necessary
                    or desirable with respect to matters or questions arising hereunder,
                    including the making of any modifications in the form of the
                    Debentures
                    which do not affect the substance thereof and which in the opinion
                    of the
                    Debenture Trustee relying on an opinion of Counsel will not be
                    prejudicial
                    to the interests of the Debentureholders;

                

           

          	(e)  	
                  altering
                    the provisions of the Indenture in respect of the exchange or
                    transfer of
                    Debentures;

                

           

          	(f)   	
                  evidencing
                    the succession, or successive successions, of others to the Corporation
                    and the covenants of and obligations assumed by any such successor
                    in
                    accordance with the provisions of this
                    Indenture;

                

           

          	(g)  	
                  giving
                    effect to any action by, or any direction from, the Debentureholders
                    permitted to be taken or given, as the case may be, by the
                    Debentureholders under this Indenture;
                    and

                

           

          	(h)  	
                  for
                    any other purpose not inconsistent with the terms of this Indenture,
                    provided that in the opinion of the Trustee (relying upon an
                    opinion of
                    Counsel) the rights of the Debentureholders are in no way prejudiced
                    thereby.

                

           

          Unless
            the supplemental indenture requires the consent or concurrence of
            Debentureholders or the holders of a particular series of Debentures,
            as the
            case may be, by an ordinary resolution or Extraordinary Resolution, the
            consent
            or concurrence of Debentureholders or the holders of a particular series
            of
            Debentures, as the case may be, shall not be required in connection with
            the
            execution, acknowledgement or delivery of a supplemental indenture. Further,
            the
            Corporation and the Debenture Trustee may without the consent or concurrence
            of
            the Debentureholders or the holders of a particular series of Debentures,
            as the
            case may be, by supplemental indenture or otherwise, make any changes
            or
            corrections in this Indenture which it shall have been advised by Counsel
            are
            required for the purpose of curing or correcting any ambiguity or defective
            or
            inconsistent provisions or clerical omissions or clerical mistakes or
            manifest
            errors contained herein or in any indenture supplemental hereto or any
            Written
            Direction of the Corporation provided for the issue of Debentures, providing
            that in the opinion of the Debenture Trustee (relying upon an opinion
            of
            Counsel) the rights of the Debentureholders are in no way prejudiced
            thereby.

           

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

          
            
               

              
                
                   

                  - 64
                    -

                   

                

              

            

          

          ARTICLE 14  

          EXECUTION
            AND FORMAL DATE

           

          	14.1  	
                  Execution

                

           

          This
            Indenture may be simultaneously 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.

           

          	14.2  	
                  Formal
                    Date

                

           

          For
            the
            purpose of convenience this Indenture may be referred to as bearing the
            formal
            date of October 19,
            2006
            irrespective of the actual date of execution hereof

           

          (b)  IN
            WITNESS whereof the parties hereto have executed these presents under
            their
            respective corporate seals and the hands of their proper officers in
            that
            behalf.

           

          RED
            MILE ENTERTAINMENT, INC.

          

          

          By:    __________________________      

          Name: Chester
            Aldridge

          Title: President
            and CEO

           

          OLYMPIA
            TRUST COMPANY

          

          

          By:    _________________________      

          Name: 

          Title: 

           

          By:    _________________________      

          Name: 

          Title: 

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

    

     

    

      SCHEDULE
        “A”

      

      TO
        THE INDENTURE

      

      BETWEEN

      

      RED
        MILE ENERGY INC. AND

      

      OLYMPIA
        TRUST COMPANY

      

      

      FORM
        OF INITIAL DEBENTURE

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE
        “A”

       

      UNLESS
        PERMITTED UNDER SECURITIES LEGISLATION THE HOLDER OF THE SECURITIES REPRESENTED
        BY THIS CERTIFICATE SHALL NOT TRADE THESE SECURITIES BEFORE
THE
        DATE THAT IS 4 MONTHS AND A DAY AFTER THE LATER OF [INSERT DATE OF DISTIBUTION
        OF THE SECURITIES]
        AND THE DATE THE CORPORATION BECAME A REPORTING ISSUER IN ANY PROVINCE OR
        TERRITORY OF CANADA].

       

      THE
        SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
        THE
        SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND HAVE BEEN ISSUED IN RELIANCE
        ON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT PROVIDED BY
        REGULATION S PROMULGATED UNDER THE ACT. THE SECURITIES MAY NOT BE REOFFERED
        FOR
        SALE OR RESOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
        REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN EXEMPTION FROM THE
        REGISTRATION REQURIEMENTS OF THE ACT AFTER PROVIDING A LEGAL OPINION TO SUCH
        EFFECT IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION. HEDGING
        TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN
        COMPLIANCE WITH THE ACT.

       

      
        	
                No.
                  l

                 

              	
                $ ̃

                 

              

      

      RED
        MILE ENTERTAINMENT INC.

       

      (Incorporated
        under the laws of the State of Delaware)

       

      5.5%
        SENIOR SECURED CONVERTIBLE DEBENTURE

      DUE
        OCTOBER l,
        2008

       

      RED
        MILE ENTERTAINMENT INC.
        (the
“Corporation”)
        for
        value received hereby acknowledges itself indebted and, subject to the
        provisions of the trust indenture (the “Indenture”)
        dated
        as of October 19,
        2006
        between the Corporation and Olympia
        Trust Company
        (the
“Debenture
        Trustee”),
        promises to pay to

       

       **[REGISTRATION]**

       

       the
        registered holder hereof, on presentation and surrender of this Debenture,
        the
        sum of  ̃
        Dollars
        ($ ̃)
        in
        lawful money of the United States (the “Principal
        Amount”)
        on
October
        l,
        2008
        (the “Maturity
        Date”)
        or on
        such earlier date as the Principal Amount hereof may become due in accordance
        with the provisions of the Indenture and, subject as hereinafter provided,
        to
        pay interest on the principal amount hereof from the date hereof, or from
        the
        last Interest Payment Date to which interest shall have been paid or made
        available for payment hereon, whichever is later, at the rate of 5.5% per
        annum,
        in like money, in arrears in equal (with the exception of the first interest
        payment which will include interest from October l,
        2006 as
        set forth below) semi-annual instalments (less any tax required by law to
        be
        deducted) on September 15 and March 15 in each year commencing on March 15,
        2007
        and the last payment (representing interest payable from the last Interest
        Payment Date to, but excluding, the Maturity Date) to fall due on the Maturity
        Date and, should the Corporation at any time default in the payment of any
        principal, premium (if any) or interest, to pay interest on the amount in
        default at the same rate, in like money and on the same dates. The first
        interest payment will include interest accrued from October l,
        2006
        to, but excluding March 15, 2007.

       

      Interest
        hereon shall be payable by cheque mailed by prepaid ordinary mail or by
        electronic transfer of funds to the registered holder hereof and, subject
        to the
        provisions of the Indenture, the mailing of such cheque or payment by electronic
        funds transfer shall, to the extent of the sum represented thereby (plus
        the
        amount of any tax withheld and remitted), satisfy and discharge all liability
        for interest on this Initial Debenture. The Corporation may, on notice as
        provided in the Indenture and subject to the restrictions set forth in the
        Indenture, at its option and subject to any applicable regulatory approval,
        elect to satisfy the obligation to pay all or any portion of the interest
        payable on this Initial Debenture and due on any Interest Payment Date by
        the
        issue of that number of Common Shares obtained by dividing the applicable
        amount
        of interest by the Current Market Price of the Common Shares in effect on
        the
        Interest Payment Date.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
           

          
            
               

              -A2-

            

          

        

      

       

       

      This
        Debenture is one of the 5.5% Senior Secured Convertible Debentures (referred
        to
        herein as the “Initial
        Debenture”)
        of the
        Corporation issued under the provisions of the Indenture. The Initial Debentures
        authorized for issue are limited to an aggregate principal amount of $10,000,000
        in lawful money of the United States. Reference is hereby expressly made
        to the
        Indenture for a description of the terms and conditions upon which the Initial
        Debentures are issued and held and the rights and remedies of the holders
        of the
        Initial Debentures and of the Corporation and of the Debenture Trustee, all
        to
        the same effect as if the provisions of the Indenture were herein set forth
        to
        all of which provisions the holder of this Initial Debenture by acceptance
        hereof assents. To the extent that anything contained herein is inconsistent
        with or conflicts with the provisions of the Indenture, the provisions of
        the
        Indenture shall govern.

       

      The
        Initial Debentures are issuable only in denominations of $1,000 and integral
        multiples thereof. Upon compliance with the provisions of the Indenture,
        Debentures of any denomination may be exchanged for an equal aggregate principal
        amount of Debentures in any other authorized denomination or denominations.
        The
        whole, or if this Initial Debenture is a denomination in excess of $1,000,
        any
        part which is $1,000 or an integral multiple thereof, of the principal of
        this
        Initial Debenture is convertible, at the option of the holder hereof, upon
        surrender of this Initial Debenture at the principal office of the Debenture
        Trustee in Calgary,
        Alberta
        at any
        time prior to the close of business on the Maturity Date or, if this Initial
        Debenture is called for redemption on or prior to such date, then up to but
        not
        after 5:00 p.m. (Eastern time) on the last Business Day immediately preceding
        the date specified for redemption of this Initial Debenture, into Common
        Shares
        (without adjustment for interest accrued hereon or for dividends or
        distributions on Common Shares issuable upon conversion) at a conversion
        price
        of $1.75 (the “Conversion
        Price”)
        per
        Common Share, being a rate of approximately 571 Common Shares for each $1,000
        principal amount of Initial Debentures, all subject to the terms and conditions
        and in the manner set forth in the Indenture. No Debentures may be converted
        during the five Business Days preceding and including September 15 and March
        15
        in each year as the registers of the Debenture Trustee will be closed during
        such periods. The Indenture makes provision for the adjustment of the Conversion
        Price in the events therein specified. No fractional Common Shares will be
        issued on any conversion but in lieu thereof, the Corporation will satisfy
        such
        fractional interest by a cash payment equal to the market price of such
        fractional interest determined in accordance with the Indenture. Holders
        converting their Debentures will receive accrued and unpaid interest thereon.
        If
        a Debenture is surrendered for conversion on an Interest Payment Date or
        during
        the five preceding Business Days, the Person or Persons entitled to receive
        Common Shares in respect of the Debenture so surrendered for conversion shall
        not become the holder or holders of record of such Common Shares until the
        Business Day following such Interest Payment Date.

       

      This
        Initial Debenture may be redeemed at the option of the Corporation on the
        terms
        and conditions set out in the Indenture at the redemption price therein and
        herein set out provided that this Initial Debenture is not redeemable before
        the
        first anniversary of the date of issuance, except in the event of the
        satisfaction of certain conditions after a Change of Control has occurred.
        On
        and after first anniversary of the Issue Date and prior to the Maturity Date,
        the Initial Debentures are redeemable at the option of the Corporation provided
        that the Current Market Price of the Common Shares on the date on which notice
        of redemption is given is not less than $3.00 at a price equal to 110% of
        the
        principal amount of the Initial Debentures and, in addition thereto, at the
        time
        of redemption, the Corporation shall pay to the holder accrued and unpaid
        interest thereon. The Corporation may, on notice as provided in the Indenture
        and subject to the restrictions set forth in the Indenture, at its option
        and
        subject to any applicable regulatory approval, elect to satisfy its obligation
        to pay all or any portion of the applicable Redemption Price and any accrued
        and
        unpaid interest thereon by the issue of that number of Common Shares obtained
        by
        dividing the aggregate of the outstanding principal amount of the Initial
        Debentures to be redeemed and any accrued and unpaid interest thereon by
        the
        Conversion Price in effect on the Redemption Date.

       

      Upon
        the
        occurrence of a Change of Control of the Corporation, the Corporation is
        required to make an offer to purchase all of the Initial Debentures at a
        price
        equal to 110% of the principal amount of such Initial Debentures plus accrued
        and unpaid interest (if any) up to, but excluding, the date the Initial
        Debentures are so repurchased (the “Offer”).
        If
        90% or more of the principal amount of all Initial Debentures outstanding
        on the
        date the Corporation provides notice of a Change of Control to the Debenture
        Trustee have been tendered for purchase pursuant to the Offer, the Corporation
        has the right to redeem and shall redeem all the remaining outstanding Initial
        Debentures effective as of the same date and at the same price.

       

      The
        Corporation may, on notice as provided in the Indenture and subject to the
        restrictions set forth in the Indenture, at its option and subject to any
        applicable regulatory approval, elect to satisfy the obligation to repay
        all

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

        
          
             

            
              
                 

                -A3-

              

            

          

        

         

         

        or
          any
          portion of the principal amount of this Initial Debenture and any accrued
          and
          unpaid interest thereon due on the Maturity Date by the issue of that number
          of
          Common Shares obtained by dividing the principal amount of this Initial
          Debenture and any accrued and unpaid interest thereon by the Current Market
          Price in effect on the Maturity Date.

      

       

      This
        Initial Debentures is a direct obligation of the Corporation secured against
        all
        of present and after acquired personal property of the Corporation to the
        extent
        a security interest in such collateral may be created and perfected under
        Article 9 of the New York Uniform Commercial Code (and as applicable the
        Delaware Uniform Commercial Code) provided however that the Corporation may
        factor or otherwise sell its accounts receivable in the ordinary course of
        business or secure such accounts receivable in priority to the Initial
        Debentures in favour of a third party lender.

       

      The
        principal hereof may become or be declared due and payable before the stated
        maturity in the events, in the manner, with the effect and at the times provided
        in the Indenture.

       

      The
        Indenture contains provisions making binding upon all holders of Debentures
        outstanding thereunder (or in certain circumstances specific series of
        Debentures) resolutions passed at meetings of such holders held in accordance
        with such provisions and instruments signed by the holders of a specified
        majority of Debentures outstanding (or specific series), which resolutions
        or
        instruments may have the effect of amending the terms of this Initial Debenture
        or the Indenture.

       

      This
        Initial Debenture may only be transferred, upon compliance with the conditions
        prescribed in the Indenture, in one of the registers to be kept at the principal
        office of the Debenture Trustee in Calgary,
        Alberta
        and in
        such other place or places and/or by such other registrars (if any) as the
        Corporation with the approval of the Debenture Trustee may designate. No
        transfer of this Initial Debenture shall be valid unless made on the register
        by
        the registered holder hereof or his executors or administrators or other
        legal
        representatives, or his or their attorney duly appointed by an instrument
        in
        form and substance satisfactory to the Debenture Trustee or other registrar,
        and
        upon compliance with such reasonable requirements as the Debenture Trustee
        and/or other registrar may prescribe and upon surrender of this Initial
        Debenture for cancellation. Thereupon a new Initial Debenture or Initial
        Debentures in the same aggregate principal amount shall be issued to the
        transferee in exchange hereof

       

      This
        Initial Debenture shall not become obligatory for any purpose until it shall
        have been certified by the Debenture Trustee under the Indenture.

       

      Capitalized
        words or expressions used in this Initial Debenture shall, unless otherwise
        defined herein, have the meaning ascribed thereto in the Indenture.

       

      IN
        WITNESS WHEREOF RED MILE ENTERTAINMENT INC.
        has
        caused this Debenture to be signed by its authorized representatives as of
        the
l
        day of
        October, 2006.

       

      RED
        MILE ENTERTAINMENT INC.

       

      By:
        _______________________________      

       

      This
        Initial Debenture is one of the 5.5% Senior Secured Convertible Debentures
        referred to in the Indenture within mentioned.

       

      OLYMPIA
        TRUST COMPANY

       

      

      By:
        _______________________________________       

      (Authorized
        Officer)

       

      Date
        of
        Certification:      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
           

          
            
               

              -A4-

            

          

        

      

       

      FORM
        OF ASSIGNMENT

       

      FOR
        VALUE
        RECEIVED, the undersigned hereby sells, assigns and transfers unto
        ____________________________________ whose address and social insurance number,
        if applicable, are set forth below, this Initial Debenture (or $______________
        principal amount hereof) of RED MILE ENTERTAINMENT INC. standing in the name(s)
        of the undersigned in the register maintained by the Corporation with respect
        to
        such Initial Debenture and does hereby irrevocably authorize and direct the
        Debenture Trustee to transfer such Initial Debenture in such register, with
        full
        power of substitution in the premises.

       

      Dated:
         

       

      Address
        of Transferee:  

      (Street
        Address, City, Province and Postal Code)

       

      Social
        Insurance Number of Transferee, if applicable:  

       

      *If
        less
        than the full principal amount of the within Initial Debenture is to be
        transferred, indicate in the space provided the principal amount (which must
        be
        $1,000 or an integral multiple thereof, unless you hold an Initial Debenture
        in
        a non-integral multiple of 1,000 by reason of your having exercised your
        right
        to exchange upon the making of an Offer, in which case such Initial Debenture
        is
        transferable only in its entirety) to be transferred.

       

      
        	
                1.

              	
                The
                  signature(s) to this assignment must correspond with the name(s)
                  as
                  written upon the face of this Initial Debenture in every particular
                  without alteration or any change whatsoever. The signature(s) must
                  be
                  guaranteed by a Canadian chartered bank or trust company or by
                  a member of
                  an acceptable Medallion Guarantee Program. Notarized or witnessed
                  signatures are not acceptable as guaranteed signatures. The Guarantor
                  must
                  affix a stamp bearing the actual words: “SIGNATURE
                  GUARANTEED”.

              

      

       

      
        	
                2.

              	
                The
                  registered holder of this Initial Debenture is responsible for
                  the payment
                  of any documentary, stamp or other transfer taxes that may be payable
                  in
                  respect of the transfer of this Debenture

              

      

       

      Signature
        of Guarantor:

       

      

       

       

      Authorized
        Officer    Signature
        of transferring registered holder

      

      

      

       

      Name
        of
        Institution

      

      

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      

      

      

      SCHEDULE
        “B”

      

      TO
        THE INDENTURE

      

      BETWEEN

      

      RED
        MILE ENERGY INC. AND

      

      OLYMPIA
        TRUST COMPANY

      

      FORM
        OF REDEMPTION NOTICE

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE
        “B”

      

       

      Form
        of Redemption Notice

       

      RED
        MILE ENTERTAINMENT INC.

       

      5.5%
        SENIOR SECURED CONVERTIBLE DEBENTURES

       

      REDEMPTION
        NOTICE

       

      

       

      
        	
                To:

              	
                Holders
                  of 5.5% Senior Secured Convertible Debentures (the “Debentures”)
                  of Red Mile Entertainment Inc.(the “Corporation”)

              

      

       

      And
        to: Olympia
        Trust Company
        (the
“Debenture
        Trustee”)

       

      

       

      Note: All
        capitalized terms used herein have the meaning ascribed thereto in the Indenture
        mentioned below, unless otherwise indicated.

       

      Notice
        is
        hereby given pursuant to Section 4.3 of the trust indenture (the “Indenture”)
        dated
        as of October 19,
        2006
        between the Corporation and the
        Debenture Trustee,
        that
        the aggregate principal amount of $______________
        of the
        $______________
        of
        Debentures outstanding will be redeemed as of ___________________________
        (the
“Redemption
        Date”),
        upon
        payment of a redemption amount of $_____________
        for each
        $1,000 principal amount of Debentures, being equal to the aggregate of (i)
        $_______________
        (the
“Redemption
        Price”),
        and
        (ii) all accrued and unpaid interest hereon to but excluding the Redemption
        Date
        (collectively, the “Total
        Redemption Price”).

       

      The
        Total
        Redemption Price will be payable upon presentation and surrender of the
        Debentures called for redemption at the following corporate trust
        office:

       

      Olympia
        Trust Company

      2300,
        125
        - 9 Avenue SE

      Calgary,
        AB T2G 0P6

      

       

      The
        interest upon the principal amount of Debentures called for redemption shall
        cease to be payable from and after the Redemption Date, unless payment of
        the
        Total Redemption Price shall not be made on presentation for surrender of
        such
        Debentures at the above-mentioned corporate trust office on or after the
        Redemption Date or prior to the setting aside of the Total Redemption Price
        pursuant to the Indenture.

       

      [Pursuant
        to Section 4.6 of the Indenture, the Corporation hereby irrevocably elects
        to
        satisfy its obligation to pay to the holders of Debentures
        $______________
        of the Redemption Price payable to holders of Debentures in accordance with
        this
        notice by issuing and delivering to the holders that number of Common Shares
        obtained by dividing the Redemption Price by the Conversion Price in effect
        on
        the Redemption Date.]

       

      [Pursuant
        to Section 4.6 of the Indenture, the Corporation hereby irrevocably elects
        to
        satisfy its obligation to pay the holders of Debentures $_______________
        of the
        accrued and unpaid interest up to but excluding the Redemption Date payable
        to
        holders of the Debentures in accordance with this notice by issuing and
        delivering to the holders that number of Common Shares obtained by dividing
        the
        applicable amount of interest by the Conversion Price in effect on the
        Redemption Date.]

