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EXCHANGEABLE SHARE PROVISIONS

SPECIAL RIGHTS AND RESTRICTIONS

EXCHANGEABLE SHARES

The Exchangeable Shares Without Par Value have attached to them the special rights and restrictions set out in this Part :

1.

Interpretation.

(a)

Definitions.  For the purposes of these Exchangeable Share Provisions:

"affiliate" has the meaning ascribed thereto in the Securities Act (British Columbia);

"BCA(BC)" means the Business Corporations Act (British Columbia), and all regulations made thereunder as promulgated or amended from time to time;

"Board of Directors" means the board of directors of the Company;

"Business Day" means any day other than a Saturday, Sunday, a public holiday or a day on which commercial banking institutions in Vancouver, British Columbia are closed for business;

"Callco" means 1061806 B.C. Ltd., a subsidiary of the Parent existing under the laws of the Province of British Columbia, or any other direct or indirect wholly-owned subsidiary of the Parent designated by the Parent from time to time in replacement thereof;

"Canadian Dollar Equivalent" means, at any date, in respect of any amount expressed in a currency other than Canadian dollars (the "Foreign Currency Amount") as of such date, the product obtained by multiplying (i) the Foreign Currency Amount by (ii) the noon spot exchange rate on such date for such foreign currency expressed in Canadian dollars as reported by the Bank of Canada or, in the event such spot exchange rate is not available, such spot exchange rate on such date for such foreign currency expressed in Canadian dollars as may be deemed by the Board of Directors to be appropriate for such purpose;

"Common Shares" means the common shares in the capital of the Company;

"Current Market Price" means, in respect of a Parent Share on any date, the Canadian Dollar Equivalent of the average closing sale price on the OTCQB during the period of 20 consecutive trading days ending on the third trading day immediately before such date or, if the Parent Shares are not then quoted on the OTCQB, on such other stock exchange or automated quotation system on which the Parent Shares are listed or quoted, as the case may be, as may be selected by the Board of Directors for such purpose; provided, however, that if in the opinion of the Board of Directors the public distribution or trading activity of Parent Shares during such period does not reflect the fair market value of a Parent Share, then the Current Market Price of a Parent Share shall be determined by the Board of Directors, based upon the advice of such qualified independent financial advisors as the Board of Directors may deem to be appropriate; and provided further that any such selection, opinion or determination by the Board of Directors shall be conclusive and binding, absent manifest error;

"Effective Date" has the meaning ascribed thereto in the Exchange Agreement;

"Exchange Agreement" means the exchange agreement to be entered into among the Parent, the Company, Callco, iMedical Innovation Inc. and the securityholders of iMedical Innovation Inc. who have signed the Exchange Agreement or who have agreed to be bound by the Exchange Agreement, including the schedules thereto, as the same may be amended, supplemented, restated or otherwise modified from time to time in accordance with its term;

"Exchangeable Shares" means the exchangeable shares in the capital of the Company, having the rights, privileges, restrictions and conditions set forth herein;

"Exchangeable Share Consideration" means, with respect to each Exchangeable Share, for any acquisition of, redemption of or distribution of assets of the Company in respect of such Exchangeable Share, or purchase of such Exchangeable Share pursuant to these Exchangeable Share Provisions, the Exchange Agreement, the Support Agreement or the Voting and Exchange Trust Agreement:

(i)

the Current Market Price of one Parent Share deliverable in connection with such action; plus

(ii)

a cheque or cheques payable at par at any branch of the bankers of the payor in the amount of all declared, payable and unpaid, and all undeclared but payable, cash dividends deliverable in connection with such action; plus

(iii)

such stock or other property constituting any declared, payable and unpaid non-cash dividends deliverable in connection with such action,

provided that: (A) the part of the consideration which represents (i) above shall be fully paid and satisfied by the delivery of one Parent Share, such share to be duly issued, fully paid and non-assessable; (B) the part of the consideration which represents (iii) above shall be fully paid and satisfied by delivery of such non-cash items; (C) in each case, any such consideration shall be delivered free and clear of any lien, claim, encumbrance, security interest or adverse claim or interest; and (D) in each case, any such consideration shall be paid without interest and less any tax required to be deducted and withheld therefrom;

"Exchangeable Share Price" means, at any time, for each Exchangeable Share, an amount equal to the aggregate of:

(iv)

the Current Market Price of one Parent Share at such time;

(v)

the full amount of all cash dividends declared, payable and unpaid, at such time, on such Exchangeable Share;