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
           

          
            
               

              -B2-

               

            

          

        

      

       No
        fractional Common Shares shall be delivered upon the exercise by the Corporation
        of the above-mentioned redemption right but, in lieu thereof, the Corporation
        shall pay the cash equivalent thereof determined on the basis of the Conversion
        Price on the Redemption Date (less any tax required to be deducted, if
        any).

       

      In
        this
        connection, upon presentation and surrender of the Debentures for payment
        on the
        Redemption Date, the Corporation shall, on the Redemption Date, make the
        delivery to the Debenture Trustee, at the above-mentioned corporate trust
        office, for delivery to and on account of the holders, of certificates
        representing the Common Shares to which holders are entitled together with
        the
        cash equivalent in lieu of fractional Common Shares, and, if only a portion
        of
        the Debentures or the interest are to be redeemed by issuing Common Shares,
        cash
        representing the balance of the Redemption Price and interest.

       

      DATED:

       

      RED
        MILE ENTERTAINMENT INC.

      

      

      

       

      (Authorized
        Signatory)

      

       

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      

      

       

      

      

      

      SCHEDULE
        “C”

       

      TO
        THE INDENTURE

       

      BETWEEN

       

      RED
        MILE ENERGY INC. AND

      

      OLYMPIA
        TRUST COMPANY

      

       

      FORM
        OF MATURITY NOTICE

       

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE
        “C”

       

      Form
        of Maturity Notice

       

      RED
        MILE ENTERTAINMENT INC.

       

      5.5%
        SENIOR SECURED CONVERTIBLE DEBENTURES 

       

      MATURITY
        NOTICE

       

       

      
        	
                To:

              	
                Holders
                  of 5.5%
                  Senior Secured Convertible Debentures (the “Debentures”)
                  of Red Mile Entertainment Inc. (the “Corporation”)

              

      

       

      And
        to: Olympia
        Trust Company
        (the
“Debenture
        Trustee”)

       

      

       

      
        	
                Note:

              	
                All
                  capitalized terms used herein have the meaning ascribed thereto
                  in the
                  Indenture mentioned below, unless otherwise
                  indicated.

              

      

       

      (y)  Notice
        is
        hereby given pursuant to Section 4.9(b) of the trust indenture (the
“Indenture”)
        dated
        as of October 19,
        2006,
        as the same may be amended, supplemented or restated between the Corporation
        and
the
        Debenture Trustee,,
        that
        the Debentures are due and payable as of _______________
        (the
“Maturity
        Date”)
        [and
        the Corporation elects to satisfy its obligation to pay to holders of Debentures
        the principal amount of all of the Debentures and any accrued and unpaid
        interest thereon outstanding on the Maturity Date by issuing and delivering
        to
        the holders that number of Common Shares equal to the number obtained by
        dividing such principal amount of the Debentures and any accrued and unpaid
        interest thereon by the Current Market Price of Common Shares in effect on
        the
        Maturity Date.]

       

      (z)  No
        fractional Common Shares shall be delivered on exercise by the Corporation
        of
        the above mentioned repayment right but, in lieu thereof the Corporation
        shall
        pay the cash equivalent thereof determined on the basis of the Current Market
        Price of Common Shares on the Maturity Date (less any tax required to be
        deducted, if any).

       

      (aa)  In
        this
        connection, upon presentation and surrender of the Debentures for payment
        on the
        Maturity Date, the Corporation shall, on the Maturity Date, make delivery
        to the
        Debenture Trustee, at its principal corporate trust office in Calgary,
        Alberta,
        for
        delivery to and on account of the holders, of certificates representing the
        Common Shares to which holders are entitled together with the cash equivalent
        in
        lieu of fractional Common Shares, and if only a portion of the Debentures
        and
        interest thereon are to be repaid by issuing Common Shares, cash representing
        the balance of the principal amount due on the Maturity Date and all accrued
        and
        unpaid interest up to but excluding the Maturity Date.

       

      DATED:

       

      RED
        MILE ENTERTAINMENT INC.

      

      

      ______________________________

      (Authorized
        Signatory)

      

      

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

       

      

      

      

      

      

      

      SCHEDULE
        “D”

       

      TO
        THE INDENTURE

       

      BETWEEN

       

      RED
        MILE ENTERTAINMENT INC. AND

       

      OLYMPIA
        TRUST COMPANY

       

      FORM
        OF NOTICE OF CONVERSION

       

      

       

      

       

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      SCHEDULE
        “D”

       

      Form
        of Notice of Conversion

       

      CONVERSION
        NOTICE

       

      

       

      To:  Red
        Mile
        Entertainment Inc.

       

      And
        To:  Olympia
        Trust Company
        (The
“Debenture
        Trustee”)

       

      
        	
                Note:

              	
                All
                  capitalized terms used herein have the meaning ascribed thereto
                  in the
                  Indenture mentioned below, unless otherwise
                  indicated.

              

      

       

      (bb)  The
        undersigned registered holder of 5.5% Senior Secured Convertible Debentures
        bearing Certificate No. ______________
        irrevocably elects to convert such Debentures (or $_______________
        principal amount thereof*) in accordance with the terms of the Indenture
        referred to in such Debentures and tenders herewith the Debentures, and,
        if
        applicable, directs that the Common Shares of Red Mile Entertainment Inc.
        issuable upon a conversion be issued and delivered to the Person indicated
        below. (If Common Shares are to be issued in the name of a Person other than
        the
        holder, all requisite transfer taxes must be tendered by the
        undersigned).

       

      

       

      Dated:
                    

      (Signature
        of Registered Holder)

       

      

       

      
        	
                *

              	
                If
                  less than the full principal amount of the Debentures, indicate
                  in the
                  space provided the principal amount (which must be $1,000 or integral
                  multiples thereof).

              

      

       

      
        	
                NOTE:

              	
                If
                  Common Shares are to be issued in the name of a Person other than
                  the
                  holder, the signature must be guaranteed by a chartered bank, a
                  trust
                  company or by a member of an acceptable Medallion Guarantee Program.
                  The
                  Guarantor must affix a stamp bearing the actual words: “SIGNATURE
                  GUARANTEED”.

              

      

       

      (Print
        name in which Common Shares are to be issued, delivered and
        registered)

       

      Name:       

      

       

      (Address)

      

      

       

      (City,
        Province and Postal Code)

      

      Name
        of
        guarantor:      

      

      Authorized
        signature:       

      

       

      

       

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      

       

      

       

      SCHEDULE
        “E”

       

      TO
        THE INDENTURE

       

      BETWEEN

       

      RED
        MILE ENTERTAINMENT INC. AND

       

      OLYMPIA
        TRUST COMPANY

       

      FORM
        OF SHARE INTEREST PAYMENT NOTICE

       

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

       

      SCHEDULE
        “E”

       

      Form
        of Share Interest Payment Notice

       

      RED
        MILE ENTERTAINMENT INC.

       

      5.5%
        SENIOR SECURED CONVERTIBLE DEBENTURES 

       

      SHARE
        INTEREST PAYMENT NOTICE

       

      

       

      
        	
                To:

              	
                Holders
                  of 5.5%
                  Convertible Unsecured Subordinated Debentures (the “Debentures”)
                  of Red Mile Entertainment Inc. (the “Corporation”)

              

      

       

      And
        to: Olympia
        Trust Company
        (the
“Debenture
        Trustee”)

       

      

       

      
        	
                Note:

              	
                All
                  capitalized terms used herein have the meaning ascribed thereto
                  in the
                  Indenture mentioned below, unless otherwise
                  indicated.

              

      

       

      (cc)  Notice
        is
        hereby given pursuant to Section 2.17(b) of the trust indenture (the
“Indenture”)
        dated
        as of October 19,
        2006,
        as the same may be amended, supplemented or restated between the Corporation
        and
the
        Debenture Trustee,
        that
        interest is due and payable as of _______________
        (the
“Interest
        Payment Date”)
        and
        the Corporation elects to satisfy its obligation to pay to holders of Debentures
        the amount of such interest on all of the Debentures outstanding on the Interest
        Payment Date by issuing and delivering to the holders that number of Common
        Shares equal to the number obtained by dividing such amount of interest by
        the
        Current Market Price of the Common Shares in effect on the Interest Payment
        Date.

       

      (dd)  No
        fractional Common Shares shall be delivered on exercise by the Corporation
        of
        the above mentioned repayment right but, in lieu thereof the Corporation
        shall
        pay the cash equivalent thereof determined on the basis of the Current Market
        Price of Common Shares on the Interest Payment Date (less any tax required
        to be
        deducted, if any).

       

      (ee)  In
        this
        connection, the Corporation shall, on the Interest Payment Date, make delivery
        to the Debenture Trustee, at its principle corporate trust office in
Calgary,
        Alberta,
        for
        delivery to and on account of the holders, of certificates representing the
        Common Shares to which holders are entitled together with the cash equivalent
        in
        lieu of fractional Common Shares, and if only a portion of the interest is
        to be
        paid by issuing Common Shares, cash representing the balance of the interest
        due
        on the Interest Payment Date.

       

      DATED:

       

      RED
        MILE ENTERTAINMENT INC.

      

      

      _________________________________

      (Authorized
        Signatory)

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE
        “F”

       

      TO
        THE INDENTURE

       

      BETWEEN

       

      RED
        MILE ENTERTAINMENT INC. AND

       

      OLYMPIA
        TRUST COMPANY

       

      FORM
        OF SECURITY AGREEMENT

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SECURITY
        AGREEMENT

       

      

      

      THIS
        SECURITY AGREEMENT (this “Agreement”), dated as of October 19, 2006, is made and
        given by RED
        MILE
        ENTERTAINMENT, INC.,
        a
        corporation organized under the laws of the State of Delaware (the “Grantor”),
        to OLYMPIA
        TRUST COMPANY,
        a trust
        company incorporated under the laws of the Province of Alberta in its capacity
        as Debenture Trustee (the “Security Trustee”).

      

      RECITALS

      

      A.
        The
        Grantor will or may become, or is now, indebted in the amount of a minimum
        of
        US$5,000,000 to Debentureholders under Initial Debentures issued under that
        certain Trust Indenture dated October 19, 2006 (the “Indenture”).

      

      B.
        The
        Security Trustee is the Debenture Trustee under the Indenture.

      

      C.
        Under
        the terms of the Indenture the Grantor has agreed, and is required, to grant
        a
        security interest over all of its personal property to the Debenture Trustee
        as
        security for its obligations to, and for the benefit of, the Debentureholders
        under the Initial Debentures. The security interest granted hereunder shall
        be
        subordinated to any security interest granted over the Grantor's accounts
        receivable to secure indebtedness to any commercial bank, financial institution
        or other lender(s).

      

      D.
        The
        Grantor finds it advantageous, desirable and in its best interests to comply
        with the requirement that it execute and deliver this Agreement to the Security
        Trustee.

      

      NOW,
        THEREFORE, in consideration of the premises and in order to induce the
        Debentureholders to extend or continue credit accommodations to the Grantor,
        the
        Grantor hereby agrees with the Security Trustee for the benefit of the
        Debentureholders of the Initial Debentures as follows:

      

      Section
        1.
        Defined
        Terms.

      

      1
        (a)
        As used
        in this Agreement, the following terms shall have the meanings
        indicated:

      

      “Account”
shall
        mean the rights of the Grantor to payment for goods sold or leased or for
        services rendered which is not evidenced by an Instrument or Chattel Paper,
        whether or not such right has been earned by performance, all guaranties
        and
        security therefor, and all interests in the goods the sale or lease of which
        gave rise thereto, including the right to stop such goods in transit.

      

      “Account
        Debtor”
shall
        mean a Person who is obligated on or under any Account, Chattel Paper,
        Instrument or General Intangible.

      

      “Chattel
        Paper”
shall
        mean a writing or writings which evidence both a monetary obligation and
        a
        security interest in or lease of specific goods; when a transaction is evidenced
        by both a security agreement or a lease and by an Instrument or a series
        of
        Instruments, the group of writings taken together constitutes Chattel
        Paper.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      “Collateral”
shall
        mean all property and rights in property now owned or hereafter at any time
        acquired by the Grantor in or upon which a Security Interest is granted to
        the
        Security Trustee by the Grantor under this Agreement.

      

      “Debentureholders”
has
        the
        meaning ascribed to such term in the Indenture.

      

      “Debenture
        Trustee”
means
        the Security Trustee in its capacity as debenture trustee under the
        Indenture.

      

      “Document”
shall
        mean any bill of lading, dock warrant, dock receipt, warehouse receipt or
        order
        for the delivery of goods, together with any other document or receipt which
        in
        the regular course of business or financing is treated as adequately evidencing
        that the Person in possession of it is entitled to receive, hold and dispose
        of
        the document and the goods it covers.

      

      “Equipment”
shall
        mean all machinery, equipment, motor vehicles, furniture, furnishings and
        fixtures, including all accessions, accessories and attachments thereto,
        and any
        guaranties, warranties, indemnities and other agreements of manufacturers,
        vendors and others with respect to such Equipment.

      

      “Event
        of Default”
shall
        have the meaning given to such term in Section 18
        hereof.

      

      “Financing
        Statement”
shall
        have the meaning given to such term in Section 4
        hereof.

      

      “General
        Intangibles”
shall
        mean any personal property (other than goods, Accounts, Chattel Paper,
        Documents, Instruments and money) including choses in action, causes of action,
        contract rights, corporate and other business records, inventions, designs,
        patents, patent applications, service marks, trademarks, tradenames, trade
        secrets, internet domain names, engineering drawings, good will, registrations,
        copyrights, licenses, franchises, customer lists, tax refund claims, royalties,
        licensing and product rights, rights to the retrieval from third parties
        of
        electronically processed and recorded data and all rights to payment resulting
        from an order of any court.

      

      “Indenture”
means
        that certain Trust Indenture dated October 19, 2006 between the Grantor and
        the
        Debenture Trustee providing for the issue of debentures of various series
        including the Initial Debentures.

      

      “Initial
        Debentures”
means
        up to US$10,000,000 of 5.5% senior secured convertible debentures issued
        by the
        Grantor to the Debentureholders in one or more closings, and such term has
        the
        meaning ascribed thereto in the Indenture.

      

      “Instrument”
shall
        mean a draft, check, certificate of deposit, note, bill of exchange, security
        or
        any other writing which evidences a right to the payment of money and is
        not
        itself a security agreement or lease and is of a type which is transferred
        in
        the ordinary course of business by delivery with any necessary endorsement
        or
        assignment.

      

      “Inventory”
shall
        mean any and all goods owned or held by or for the account of the Grantor
        for
        sale or lease, or for furnishing under a contract of service, or as raw
        materials, work in process, materials incorporated in or consumed in the
        production of any of the foregoing and supplies, in each case wherever the
        same
        shall be located, whether in transit, on consignment, in retail outlets,
        warehouses, terminals or otherwise, and all property the sale, lease or other
        disposition of which has given rise to an Account and which has been returned
        to
        the Grantor or repossessed by the Grantor or stopped in transit.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Lien”
shall
        mean any security interest, mortgage, pledge, lien, charge, encumbrance,
        title
        retention agreement or analogous instrument or device (including the interest
        of
        the lessors under capitalized leases), in, of or on any assets or properties
        of
        the Person referred to.

      

      “Obligations”
shall
        mean (a) all principal of, and interest on, the Initial Debentures and any
        extensions, renewals or replacements thereof, (b) all liabilities of the
        Grantor
        under the Indenture and (c) all liabilities of the Grantor under this
        Agreement.

      

      “Person”
shall
        mean any individual, corporation, partnership, limited partnership, limited
        liability company, joint venture, firm, association, trust, unincorporated
        organization, government or governmental agency or political subdivision
        or any
        other entity, whether acting in an individual, fiduciary or other
        capacity.

      

      “Security
        Interest”
shall
        have the meaning given such term in Section 2 hereof.

      

      1
        (b)
        All
        other terms used in this Agreement which are not specifically defined herein
        shall have the meaning assigned to such terms in the Uniform Commercial Code
        in
        effect in the State of New York as of the date of this Agreement to the extent
        such other terms are defined therein.

      

      1
        (c)
        Unless
        the context of this Agreement otherwise clearly requires, references to the
        plural include the singular, the singular, the plural and “or” has the inclusive
        meaning represented by the phrase “and/or.” The words “include,” “includes” and
“including” shall be deemed to be followed by the phrase “without limitation.”
The words “hereof,” “herein,” “hereunder” and similar terms in this Agreement
        refer to this Agreement as a whole and not to any particular provision of
        this
        Agreement. References to Sections are references to Sections in this Agreement
        unless otherwise provided.

      

      Section
        2.
        Grant
        of Security Interest.
        As
        security for the payment and performance of all of the Obligations, the Grantor
        hereby grants to the Security Trustee a security interest (the “Security
        Interest”) in all of the Grantor’s right, title, and interest in and to the
        following, whether now or hereafter owned, existing, arising or acquired
        and
        wherever located:

      

      2
        (a)
        All
        Accounts.

      

      2
        (b)
        All
        Chattel Paper.

      

      2
        (c)
        All
        Documents.

      

      2
        (d)
        All
        Equipment.

      

      2
        (e)
        All
        General Intangibles.

      

      2
        (f)
        All
        Instruments.

      

      2
        (g)
        All
        Inventory.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      2
        (h)
        To the
        extent not otherwise included in the foregoing, (i) all other rights to the
        payment of money, including rents and other sums payable to the Grantor under
        leases, rental agreements and other Chattel Paper and insurance proceeds,
        and
        each letter-of-credit right and all investment property; (ii) all books,
        correspondence, credit files, records, invoices, bills of lading, and other
        documents relating to any of the foregoing, including, without limitation,
        all
        tapes, cards, disks, computer software, computer runs, and other papers and
        documents in the possession or control of the Grantor or any computer bureau
        from time to time acting for the Grantor; (iii) all rights in, to and under
        all
        policies insuring the life of any officer, director, stockholder or employee
        of
        the Grantor, the proceeds of which are payable to the Grantor; and (iv) all
        accessions and additions to, parts and appurtenances of, substitutions for
        and
        replacements of any of the foregoing.

      

      2
        (i)
        To the
        extent not otherwise included, all proceeds and products of any and all of
        the
        foregoing.

      

      Section
        3.
        Grantor
        Remains Liable.
        Anything herein to the contrary notwithstanding, (a) the Grantor shall remain
        liable under the Accounts, Chattel Paper, General Intangibles and other items
        included in the Collateral to the extent set forth therein to perform all
        of its
        duties and obligations thereunder to the same extent as if this Agreement
        had
        not been executed, (b) the exercise by the Security Trustee of any of the
        rights
        hereunder shall not release the Grantor from any of its duties or obligations
        under any items included in the Collateral, and (c) the Security Trustee
        shall
        have no obligation or liability under Accounts, Chattel Paper, General
        Intangibles and other items included in the Collateral by reason of this
        Agreement, nor shall the Security Trustee be obligated to perform any of
        the
        obligations or duties of the Grantor thereunder or to take any action to
        collect
        or enforce any claim for payment assigned hereunder.

      

      Section
        4.
        Title
        to Collateral.
        The
        Grantor has (or will have at the time it acquires rights in Collateral hereafter
        acquired or arising) and will maintain so long as the Security Interest may
        remain outstanding, title to each item of Collateral (including the proceeds
        and
        products thereof), free and clear of all Liens except (i) the Security Interest
        and (ii) a Lien over the Grantor’s accounts receivable granted to a commercial
        bank, financial institution or other lender(s) (and the Security Trustee
        shall
        subordinate its Security Interest in such accounts receivable to such commercial
        bank, financial institution or other lender(s)). The Grantor will defend
        the
        Collateral against all claims or demands of all Persons (other than the Security
        Trustee) claiming the Collateral or any interest therein. As of the date
        of
        execution of this Agreement, no effective financing statement or other similar
        document used to perfect and preserve a security interest under the laws
        of any
        jurisdiction (a "Financing Statement") covering all or any part of the
        Collateral is on file in any recording office, except such as may have been
        filed in favor of the Security Trustee relating to this Agreement.

      

      Section
        5.
        Disposition
        of Collateral.
        The
        Grantor will not sell, lease or otherwise dispose of, or discount or factor
        with
        or without recourse, any Collateral, except sales of items of Inventory and
        accounts receivable in the ordinary course of business. For clarity, Grantor
        is
        permitted to factor its accounts receivable so long as the same are sold
        in the
        ordinary course of business to a recognized commercial factor for their
        reasonable fair market value. To facilitate such factoring, the Security
        Trustee
        shall permit, and the Financing Statement shall expressly provide, that sales
        of
        accounts receivable at the reasonable fair market value thereof shall
        automatically, without any further act or deed, be released from the Security
        Interest.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      Section
        6.
        Names,
        Offices, Locations.
        The
        Grantor does business solely under its own name and the trade names and styles,
        if any, set forth on Schedule II hereto. Except as noted on said Schedule,
        no
        such trade names or styles and no trademarks or other similar marks owned
        by the
        Grantor are registered with any governmental unit. The chief place of business
        and chief executive office and the office where it keeps its books and records
        concerning the Accounts and General Intangibles and the originals of all
        Chattel
        Paper, Documents and Instruments are located at its address set forth on
        the
        signature page hereof. All items of Equipment and Inventory existing on the
        date
        of this Agreement are located at the places specified on Schedule I hereto.
        The
        Grantor will immediately notify the Security Trustee of any additional state
        in
        which any item of Inventory or Equipment is hereafter located. The Grantor
        will
        from time to time at the request of the Security Trustee provide the Security
        Trustee with current lists as to the locations of the Equipment and Inventory.
        The Grantor will not permit any Inventory, Equipment, Chattel Paper or Documents
        or any records pertaining to Accounts and General Intangibles to be located
        in
        any state or area in which, in the event of such location, a financing statement
        covering such Collateral would be required to be, but has not in fact been,
        filed in order to perfect the Security Interest. The Grantor will not change
        its
        name or the location of its chief place of business and chief executive office
        unless the Security Trustee has been given at least 30 days prior written
        notice
        thereof and the Grantor has executed and delivered to the Security Trustee
        such
        Financing Statements and other instruments required or appropriate to continue
        the perfection of the Security Interest.

      

      Section
        7.
        Rights
        to Payment.
        Except
        as the Grantor may otherwise advise the Security Trustee in writing, each
        Account, Chattel Paper, Document, General Intangible and Instrument constituting
        or evidencing Collateral is (or, in the case of all future Collateral, will
        be
        when arising or issued) the valid, genuine and legally enforceable obligation
        of
        the Account Debtor or other obligor named therein or in the Grantor’s records
        pertaining thereto as being obligated to pay or perform such obligation.
        Without
        the Security Trustee’s prior written consent, the Grantor will not agree to any
        modifications, amendments, subordinations, cancellations or terminations
        of the
        obligations of any such Account Debtors or other obligors except in the ordinary
        course of business (including the issuance of price protection credits, returns
        credits, marketing co-op credits, and similar credits in the normal course
        of
        business) and in amounts not exceeding $200,000 per Account Debtor or other
        obligor in any calendar year. The Grantor will perform and comply in all
        material respects with all its obligations under any items included in the
        Collateral and exercise promptly and diligently its rights
        thereunder.

      

      Section
        8.
        Further
        Assurances; Attorney-in-Fact.
        

      

      8
        (a)
        The
        Grantor agrees that from time to time, at its expense, it will promptly execute
        and deliver all further instruments and documents, and take all further action,
        that may be necessary or that the Security Trustee may reasonably request,
        in
        order to perfect and protect the Security Interest granted or purported to
        be
        granted hereby or to enable the Security Trustee to exercise and enforce
        its
        rights and remedies hereunder with respect to any Collateral (but any failure
        to
        request or assure that the Grantor execute and deliver such instrument or
        documents or to take such action shall not affect or impair the validity,
        sufficiency or enforceability of this Agreement and the Security Interest,
        regardless of whether any such item was or was not executed and delivered
        or
        action taken in a similar context or on a prior occasion). Without limiting
        the
        generality of the foregoing, the Grantor will, promptly and from time to
        time at
        the request of the Security Trustee: (i) mark, or permit the Security Trustee
        to
        mark, conspicuously its books, records, and accounts showing or dealing with
        the
        Collateral, and each item of Chattel Paper included in the Collateral, with
        a
        legend, in form and substance satisfactory to the Security Trustee, indicating
        that each such item of Collateral and each such item of Chattel Paper is
        subject
        to the Security Interest granted hereby; (ii) deliver and pledge to the Security
        Trustee, all 

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          
    Instruments
          and Documents, duly indorsed or accompanied by duly executed instruments
          of
          transfer or assignment, with full recourse to the Grantor, all in form
          and
          substance satisfactory to the Security Trustee; (iii) execute and file
          such
          Financing Statements or continuation statements in respect thereof, or
          amendments thereto, and such other instruments or notices (including fixture
          filings with any necessary legal descriptions as to any goods included
          in the
          Collateral which the Security Trustee determines might be deemed to be
          fixtures,
          and instruments and notices with respect to vehicle titles), as may be
          necessary
          or desirable, or as the Security Trustee may request, in order to perfect,
          preserve, and enhance the Security Interest granted or purported to be
          granted
          hereby; and (iv) obtain waivers, in form satisfactory to the Security Trustee,
          of any claim to any Collateral from any landlords or mortgagees of any
          property
          where any Inventory or Equipment is located.

      

      

      8
        (b)
        The
        Grantor hereby authorizes the Security Trustee to file one or more Financing
        Statements or continuation statements in respect thereof, and amendments
        thereto, relating to all or any part of the Collateral without the signature
        of
        the Grantor where permitted by law. A photocopy or other reproduction of
        this
        Agreement or any Financing Statement covering the Collateral or any part
        thereof
        shall be sufficient as a Financing Statement where permitted by
        law.

      

      8
        (c)
        The
        Grantor will furnish to the Security Trustee from time to time statements
        and
        schedules further identifying and describing the Collateral and such other
        reports in connection with the Collateral as the Security Trustee may reasonably
        request, all in reasonable detail and in form and substance reasonably
        satisfactory to the Security Trustee.

      

      8
        (d)
        In
        furtherance, and not in limitation, of the other rights, powers and remedies
        granted to the Security Trustee in this Agreement, the Grantor hereby appoints
        the Security Trustee the Grantor’s attorney-in-fact, with full authority in the
        place and stead of Grantor and in the name of Grantor or otherwise, from
        time to
        time in the Security Trustee’s good faith discretion, to take any action
        (including the right to collect on any Collateral) and to execute any instrument
        that the Security Trustee may reasonably believe is necessary or advisable
        to
        accomplish the purposes of this Agreement, in a manner consistent with the
        terms
        hereof.

      

      Section
        9.
        Taxes
        and Claims.
        The
        Grantor will promptly pay all taxes and other governmental charges levied
        or
        assessed upon or against any Collateral or upon or against the creation,
        perfection or continuance of the Security Interest, as well as all other
        claims
        of any kind (including claims for labor, material and supplies) against or
        with
        respect to the Collateral, except to the extent (a) such taxes, charges or
        claims are being contested in good faith by appropriate proceedings, (b)
        such
        proceedings do not involve any material danger of the sale, forfeiture or
        loss
        of any of the Collateral or any interest therein and (c) such taxes, charges
        or
        claims are adequately reserved against on the Grantor’s books in accordance with
        generally accepted accounting principles.

      

      Section
        10.
        Books
        and Records.
        The
        Grantor will keep and maintain at its own cost and expense satisfactory and
        complete records of the Collateral, including a record of all payments received
        and credits granted with respect to all Accounts , Chattel Paper and other
        items
        included in the Collateral. 

      

      Section
        11.
        Inspection,
        Reports, Verifications.
        The
        Grantor will at all reasonable times permit the Security Trustee or its
        representatives to examine or inspect any Collateral, any evidence of Collateral
        and the Grantor’s books and records concerning the Collateral, wherever located.
        The Grantor will from time to time when requested by the Security Trustee
        furnish to the Security Trustee a report on its Accounts, Chattel Paper,
        General
        Intangibles and Instruments, naming the Account Debtors or other obligors
        thereon, the amount due and the aging thereof. The Security Trustee or its
        designee, upon 5 days prior written notice to the Grantor, is authorized
        to
        contact Account Debtors and other Persons obligated on any such Collateral
        from
        time to time to verify the existence, amount and/or terms of such
        Collateral.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      Section
        12.
        Notice
        of Loss.
        The
        Grantor will promptly notify the Security Trustee of any loss of or material
        damage to any material item of Collateral or of any substantial adverse change,
        known to Grantor, in any material item of Collateral or the prospect of payment
        or performance thereof. 

      

      Section
        13.
        Insurance.
        The
        Grantor will keep the Inventory and Equipment insured against “all risks” for
        the full replacement cost thereof subject to a deductible not exceeding US$1,000
        and with an insurance company or companies satisfactory to the Security Trustee,
        the policies to protect the Security Trustee as its interests may appear,
        with
        such policies or certificates with respect thereto to be delivered to the
        Security Trustee at its request. Each such policy or the certificate with
        respect thereto shall provide that such policy shall not be canceled or allowed
        to lapse unless at least 30 days prior written notice is given to the Security
        Trustee.

      

      Section
        14.
        Lawful
        Use; Fair Labor Standards Act.
        The
        Grantor will use and keep the Collateral, and will require that others use
        and
        keep the Collateral, only for lawful purposes, without violation of any federal,
        state or local law, statute or ordinance. All Inventory of the Grantor as
        of the
        date of this Agreement that was produced by the Grantor or with respect to
        which
        the Grantor performed any manufacturing or assembly process was produced
        by the
        Grantor (or such manufacturing or assembly process was conducted) in compliance
        in all material respects with all requirements of the Fair Labor Standards
        Act,
        and all Inventory produced, manufactured or assembled by the Grantor after
        the
        date of this Agreement will be so produced, manufactured or assembled, as
        the
        case may be. 

      

      Section
        15.
        Action
        by the Security Trustee.
        If the
        Grantor at any time fails to perform or observe any of the foregoing agreements,
        the Security Trustee shall have (and the Grantor hereby grants to the Security
        Trustee) the right, power and authority (but not the duty) to perform or
        observe
        such agreement on behalf and in the name, place and stead of the Grantor
        (or, at
        the Security Trustee’s option, in the Security Trustee’s name) and to take any
        and all other actions which the Security Trustee may reasonably deem necessary
        to cure or correct such failure (including, without limitation, the payment
        of
        taxes, the satisfaction of Liens, the procurement and maintenance of insurance,
        the execution of assignments, security agreements and Financing Statements,
        and
        the indorsement of instruments); and the Grantor shall thereupon pay to the
        Security Trustee on demand the amount of all monies expended and all costs
        and
        expenses (including reasonable attorneys’ fees and legal expenses) incurred by
        the Security Trustee in connection with or as a result of the performance
        or
        observance of such agreements or the taking of such action by the Security
        Trustee, together with interest thereon from the date expended or incurred
        at
        the highest lawful rate then applicable to any of the Obligations, and all
        such
        monies expended, costs and expenses and interest thereon shall be part of
        the
        Obligations secured by the Security Interest.

      

      Section
        16.
        Insurance
        Claims.
        As
        additional security for the payment and performance of the Obligations, the
        Grantor hereby assigns to the Security Trustee any and all monies (including
        proceeds of insurance and refunds of unearned premiums) due or to become
        due
        under, and all other rights of the Grantor with respect to, any and all policies
        of insurance now or at any time hereafter covering the Collateral or any
        evidence thereof or any business records or valuable papers pertaining thereto.
        At any time, whether before or after the occurrence of any Event of Default,
        the
        Security Trustee may (but need not), in the Security Trustee’s name or in
        Grantor’s name, execute and deliver proofs of claim, receive all such monies,
        indorse checks and other instruments representing payment of such monies,
        and
        adjust, litigate, compromise or release any claim against the issuer of any
        such
        policy. Notwithstanding any of the foregoing, so long as no Event of Default
        exists the Grantor shall be entitled to all insurance proceeds with respect
        to
        Equipment or Inventory provided that such proceeds are applied to the cost
        of
        replacement Equipment or Inventory. 

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      Section
        17.
        The
        Security Trustee’s Duties.
        The
        powers conferred on the Security Trustee hereunder are solely to protect
        its
        interest and the interests of the Debentureholders in the Collateral and
        shall
        not impose any duty upon it to exercise any such powers. Except
        for (a) the safe custody of any Collateral in its possession, (b) the accounting
        for monies actually received by it hereunder, (c) filing the Financing
        Statement(s) contemplated in Section 8(b) hereof, (d) subordinating its
        interest in accounts receivable as contemplated in Section 4 and (e) any
        duty
        expressly imposed on the Security Trustee by applicable Laws with respect
        to any
        Collateral that has not been waived by the Grantor hereunder, the Security
        Trustee shall have no duty with respect to any Collateral and no implied
        duties
        or obligations shall be read into this Agreement against the Security Trustee.
        Without limiting the generality of the foregoing, the Security
        Trustee shall have no duty, as to any Collateral, for (i) ascertaining or
        taking
        action with respect to calls, conversions, exchanges, maturities, tenders
        or
        other matters relative to any Collateral, (ii) taking
        any necessary steps to preserve rights against any parties with respect to
        any
        Collateral or (iii) taking any action to protect against any diminution in
        value
        of the Collateral, whether
        or not the Security Trustee has or is deemed to have knowledge of such matters,
        or as to the taking of any necessary steps to preserve rights against any
        Persons or any other rights pertaining to any Collateral
        but, in
        each case, the Security Trustee may do so and all expenses reasonably incurred
        in connection therewith shall be part of the Obligations
        The
        Security Trustee shall be deemed to have exercised reasonable care in the
        safekeeping of any Collateral in its possession if such Collateral is accorded
        treatment substantially equal to the safekeeping which the Security Trustee
        accords its own property of like kind. The Security Trustee will take action
        in
        the nature of exchanges, conversions, redemptions, tenders and the like
        requested in writing by the Grantor with respect to the Collateral in the
        Security Trustee’s possession if the Security Trustee in its reasonable judgment
        determines that such action will not impair the Security Interest or the
        value
        of the Collateral, but a failure of the Security Trustee to comply with any
        such
        request shall not of itself be deemed a failure to exercise reasonable care.
        

      

      Section
        18.
        Default.
        Each of
        the events described as an event of default under Section 7.1 of the Indenture
        shall be an “Event of Default” under this Agreement. 

      

      Section
        19.
        Remedies
        on Default.
        Without
        limiting its rights and remedies as Debenture Trustee under Article 7 of
        the
        Indenture, upon the occurrence of an Event of Default and at any time
        thereafter: 

      

      19
        (a)
        The
        Security Trustee may exercise and enforce any and all rights and remedies
        available upon default to a secured party under the Uniform Commercial
        Code.

      

      19
        (b)
        The
        Security Trustee shall have the right to enter upon and into and take possession
        of all or such part or parts of the properties of the Grantor, including
        lands,
        plants, buildings, Equipment, Inventory and other property as may be necessary
        or appropriate in the judgment of the Security Trustee to permit or enable
        the
        Security Trustee to manufacture, produce, process, store or sell or complete
        the
        manufacture, production, processing, storing or sale of all or any part of
        the
        Collateral, as the Security Trustee may elect, and to use and operate said
        properties for said purposes and for such length of time as the Security
        Trustee
        may deem necessary or appropriate for said purposes without the payment of
        any
        compensation to Grantor therefor. The Security Trustee may require the Grantor
        to, and the Grantor hereby agrees that it will, at its expense and upon request
        of the Security Trustee forthwith, assemble all or part of the Collateral
        as
        directed by the Security Trustee and make it available to the Security Trustee
        at a place or places to be designated by the Security Trustee. 

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      19
        (c)
        Any
        sale of Collateral may be in one or more parcels at public or private sale,
        at
        any of the Security Trustee’s offices or elsewhere, for cash, on credit, or for
        future delivery, and upon such other terms as the Security Trustee may
        reasonably believe are commercially reasonable. The Security Trustee shall
        not
        be obligated to make any sale of Collateral regardless of notice of sale
        having
        been given, and the Security Trustee may adjourn any public or private sale
        from
        time to time by announcement made at the time and place fixed therefor, and
        such
        sale may, without further notice, be made at the time and place to which
        it was
        so adjourned. 

      

      19
        (d)
        The
        Security Trustee is hereby granted a license or other right to use, without
        charge, all of the Grantor’s property, including, without limitation, all of the
        Grantor’s labels, trademarks, copyrights, patents and advertising matter, or any
        property of a similar nature, as it pertains to the Collateral, in completing
        production of, advertising for sale and selling any Collateral, and the
        Grantor’s rights under all licenses and all franchise agreements shall inure to
        the Security Trustee’s benefit until the Obligations are paid in
        full.

      

      19
        (e)
        If
        notice to the Grantor of any intended disposition of Collateral or any other
        intended action is required by law in a particular instance, such notice
        shall
        be deemed commercially reasonable if given in the manner specified for the
        giving of notice in Section 24
        hereof
        at least ten calendar days prior to the date of intended disposition or other
        action, and the Security Trustee may exercise or enforce any and all other
        rights or remedies available by law or agreement against the Collateral,
        against
        the Grantor, or against any other Person or property.

      

      Section
        20.
        Remedies
        as to Certain Rights to Payment.
        Upon
        the occurrence of an Event of Default and at any time thereafter the Security
        Trustee may notify any Account Debtor or other Person obligated on any Accounts
        or other Collateral that the same have been assigned or transferred to the
        Security Trustee and that the same should be performed as requested by, or
        paid
        directly to, the Security Trustee, as the case may be. The Grantor shall
        join in
        giving such notice, if the Security Trustee so requests. The Security Trustee
        may, in the Security Trustee’s name or in the Grantor’s name, demand, sue for,
        collect or receive any money or property at any time payable or receivable
        on
        account of, or securing, any such Collateral or grant any extension to, make
        any
        compromise or settlement with or otherwise agree to waive, modify, amend
        or
        change the obligation of any such Account Debtor or other Person. If any
        payments on any such Collateral are received by the Grantor after an Event
        of
        Default has occurred, such payments shall be held in trust by the Grantor
        as the
        property of the Security Trustee and shall not be commingled with any funds
        or
        property of the Grantor and shall be forthwith remitted to the Security Trustee
        for application on the Obligations.

      

      Section
        21.
        Application
        of Proceeds.
        Without
        limiting its rights and remedies as Debenture Trustee under Article 7 of
        the
        Indenture, all cash proceeds received by the Security Trustee in respect
        of any
        sale of, collection from, or other realization upon all or any part of the
        Collateral may, in the discretion of the Security Trustee, be held by the
        Security Trustee as collateral for, or then or at any time thereafter be
        applied
        in whole or in part by the Security Trustee against, all or any part of the
        Obligations (including, without limitation, any expenses of the Security
        Trustee
        payable pursuant to Section 22
        hereof).

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      Section
        22.
        Costs
        and Expenses; Indemnity.
        The
        Grantor will pay or reimburse the Security Trustee on demand for all
        out-of-pocket expenses (including in each case all filing and recording fees
        and
        taxes and all reasonable fees and expenses of counsel and of any experts
        and
        agents) incurred by the Security Trustee in connection with the creation,
        perfection, protection, satisfaction, foreclosure or enforcement of the Security
        Interest and the preparation, administration, continuance, amendment or
        enforcement of this Agreement, and all such costs and expenses shall be part
        of
        the Obligations secured by the Security Interest. The Grantor shall indemnify
        and hold the Security Trustee harmless from and against any and all claims,
        losses and liabilities (including reasonable attorneys’ fees) growing out of or
        resulting from this Agreement and the Security Interest hereby created
        (including enforcement of this Agreement) or the Security Trustee’s actions
        pursuant hereto, except claims, losses or liabilities resulting from the
        Security Trustee’s gross negligence or willful misconduct as determined by a
        final judgment of a court of competent jurisdiction. Any liability of the
        Grantor to indemnify and hold the Security Trustee harmless pursuant to the
        preceding sentence shall be part of the Obligations secured by the Security
        Interest. The obligations of the Grantor under this Section shall survive
        any
        termination of this Agreement.

      

      Section
        23.
        Waivers;
        Remedies; Marshalling.
        This
        Agreement can be waived, modified, amended, terminated or discharged, and
        the
        Security Interest can be released, only explicitly in a writing signed by
        the
        Security Trustee. A waiver so signed shall be effective only in the specific
        instance and for the specific purpose given. Mere delay or failure to act
        shall
        not preclude the exercise or enforcement of any rights and remedies available
        to
        the Security Trustee. All rights and remedies of the Security Trustee shall
        be
        cumulative and may be exercised singly in any order or sequence, or
        concurrently, at the Security Trustee’s option, and the exercise or enforcement
        of any such right or remedy shall neither be a condition to nor bar the exercise
        or enforcement of any other. The Grantor hereby waives all requirements of
        law,
        if any, relating to the marshalling of assets which would be applicable in
        connection with the enforcement by the Security Trustee of its remedies
        hereunder, absent this waiver. 

      

      Section
        24.
        Notices.
        Any
        notice or other communication to any party in connection with this Agreement
        shall be in writing and shall be sent by manual delivery, telegram, telex,
        facsimile transmission, overnight courier or United States mail (postage
        prepaid) addressed to such party at the address specified on the signature
        page
        hereof, or at such other address as such party shall have specified to the
        other
        party hereto in writing. All periods of notice shall be measured from the
        date
        of delivery thereof if manually delivered, from the date of sending thereof
        if
        sent by telegram, telex or facsimile transmission, from the first business
        day
        after the date of sending if sent by overnight courier, or from four days
        after
        the date of mailing if mailed.

      

      Section
        25.
        Grantor
        Acknowledgments.
        The
        Grantor hereby acknowledges that (a) it has been advised by counsel in the
        negotiation, execution and delivery of this Agreement, (b) the Security Trustee
        has no fiduciary relationship to the Grantor, the relationship being solely
        that
        of debtor and creditor, and (c) no joint venture exists between the Grantor
        and
        the Security Trustee.