(vi)

the full amount of all non-cash dividends declared, payable and unpaid, at such time, on such Exchangeable Share; and

(vii)

the full amount of all dividends declared and payable or paid in respect of each Parent Share which have not, at such time, been declared or paid on Exchangeable Shares in accordance herewith;

"Exchangeable Share Provisions" means the rights, privileges, restrictions and conditions set out herein;

"Exchangeable Share Voting Event" means any matter in respect of which holders of Exchangeable Shares are entitled to vote as shareholders of the Company, other than an Exempt Exchangeable Share Voting Event, and, for greater certainty, excluding any matter in respect of which holders of Exchangeable Shares are entitled to vote (or instruct the Trustee to vote) in their capacity as Beneficiaries under (and as that term is defined in) the Voting and Exchange Trust Agreement;

"Exempt Exchangeable Share Voting Event" means any matter in respect of which holders of Exchangeable Shares are entitled to vote as shareholders of the Company to approve or disapprove, as applicable, any change to, or in the rights of the holders of, the Exchangeable Shares, where the approval or disapproval, as applicable, of such change is required to maintain the economic equivalence of the Exchangeable Shares and the Parent Shares;

"Liquidation Amount" has the meaning ascribed thereto in Section ;

"Liquidation Call Right" has the meaning ascribed thereto in the Exchange Agreement;

"Liquidation Date" has the meaning ascribed thereto in Section ;

"OTCQB" means the OTCQB tier of the OTC Markets Group;

"Parent" means Biotricity Inc., a corporation existing under the laws of the State of Nevada;

"Parent Control Transaction" shall be deemed to have occurred if:

(viii)

any person acquires (including by way of Exchange Agreement), directly or indirectly, any voting security of the Parent and, immediately after such acquisition, directly or indirectly owns, or exercises control and direction over, voting securities representing more than 50% of the total voting power of all of the then outstanding voting securities of the Parent;

(ix)

the shareholders of the Parent approve a merger, consolidation, recapitalization or reorganization of the Parent, other than any such transaction which would result in the holders of outstanding voting securities of the Parent immediately prior to such transaction directly or indirectly owning, or exercising control and direction over, voting securities representing more than 50% of the total voting power of all of the voting securities of the surviving entity outstanding immediately after such transaction;

(x)

the shareholders of the Parent approve a liquidation of the Parent; or

(xi)

the Parent sells or disposes of all or substantially all of its assets;

"Parent Dividend Declaration Date" means the date on which the board of directors of the Parent declares any dividend or other distribution on the Parent Shares;

"Parent Shares" means shares of common stock of the Parent;

"person" includes any individual, sole proprietorship, corporation, body corporate, incorporated or unincorporated association, syndicate or organization, partnership, limited partnership, limited liability company, unlimited liability company, joint venture,  joint stock company, trust, natural person in his or her capacity as trustee, executor, administrator or other legal representative, a government or governmental authority or other entity, whether or not having legal status;

"Redemption Call Purchase Price" has the meaning ascribed thereto in the Exchange Agreement;

"Redemption Call Right" has the meaning ascribed thereto in the Exchange Agreement;

"Redemption Date" means the date, if any, established by the Board of Directors for the redemption by the Company of all but not less than all of the outstanding Exchangeable Shares, which date shall be no earlier than the sixth anniversary of the Effective Date, unless:

(i)

the aggregate number of Exchangeable Shares issued and outstanding (other than Exchangeable Shares held by the Parent and its subsidiaries) is less than 5% of the number of Exchangeable Shares issued on the Effective Date (as such number of shares may be adjusted as deemed appropriate by the Board of Directors to give effect to any subdivision, combination or consolidation of or stock dividend on the Exchangeable Shares, any issue or distribution of rights to acquire Exchangeable Shares or securities exchangeable for or convertible into Exchangeable Shares, any issue or distribution of other securities or rights or evidences of indebtedness or assets, or any other capital reorganization or other transaction affecting the Exchangeable Shares), in which case the Board of Directors may accelerate such redemption date to such date as it may determine, upon at least 30 days' prior written notice to the registered holders of the Exchangeable Shares;

(ii)

a Parent Control Transaction is proposed, in which case, provided that the Board of Directors determines, in good faith and in its sole discretion, that it is not reasonably practicable to substantially replicate the terms and conditions of the Exchangeable Shares in connection with such Parent Control Transaction and that the redemption of all but not less than all of the outstanding Exchangeable Shares is necessary to enable the completion of such Parent Control Transaction in accordance with its terms, the Board of Directors may accelerate such redemption date to such date as it may determine, upon such number of days, prior written notice to the registered holders of the Exchangeable Shares and the Trustee as the Board of Directors may determine to be reasonably practicable in such circumstances;