      

      Section
        26.
        Continuing
        Security Interest.
        This
        Agreement shall (a) create a continuing security interest in the Collateral
        and
        shall remain in full force and effect until payment in full of the Obligations
        and the expiration of the obligations, if any, of the Security Trustee to
        extend
        credit accommodations to the Grantor, (b) be binding upon the Grantor, its
        successors and assigns, and (c) inure to the benefit of, and be enforceable
        by,
        the Security Trustee and its successors, transferees, and assigns. 

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      Section
        27.
        Termination
        of Security Interest.
        Upon
        payment in full of the Obligations and the expiration of any obligation of
        the
        Security Trustee to extend credit accommodations to the Grantor, the Security
        Interest granted hereby shall terminate. Upon any such termination, the Security
        Trustee will return to the Grantor such of the Collateral then in the possession
        of the Security Trustee as shall not have been sold or otherwise applied
        pursuant to the terms hereof and execute and deliver to the Grantor such
        documents as the Grantor shall reasonably request to evidence such termination.
        Any reversion or return of Collateral upon termination of this Agreement
        and any
        instruments of transfer or termination shall be at the expense of the Grantor
        and shall be without warranty by, or recourse on, the Security Trustee. As
        used
        in this Section, “Grantor” includes any assigns of Grantor, any Person holding a
        subordinate security interest in any of the Collateral or whoever else may
        be
        lawfully entitled to any part of the Collateral.

      

      Section
        28.
        Governing
        Law and Construction.
        THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT SHALL BE
        GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO CONFLICT
        OF LAWS PRINCIPLES THEREOF, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION
        OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF
        ANY
        PARTICULAR COLLATERAL ARE MANDATORILY GOVERNED BY THE LAWS OF A JURISDICTION
        OTHER THAN THE STATE OF NEW YORK.
        Whenever
        possible, each provision of this Agreement and any other statement, instrument
        or transaction contemplated hereby or relating hereto shall be interpreted
        in
        such manner as to be effective and valid under such applicable law, but,
        if any
        provision of this Agreement or any other statement, instrument or transaction
        contemplated hereby or relating hereto shall be held to be prohibited or
        invalid
        under such applicable law, such provision shall be ineffective only to the
        extent of such prohibition or invalidity, without invalidating the remainder
        of
        such provision or the remaining provisions of this Agreement or any other
        statement, instrument or transaction contemplated hereby or relating
        hereto.

      

         Section
        29.
        Consent
        to Jurisdiction.
        AT THE OPTION OF THE SECURED PARTY, THIS AGREEMENT MAY BE ENFORCED IN ANY
        FEDERAL COURT OR NEW YORK STATE COURT SITTING IN NEW YORK CITY, NEW YORK;
        AND
        THE GRANTOR CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND
        WAIVES
        ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE
        GRANTOR COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT
        OR
        CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED
        BY
        THIS AGREEMENT, THE SECURED PARTY AT ITS OPTION SHALL BE ENTITLED TO HAVE
        THE
        CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED,
        OR IF
        SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE
        DISMISSED WITHOUT PREJUDICE.

      

      Section
        30.
        Waiver
        of Notice and Hearing.
        THE GRANTOR HEREBY WAIVES ALL RIGHTS TO A JUDICIAL HEARING OF ANY KIND PRIOR
        TO
        THE EXERCISE BY THE SECURED PARTY OF ITS RIGHTS TO POSSESSION OF THE COLLATERAL
        WITHOUT JUDICIAL PROCESS OR OF ITS RIGHTS TO REPLEVY, ATTACH, OR LEVY UPON
        THE
        COLLATERAL WITHOUT PRIOR NOTICE OR HEARING. THE GRANTOR ACKNOWLEDGES THAT
        IT HAS
        BEEN ADVISED BY COUNSEL OF ITS CHOICE WITH RESPECT TO THIS PROVISION AND
        THIS
        AGREEMENT.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      Section
        31. Waiver
        of Jury Trial.
        EACH OF THE GRANTOR AND THE SECURED PARTY, BY ITS ACCEPTANCE OF THIS AGREEMENT,
        IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
        ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
        HEREBY.

      

      Section
        32.
        Counterparts.
        This
        Agreement may be executed in any number of counterparts, each of which when
        so
        executed and delivered shall be deemed an original, but all such counterparts
        together shall constitute but one and the same instrument.

      

      Section
        33.
        General.
        All
        representations and warranties contained in this Agreement or in any other
        agreement between the Grantor and the Security Trustee shall survive the
        execution, delivery and performance of this Agreement and the creation and
        payment of the Obligations. The Grantor waives notice of the acceptance of
        this
        Agreement by the Security Trustee. Captions in this Agreement are for reference
        and convenience only and shall not affect the interpretation or meaning of
        any
        provision of this Agreement.

      

      IN
        WITNESS WHEREOF, the Grantor has caused this Agreement to be duly executed
        and
        delivered by its officer thereunto duly authorized as of the date first above
        written.

      

      RED
        MILE ENTERTAINMENT, INC. 

      

      By
        ___________________________ 

      

      Title
        __________________________ 

      Address
        for Grantor:

      

      4000
        Bridgeway, Suite 101, 

      Sausalito,
        California 94965

      Fax
        

      

      Grantor’s
        Tax ID # 20-4441647

      

      

      Address
        for the Security Trustee:

      Olympia
        Trust Company

      2300,
        125
        - 9th
        Avenue
        S.E.

      Calgary,
        Alberta T2G OP6

      Fax
        (403)
        265-1455

      

      

      
        
          
            

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
            

          

        

      

      

      SCHEDULE
        I 

      to

      Security
        Agreement

       

      

      Locations
        of Equipment and Inventory as of September 30, 2006:

      

      Raw
        Materials: $53,789.79 at warehouse of Lixivian Corporation in
        Minnesota;

      Finished
        Goods: $15,899.13 at warehouse of Lixivian Corporation in
        Minnesota;

      Raw
        Materials and Finished Goods: $40,000 at warehouse of Zomax Corp. in
        Minnesota.

      

      

      Lixivian
        Corporation is a third party manufacturer of PC Games; Their offices are
        located
        at the following:

      

      153
        East
        Lake Street

      Wayzata,
        MN 55391

      

      Zomax
        Corp. is a third party manufacturer of PC Games; Their offices are located
        at
        the following:

      

      5353
        Nathan Lane

      Plymouth,
        MN 55442

      

      

      

      

      

      

      

      

      

      
        
          
            

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
            

          

        

      

      

      SCHEDULE
        II 

      to

      Security
        Agreement

      

      

      Trade
        Names and Trade Styles

      

      

      

      Red
        Mile’s sole registered trademark is the Red Mile Entertainment, Inc. name.

      

      

      

      

      
        
          
            

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
            

          

        

      

      

      (Suggested
        Exhibit for Financing Statement.

      NOT
        PART OF THE SECURITY AGREEMENT.)

      

      EXHIBIT
        A

      TO
        FINANCING STATEMENT

      

      

      Debtor:
          Red
        Mile
        Entertainment, Inc.

      4000
        Bridgeway, Suite 101, 

      Sausalito,
        California 94965

      

      Security
        Trustee: Olympia
        Trust Company

      2300,
        125
        - 9th
        Avenue
        S.E.

      Calgary,
        Alberta T2G OP6

       

      

      

      This
        Financing Statement covers the following types (or items) of
        property:

      

      All
        of
        the Debtor’s right, title, and interest in and to the following, whether now or
        hereafter owned, existing, arising or acquired and wherever
        located:

      

      All
        Accounts

      

      All
        Chattel Paper

      

      All
        Documents

      

      All
        Equipment

      

      All
        General Intangibles

      

      All
        Instruments

      

      All
        Inventory

      

      To
        the
        extent not otherwise included in the foregoing, (i) all other rights to the
        payment of money, including rents and other sums payable to the Debtor under
        leases, rental agreements and other Chattel Paper and insurance proceeds;
        (ii)
        all books, correspondence, credit files, records, invoices, bills of lading,
        and
        other documents relating to any of the foregoing, including, without limitation,
        all tapes, cards, disks, computer software, computer runs, and other papers
        and
        documents in the possession or control of the Debtor or any computer bureau
        from
        time to time acting for the Debtor; (iii) all rights in, to and under all
        policies insuring the life of any officer, director, stockholder or employee
        of
        the Debtor, the proceeds of which are payable to the Debtor; and (iv) all
        accessions and additions to, parts and appurtenances of, substitutions for
        and
        replacements of any of the foregoing

      

      To
        the
        extent not otherwise included, all proceeds and products of any and all of
        the
        foregoing.

      

      Debtor
        is
        permitted to factor its accounts receivable so long as the same are sold
        in the
        ordinary course of business at the fair market value thereof. Accounts
        receivable factored as aforesaid shall automatically, without any further
        act or
        deed, be released from the security interest evidenced by this financing
        statement.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      Debtor
        is
        permitted to grant to a commercial bank, financial institution or other lenders
        a security interest in its accounts receivable and the Secured Party’s security
        interest in such accounts receivable shall be subordinate to such creditor’s
        security interest in such accounts receivable.

      

      DEFINED
        TERMS

      

      As
        used
        in this Financing Statement, the following terms shall have the meanings
        indicated:

      

      “Account”
shall
        mean the rights of the Debtor to payment for goods sold or leased or for
        services rendered which is not evidenced by an Instrument or Chattel Paper,
        whether or not such right has been earned by performance, all guaranties
        and
        security therefor, and all interests in the goods the sale or lease of which
        gave rise thereto, including the right to stop such goods in
        transit.

      

      “Chattel
        Paper”
shall
        mean a writing or writings which evidence both a monetary obligation and
        a
        security interest in or lease of specific goods; when a transaction is evidenced
        by both a security agreement or a lease and by an Instrument or a series
        of
        Instruments, the group of writings taken together constitutes Chattel
        Paper.

      

      “Document”
shall
        mean any bill of lading, dock warrant, dock receipt, warehouse receipt or
        order
        for the delivery of goods, together with any other document or receipt which
        in
        the regular course of business or financing is treated as adequately evidencing
        that the Person in possession of it is entitled to receive, hold and dispose
        of
        the document and the goods it covers.

      

      “Equipment”
shall
        mean all machinery, equipment, furniture, furnishings and fixtures, including
        all accessions, accessories and attachments thereto, and any guaranties,
        warranties, indemnities and other agreements of manufacturers, vendors and
        others with respect to such Equipment.

      

      “General
        Intangibles”
shall
        mean any personal property (other than goods, Accounts, Chattel Paper,
        Documents, Instruments and money) including choses in action, causes of action,
        contract rights, corporate and other business records, inventions, designs,
        patents, patent applications, service marks, trademarks, tradenames, trade
        secrets, engineering drawings, good will, registrations, copyrights, licenses,
        franchises, customer lists, tax refund claims, royalties, licensing and product
        rights, rights to the retrieval from third parties of electronically processed
        and recorded data and all rights to payment resulting from an order of any
        court.

      

      “Instrument”
shall
        mean a draft, check, certificate of deposit, note, bill of exchange, security
        or
        any other writing which evidences a right to the payment of money and is
        not
        itself a security agreement or lease and is of a type which is transferred
        in
        the ordinary course of business by delivery with any necessary endorsement
        or
        assignment.

      

      “Inventory”
shall
        mean any and all goods owned or held by or for the account of the Debtor
        for
        sale or lease, or for furnishing under a contract of service, or as raw
        materials, work in process, materials incorporated in or consumed in the
        production of any of the foregoing and supplies, in each case wherever the
        same
        shall be located, whether in transit, on consignment, in retail outlets,
        warehouses, terminals or otherwise, and all property the sale, lease or other
        disposition of which has given rise to an Account and which has been returned
        to
        the Debtor or repossessed by the Debtor or stopped in transit.4.3 Agency Agreement

    AGENCY
      AGREEMENT

     

    

     

    Effective
      August 23,
      2006

     

    Red
      Mile Entertainment, Inc.

    4000
      Bridgeway, Suite 101

    Sausalito,
      California 95965

     

    Attention: Chester
      P. Aldridge

     

    Dear
      Sirs:

     

    Re: Issue
      and Sale of Convertible Debentures 

     

    J.
      F.
      Mackie & Company Ltd. (the “Agent”)
      understands that Red Mile Entertainment Inc. (the “Corporation”)
      proposes to issue and sell a minimum of US$5 million and a maximum of up to
      US$10 million principal amount senior secured convertible debentures (the
      "Convertible
      Debentures")
      of the
      Corporation (the “Offering”).
      Each
      Convertible Debenture will have a subscription price of US$1,000 and will be
      issued pursuant to the terms of an indenture (the "Indenture")
      to be
      entered into between the Corporation and Corporate Stock Transfer (the
      "Trustee") to
      be
      dated as of the Closing Date (as hereinafter defined). The Agent further
      understands that the sale of the Convertible Debentures is to be effected in
      reliance upon exemptions from the prospectus and registration requirements
      of
      the securities laws of the provinces of British Columbia, Alberta, Saskatchewan,
      Manitoba and Ontario and certain international jurisdictions (the
      "Selling
      Jurisdictions").

     

    Upon
      and
      subject to the terms and conditions hereof, the Agent agrees to act as, and
      the
      Corporation appoints the Agent as, the sole and exclusive agent of the
      Corporation to offer for sale on the Closing Date on a private placement basis
      the Convertible Debentures in the Selling Jurisdictions and to use its best
      efforts to secure subscriptions therefor, provided that the Agent shall be
      under
      no obligation to purchase any of such Convertible Debentures as principal.
      The
      Agent shall be entitled in connection with the offering and sale of the
      Convertible Debentures to retain as sub-agents other registered securities
      dealers and may receive (for delivery to the Corporation at the Closing Time)
      subscriptions for Convertible Debentures from other registered securities
      dealers. The fee payable to such sub-agents shall be for the account of the
      Agent.

     

    In
      consideration for its services hereunder, the Agent shall be entitled to the
      commission and expenses provided for in sections 8 and 9, which shall be payable
      or issued, as the case may be, at the Closing Time. For greater certainty,
      except as provided for in sections 8
      and
9,
      the
      services provided by the Agent in connection herewith will not be subject to
      Goods and Services Tax provided for in the Excise
      Tax Act
      (Canada)
      and taxable supplies will be incidental to the exempt financial services
      provided.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

     

    -2-

    
 

    The
      following are the terms and conditions of this Agreement:

     

    	1.  	
            Definitions:

          

     

    In
      this
      Agreement:

     

    	(a)  	
            “Agent”
              means J. F. Mackie & Company Ltd.;

          

     

    	(b)  	
            “Agent's
              counsel”
              means Heenan Blaikie LLP, or such other legal counsel as the Agent,
              with
              the consent of the Corporation, acting reasonably, may
              appoint;

          

     

    	(c)  	
            “Agreement”
              means this agency agreement dated effective
              August 23,
              2006 between the Agent and the
              Corporation;

          

     

    	(d)  	
            “Applicable
              Securities Laws”
              includes, collectively, all securities laws, rules, regulations, notices,
              policies and similar instruments applicable to the Corporation and
              to the
              distribution of securities in accordance with this
              Agreement;

          

     

    	(e)  	
            “associates”
              has the meaning ascribed thereto in the Securities
              Act
              (Alberta); 

          

     

    	(f)  	
            “business
              day”
              means a day which is not Saturday, Sunday or a legal holiday in the
              City
              of Calgary;

          

     

    	(g)  	
            “Canadian
              Selling Jurisdictions”
              means the provinces of British Columbia, Alberta, Saskatchewan, Manitoba
              and Ontario;

          

     

    	(h)  	
            “Closing
              Date”
              means October
              19,
              2006 or such other date or dates as the Agent and the Corporation may
              agree in writing;

          

     

    	(i)  	
            “Closing
              Time”
              means 11:00
              a.m. (Calgary time), or such other time on the Closing Date as the
              Agent
              and the Corporation may agree in writing;

          

     

    	(j)  	
            “Common
              Shares”
              means common shares in the capital of the
              Corporation;

          

     

    	(k)  	
            "Convertible
              Debentures"
              means the senior secured convertible debentures of the Corporation
              issued
              in accordance with the terms of the
              Indenture;

          

     

    	(l)  	
            “Copyrights”
              shall mean all copyrights, and all right, title and interest in all
              copyrights, copyright registrations and applications for copyright
              registration, certificates of copyright and copyrightable subject matter
              throughout the world, all right, title and interest in related
              applications and registrations throughout the world, and all moral
              rights;

          

     

    	(m)  	
            “Corporation”
              means Red Mile Entertainment Inc., a body corporate incorporated pursuant
              to the laws of Delaware;

          

     

    	(n)  	
            “Corporation
              Intellectual Property Rights”
              shall mean all Intellectual Property Rights and Corporation Technology
              used or proposed to be used in, or necessary to, the business of the
              Corporation as currently conducted or as currently reasonably contemplated
              by the Corporation, whether owned or controlled, licenced, or otherwise
              held by or for the benefit of the
              Corporation;

          

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    
       

      -3-

      
 

    

     

    	(o)  	
            “Corporation
              Technology”
              shall mean all Technology used or proposed to be used in, or necessary
              to,
              the business of the Corporation as currently conducted or as currently
              contemplated by the Corporation, whether owned or controlled, licenced
              or
              otherwise held by or for the benefit of the Corporation.
              

          

     

    	(p)  	
            “Corporation's
              counsel”
              means Lehman
              and Eilen LLP,
              or such other legal counsel as the Corporation, with the consent of
              the
              Agent, acting reasonably, may appoint;

          

     

    	(q)  	
            “Debenture
              Trustee”
              means Olympia Trust Company at its Calgary office located at Suite
              2300,
              125 - 9th
              Avenue SE, Calgary, AB, T2G 0P6;

          

     

    	(r)  	
            “Documents”
              means (i) all documents and other information filed by or on behalf
              of the Corporation in compliance with or intended compliance with
              Applicable Securities Laws or mailed to the securityholders of the
              Corporation; and (ii) Form SB-2;

          

     

    	(s)  	
            “Due
              Diligence Sessions”
              has the meaning set forth in subsection 2(c);

          

     

    	(t)  	
            “Financial
              Statements”
              means the financial statements of the Corporation provided by the
              Corporation to the Agent and set out in the Form SB-2 and Form 10-QSB,
              including: 

          

     

    	(i)  	
            the
              audited consolidated balance sheet of the Corporation and its subsidiaries
              as of March 31, 2006 and 2005, and the related consolidated statements
              of
              operations, stockholders’ deficit, and cash flows for the year ended March
              31, 2006 and for the period from December 21, 2004 through March 31,
              2005;
              and

          

     

    	(ii)  	
            the
              unaudited consolidated financial statements of the Corporation for
              period
              ended June 30, 2006;

          

     

    	(u)  	
            “Form
              SB-2”
              means the Form SB-2 of the Corporation filed with the United States
              Securities and Exchange Commission and becoming effective on August
              11,
              2006

          

     

    	(v)  	
            “Form
              10-QSB”
              means the quarterly report filed with the United States Securities
              and
              Exchange Commission for the quarterly period ended June 30,
              2006; 

          

     

    	(w)  	
            “Indemnified
              Persons”
              means each of: (i) the Agent; (ii) agents of the Agent;
              (iii) affiliates of the Agent; and (iv) the directors, officers,
              shareholders, partners and employees of the Agent, agents of the Agent
              and
              affiliates of the Agent;

          

     

    	(x)  	
            "Indenture"
              shall have the meaning ascribed thereto in the first paragraph of this
              Agreement;

          

     

    	(y)  	
            “Intellectual
              Property Rights”
              means (i) any trademarks, trade mark registrations, trade mark
              applications, trade dress and logos, trade names, domain names, business
              names, corporate names, website names and world wide web addresses,
              business names, brand names, service marks, computer software, computer
              programs, Copyrights, including any performing, author or moral rights,
              designs, integrated circuit topographies, inventions, Patents, franchises,
              formulae, processes, know-how, Technology and related goodwill, (ii)
              any
              applications, registrations, issued Patents, continuations in part,
              divisional applications or analogous rights or licence rights therefor,
              (iii) proprietary and non-public business information, including
              inventions (whether patentable or not), invention disclosures,
              improvements, discoveries, trade secrets, know-how, methods, processes,
              schematics and any documentation relating thereto, and (iv) other
              intellectual or industrial property;

          

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
       

      -4-

       

    

     

    	(z)  	
            “Offering”
              means the offering of a minimum of US$5,000,000 and a maximum of
              US$10,000,000 principal amount Convertible Debentures;
              

          

     

    	(aa)  	
            “Patents”
              shall mean all patent rights and all right, title and interest in and
              to
              all letters patent or equivalent rights and applications including
              any
              reissue, extension, division, continuation, or continuation in part
              applications throughout the world and any patents issuing with respect
              to
              such applications. 

          

     

    	(bb)  	
            “Person”
              means a natural person, partnership, limited liability partnership,
              corporation, joint stock company, trust, unincorporated association,
              joint
              venture or other entity;

          

     

    	(cc)  	
            “Securities
              Commissions”
              means the securities commissions and regulatory authorities in each
              of the
              Selling Jurisdictions and the United States Securities and Exchange
              Commission and regulatory authorities in the individual states of the
              United States;

          

     

    	(dd)  	
            "Selling
              Jurisdictions"
              shall have the meaning ascribed thereto in the first paragraph of this
              Agreement;

          

     

    	(ee)  	
            "Series
              A Preferred Shares"
              means Series A Preferred Shares in the capital of the
              Corporation;

          

     

    	(ff)  	
            "Series
              B Preferred Shares"
              means Series B Preferred Shares in the capital of the
              Corporation;

          

     

    	(gg)  	
            "Series
              C Preferred Shares"
              means Series C Preferred Shares in the capital of the
              Corporation;

          

     

    	(hh)  	
            “Subscriber”
              means any person who subscribes for Convertible Debentures and whose
              Subscription Agreement is accepted by the Corporation, and “Subscribers”
              means, collectively, all such persons;

          

     

    	(ii)  	
            “Subscription
              Agreement”
              means a subscription agreement to be entered into between the Corporation
              and Subscribers including any amendments or addendums
              thereto;

          

     

    	(jj)  	
            “Subscription
              Proceeds”
              means the aggregate gross proceeds received in respect of the sale
              of
              Convertible Debentures pursuant to the
              Offering;

          

     

    	(kk)  	
            “Subsidiary”
              means a subsidiary of the Corporation within the meaning of the
              Business
              Corporations Act (Alberta)
              and “Subsidiaries”
              means all of them; 

          

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
       

      -5-

      
 

    

     

    	(ll)  	
            “Technology”
              shall mean any algorithms, computer software (in source code and object
              code form), documentation, data and data bases, inventions and discoveries
              (whether or not patented or patentable), ideas, concepts, techniques,
              know-how, processes, methods, applications, know-how, content, technical
              information, engineering, production and other designs, drawings,
              schematics, specifications, formulas and all other technology or
              information existing anywhere in the world;

          

     

    	(mm)  	
            “Third
              Party Intellectual Property Rights”
              shall mean the Intellectual Property Rights and Technology of Persons
              other than the Corporation that are used in or necessary to the business
              of the Corporation as presently conducted or as contemplated to be
              conducted; 

          

     

    	(nn)  	
            "Underlying
              Securities"
              means the Common Shares underlying the Convertible Debentures;
              

          

     

    In
      this
      agreement, “misrepresentation”,
      “material
      change”
and
      “material
      fact”
shall
      have the meanings ascribed thereto under the Applicable Securities Laws of
      the
      Province of Alberta; “distribution”
means
      “distribution”
or
      “distribution
      to the public”,
      as the
      case may be, as defined under the Applicable Securities Laws of the Province
      of
      Alberta; and “distribute”
has
      a
      corresponding meaning.

     

    In
      this
      agreement, “to
      the best of the knowledge, information and belief of”
or
      “to
      the best of its knowledge, information and belief”
means,
      unless otherwise expressly stated, a statement of the declarant's knowledge
      of
      the facts or circumstances to which such phrase related, after having made
      due
      and applicable inquiries and investigations in connection with such facts and
      circumstances; and “to
      the best of the knowledge, information and belief of the
      Corporation”
or
      “to
      the best of the Corporation's knowledge, information and
      belief”
means,
      unless otherwise expressly stated, a statement as to the best knowledge of
      each
      of the directors and senior officers of the Corporation about the facts or
      circumstances to which such phrase related, after having made due and applicable
      inquiries and investigations in connection with such facts and
      circumstances.

     

    	2.  	
            Corporation's
              Covenants as to Creation and
              Qualification

          

     

    The
      Corporation covenants and agrees:

     

    	(a)  	
            that
              the Convertible Debentures will be duly and validly created, authorized
              and issued pursuant to the terms of the Indenture and the Subscription
              Agreements and that the Underlying Securities, if and when issued upon
              the
              conversion of the Convertible Debentures, will be duly and validly
              issued
              as fully paid and non-assessable Common Shares of the
              Corporation;

          

     

    	(b)  	
            that
              the Corporation will: (i) duly, punctually and faithfully perform all
              the obligations to be performed by it hereunder and under the Subscription
              Agreements; and (ii) as soon as reasonably possible, and in any event
              by the Closing Date, execute or procure the execution of all documents
              and
              use its best efforts to take or cause to be taken all steps as may
              be
              necessary or desirable to fulfill, to the satisfaction of Agent's counsel
              and Corporation's counsel, all legal requirements to enable the
              Convertible Debentures to be offered for sale and sold on a private
              placement basis in the Selling Jurisdictions through the Agent by way
              of
              the exemptions under Applicable Securities Laws of the Selling
              Jurisdictions as contemplated hereby; and

          

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
       

      -6-

      
 

    

     

    	(c)  	
            that,
              prior to the Closing Time, the Corporation shall allow the Agent the
              opportunity to conduct required due diligence, including, without limiting
              the generality of the foregoing, due diligence in relation to the
              operations and affairs of the Corporation and provide and cause to
              be
              provided to the Agent and the Agent's counsel reasonable access to
              the
              properties, senior management personnel, and corporate, financial,
              property and other records of the Corporation for the purposes of
              conducting such due diligence reviews. Without limiting the scope of
              the
              due diligence inquiries the Agent may conduct, the Corporation shall
              make
              available its directors and senior management and auditors to answer
              any
              questions which the Agent may have and to participate in one or more
              due
              diligence sessions to be held prior to Closing (collectively, the
              “Due
              Diligence Sessions”).

          

     

    	3.  	
            Corporation's
              Covenants as to Changes

          

     

    The
      Corporation covenants and agrees that:

     

    	(a)  	
            during
              the period commencing with the date hereof and ending on the Closing
              Date,
              the Corporation will promptly inform the Agent of the full particulars
              of
              (i) any material change, (actual, anticipated or threatened) in the
              assets, liabilities (absolute, accrued, contingent or otherwise),
              business, operations, capital or condition (financial or otherwise)
              of the
              Corporation; and (ii) the occurrence of a material fact or event
              which, in any such case is, or may be, of such a nature to render any
              previous disclosure to the Agent untrue, false or misleading in any
              material respect; provided that if there is any reasonable doubt as
              to
              whether a material change, occurrence or event of the nature referred
              to
              in this subsection has occurred, the Corporation shall promptly inform
              the
              Agent of the full particulars of the occurrence giving rise to the
              uncertainty and shall consult with the Agent as to whether the occurrence
              is of such nature;

          

     

    	(b)  	
            during
              the period commencing with the date hereof and ending sixty days after
              the
              Closing Date, the Corporation will promptly inform the Agent of the
              full
              particulars of: (i) any material request or inquiry of any Securities
              Commission for any information relating to the Offering, the distribution
              of the Common Shares, or the Corporation (or any of its directors or
              officers); (ii) the issuance by any Securities Commission or other
              securities commissions or similar regulatory authority or by any other
              competent authority of any order to cease or suspend trading or issuance
              of any securities of the Corporation or of the institution or threat
              of
              institution of any proceedings for that purpose and (iii) the receipt
              by
              the Corporation of any communication from any Securities Commission
              or any
              other securities commission, securities regulatory authority, stock
              exchange or other regulatory authority relating to the Offering;
              and

          

     

    	(c)  	
            during
              the period commencing on the date hereof and ending on the Closing
              Date,
              the Corporation will promptly provide to the Agent, for review by the
              Agent and the Agent's counsel, prior to filing, delivery or issuance:
              (i) any proposed document to be delivered to the shareholders of the
              Corporation; and (ii) any press release relating to the Corporation
              or the Offering.

          

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
       

      -7-

      
 

    

     

    	4.  	
            Corporation's
              Other Covenants

          

     

    The
      Corporation covenants and agrees:

     

    	(a)  	
            as
              to the following with respect to registration of securities of the
              Corporation: 

          

     

    	(i)  	
            Corporation
              Registration.
              At any time following twelve months from the Closing Date, the Subscribers
              shall be entitled to "piggyback" registration rights on all registrations
              of the Corporation or on any demand registrations of any other investor
              subject to the right, however, of the Corporation and its underwriters
              to
              reduce the number of shares proposed to be registered pro rata in view
              of
              market conditions, and subject to complete cutback in the case of the
              Corporation’s initial public offering. If the Subscribers are so limited,
              however, no party shall sell shares in such registration other than
              the
              Corporation or the Subscriber, if any, invoking the demand registration.
              In the event that the Corporation exercises its rights to convert the
              Debentures into Common Shares, no shareholder of the Corporation shall
              be
              granted registration rights pari passu with or senior to those rights
              granted to the Subscribers holding such Common Shares without the consent
              of the holders of 50% such Common Shares.

          

     

    	(ii)  	
            Expenses.
              The Corporation shall bear registration expenses (exclusive of
              underwriting discounts and commissions) of all such demands, piggybacks
              and registrations on Form S-3 (including the expense of a single counsel
              to the selling shareholders, which counsel shall also be counsel to
              the
              Corporation unless there is a conflict of interest with respect to
              the
              representation of any selling shareholder or the underwriters otherwise
              object).

          

     

    	(iii)  	
            Transfer
              of Rights.
              The registration rights may be transferred to (i) any partner or retired
              partner of any holder that is a partnership, (ii) any family member
              or
              trust for the benefit of any individual holder, or (iii) any transferee
              who acquires at least 100,000 Underlying Securities, provided the
              Corporation is given written notice
              thereof.

          

     

    	(iv)  	
            Termination
              of Rights:
              The obligation of the Corporation under Section 4 shall not apply to
              any
              shares of the Corporation that are eligible for immediate resale pursuant
              to Rule 144(k) under the 1933 Act or are otherwise eligible for resale
              pursuant to Rule 144(k) within a period of three
              months.

          

     

    	(b)  	
            that
              the Corporation shall make an application in the Province of Alberta
              for
              exemptive relief from the requirements of Applicable Securities Laws
              of
              the Canadian Selling Jurisdictions that the first trade by Canadian
              Subscribers in Convertible Debentures and
              Underlying Securities be exempt from the prospectus and registration
              requirements of the applicable Canadian Securities legislation and
              that,
              in the event such exemptive relief is not granted, the Corporation
              shall
              be required to file a prospectus or otherwise file any relevant
              application to become a reporting issuer in the Province of Alberta
              concurrently with or promptly following the completion of the
              Corporation's initial public offering in the United States, and in
              any
              event within eight months of the date of the Closing Date, and to maintain
              its reporting issuer status in the Province of Alberta for a period
              of two
              years thereafter; and

          

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
       

      -8-

      
 

    

     

    	(c)  	
            that
              the Corporation shall, prior to Closing, enter into acceptable agreements
              with each officer and employee of the Corporation governing non-disclosure
              of proprietary information and assignment of inventions to the
              Corporation;
              and

          

     

    	(d)  	
            For
              a period from acceptance of this offer until 90 days following the
              Closing
              Date, the Corporation may not offer, or announce the offering of, make
              or
              announce any agreement to issue, sell or exchange debt instruments,
              Common
              Shares or securities convertible or exchangeable into Common Shares
              (other
              than grants of employee stock options to directors, officers, employees
              or
              consultants of the Corporation, that have been disclosed to the Agent
              prior to Closing Date and the issuance of Common Shares on the exercise
              of
              existing stock options), without the prior written consent of the Agent,
              such consent not to be unreasonably withheld.

          

     

    

     

    The
      Agent
      agrees that the restriction set forth in this Section 4(d) shall not apply
      to:
      (i) the planned additional financing on substantially the terms disclosed in
      writing to the Agent with Merriman Curhan Ford and Company that may begin
      immediately after the Closing Date or other such time as the Corporation may
      see
      fit, including the preparation and filing of any applicable forms necessary
      to
      register its Common Shares in connection with such additional financing with
      the
      Securities and Exchange Commission; (ii) the proposed acquisition of IR Gurus;
      and (iii) the proposed acquisition of Evolved Games.

     

    	5.  	
            Agent's
              Covenants

          

     

    The
      Agent
      covenants and agrees with the Corporation that it will:

     

    	(a)  	
            conduct
              activities in connection with this Agreement and the proposed offer
              and
              sale of the Convertible Debentures in compliance with all Applicable
              Securities Laws in the Selling Jurisdictions and the rules of the
              Investment Dealers Association of Canada;

          

     

    	(b)  	
            not
              solicit subscriptions for Convertible Debentures, trade in Convertible
              Debentures or otherwise do any act in furtherance of a trade of
              Convertible Debentures outside of the Selling Jurisdictions, except
              in
              compliance with the applicable laws thereof in accordance with the
              terms
              and conditions of this Agreement, and obtaining the prior written consent
              of the Corporation, not to be unreasonably withheld; and provided such
              actions do not obligate the Corporation to take any action to qualify
              or
              register any of its securities or any trade in any of its securities
              obligate the Corporation to establish or maintain any office or director
              in such jurisdiction, or subject the Corporation to any reporting or
              other
              requirement in such jurisdiction.

          

     

    	(c)  	
            obtain
              from each Subscriber an executed Subscription Agreement, including
              all
              applicable schedules and all applicable undertakings, questionnaires
              and
              other forms required under Applicable Securities Laws and supplied
              to the
              Agent by the Corporation for completion in connection with the
              distribution of the Convertible Debentures;

          

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    
       

      -9-

      
 

    

    	(d)  	
            not
              advertise the proposed offering or sale of the Convertible Debentures
              in
              printed media of general and regular paid circulation, radio or television
              and not to make available for prospective purchasers of Convertible
              Debentures any document or material which would constitute or require
              the
              Corporation to prepare an offering memorandum or prospectus as defined
              under Applicable Securities Laws; and

          

     

    	(e)  	
            file
              or cause to be filed the financing statements contemplated in Section
              6.7
              of the Indenture in respect of all Debentures issued pursuant hereto
              and
              provide a copy thereof to the
              Corporation.

          

     

    	6.  	
            Representations
              and Warranties of the
              Corporation

          

     

    The
      Corporation represents and warrants to the Agent, and acknowledges that the
      Agent is relying upon such representations and warranties, that:

     

    	(a)  	
            the
              Corporation and each of its Subsidiaries has been duly incorporated
              and is
              valid and subsisting under the laws of its jurisdiction of incorporation
              and has all requisite corporate authority and power to carry on its
              business, as now conducted and as presently proposed to be conducted
              by
              it, and to own, lease and operate its assets and
              properties;

          

     

    	(b)  	
            the
              Corporation and each of its Subsidiaries is qualified to carry on business
              and is validly existing under the laws of each jurisdiction in which
              it
              carries on a material portion of its
              business;

          

     

    	(c)  	
            other
              than 2WG Media, Inc. and
              Red Mile Entertainment, Pty, the
              Corporation has no Subsidiaries and the Corporation is not affiliated
              with
              nor is it a holding corporation of any other body
              corporate;

          

     

    	(d)  	
            the
              Corporation owns all of the outstanding securities of 2WG Media, Inc.
              and
              Red Mile Entertainment, Pty, and Red Mile Entertainment, Pty does not
              carry on any active business;

          

     

    	(e)  	
            the
              Corporation and each of its Subsidiaries has conducted and is conducting
              its business in compliance in all material respects with all applicable
              laws, rules and regulations and, in particular, all applicable licensing
              and environmental legislation, regulations or by-laws or other lawful
              requirements of any governmental or regulatory bodies applicable to
              it in
              each jurisdiction in which it carries on business, and the Corporation
              and
              each of its Subsidiaries holds all material licences, registrations
              and
              qualifications in all jurisdictions in which it carries on its business
              which are necessary or desirable to carry on the business as now conducted
              and as presently proposed to be conducted, and all such licenses,
              registrations or qualifications are valid and existing and in good
              standing and none of such licenses, registrations or qualifications
              contains any burdensome term, provision, condition or limitation which
              has
              or is likely to have any material adverse effect on the business of
              the
              Corporation and its Subsidiaries (taken as a whole) as now conducted
              or as
              proposed to be conducted;

          

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
       

      -10-

      
 

    

    	(f)  	
            the
              Corporation has full corporate power and authority to enter into this
              Agreement , the Indenture and the Subscription Agreements and to perform
              its obligations set out herein and therein (including, without limitation,
              to cause the issuance of the Convertible Debentures and the Underlying
              Securities), and this Agreement has been, and the Subscription Agreements
              and the Indenture will on the Closing Date be, duly authorized, executed
              and delivered by the Corporation and this Agreement is, and the
              Subscription Agreements and the Indenture will on the Closing Date
              be,
              legal, valid and binding obligations of the Corporation, enforceable
              against the Corporation in accordance with their respective terms subject
              to applicable bankruptcy, insolvency, moratorium, reorganization and
              other
              laws and equitable principles affecting creditors' rights generally,
              the
              statutory and equitable powers of the courts in Canada and the United
              States to stay proceedings before them and the execution of judgments
              and
              the fact that specific performance and injunctive relief are equitable
              remedies which may be ordered by a court in its discretion and,
              accordingly, may not be available as a remedy in an action to enforce
              a
              covenant and subject to the fact that the rights to indemnity,
              contribution and waiver set forth herein may be limited by applicable
              laws
              or the public policy underlying such
              laws;

          

     

    	(g)  	
            the
              Underlying Securities have been reserved and allotted for issuance
              and
              when issued upon the conversion of the Convertible Debentures will
              be
              validly issued, fully paid and non-assessable Common
              Shares;

          

     

    	(h)  	
            the
              definitive forms of certificates representing the Convertible Debentures
              and the Common Shares are in due and proper form under the laws governing
              the Corporation;

          

     

    	(i)  	
            the
              authorized capital of the Corporation consists solely of 100,000,000
              Common Shares and 15,000,000 Preferred Shares of which, as at the Closing
              Date (prior to the issuance of Shares on the Closing Date), 25,436,506
              Common Shares, No Series A Preferred Shares, 2,536,000 Series B Preferred
              Shares and 1,298,860
              Series C Preferred Shares are issued and outstanding, which shares
              are
              validly issued, fully paid and non-assessable;

          

     

    	(j)  	
            neither
              the Corporation nor its Subsidiaries is a party to or bound by any
              agreement of guarantee, indemnification (other than an indemnification
              of
              directors and officers in accordance with the by-laws of the Corporation
              or its Subsidiaries and applicable laws, indemnities in favour of the
              Agent pursuant to this Agreement, indemnities in favour of purchasers
              of
              assets in purchase and sale agreements and indemnities and guarantees
              in
              favour of the bankers of the Corporation) or any other like commitment
              of
              the obligations, liabilities (contingent or otherwise) of indebtedness
              of
              any other person;

          

     

    	(k)  	
            other
              than this Agreement, the Subscription Agreements, the Indenture and
              the
              agreements set forth in Schedule 6(k)
              hereto, there are no material contracts or agreements which have or
              which
              might have or create any material obligation to the Corporation or
              from
              which they derive or could derive any material benefit or which are
              required by the Corporation to carry on its business as now conducted
              by
              it or as is now proposed to be carried on by it. For the purposes of
              this
              representation and warranty, contracts shall be deemed to give rise
              to a
              material obligation where such contract provides for expenditures by
              the
              Corporation for an aggregate of more than $100,000 during any 12 month
              period;

          

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
       

      -11-

      
 

    

    	(l)  	
            other
              than accrued and unpaid bonuses in the amount of US$165,999, the
              Corporation has no loans or other indebtedness outstanding which have
              been
              made to or from any of its shareholders, officers, directors or employees
              or any other person not dealing at arm's length with the
              Corporation;

          

     

    	(m)  	
            except
              for transactions contemplated herein and except as otherwise disclosed
              in
              writing to the Agent prior to the date hereof, the Corporation has
              not
              entered into any transaction which is or may reasonably be expected
              to be
              material to the Corporation and which is not in the ordinary course
              of
              business;

          

     

    	(n)  	
            the
              Corporation is not in default or breach of, and the execution and delivery
              of, and the performance of and compliance with the terms of, this
              Agreement and the Subscription Agreements by the Corporation or any
              of the
              transactions contemplated hereby or thereby, does not and will not
              result
              in any breach of, or constitute a default under, and does not and will
              not
              create a state of facts which, after notice or lapse of time or both,
              would result in a breach of or constitute a default under, any term
              or
              provision of the articles, by-laws or resolutions of shareholders or
              directors of the Corporation, or any indenture, mortgage, note, contract,
              agreement (written or oral), instrument, lease or other document to
              which
              the Corporation is a party or by which it is bound, or any judgment,
              decree, order, statute, rule or regulation applicable to the Corporation,
              which default or breach might reasonably be expected to materially
              adversely affect the business, operations, capital or condition (financial
              or otherwise) of the Corporation, or its
              assets;

          

     

    	(o)  	
            the
              Agent has been provided with true and correct copies of the constating
              documents of the Corporation and minutes of all meetings and all the
              resolutions of the directors, shareholders and committees of the
              Corporation;

          

     

    	(p)  	
            there
              has not been any material adverse change in the consolidated capital,
              assets, liabilities (absolute, accrued, contingent or otherwise) of
              the
              Corporation from the position set forth in the Financial Statements
              (other
              than as has been disclosed in writing to the Agent prior to the date
              hereof or as set out herein); 