(iii)

an Exchangeable Share Voting Event is proposed and (A) the Board of Directors has determined, in good faith and in its sole discretion, that it is not reasonably practicable to accomplish the business purpose (which business purpose must be bona fide and not for the primary purpose of causing the occurrence of the Redemption Date) intended by the Exchangeable Share Voting Event in a commercially reasonable manner that does not result in an Exchangeable Share Voting Event and (B) the holders of the Exchangeable Shares fail to take the necessary action at a meeting or other vote of holders of Exchangeable Shares to approve or disapprove, as applicable, the Exchangeable Share Voting Event, in which case the Redemption Date shall be the Business Day following the later of the day on which the Board of Directors makes such a determination or the holders of the Exchangeable Shares fail to take such action; or

(iv)

an Exempt Exchangeable Share Voting Event is proposed and the holders of the Exchangeable Shares fail to take the necessary action at a meeting or other vote of holders of Exchangeable Shares to approve or disapprove, as applicable, the Exempt Exchangeable Share Voting Event, in which case the Redemption Date shall be the Business Day following the day on which the holders of the Exchangeable Shares fail to take such action, provided, however, that the accidental failure or omission to give any notice of redemption under clauses (i), (ii), (iii) or (iv) above to any of the holders of Exchangeable Shares shall not affect the validity of any such redemption;

"Redemption Price" has the meaning ascribed thereto in Section ;

"Retracted Shares" has the meaning ascribed thereto in Section ;

"Retraction Call Notice" has the meaning ascribed thereto in Section ;

"Retraction Call Right" has the meaning ascribed thereto in Section ;

"Retraction Call Right Purchase Price" has the meaning ascribed thereto in Section ;

"Retraction Date" has the meaning ascribed thereto in Section ;

"Retraction Price" has the meaning ascribed thereto in Section ;

"Retraction Request" has the meaning ascribed thereto in Section ;

"Support Agreement" means the support agreement to be entered into at or prior to the issuance by the Company of any Exchangeable Shares among the Parent, Callco and the Company substantially in the form of Schedule C to the Exchange Agreement, as may be amended, supplemented or otherwise modified from time to time in accordance with its terms;

"Transfer Agent" means such person as may from time to time be appointed by the Company as the registrar and transfer agent for the Exchangeable Shares;

"Trustee" means the trustee chosen by the Parent to act as trustee under the Voting and Exchange Trust Agreement and any successor trustee appointed under the Voting and Exchange Trust Agreement; and  

"Voting and Exchange Trust Agreement" means the voting and exchange trust agreement to be made among the Parent, Callco, the Company and the Trustee in connection with the Exchange Agreement substantially in the form of Schedule D to the Exchange Agreement, as may be amended, supplemented or otherwise modified from time to time in accordance with its terms.

(a)

Interpretation Not Affected by Headings.  The division of these Exchangeable Share Provisions into sections and other portions and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation hereof.  Unless otherwise indicated, all references to a "Section" followed by a number and/or a letter refer to the specified Section of these Exchangeable Share Provisions.

(b)

Number and Gender.  In these Exchangeable Share Provisions, unless the context otherwise clearly requires, words used herein importing the singular include the plural and vice versa and words imparting any gender shall include all genders.

(c)

Date of Any Action.  If any date on which any action is required to be taken hereunder by any person is not a Business Day, then such action shall be required to be taken on the next succeeding day which is a Business Day.

(d)

Currency.  In these Exchangeable Share Provisions, unless stated otherwise, all cash payments provided for herein shall be made in Canadian dollars.

1.

Ranking of Exchangeable Shares.

The Exchangeable Shares shall be entitled to a preference over the Common Shares and any other shares ranking junior to the Exchangeable Shares (a) with respect to the payment of dividends or distributions as and to the extent provided in Section  and (b) with respect to the distribution of assets in the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or any other distribution of the assets of the Company among its shareholders for the purpose of winding up its affairs as and to the extent provided in Section .

2.

Dividends and Distributions.