          

     

    	(q)  	
            the
              books of account and other records of the Corporation, whether of a
              financial or accounting nature or otherwise, have been maintained in
              all
              material respects in accordance with prudent business
              practices;

          

     

    	(r)  	
            there
              has not been any material adverse change in the business, operations,
              capital or condition (financial or otherwise) or results of the operations
              of the Corporation since the date of the Financial Statements and since
              that date there have been no material facts, transactions, events or
              occurrences which, to the knowledge of the Corporation could materially
              adversely affect the consolidated capital, assets, liabilities (absolute,
              accrued, contingent or otherwise), business, operations or condition
              (financial or otherwise) or results of the operations of the Corporation
              which have not been disclosed in writing to the Agent prior to the
              date
              hereof;

          

     

    	(s)  	
            the
              Financial Statements fairly present, in all material respects and in
              accordance with generally accepted accounting principles in the United
              States consistently applied, the financial position and condition of
              the
              Corporation as at the dates thereof and reflect all liabilities (absolute,
              accrued, contingent or otherwise) of the Corporation as at the dates
              thereof;

          

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
       

      -12-

      
 

    

     

    	(t)  	
            to
              the knowledge of the Corporation, after due inquiry, there have not
              occurred any material spills, emissions or pollution on any property
              of
              the Corporation or for which the Corporation may be responsible, nor
              is
              the Corporation the subject of any outstanding stop orders, control
              orders, clean-up orders or reclamation orders under applicable
              environmental laws and regulations;

          

     

    	(u)  	
            to
              the best of the knowledge of the Corporation, no other party is in
              default
              in the observance or performance of any term or obligation to be performed
              by it under any contract to which the Corporation is a party or by
              which
              they are bound which is material to the business of the Corporation,
              no
              event has occurred which with notice or lapse of time or both would
              directly or indirectly constitute such a default, in any such case
              which
              default or event would reasonably be expected to have a material adverse
              effect on the assets or properties, business, results of operations,
              prospects or condition (financial or otherwise) of the
              Corporation;

          

     

    	(v)  	
            there
              are no judgments against the Corporation which are unsatisfied, nor
              are
              there any consent decrees or injunctions to which the Corporation is
              subject;

          

     

    	(w)  	
            the
              information and statements set forth in the Documents as at the date
              hereof, as they relate to the Corporation, are true, correct, and complete
              and did not contain any misrepresentation as of the respective dates
              of
              such information or statements, and, except as has been disclosed to
              the
              Agent, no material change (as defined in Applicable Securities Laws
              of the
              Alberta) has occurred in relation to such information and statements
              since
              the respective dates of such information and
              statements;

          

     

    	(x)  	
            other
              than the securities issued or to be issued pursuant to the Offering,
              no
              person, firm, corporation or other entity holds any securities convertible
              or exchangeable into shares of the Corporation or now has any agreement,
              warrant, option, right or privilege (whether contractual or pre-emptive)
              being or capable of becoming an agreement, warrant, option or right
              for
              the purchase or other acquisition of any unissued share, securities
              (including convertible securities) or warrants of the Corporation except
              for warrants and options to purchase an aggregate of not more than
              14,753,122
              Common Shares and except for 3,834,860
              Common Shares issuable on the conversion of Series B Preferred Shares
              and
              Series C Preferred Shares;

          

     

    	(y)  	
            the
              Corporation has duly and on a timely basis filed all tax returns required
              to be filed by it, has paid all taxes due and payable by it and has
              paid
              all assessments and re-assessments and all other taxes, governmental
              charges, penalties, interest and other fines due and payable by it
              and
              which are claimed by any governmental authority to be due and owing
              and
              adequate provision has been made for taxes payable for any completed
              fiscal period for which tax returns are not yet required and there
              are no
              agreements, waivers, or other arrangements providing for an extension
              of
              time with respect to the filing of any tax return or payment of any
              tax,
              governmental charge or deficiency by the Corporation and, to the best
              of
              the Corporation's knowledge, information and belief, after due inquiry,
              there are no actions, suits, proceedings, investigations or claims
              threatened or pending against the Corporation in respect of taxes,
              governmental charges or assessments or any matters under discussion
              with
              any governmental authority relating to taxes, governmental charges
              or
              assessments asserted by any such
              authority;

          

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    -13-

    
 

     

    	(z)  	
            except
              as disclosed in the Financial Statements (i) the Corporation has no
              outstanding liabilities in excess of $10,000 other than those set forth
              in
              Schedule 6(z),
              and (ii) there are no actions, suits, proceedings or inquiries in
              existence or, to the Corporation's knowledge, after due inquiry, pending
              or threatened against or affecting the Corporation at law or in equity
              or
              before or by any federal, provincial, state, municipal or other
              governmental department, commission, board, bureau, agency or
              instrumentality which in any way materially adversely affects, or could
              reasonably be expected in any way to materially adversely affect, the
              business, operations, capital or condition (financial or otherwise)
              of the
              Corporation, or any of its assets or which affects or may affect the
              distribution of the Convertible Debentures or Underlying Securities
              and
              the Corporation is not aware of any existing ground on which such action,
              suit, proceeding or inquiry might be commenced with any reasonable
              likelihood of success;

          

     

    	(aa)  	
            other
              than the Agent, there is no person, firm or corporation acting or
              purporting to act for the Corporation entitled to any brokerage or
              finder's fee or other fee or commission in connection with the Offering,
              this Agreement or any of the transactions contemplated
              hereby;

          

     

    	(bb)  	
            no
              Securities Commission or any other securities commission or similar
              regulatory authority has issued any order which is currently outstanding
              ceasing, halting, suspending or preventing other trading in any securities
              of the Corporation, no such proceeding is, to the knowledge of the
              Corporation, pending, contemplated or threatened, the Corporation is
              not
              in default of any requirement of Applicable Securities Laws and the
              Corporation is entitled to avail itself of the applicable prospectus
              exemptions available under the Applicable Securities Laws in respect
              of
              the trades in its securities to Subscribers as contemplated by this
              Agreement;

          

     

    	(cc)  	
            the
              Corporation is not a “reporting issuer” in Canada and no securities of the
              Corporation are listed on any stock
              exchange;

          

     

    	(dd)  	
            the
              Debenture Trustee, at its principal offices in the City of Calgary,
              has
              been appointed Debenture Trustee for the Convertible
              Debentures;

          

     

    	(ee)  	
            to
              the knowledge of the Corporation, other than has been disclosed to
              the
              Agent, no insider of the Corporation has any present intention to sell
              any
              securities of the Corporation;

          

     

    	(ff)  	
            except
              as have been provided to the Agent as at the date hereof, the Corporation
              is not a party to any contracts of employment which may not be terminated
              on one month's notice or which provide for payments occurring on a
              change
              of control of the Corporation;

          

     

    	(gg)  	
            other
              than leases of the Corporation with respect to its office premises,
              the
              Corporation does not own or lease nor has it agreed to acquire or lease,
              any interest in real property;

          

     

    	(hh)  	
            to
              the knowledge of the Corporation, no officer, director or securityholder
              of the Corporation is subject to any limitations or restrictions on
              their
              activities or investments, including any non-competition provisions,
              that
              would in any way restrict or limit their involvement with the Corporation
              or the business and affairs of the
              Corporation;

          

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    -14-

    
 

     

    	(ii)  	
            all
              filings by the Corporation pursuant to which the Corporation has received
              or is entitled to receive government incentives, have been made in
              accordance, in all material respects, with all applicable legislation
              and
              contain no misrepresentations of material fact or omit to state any
              material fact which could cause any amount previously paid to the
              Corporation or previously accrued on the accounts thereof to be recovered
              or disallowed;

          

     

    	(jj)  	
            the
              written responses given by the Corporation and the directors, officers
              or
              employees of the Corporation to the questions circulated to the
              Corporation or asked at the Due Diligence Sessions shall be true and
              correct in all material respects as at the time such responses are
              given
              and at the Closing Time and such responses taken as a whole shall not
              omit
              any fact or information necessary to make any of the responses not
              misleading in light of the circumstances in which those responses where
              given; 

          

     

    	(kk)  	
            to
              its knowledge, neither the Corporation nor any of its shareholders
              is a
              party to any unanimous shareholders agreement, pooling agreement, voting
              trust or other similar type of arrangements in respect of outstanding
              securities of the Corporation; 

          

     

    	(ll)  	
            the
              representations and warranties made by the Corporation in the Subscription
              Agreements are, or will at the Closing Date be, true and correct as
              of the
              date at which they are made;

          

     

    	(mm)  	
            the
              Corporation either exclusively owns or has the valid right to use all
              Corporation Intellectual Property Rights, Corporation Technology and
              all
              Third Party Intellectual Property Rights (and, to the knowledge of
              the
              Corporation, no third party, including any past or present employee
              or
              contractor of the Corporation, owns or has any ownership interest in
              any
              Corporation Intellectual Property Rights or Corporation Technology
              that
              are not Third Party Intellectual Property Rights of the
              Corporation);

          

     

    	(nn)  	
            to
              the best knowledge of the Corporation, neither the Corporation
              Intellectual Property Rights nor the conduct of the business of the
              Corporation as presently conducted or reasonably currently contemplated
              to
              be conducted uses or discloses in an unauthorized manner, infringes,
              or
              constitutes a misappropriation of any Intellectual Property Right or
              Technology of any Person;

          

     

    	(oo)  	
            none
              of the Corporation Intellectual Property Rights or Corporation Technology
              are the subject of any interference, re-examination, cancellation,
              or
              opposition proceeding, or any currently pending or to the knowledge
              of the
              Corporation threatened, suit, action, or proceeding arising out of
              an
              alleged right of any Person with respect to any Intellectual Property
              Right or Technology;

          

     

    	(pp)  	
            the
              Corporation Intellectual Property Rights are in full force and effect
              and
              have not been used or enforced or failed to be used or enforced in
              a
              manner that would result in the abandonment, cancellation or
              unenforceability of any of the Corporation Intellectual Property Rights.
              All registrations and filings necessary to preserve the rights of the
              Corporation in and to the Corporation Intellectual Property Rights
              have
              been made;

          

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    -15-

    
 

     

    	(qq)  	
            the
              Corporation has not received any oral, written, or other communication
              that the Corporation is using or disclosing in an unauthorized manner,
              infringing, or misappropriating the alleged right of any Person with
              respect to any Intellectual Property Right, other than as set forth
              in
              Schedule 6(qq);

          

     

    	(rr)  	
            other
              than as set forth in Schedule 6(qq),
              to the knowledge of the Corporation, there is
              no:

          

     

    	(i)  	
            claim
              of adverse ownership or invalidity or other opposition to or conflict
              with
              any of the Corporation Intellectual Property Rights or Corporation
              Technology nor of any pending or threatened suit, proceeding, claim,
              demand, action or investigation of any nature or kind against the
              Corporation relating to the Corporation Intellectual Property Rights
              or
              Corporation Technology; or

          

     

    	(ii)  	
            claim
              that any products manufactured, produced, used or sold by the Corporation
              or any process, method, packaging, advertising, or material that the
              Corporation employs in the manufacture, marketing, or sale of any such
              product, or the use of any of the Corporation Intellectual Property
              Rights
              or Corporation Technology breaches, violates, infringes or interferes
              with
              any rights of any Person or requires payment for the use of any
              Intellectual Property Right, know-how or Technology of another
              Person;

          

     

    	(ss)  	
            other
              than as set forth in Schedule 6(ss),
              none of the Corporation Intellectual Property Rights or Corporation
              Technology are subject to any proceeding that restricts in any manner
              the
              use, transfer or licensing thereof by the Corporation or that may affect
              the validity, use or enforceability of the Corporation Intellectual
              Property Rights or Corporation Technology; provided that nothing herein
              applies to the prosecution (except for any interference or opposition
              proceeding) of any Corporation Intellectual Property Rights in the
              U.S.
              Patent and Trademark Office or any other government office;
              and

          

     

    	(tt)  	
            the
              Corporation has maintained and continues to maintain a system to safeguard
              and maintain the secrecy and confidentiality of and its proprietary
              rights
              in all of the material Corporation Intellectual Property Rights and
              Corporation Technology not otherwise protected by patents, patent
              applications, or copyright or trademark law. Without limitation on
              the
              generality of the foregoing, (i) any disclosures to third parties of
              trade secrets that are material to the operation of the Corporation’s
              business have been pursuant to executed written confidentiality
              agreements, (ii) the Corporation has obtained confidentiality and
              inventions assignment agreements, in one or more forms, that have
              protections and conditions, from all of the past and present employees
              and
              independent contractors of the Corporation involved in the creation
              or
              development of the Corporation Intellectual Property Rights and
              Corporation Technology that are material to the operation of the business
              of the Corporation, (iii) to the knowledge of the Corporation, there
              has been no breach or violation of any secrecy or confidentiality
              commitments of any person in respect of any material confidential
              information of the Corporation, and (iv) the measures taken by the
              Corporation to protect the proprietary and non-public aspects of the
              Corporation’s processes and methodology are reasonably designed to
              adequately prevent third parties from using any such aspects of such
              products, without the approval of the Corporation. No Person who has
              performed services related to the Corporation business has any right,
              title or interest in any Corporation Intellectual Property Rights or
              Corporation Technology.

          

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
       

      -16-

      
 

    

    	7.  	
            Conditions

          

     

    The
      obligations of the Agent hereunder shall be conditional upon the Agent
      receiving, and the Agent shall have the right on the Closing Date or on each
      Closing Date if there is more than one closing, on behalf of Subscribers to
      withdraw all Subscription Agreements delivered and not previously withdrawn,
      unless the Agent receives, on or prior to the Closing Date:

     

    	(a)  	
            a
              legal opinion of the Corporation's counsel addressed to the Agent,
              the
              Agent's counsel and the Subscribers in form and substance reasonably
              satisfactory to the Agent, with respect to such matters as the Agent
              may
              reasonably request relating to the offering, issuance and sale of the
              Convertible Debentures, including, without limitation, that as at the
              Closing Date:

          

     

    	(i)  	
            the
              Corporation is valid and subsisting under the laws of its jurisdiction
              of
              incorporation and has all requisite corporate power and authority to
              carry
              on its business as now conducted by it and to own its assets and is
              qualified to carry on business under the laws of each jurisdiction
              in
              which it carries on a material portion of its
              business;

          

     

    	(ii)  	
            the
              Corporation has full corporate power and authority to enter into this
              Agreement, the Indenture, the Security Agreement and the Subscription
              Agreements and to perform its obligations set out herein and therein,
              and
              this Agreement has been and the Security Agreement, the Subscription
              Agreements and the Indenture will, on the Closing Date, be duly
              authorized, executed and delivered by the Corporation and constitute
              legal, valid and binding obligations of the Corporation enforceable
              against the Corporation in accordance with their respective terms,
              subject
              to applicable bankruptcy, insolvency, moratorium, reorganization and
              other
              laws and equitable principles affecting creditors' rights generally,
              the
              statutory and equitable powers of the courts in Canada or the United
              States to stay proceedings before them and the execution of judgments
              and
              the fact that specific performance and injunctive relief are equitable
              remedies which may be ordered by a court in its discretion and,
              accordingly, may not be available as a remedy in an action to enforce
              a
              covenant and subject to the fact that the rights to indemnity,
              contribution and waiver set forth herein may be limited by applicable
              laws
              or the public policy underlying such
              laws;

          

     

    	(iii)  	
            the
              execution and delivery of this Agreement, the Indenture, the Security
              Agreement and the Subscription Agreements and the fulfillment of the
              terms
              hereof or thereof by the Corporation and the performance of and compliance
              with the terms of this Agreement, the Indenture, the Security Agreement
              and the Subscription Agreements by the Corporation do not and will
              not
              result in a breach of, or constitute a default under, and do not and
              will
              not create a state of facts which, after notice or lapse of time or
              both,
              will result in a breach of or constitute a default
              under:

          

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
       

      -17-

      
 

    

    	A.  	
            any
              applicable laws of the States of New York or Delaware or the federal
              laws
              of the United States applicable therein;

          

     

    	B.  	
            any
              term or provision of the articles, by-laws or resolutions of the directors
              or shareholders of the Corporation;

          

     

    	C.  	
            of
              which the Corporation's counsel is aware, any of the terms or provisions
              of any mortgage, note, indenture, contract, agreement (written or oral),
              instrument, lease or other document to which the Corporation is a party
              or
              by which it is bound on the Closing Date;
              or

          

     

    	D.  	
            of
              which Corporation’s counsel is aware, any judgment, decree or order
              applicable to the Corporation, 

          

     

    which
      default or breach might reasonably be expected to materially adversely affect
      the business, operations, capital or condition (financial or otherwise) of
      the
      Corporation or its properties or assets.

     

    	(iv)  	
            the
              form and terms of the certificates representing the Convertible Debentures
              have been approved and adopted by the board of directors of the
              Corporation and conform with applicable law and the constating documents
              of the Corporation;

          

     

    	(v)  	
            the
              Common Shares to be issued on conversion of the Convertible Debentures
              have been reserved and allotted for issuance and, when issued upon
              conversion of the Convertible Debentures will be validly issued, fully
              paid and non-assessable Common Shares of the
              Corporation;

          

     

    	(vi)  	
            all
              Applicable Securities Laws of the Selling Jurisdictions and the United
              States of America in connection with the creation, offering, issuance
              and
              sale of the Convertible Debentures and Underlying Securities have been
              complied with by the Corporation and no registration under the
              United
              States Securities Act of 1933,
              as amended (the “U.S.
              Securities Act”),
              is required for the offer and sale of the Convertible Debentures and
              the
              issuance of the Underlying Securities upon conversion of the Convertible
              Debentures, assuming distribution by the Corporation in compliance
              with
              the relevant provisions of such Applicable Securities
              Laws;

          

     

    	(vii)  	
            The
              Security Agreement creates a valid security interest in the Collateral
              in
              favor of the Debenture Trustee for the benefit of the Debentureholders
              to
              secure the Obligations (as such term is defined in the Security
              Agreement). Under Article 9 of the Uniform Commercial Code as enacted
              in
              the State of New York (the “UCC-NY”),
              while a debtor is “located” in a jurisdiction, the local law of that
              jurisdiction governs perfection of a security interest granted by such
              debtor which can be perfected by the filing of a Uniform Commercial
              Code
              financing statement. Under the UCC-NY, the Corporation is “located” in the
              State of Delaware and the Uniform Commercial Code in effect in the
              State
              of Delaware (the “UCC-DE”)
              governs perfection of a security interest granted by such Company which
              can be perfected by the filing of a Uniform Commercial Code financing
              statement
              in the office of the Secretary of State of the State of Delaware.
              The
              Financing Statement is sufficient in form to perfect a security interest
              of the Debenture Trustee in the Collateral, to the extent a security
              interest in such Collateral may be perfected under the UCC-DE by filing
              a
              financing statement with the Secretary of State of Delaware. Upon proper
              filing of the Financing Statement with the Secretary of State of Delaware,
              the Debenture Trustee will have a perfected security interest in the
              Collateral to the extent that a security interest can be perfected
              therein
              by the filing of a financing statement with the Secretary of State
              of
              Delaware.

          

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
       

      -18-

      
 

    

    	(viii)  	
            The
              choice of Alberta law to govern this Agreement, the Indenture and the
              Subscription Agreements and the choice of New York law to govern the
              Security Agreement are valid choices of law under the laws of the States
              of Delaware and New York and the Province of Alberta and will accordingly
              be applied by courts in such
              jurisdictions.

          

     

    	(ix)  	
            The
              State of New York has enacted the Uniform Foreign Country Money Judgments
              Recognition Act, which appears in the Consolidated Laws of New York
              at
              Sections 5301 to 5309. Under those Sections, a judgment of a foreign
              state
              granting or denying recovery of a sum of money, other than a judgment
              for
              (a) taxes, or (b) a fine or other penalty, or (c) in matrimonial or
              family
              matters, is conclusive between the parties to the extent that it grants
              or
              denies recovery of a sum of money, and the foreign judgment is enforceable
              in the same manner as the judgment of another state which is entitled
              to
              full faith and credit but is not conclusive under certain circumstances
              listed in the statute. In particular, we note that Section 5305(a)(3)
              of
              Consolidated Laws of New York provides that a foreign judgment shall
              not
              be refused recognition for lack of personal jurisdiction if the defendant
              prior to the commencement of the proceedings had agreed to submit to
              the
              jurisdiction of the foreign court with respect to the subject matter
              involved. We also note that the Corporation has agreed to the submission
              to the jurisdiction of the courts of Alberta under this Agreement,
              the
              Indenture and the Subscription Agreements.
              We are aware of no statutory or judicial authority under New York law
              that
              would suggest that the Corporation’s submission to the jurisdiction of the
              courts of Alberta under such documents would not be given effect in
              New
              York. 