(a)

Dividends and Distributions.  A holder of an Exchangeable Share shall be entitled to receive and the Board of Directors shall, subject to applicable law, on each Parent Dividend Declaration Date, declare a dividend or distribution on each Exchangeable Share:

(i)

in the case of a cash dividend or distribution declared on the Parent Shares, in an amount in cash for each Exchangeable Share equal to the Canadian Dollar Equivalent of the cash dividend or distribution declared on each Parent Share on the Parent Dividend Declaration Date;

(ii)

in the case of a stock dividend or distribution declared on the Parent Shares to be paid in Parent Shares, by the issue or transfer by the Company of such number of Exchangeable Shares for each Exchangeable Share as is equal to the number of Parent Shares to be paid on each Parent Share; provided, however, that the Company may, in lieu of such stock dividend, elect to effect a contemporaneous and economically equivalent (as determined by the Board of Directors in accordance with Section ) subdivision of the outstanding Exchangeable Shares; or

(iii)

in the case of a dividend or distribution declared on the Parent Shares in property other than cash or Parent Shares, in such type and amount of property for each Exchangeable Share as is the same as or economically equivalent (as determined by the Board of Directors in accordance with Section ) to the type and amount of property declared as a dividend or distribution on each Parent Share.

Such dividends or distributions shall be paid out of money, assets or property of the Company properly applicable to the payment of dividends or other distributions, or out of authorized but unissued shares of the Company, as applicable.  The holders of Exchangeable Shares shall not be entitled to any dividends or other distributions other than or in excess of the dividends and distributions referred to in this Section .

(b)

Payments of Dividends and Distributions.  Cheques of the Company payable at par at any branch of the bankers of the Company shall be issued in respect of any cash dividends or distributions contemplated by Section  and the sending of such cheque to each holder of an Exchangeable Share shall satisfy the cash dividend or distribution represented thereby unless the cheque is not paid on presentation.  Written evidence of the book entry issuance or transfer to the registered holder of Exchangeable Shares shall be delivered in respect of any stock dividends or distributions contemplated by Section  and the sending of such written evidence to each holder of an Exchangeable Share shall satisfy the stock dividend or distribution represented thereby.  Such other type and amount of property in respect of any dividends or distributions contemplated by Section  shall be issued, distributed or transferred by the Company in such manner as it shall determine and the issuance, distribution or transfer thereof by the Company to each holder of an Exchangeable Share shall satisfy the dividend or distribution represented thereby.  Subject to the requirements of applicable law with respect to unclaimed property, no holder of an Exchangeable Share shall be entitled to recover by action or other legal process against the Company any dividend or distribution that is represented by a cheque that has not been duly presented to the Company's bankers for payment or that otherwise remains unclaimed for a period of six years from the date on which such dividend was payable.

(c)

Record and Payment Dates.  The record date for the determination of the holders of Exchangeable Shares entitled to receive payment of, and the payment date for, any dividend or distribution declared on the Exchangeable Shares under Section  shall be the same dates as the record date and payment date, respectively, for the corresponding dividend or distribution declared on the Parent Shares.  The record date for the determination of the holders of Exchangeable Shares entitled to receive Exchangeable Shares in connection with any subdivision of the Exchangeable Shares under Section  and the effective date of such subdivision shall be the same dates as the record and payment date, respectively, for the corresponding stock dividend or distribution declared on the Parent Shares.

(d)

Partial Payment.  If on any payment date for any dividends or distributions declared on the Exchangeable Shares under Section  the dividends or distributions are not paid in full on all of the Exchangeable Shares then outstanding, any such dividends or distributions that remain unpaid shall be paid on a subsequent date or dates determined by the Board of Directors on which the Company shall have sufficient moneys, assets or property properly applicable to the payment of such dividends or distributions.

(e)

Economic Equivalence.  The Board of Directors shall determine, in good faith and in its sole discretion (with the assistance of such financial or other advisors as the Board of Directors may determine), "economic equivalence" for the purposes of the Exchangeable Share Provisions and each such determination shall be conclusive and binding on the Company and its shareholders.  In making each such determination, the following factors shall, without excluding other factors determined by the Board of Directors to be relevant, be considered by the Board of Directors:

(i)

in the case of any stock dividend or other distribution payable in Parent Shares, the number of such shares issued in proportion to the number of Parent Shares previously outstanding;

(ii)

in the case of the issuance or distribution of any rights, options or warrants to subscribe for or purchase Parent Shares (or securities exchangeable for or convertible into or carrying rights to acquire Parent Shares), the relationship between the exercise price of each such right, option or warrant, the Current Market Price of a Parent Share, the volatility of the Parent Shares and the terms of any such instrument;