          

     

    and
      additionally relating to:

     

    	(i)  	
            the
              distribution of the Underlying Securities issuable on conversion of
              the
              Convertible Debentures; 

          

     

    	(ii)  	
            the
              first trade in the Convertible Debentures and the Common Shares issuable
              on conversion of the Convertible Debentures;
              and

          

     

    	(iii)  	
            the
              authorized and issued capital of the
              Corporation;

          

     

    and
      as to
      all other legal matters, in any way connected with the Offering and issuance,
      sale and delivery of the Convertible Debentures as the Agent may reasonably
      request.

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    -19-

    
 

     

    It
      is
      understood that the Corporation's counsel may rely on the opinions of local
      counsel acceptable to it as to matters governed by the laws of jurisdictions
      other than the jurisdiction of residence of such counsel and on certificates
      of
      officers of the Corporation and public officials as to relevant matters of
      fact.

     

    	(b)  	
            a
              certificate of the Corporation dated the Closing Date, addressed to
              the
              Agent and signed on the Corporation's behalf by its President or such
              other officer or director of the Corporation satisfactory to the Agent,
              acting reasonably, certifying that:

          

     

    	(i)  	
            the
              Corporation has complied with and satisfied in all material respects
              all
              covenants and conditions of this Agreement on its part to be complied
              with
              or satisfied at or prior to the Closing Time except to the extent same
              have been waived by the Agent;

          

     

    	(ii)  	
            the
              representations and warranties of the Corporation set forth in this
              Agreement and, where applicable, in the Subscription Agreements are
              true
              and correct in all material respects at the Closing Time, as if made
              at
              such time;

          

     

    	(iii)  	
            no
              event of a nature referred to in subsection 12(b)(i),
              (iii), (vi) or (ix) has occurred since the date of this Agreement or
              to
              the knowledge of such officer is pending, contemplated or
              threatened;

          

     

    	(iv)  	
            the
              Corporation has made and/or obtained, at or prior to the Closing Time,
              all
              necessary filings, approvals, consents and acceptances under Applicable
              Securities Laws, and under any applicable agreement or document to
              which
              the Corporation is a party or by which it is bound in respect of the
              execution and delivery of this Agreement and the offering and sale
              of the
              Convertible Debentures and the consummation of the transactions
              contemplated hereby; and

          

     

    	(v)  	
            no
              order suspending the sale or ceasing the trading of securities of the
              Corporation has been issued and no proceedings for that purpose have
              been
              instituted or are pending or to the knowledge of such officer are
              threatened under Applicable Securities
              Laws;

          

     

    	(c)  	
            definitive
              certificates for the Convertible Debentures subscribed for pursuant
              to the
              Offering, registered in such name or names as the Agent shall notify
              the
              Corporation in writing not less than 24 hours prior to the Closing
              Time, provided such certificates registered in such names may, subject
              to
              receipt by the Corporation, be delivered in advance of the Closing
              Date to
              the Agent or such other parties in such locations as the Agent may
              direct
              and the Agent and the Corporation may agree
              upon;

          

     

    	(d)  	
            executed
              copies of the Subscription Agreements in form and substance reasonably
              satisfactory to the Agent and the Agent's
              counsel;

          

     

    	(e)  	
            payment
              of all commissions payable by the Corporation to the Agent pursuant
              to
              section 8 and all expenses payable by the Corporation pursuant to
              section 9, provided that such payment may be made by deducting such
              fees and expenses from the gross proceeds of the Offering in accordance
              with Section 10(b); and

          

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

         

        -20-

        
 

      

    

    	(f)  	
            such
              other matters as may be reasonably requested by the
              Agent.

          

     

    The
      foregoing conditions are for the sole benefit of the Agent and may be waived
      in
      whole or in part by the Agent at any time and without limitation, and the Agent
      shall have the right, if any of the foregoing conditions are not met, on behalf
      of potential Subscribers, to withdraw all Subscription Agreements delivered
      and
      not previously accepted by the Corporation or withdrawn or rescinded by such
      persons. If any of the foregoing conditions are not met on or before the Closing
      Date, the Agent may terminate its obligations under this Agreement without
      prejudice to any other remedies it may have.

     

    	8.  	
            Agent’s
              Commission 

          

     

    On
      the
      Closing Date,
      the
      Corporation agrees to pay to the Agent a commission equal to 6.0% of the gross
      proceeds raised from the sale of the Convertible Debentures. 

     

    	9.  	
            Expenses

          

     

    Whether
      or not the transactions contemplated herein shall be completed, the Corporation
      agrees to pay all reasonable costs and expenses of or incidental to the
      Offering, including, without limitation, all reasonable costs and expenses
      related to the preparation, filing and reproduction of documents and the
      out-of-pocket expenses of the Agent including the reasonable fees, disbursements
      and expenses incurred by the Agent's counsel (to a maximum of US$50,000)
      relating to the transactions contemplated herein.

     

    	10.  	
            Closing

          

     

    The
      issue
      and sale of the Convertible Debentures shall be completed at the Closing Time
      at
      the offices of the Corporation's counsel or at such other place as the
      Corporation and the Agent may agree. Subject to the conditions set forth in
      section 7,
      the
      Agent, on the Closing Date, shall deliver to the Corporation:

     

    	(a)  	
            all
              executed Subscription Agreements; and

          

     

    	(b)  	
            via
              wire transfer, United States funds in an amount equal to the aggregate
              gross subscription price of all subscriptions delivered to and accepted
              by
              the Corporation less the fees and expenses set forth in sections 8
              and 9
              hereof,

          

     

    against
      delivery by the Corporation to the Agent of the certificates, opinions and
      documents set forth in section 7
      hereof.

     

    The
      Corporation may not reject any properly completed Subscription Agreement, unless
      (i) the issuance of Convertible Debentures would breach Applicable Securities
      Laws or (ii) the aggregate of the number of Convertible Debentures subscribed
      for pursuant to all Subscription Agreements tendered by the Agent exceeds
      $10,000,000. 

     

    	11.  	
            Waiver

          

     

    The
      Agent
      may waive in whole or in part any breach of, default under or non-compliance
      with any representation, warranty, covenant, term or condition hereof, or extend
      the time for compliance therewith, without prejudice to any of its rights in
      respect of any other representation, warranty, covenant, term or condition
      hereof or any other breach of, default under or non-compliance with any other
      representation, warranty, covenant, term or condition hereof, provided that
      any
      such waiver or extension shall be binding on the Agent only if the same is
      in
      writing.

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    -21-

    
 

     

    	12.  	
            Termination
              Events

          

     

    	(a)  	
            All
              representations, warranties, covenants, terms and conditions of this
              Agreement shall be construed as conditions, and any material breach
              or
              failure to comply with any such representation, warranty, covenant,
              term
              or condition shall entitle the Agent to terminate its obligation to
              distribute the Convertible Debentures by written notice to that effect
              given to the Corporation prior to the Closing Date.
              

          

     

    	(b)  	
            In
              addition to any other remedies which may be available to the Agent,
              the
              Agent shall be entitled, at its option, to terminate and cancel its
              obligations under this Agreement if, prior to the Closing Time on the
              Closing Date:

          

     

    	(i)  	
            any
              inquiry, investigation (whether formal or informal) or other proceeding
              is
              announced or commenced by any Securities Commission or similar regulatory
              authority, or any order is issued in relation to the Corporation, any
              of
              its affiliates, or any of its directors or officers or any of the
              Corporation's securities or any order is issued under or pursuant to
              any
              statute of Canada or the United States or of any of the provinces of
              Canada or states of the United States, or any other applicable law
              or
              regulatory authority (unless based on the activities or alleged activities
              of the Agent or its sub-agents); or

          

     

    	(ii)  	
            there
              is any change of law, regulation or policy or the interpretation or
              administration thereof, which, in the reasonable opinion of the Agent,
              prevents or restricts trading in or the distribution of the Convertible
              Debentures or Common Shares or has or would be expected to have a material
              adverse effect on the market price or value of or the investment quality
              or marketability of the Convertible Debentures or Common Shares;
              or

          

     

    	(iii)  	
            there
              shall occur an event, fact or circumstance, (actual, contemplated or
              threatened), which constitutes a material change or any change in a
              material fact or a development that could result in a material change
              or
              change in a material fact in respect of the business, operations, capital,
              condition (financial or otherwise), properties, assets, liabilities,
              obligations or affairs of the Corporation which, in the reasonable
              opinion
              of the Agent, could reasonably be expected to prevent or restrict trading
              in or the distribution of the Convertible Debentures or Common Shares
              or
              has or would reasonably be expected to have a material adverse effect
              on
              the market price or value of or the investment quality or marketability
              of
              the Common Shares or Convertible Debentures;
              or

          

     

    	(iv)  	
            the
              state of the financial markets or the market for video games or any
              aspects thereof including federal, provincial or state tax laws applying
              thereto become such that in the opinion of the Agent (A) the
              Convertible Debentures or Common Shares cannot be profitably marketed;
              or
              (B) the advantages or risk of investing in the Convertible Debentures
              or Common Shares has been materially adversely altered;
              or

          

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
       

      -22-

      
 

    

    	(v)  	
            there
              should develop, occur or come into effect or existence any event, action,
              state, condition or major financial occurrence of national or
              international consequence, acts of hostility or escalation thereof
              or any
              other calamity or crisis or any change or development involving a
              prospective change in national or international political, financial
              or
              economic conditions, or any law or regulation (including federal,
              provincial or state taxation laws) is enacted or changed which, in
              the
              sole opinion of the Agent, acting reasonably, materially adversely
              affects, or involves, or could reasonably be expected to materially
              adversely affect or involve, the financial markets generally or the
              business, operations, affairs, assets, liabilities (contingent or
              otherwise), capital or control of the Corporation or the market price
              or
              value of the Convertible Debentures or Common Shares;
              or

          

     

    	(vi)  	
            the
              Corporation shall be in breach of, default under or non-compliance
              with
              any material representation, warranty, term or condition of this Agreement
              or the Subscription Agreements; or

          

     

    	(vii)  	
            the
              Agent discovers any facts or matters with respect to the Corporation
              or
              the insiders of the Corporation pursuant to the Agent's due diligence
              review or otherwise that are not satisfactory to the Agent, acting
              reasonably; or

          

     

    	(viii)  	
            the
              Agent shall determine that the responses provided by the Corporation
              at
              the Due Diligence Sessions contained information which would have,
              in the
              sole opinion of the Agent, acting reasonably, a material adverse effect
              on
              the market price or value of the Common Shares or Convertible Debentures;
              or

          

     

    	(ix)  	
            any
              order to cease or suspend trading in any securities of the Corporation,
              or
              prohibiting or restricting the distribution of the Common Shares or
              Convertible Debentures is made, or proceedings are announced or commenced
              for the making of, any such order, by any Securities Commission, any
              other
              securities commissions or similar regulatory authority, and has not
              been
              rescinded, revoked or withdrawn within two business
              days;

          

     

    in
      any of
      which cases the Agent shall be entitled, at its option, to terminate and cancel
      its obligations to the Corporation under this Agreement and the obligations
      of
      any purchaser under any Subscription Agreement by written notice to that effect
      given to the Corporation prior to the Closing. In the event of any such
      termination, the Corporation's liabilities to the Agent shall be at an end
      except for any liability of the Corporation provided for in this Agreement
      which
      by its terms survives termination.

     

    	(c)  	
            The
              Agent may exercise any or all of the rights provided for in section
              7 or
              subsections 12(a) or 12(b) notwithstanding any material change, change,
              event or state of facts and notwithstanding any act or thing taken
              or done
              by the Agent or any inaction by the Agent, whether before or after
              the
              occurrence of any material change, including, without limitation, any
              act
              of the Agent related to the Offering or continued offering of the
              Convertible Debentures for sale other than any unlawful act relating
              solely to the Agent and the Agent shall only be considered to have
              waived
              or be estopped from expressing or relying upon any of their rights
              under
              or pursuant to section 7 or subsections 12(a) or 12(b) if such waiver
              or
              estoppel is in writing and specifically waives or estops such exercise
              or
              reliance.

          

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    -23-

    
 

     

    	(d)  	
            Any
              termination pursuant to the terms of this Agreement shall be effected
              by
              notice in writing delivered by the Agent to the Corporation; provided
              that
              no termination shall discharge or otherwise affect any obligation of
              the
              Corporation under section 9 and sections 14 through 23. The rights
              of the
              Agent to terminate its obligations hereunder are in addition to, and
              without prejudice to, any other remedies it may
              have.

          

     

    	13.  	
            Survival

          

     

    All
      representations, warranties, terms and conditions herein or contained in
      certificates or documents submitted pursuant to or in connection with the
      transactions contemplated herein shall not merge on the completion of the
      transactions contemplated hereby or the termination of this Agreement, but
      shall
      survive and continue in full force and effect for the benefit of the Agent
      and
      the Subscribers for a period of two years from the Closing Date regardless
      of
      any investigation by or on behalf of the Agent with respect
      thereto.

     

    	14.  	
            Indemnity

          

     

    	(a)  	
            The
              Corporation shall indemnify and save each of the Indemnified Persons
              harmless from and against any and all losses (other than loss of profits
              or commissions), claims, damages, liabilities, demands, expenses
              (including reasonable fees and disbursements of counsel) or costs
              (collectively “Claims”) which any of the Indemnified Persons may suffer or
              incur, whether under the provisions of any statute or otherwise, in
              any
              way caused by, or arising directly or indirectly from or in consequence
              of:

          

     

    	(i)  	
            any
              information or statement contained in the Subscription Agreements or
              the
              Documents which is or is alleged to be untrue or misleading or which
              omits
              or is alleged to omit to provide any information or state any fact
              the
              omission of which makes or is alleged to make the statement untrue
              or
              misleading in light of the circumstances in which it was made;
              or

          

     

    	(ii)  	
            any
              misrepresentation or alleged misrepresentation contained in the
              Subscription Agreements or the Documents, except a misrepresentation
              which
              is based upon information relating to the Agent and furnished by the
              Agent
              or Agent’s counsel expressly for inclusion in such documents;
              or

          

     

    	(iii)  	
            any
              order, inquiry or investigation of the type referred to in
              subsection 12(b)(i); or

          

     

    	(iv)  	
            any
              prohibition or restriction in trading in the securities of the Corporation
              or any prohibition or restriction affecting the distribution of the
              Offered Shares imposed by any competent authority if such prohibition
              or
              restriction is based on any misrepresentation or alleged misrepresentation
              of a kind referred to in subsection 14(a)(ii);
              or

          

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
       

      -24-

      
 

    

    	(v)  	
            any
              misrepresentation or alleged misrepresentation contained in any of
              the
              responses to the Agent by the Corporation or any directors, officers
              or
              employees of the Corporation in the Due Diligence Sessions;
              or

          

     

    	(vi)  	
            any
              breach of, default under or non-compliance by the Corporation with
              any
              representation, warranty, term or condition of this Agreement or any
              requirement of Applicable Securities
              Laws.

          

     

    	(b)  	
            The
              rights of indemnity contained in this section 14 shall not apply to
              any
              Claim to the extent that a court of competent jurisdiction in a final
              judgment from which no appeal can be made or regulatory authority in
              a
              final ruling from which no appeal can be made shall determine that
              such
              Claim resulted from the gross negligence, fraud or wilful misconduct
              of
              the person claiming indemnity.

          

     

    	(c)  	
            The
              Corporation hereby waives its rights to recover contribution from the
              Agent and any Indemnified Persons with respect to any liability of
              the
              Corporation by reason of or arising out of any misrepresentation contained
              in any of the documents referred to in subsection 14(a) provided, however,
              that such waiver shall not apply to misrepresentations relating solely
              to
              the Agent contained in any of the documents referred to in subsection
              14(a) and furnished to the Corporation by the Agent expressly for
              inclusion in such document or to any Claim to the extent that a court
              of
              competent jurisdiction in a final judgment from which no appeal can
              be
              made or regulatory authority in a final ruling from which no appeal
              can be
              made shall determine that such Claim resulted from the gross negligence,
              fraud or willful misconduct of the person claiming
              indemnity.

          

     

    	(d)  	
            The
              Corporation agrees that in case any legal proceedings or investigation
              shall be brought against or initiated against the Corporation by any
              governmental commission, regulatory authority, exchange, court or other
              authority and an Indemnified Person or other representative of the
              Agent
              shall be required to testify or respond to procedures designed to discover
              information regarding, in connection with or relating to the performance
              of professional services rendered to the Corporation by the Agent,
              the
              Corporation shall be responsible to pay the Agent the reasonable costs
              (including an amount to reimburse the Indemnified Person for the
              reasonable time spent by its personnel in connection therewith on a
              per
              diem basis and all reasonable out of pocket expenses) in connection
              therewith.

          

     

    	(e)  	
            Promptly
              after receipt of notice of the commencement or threatened commencement
              of
              any legal proceeding of the type described or referred to above against
              an
              Indemnified Person, such Indemnified Person shall notify the Corporation
              in writing of the commencement thereof and, throughout the course thereof,
              shall provide copies of all relevant documentation to the Corporation,
              will keep the Corporation advised of the progress thereof and will
              discuss
              with the Corporation all significant actions proposed. The omission
              so to
              notify the Corporation shall not relieve the Corporation of any liability
              which the Corporation may have to the Indemnified Person provided that
              any
              such delay in or failure to give notice as herein required does not
              materially prejudice the defence of the legal proceedings or investigation
              and does not result in any material increase in the liability which
              the
              Corporation would otherwise have under this indemnity had the Indemnified
              Person not so delayed in or failed to give the notice herein
              required.

          

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    -25-

    
 

     

    	(f)  	
            The
              Corporation shall have the right to assume the carriage of the defence
              of
              any such legal proceeding or investigation on behalf of the Indemnified
              Person unless:

          

     

    	(i)  	
            the
              Indemnified Person has been advised in writing by its counsel that
              by so
              doing there is a substantial risk of a conflict of interest between
              the
              position of the Indemnified Person and the Corporation's position as
              to
              the conduct of the defence thereof; or

          

     

    	(ii)  	
            the
              Corporation has failed to undertake a defence of such legal proceeding
              or
              investigation or appoint counsel reasonably acceptable to the Indemnified
              Person within ten days from the date that notice of the action has
              been
              first received by the Corporation.

          

     

    The
      reasonable fees and expenses of counsel for the Indemnified Person in either
      of
      the circumstances described in subsection 14(f)(i) or subsection 14(f)(ii)
      above
      shall be for the account of and shall be paid by the Corporation; it being
      understood, however, that the Corporation shall not, in connection with any
      one
      such action or separate but substantially similar or related actions in the
      same
      jurisdiction arising out of the same general allegations or circumstances,
      be
      liable for the reasonable fees and expenses of more than one separate law firm
      (in addition to any local counsel) for all such Indemnified Persons. Neither
      the
      Corporation nor the Indemnified Person may effect settlement of the action
      without the other's prior written consent.

     

    	(g)  	
            It
              is the intention of the Corporation to constitute the Agent as trustee
              for
              the Indemnified Persons for the purposes of this section 15 and the
              Agent
              agrees to accept such trust and to hold and enforce such covenants
              on
              behalf of such persons.

          

     

    	(h)  	
            No
              admission of liability and no settlement of any proceeding shall be
              made
              without the consent of the Indemnified Persons affected, such consent
              not
              to be unreasonably withheld.

          

     

    	15.  	
            Right
              of Contribution

          

     

    In
      order
      to provide for just and equitable contribution in circumstances in which the
      indemnification provided for in this Agreement is due in accordance with its
      terms but is (in whole or in part), for any reason, held by a court to be
      unavailable from the Corporation on grounds of policy or otherwise, each of
      the
      Corporation and the party or parties seeking indemnification shall contribute
      to
      the aggregate liabilities, claims, demands, losses (other than losses of profit
      in connection with the distribution of the Offered Shares), costs, damages
      and
      expenses (or claims, actions, suits or proceedings in respect thereof) to which
      they may be subject or which they may suffer or incur:

     

    	(a)  	
            in
              such proportion as is appropriate to reflect the relative benefit received
              by the Corporation on the one hand and by the Agent on the other hand
              from
              the offering of the Offered Shares; or

          

     

    	(b)  	
            if
              the allocation provided by subsection 15(a) above is not permitted
              by
              applicable law, in such proportion as is appropriate to reflect not
              only
              the relative benefits referred to in subsection 15(a) above but also
              to
              reflect the relative fault of the party or parties seeking indemnity,
              on
              the one hand, and the parties from whom indemnity is sought, on the
              other
              hand, in connection with the statement, omission, misrepresentation
              or
              alleged misrepresentation, order, inquiry, investigation or other matter
              or thing which resulted in such Claims, as well as any other relevant
              equitable considerations.

          

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    -26-

    
 

     

    The
      relative benefits received by the Corporation, on the one hand, and the Agent,
      on the other hand, shall be deemed to be in the same proportion that the total
      proceeds of the Offering received by the Corporation (net of fees but before
      deducting expenses) bear to the commission and fees received by the
      Agent.

     

    The
      amount paid or payable by an Indemnified Person as a result of Claims referred
      to above shall, without limitation, include any legal or other expenses
      reasonably incurred by the Indemnified Person in connection with investigating
      or defending such Claims, whether or not resulting in any action, suit,
      proceeding or claim.