(iii)

in the case of the issuance or distribution of any other form of property (including any shares or securities of the Parent of any class other than Parent Shares, any rights, options or warrants other than those referred to in Section , any evidences of indebtedness of the Parent or any assets of the Parent), the relationship between the fair market value (as determined by the Board of Directors in the manner above contemplated) of such property to be issued or distributed with respect to each outstanding Parent Share and the Current Market Price of a Parent Share;

(iv)

in the case of any subdivision, redivision or change of the then outstanding Parent Shares into a greater number of Parent Shares or the reduction, combination, consolidation or change of the then outstanding Parent Shares into a lesser number of Parent Shares or any amalgamation, merger, arrangement, reorganization or other transaction affecting the Parent Shares, the effect thereof upon the then outstanding Exchangeable Shares; and

(v)

in all such cases, the general taxation consequences of the relevant event to holders of Exchangeable Shares to the extent that such consequences may differ from the taxation consequences to holders of Parent Shares as a result of differences between taxation laws of Canada and the United States (except for any differing consequences arising as a result of differing withholding taxes and marginal taxation rates and without regard to the individual circumstances of holders of Exchangeable Shares).

3.

Certain Restrictions.

So long as any of the Exchangeable Shares are outstanding (other than as may be held by the Parent or its subsidiaries), the Company shall not at any time without, but may at any time with, the approval of the holders of the Exchangeable Shares given as specified in Section ):

(a)

pay any dividends or distributions on the Common Shares or any other shares ranking junior to the Exchangeable Shares with respect to the payment of dividends or distributions, other than stock dividends payable in Common Shares or any such other shares ranking junior to the Exchangeable Shares, as the case may be;

(b)

redeem or purchase or make any capital distribution in respect of Common Shares or any other shares ranking junior to the Exchangeable Shares with respect to the payment of dividends or the distribution of the assets in the event of the liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, or any other distribution of the assets of the Company among its shareholders for the purpose of winding up its affairs;

(c)

redeem or purchase or make any capital distribution in respect of any other shares of the Company ranking equally with the Exchangeable Shares with respect to the payment of dividends or the distribution of assets in the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or any other distribution of the assets of the Company among its shareholders for the purpose of winding up its affairs;

(d)

issue any Exchangeable Shares or any other shares of the Company ranking equally with the Exchangeable Shares other, in each case, than by way of stock dividends to the holders of such Exchangeable Shares; or

(e)

issue any shares of the Company ranking superior to the Exchangeable Shares,

(f)

provided, however, that the restrictions in Sections , ,  and  shall not apply if all dividends or distributions on the outstanding Exchangeable Shares corresponding to dividends or distributions declared and paid to date on the Parent Shares shall have been declared and paid in full on the Exchangeable Shares and provided that the proposed redemption, purchase or other capital distribution does not impair the Company's ability to redeem all of the outstanding Exchangeable Shares.

4.

Liquidation.

(a)

Liquidation Amount.  Subject to applicable laws and the due exercise by the Parent or Callco of the Liquidation Call Right, in the event of the liquidation, dissolution or winding-up of the Company or any other distribution of the assets of the Company among its shareholders for the purpose of winding up its affairs, subject to the exercise of the Liquidation Call Right, a holder of Exchangeable Shares shall be entitled, subject to applicable law, to receive from the assets of the Company in respect of each Exchangeable Share held by such holder on the effective date of such liquidation, dissolution, winding-up or other distribution (the "Liquidation Date"), before any distribution of any part of the assets of the Company among the holders of the Common Shares or any other shares ranking junior to the Exchangeable Shares with respect to dividends or distributions an amount per share (the "Liquidation Amount") equal to the Exchangeable Share Price applicable on the last Business Day prior to the Liquidation Date, which price shall be satisfied in full by the Company delivering or causing to be delivered to such holder the Exchangeable Share Consideration representing the Liquidation Amount.

(b)