     

    The
      Corporation agrees that it would not be just and equitable if contributions
      pursuant to this Agreement were determined by pro rata allocation or by any
      other method of allocation which does not take into account the equitable
      considerations referred to in the immediately preceding sections. The rights
      to
      contribution provided in this section 15 shall be in addition to, and without
      prejudice to, any other right to contribution which the Agent may
      have.

     

    Any
      liability of the Agent under this section 15 shall be limited to the amounts
      payable to the Agent pursuant to sections 8 and 9 hereof.

     

    	16.  	
            Notices

          

     

    Any
      notice or other communication to be given hereunder shall, in the case of notice
      to be given to the Corporation, be addressed to:

     

    Red
      Mile
      Entertainment Inc.

    4000
      Bridgeway, Suite 101

    Sausalito,
      California 95965

     

    Attention: Mr.
      Chester P. Aldridge

    Facsimile
      No.: (415)
      339-4250

     

    with
      a
      copy to:

     

    Hank
      Gracin, Esq.

    Lehman
      & Eilen LLP 

    Mission
      Bay Office Plaza 

    20283
      State Road 7, Suite 300

    Boca
      Raton, FL  33498 

    Tel: 
      (561) 237-0804 

    Fax: (561)
      237-0803

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
       

      -27-

      
 

    

    and
      in
      the case of notice to be given to the Agent, addressed to:

     

    J.
      F.
      Mackie & Company Ltd.

    Suite
      1550, 335-8th Avenue S.W.

    Calgary,
      Alberta T2P 1C9

     

    Attention: J.
      Scott
      Riddell

    Facsimile
      No.: (403)
      218-6377

     

    with
      a
      copy to:

     

    Heenan
      Blaikie LLP

    Barristers
      and Solicitors

    1200,
      425-1st
      Street
      S.W.

    Calgary,
      Alberta T2P 3L8

     

    Attention: Tim
      D.
      Sweeney

                   
      Facsimile No.: (403)
      234-7987

     

    or
      to
      such other address as the party may designate by notice given to the others.
      Each communication shall be personally delivered to the addressee or sent by
      facsimile transmission to the addressee, and:

     

    	(a)  	
            a
              communication which is personally delivered shall, if delivered before
              4:30 p.m. (local time) on a business day, be deemed to be given and
              received on that day and, in any other case be deemed to be given and
              received on the first business day following the day on which it is
              delivered; and

          

     

    	(b)  	
            a
              communication which is sent by facsimile transmission shall, if sent
              on a
              business day before 4:30 p.m. (local time), be deemed to be given and
              received on that day and, in any other case be deemed to be given and
              received on the first business day following the day on which it is
              sent.

          

     

    	17.  	
            Trust

          

     

    The
      Corporation hereby constitutes the Agent as trustee for the Subscribers in
      respect of the benefit to the representations, warranties and covenants of
      the
      Corporation set forth in this Agreement and the Subscription
      Agreements.

     

    	18.  	
            Severance

          

     

    If
      one or
      more of the provisions contained herein shall, for any reason, be held to be
      invalid, illegal or unenforceable in any respect, such invalidity, illegality
      or
      unenforceability shall not affect any other provision of this Agreement, but
      this Agreement shall be construed as if such invalid, illegal or unenforceable
      provision or provisions had never been contained herein.

     

    	19.  	
            Governing
              Law

          

     

    This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      Province of Alberta and the laws of Canada applicable therein. Each of the
      parties hereto irrevocably attorns to the exclusive jurisdiction of the courts
      of the Province of Alberta.

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
       

      -28-

      
 

    

    	20.  	
            Time
              of the Essence

          

     

    Time
      shall be of the essence of this Agreement.

     

    	21.  	
            Currency

          

     

    In
      this
      Agreement, references to dollars, "$" or "USD $" are to United States dollars
      .

     

    	22.  	
            Counterpart
              Execution

          

     

    This
      Agreement may be executed in one or more counterparts each of which so executed
      shall constitute an original and all of which together shall constitute one
      and
      the same agreement. The parties hereto shall be entitled to rely on delivery
      of
      a facsimile copy of this executed agreement and such facsimile copy shall be
      legally effective to create a valid and binding agreement.

     

    	23.  	
            Entire
              Agreement

          

     

    It
      is
      understood that the terms and conditions of this Agreement supersede any
      previous verbal or written agreement between the Agent and the Corporation
      with
      respect to the issuance of Convertible Debentures by the
      Corporation.

     

    	24.  	
            United
              States Securities Law
              Considerations

          

     

    	(a)  	
            The
              Corporation represents, warrants, covenants and agrees to and with
              the
              Agent that:

          

     

    	(i)  	
            it
              is not required to register as an “investment company” pursuant to the
              provisions of the United States Investment Company Act of 1940, as
              amended;

          

     

    	(ii)  	
            for
              so long as any of the Convertible Debentures or Underlying Securities
              are
              outstanding and are “restricted securities” within the meaning of Rule
              144(a)(3) under the U.S. Securities Act, it shall either file reports
              and
              other information with the SEC under Section 13 or 15(d) of the United
              States Securities Exchange Act of 1934, as amended, or provide to any
              holder of Convertible Debentures or Underlying Securities and any
              prospective purchaser of Convertible Debentures or Underlying Securities
              designated by such holder, upon the request of such holder, the
              information required to be provided by paragraph (d)(4) of Rule 144A
              under
              the U.S. Securities Act; 

          

     

    	(iii)  	
            none
              of it, its affiliates or any person acting on its or their behalf has
              engaged or will engage in any Directed Selling Efforts with respect
              to the
              Convertible Debentures or Underlying Securities;
              and

          

     

    	(iv)  	
            it
              shall refuse to register any transfer of the Convertible Debentures
              and
              Underlying Securities not made in accordance with the provisions of
              Regulation S under the U.S. Securities Act, pursuant to registration
              under
              the U.S. Securities Act, or pursuant to an exemption from the registration
              requirements of the U.S. Securities Act.

          

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    -29-

    
 

     

    	(b)  	
            The
              Agent represents, covenants and agrees to and with the Corporation
              that:

          

     

    	(i)  	
            it
              acknowledges that the Convertible Debentures and Underlying Securities
              have not been and will not be registered under the U.S. Securities
              Act and
              may not be offered or sold within the United States. It has not offered
              or
              sold, and will not offer or sell, any of the Convertible Debentures
              in the
              United States, and has offered and sold Convertible Debentures and
              Underlying Securities outside the United States only pursuant to Rule
              903
              of Regulation S under the U.S. Securities
              Act;

          

     

    	(ii)  	
            it
              has not entered and will not enter into any contractual arrangement
              with
              respect to the distribution of the Convertible Debentures, except with
              its
              “affiliates”( as such term is defined in Rule 405 under the U.S.
              Securities Act) or with the prior written consent of the
              Corporation;

          

     

    	(iii)  	
            none
              of it, its affiliates or any person acting on its or their behalf has
              engaged or will engage in any Directed Selling Efforts with respect
              to the
              Convertible Debentures or Underlying
              Securities;

          

     

    	(iv)  	
            it
              acknowledges that certificates representing the Convertible Debentures
              and
              Underlying Securities will bear a legend to the effect that the
              Convertible Debentures and Underlying Securities have not been registered
              under the U.S. Securities Act, that transfer of the Convertible Debentures
              and Underlying Securities is prohibited except in accordance with
              Regulation S under the U.S. Securities Act, pursuant to registration
              under
              the U.S. Securities Act, or pursuant to an available exemption from
              the
              registration requirements of the U.S. Securities Act; and that hedging
              transactions involving the Convertible Debentures and Underlying
              Securities may not be conducted unless in compliance with the U.S.
              Securities Act;

          

     

    	(v)  	
            until
              one year following the closing date of the offering of the Convertible
              Debentures, if the Agent sells Convertible Debentures or Underlying
              Securities to a distributor, a dealer (as defined in Section 2(a)(12)
              of
              the U.S. Securities Act), or a person receiving a selling concession,
              fee
              or other remuneration, the Agent shall send a confirmation or other
              notice
              to the purchaser stating that the purchaser is subject to the same
              restrictions on offers and sales that apply to the
              Agent;

          

     

    	(vi)  	
            until
              one year following the closing date of the offering of the Convertible
              Debentures, all offers and sales of the Convertible Debentures and
              Underlying Securities by the Agent shall be made only in accordance
              with
              the provisions of Regulation S under the U.S. Securities Act, pursuant
              to
              registration under the U.S. Securities Act, or pursuant to an available
              exemption from the registration requirements of the U.S. Securities
              Act;
              and

          

     

    	(vii)  	
            until
              one year following the closing date of the offering of the Convertible
              Debentures, the Agent will not engage in hedging transactions with
              regard
              to the Convertible Debentures or Underlying Securities, unless in
              compliance with the U.S. Securities Act.

          

     

    	(c)  	
            Each
              of the Corporation and the Agent represent, covenant and agree
              that:

          

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    -30-

    
 

     

    	(i)  	
            no
              offers of Convertible Debentures were made or will be made to a person
              in
              the United States or to, or for the account or benefit of, a “U.S. person”
              (as such term is defined in Regulation S under the U.S. Securities
              Act),
              and at the time the buy order for the Convertible Debentures was
              originated and the subscription agreement for the Convertible Debentures
              was executed, the buyer was outside the United States, or the seller
              and
              any person acting on its behalf reasonably believe that the buyer was
              outside the United States;

          

     

    	(ii)  	
            no
              offers or sales of Convertible Debentures or Underlying Securities
              by the
              Corporation or the Agent, if made prior to the expiration of a one-year
              distribution compliance period, shall be made to a U.S. person or for
              the
              account or benefit of a U.S. person (other than a “distributor” (as such
              term is defined in Regulation S under the U.S. Securities Act));
              and

          

     

    	(iii)  	
            until
              one year following the closing date of the offering of the Convertible
              Debentures, (i) each purchaser of Convertible Debentures from the
              Corporation or the Agent (other than a distributor) shall certify that
              it
              is not a U.S. person and is not acquiring the Convertible Debentures
              or
              Underlying Securities for the account or benefit of any U.S. person
              or is
              a U.S. person who purchased securities in a transaction that did not
              require registration under the Act; (ii) each such purchaser shall
              agree
              to resell Convertible Debentures and Underlying Securities only in
              accordance with the provisions of Regulation S under the U.S. Securities
              Act, pursuant to registration under the U.S. Securities Act, or pursuant
              to an available exemption from the registration requirements of the
              U.S.
              Securities Act; and (iii) such purchaser shall agree not to engage
              in
              hedging transactions with regard to the Convertible Debentures or
              Underlying Securities unless such hedging is complies with the U.S.
              Securities Act.

          

     

    

     

    [Remainder
      of page intentionally left blank]

     

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

     

    -31-

    
 

    If
      the
      foregoing is in accordance with your understanding and is agreed to by you,
      please confirm your acceptance by signing the enclosed copies of this letter
      at
      the place indicated and by returning the same to the Agent's
      counsel.

     

    

     

    
      	
              RED
                MILE ENTERTAINMENT, INC.

            
	 	 
	
              Per:

            	
              /s/

            
	 	
              Chester
                P. Aldridge

            
	 	 
	 
	
              J.
                F. MACKIE & COMPANY LTD.

            
	 	 
	
              Per:

            	
              /s/

            
	 	
              J.
                Scott Riddell

            
	 	 

    

    

     

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    Schedule
      6(k) - Material Contracts

     

    	1.  	
            Agreement
              with MTVN for a license to the intellectual property known as Jackass
              for
              video games on various hardware platforms.

          

    	2.  	
            Agreement
              with Fleshwound Films for a license to the intellectual property known
              as
              Crusty Demons of dirt for video games on various hardware
              platforms.

          

    	3.  	
            Limited
              use license from Disney interactive for a license to the intellectual
              property known as Disney’s Aladdin for use on a P.C. based video game
              (Disney’s Aladdin Chess Adventures).

          

    	4.  	
            License
              from IR Gurus for a license to the intellectual property known as “Heroes
              Of The Pacific” on the Sony PS2, Microsoft Xbox and
              PC’s.

          

    	5.  	
            License
              from Prodigy Design Ltd. for a license to the intellectual property
              known
              as “GripShift” on the Sony PSP.

          

    	6.  	
            Development
              Agreement with Prodigy Design Ltd. For the development of the video
              game
              known as “Jackass” on the Sony PS2 and
              PSP.

          

    	7.  	
            Development
              and Licensing Agreement with IR Gurus for the development of a game
              known
              as “Heroes Of The Pacific” on the Sony
              PSP.

          

    	8.  	
            Development
              and Licensing Agreement with IR Gurus for the development of a game
              known
              as “Heroes Over Europe” on the Sony PS3 and Microsoft Xbox
              360.

          

    	9.  	
            Development
              and Licensing Agreement with IR Gurus for the development of a game
              known
              as “Equestriad” on the Sony PS2 and
              P.C’s.

          

    	10.  	
            Development
              agreement with Climax Action Limited for development of a video game
              known
              as “Crusty Demons” for the Sony PS2 and Microsoft
              Xbox.

          

    	11.  	
            Licensing
              Agreement with Sony Online Entertainment for the worldwide publishing
              rights to GripShift on the Sony PSP.

          

    	12.  	
            Co-publishing
              Agreement with Codemasters for the European publishing rights to Heroes
              Of
              The Pacific on the Sony PS2, , Microsoft Xbox and
              PC’s.

          

    	13.  	
            Publishing
              Agreement with Ubisoft for the North American publishing rights to
              Heroes
              Of The Pacific on the Sony PS2,, Microsoft Xbox and
              PC’s.

          

    	14.  	
            Publishing
              Agreement with Strategy First Corp. for the worldwide publishing rights
              to
              Disney’s Aladdin Chess Adventures.

          

    	15.  	
            Co-publishing
              Agreement with Evolved Games for the North American publishing rights
              to
              the Crusty Demons video game.

          

    	16.  	
            Co-publishing
              Agreement with Koch Media GmbH for the European publishing rights to
              the
              Crusty Demons video game.

          

    	17.  	
            Letter
              of Intent with the other owners of IR Gurus for the option to purchase
              their ownership position in IR Gurus.

          

    	18.  	
            License
              Agreement with Marshmallowville Media, L.L.C. for a license to the
              intellectual properties known as Marshmallow Shooter or Johnny Blaster’s
              M-Force for video games on various hardware
              platforms.

          

    	19.  	
            Memorandum
              of Understanding with Frank Miller Inc., Ground Zero Productions, Inc.
              and
              Union Entertainment, LLC for a lceinse to the intellectual property
              known
              as “Sin City” or Frank Miller’s Sin City for video games on various
              hardware platforms. 

          

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Schedule
      6(z) - Material Liabilities

     

    Liabilities
      greater than $10,000 as of September
      28,
      2006

    

    Red
      Mile

     

    
      	
              Lehman
                & Eilen 

            	
              18,027.43

            	
              Legal
                bill

               

            
	
              Starkey
                & Hendricks

            	
              10,695.00

               

            	
              Legal
                printer

               

            
	
              Bank
                of America

               

            	
              10,743.44

               

            	
              Visa
                bill

               

            

    

    

     

    2WG
      Media, Inc.

     

    
      	
              Cenega
                Publishing 

               

            	
              100,000.00

               

            	
              Development
                milestone due

               

            
	
              Zomax
                Inc

               

            	
              45,920.00

               

            	
              Inventory

               

            
	
              Lixivian

               

            	
              83,659.79

               

            	
              Inventory

               

            

    

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Schedule
      6(pp) - Summary of Communications regarding Intellectual Property
      claims

     

    On
      September 9, 2005, Vivendi Universal Games, Inc. (VUG) notified the Company
      that
      they believed the trademark “Heroes of the Pacific” infringed on a trademark of
      theirs “Aces of the Pacific”. 

    

    After
      thorough review of our intellectual property counsel, they informed us the
      VUG
      game was published in 1992 and appeared to be last used in 1997 or 1998 by
      VUG
      was long out of commercial use. Our council responded that their mark appeared
      to be abandoned. There were two subsequent letterS from VUG (the last in
      December 2005) where they disagreed with our assessment and tried to start
      a
      dialog toward our ceasing to use the mark or settlement (that is, pay them
      some
      sort of royalty). We last responded on December 13, 2005 telling them that
      we
      found their claim baseless and were not interested in negotiating with them.
      They never responded to this last letter and we believe they have dropped the
      issue. We believe that there is no significant liability to VUG regarding this
      issue.

    

    2. In
      February 2006, we were contacted by phone and later by email by Equity
      management, Inc. on behalf of Lockheed Martin Corporation. In the 1940’s
      Lockheed manufactured an aircraft known as the P-38J Lightning. They still
      have
      a trademark for model planes. Our counsel did not think this mark was strong
      or
      would carryover to video games. We told Equity verbally that we did not believe
      the claim was valid and have not heard from them since. We believe that there
      is
      no significant liability to Lockheed Martin regarding this issue.

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

     

    Schedule
      6(rr) - Restrictions on Intellectual Property Rights

     

    The
      software code for the following games (either completed or under development)
      is
      subject to a license which is fully transferable to purchasers of the business.
      It is also transferable to others, but only with prior approval of developer,
      such approval not to be unreasonably withheld.

    

    	·  	
            Development
              agreement with Climax Action Limited for development of a video game
              known
              as “Crusty Demons” for the Sony PS2 and Microsoft
              Xbox.

          

    	·  	
            Development
              Agreement with Prodigy Design Ltd. For the development of the video
              game
              known as “Jackass” on the Sony PS2 and
              PSP.

          

    

    The
      software code and license for the intellectual property included within the
      game
      for the following games (either completed or under development) is subject
      to a
      license which is fully transferable to purchasers of the business. It is also
      transferable to others, but only with prior approval of developer, such approval
      not to be unreasonably withheld.

    

    	·  	
            Development
              and Licensing Agreement with IR Gurus for the development of a game
              known
              as “Heroes Of The Pacific” on the Sony PS2, Microsoft Xbox and
              PC’s.

          

    	·  	
            Development
              and Licensing Agreement with IR Gurus for the development of a game
              known
              as “Heroes Of The Pacific” on the Sony
              PSP.

          

    	·  	
            Development
              and Licensing Agreement with IR Gurus for the development of a game
              known
              as “Heroes Over Europe” on the Sony PS3 and Microsoft Xbox
              360.

          

    	·  	
            Development
              and Licensing Agreement with Prodigy Design Ltd. for the development
              of a
              game known as “GripShift” on the Sony
              PSP.

          

    	·  	
            Development
              and Licensing Agreement with IR Gurus for the development of a game
              known
              as “Equestriad” on the Sony PS2 and
              P.C’s.

          

    

    The
      Publishing and Development Agreement with Buena Vista Games is only transferable
      to a controlled or controlling entity. The Company may request a transfer to
      a
      different entity, but approval is at Disney’s sole discretion and they may
      charge a transfer fee of up to $25,000. 

    

    The
      license for Crusty Demons is only transferable as part of the direct or indirect
      merger, consolidation, corporate restructuring or sale or transfer of all or
      substantially all of our assets or a controlling interest of 51% or more of
      the
      voting securities of the company.

    

    The
      MTVN
      Merchandising and License Agreement is transferable as part of the direct or
      indirect merger, consolidation, corporate restructuring or sale or transfer
      of
      all or substantially all of our assets or a controlling interest of 51% or
      more
      of the voting securities of the company, so long as this entity is not a
“Restricted Entity”. A Restricted Entity means a competitor to MTVN or an entity
      that’s capitalization and funding sources are less than those of Red Mile or the
      combined resources, post-merger will be less than Red Mile’s at the time of
      merger. Other assignments, however, including a pledge, require MTVN’s
      consent. 

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
 

    Licensing
      agreement with Marshmallowville Media, L.L.C. for a license to the intellectual
      properties known as Marshmallow Shooter or Johnny Blaster’s M-Force has no
      limitations.

    

    The
      following agreements are exclusive licenses, which allows our licensee to sell
      a
      game in a specific territory and which therefore precludes the Company from
      directly selling or licensing that game in that territory.

    

    	·  	
            Licensing
              Agreement with Sony Online Entertainment for the worldwide publishing
              rights to GripShift on the Sony PSP.

          

    	·  	
            Co-publishing
              Agreement with Codemasters for the European publishing rights to Heroes
              Of
              The Pacific on the Sony PS2, Microsoft Xbox and
              PC’s.

          

    	·  	
            Publishing
              Agreement with Ubisoft for the North American publishing rights to
              Heroes
              Of The Pacific on the Sony PS2, Microsoft Xbox and
              PC’s.

          

    	·  	
            Publishing
              Agreement with Strategy First Corp. for the worldwide publishing rights
              to
              Disney’s Aladdin Chess Adventures.

          

    	·  	
            Co-publishing
              Agreement with Evolved Games for the North American publishing rights
              to
              the Crusty Demons video game.

          

    	·  	
            Co-publishing
              Agreement with Koch Media GmbH for the European publishing rights to
              Crusty Demons.

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