Payment of Liquidation Amount.  In the case of a distribution pursuant to Section , and provided that the Liquidation Call Right has not been exercised by the Parent or Callco, on or promptly after the Liquidation Date, the Company shall deliver or cause to be delivered to the holders of the Exchangeable Shares the Liquidation Amount for each such Exchangeable Share upon presentation and surrender of the certificates representing such Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the BCA(BC) and the constating documents of the Company and such additional documents, instruments and payments as the Transfer Agent and the Company may reasonably require, at the registered office of the Company or at any office of the Transfer Agent as may be specified by the Company by notice to the holders of the Exchangeable Shares.  Payment of the Liquidation Amount for such Exchangeable Shares shall be made by delivery to each holder, at the address of such holder recorded in the securities register of the Company for the Exchangeable Shares or by holding for pick-up by such holder at the registered office of the Company or at any office of the Transfer Agent as may be specified by the Company by notice to the holders of the Exchangeable Shares, the Exchangeable Share Consideration such holder is entitled to receive pursuant to Section .  On and after the Liquidation Date, the holders of the Exchangeable Shares shall cease to be holders of such Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof (including any rights under the Voting and Exchange Trust Agreement) other than the right to receive their proportionate part of the total Liquidation Amount, unless payment of the total Liquidation Amount for such Exchangeable Shares shall not be made upon presentation and surrender of share certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected until the Liquidation Amount has been paid in the manner hereinbefore provided.  The Company shall have the right at any time after the Liquidation Date to transfer or cause to be issued or transferred to, and deposited in a custodial account with, any chartered bank or trust company the Liquidation Amount in respect of the Exchangeable Shares represented by certificates that have not at the Liquidation Date been surrendered by the holders thereof, such Liquidation Amount to be held by such bank or trust company as trustee for and on behalf of, and for the use and benefit of, such holders.  Upon such deposit being made, the rights of a holder of Exchangeable Shares after such deposit shall be limited to receiving its proportionate part of the total Liquidation Amount for such Exchangeable Shares so deposited, without interest, and all dividends and other distributions with respect to the Parent Shares to which such holder is entitled with a record date after the date of such deposit and before the date of transfer of such Parent Shares to such holder (in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom) against presentation and surrender of the certificates for the Exchangeable Shares held by them in accordance with the foregoing provisions.

(c)

No Right to Participate in Further Distributions.  After the Company has satisfied its obligations to pay the holders of the Exchangeable Shares the total Liquidation Amount per Exchangeable Share pursuant to this Section , such holders shall not be entitled to share in any further distribution of the assets of the Company.

5.

Retraction of Exchangeable Shares.

(a)

Retraction at Option of Holder

(i)

Subject to applicable laws and the due exercise by the Parent or Callco of the Retraction Call Right, a holder of Exchangeable Shares shall be entitled at any time to require the Company to redeem, on the fifth Business Day after the date on which the Retraction Request is received by the Company (the "Retraction Date"), any or all of the Exchangeable Shares registered in the name of such holder for an amount per share equal to the Exchangeable Share Price applicable on the last Business Day prior to the Retraction Date (the "Retraction Price"), which price shall be satisfied in full by the Company delivering or causing to be delivered to such holder the Exchangeable Share Consideration representing the Retraction Price.  A holder of Exchangeable Shares must give notice of a request to redeem by presenting and surrendering to the Company, at the registered office of the Company or at any office of the Transfer Agent as may be specified by the Company by notice to the holders of the Exchangeable Shares, the certificate or certificates representing the Exchangeable Shares that such holder desires to have the Company redeem, together with (A) such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the BCA(BC) and the constating documents of the Company and such additional documents, instruments and payments as the Transfer Agent and the Company may reasonably require and (B) a duly executed request (the ''Retraction Request'') in the form of Appendix I hereto or in such other form as may be acceptable to the Company specifying that such holder desires to have all or any number specified therein of the Exchangeable Shares represented by such certificate or certificates (the "Retracted Shares") redeemed by the Company.

(ii)

In the case of a redemption of Exchangeable Shares pursuant to this Section , upon receipt by the Company or the Transfer Agent in the manner specified in Section  of a certificate representing the number of Exchangeable Shares which the holder desires to have the Company redeem, together with a duly executed Retraction Request and such additional documents and instruments specified in Section , and provided that (A) the Retraction Request has not been revoked by the holder of such Exchangeable Shares in the manner specified in Section  and (B) neither the Parent nor Callco has exercised the Retraction Call Right, the Company shall redeem the Retracted Shares effective at the close of business on the Retraction Date.  On the Retraction Date, the Company shall deliver or cause to be delivered to such holder, at the address of the holder recorded in the securities register of the Company for the Exchangeable Shares or at the address specified in the Retraction Request or by holding for pick-up by the holder at the registered office of the Company or at any office of the Transfer Agent as may be specified by the Company by notice to the holders of the Exchangeable Shares, the Exchangeable Share Consideration representing the Retraction Price and such delivery of such Exchangeable Share Consideration by or on behalf of the Company by the Transfer Agent shall be deemed to be payment of and shall satisfy and discharge all liability for the Retraction Price to the extent that the same is represented by such Exchangeable Share Consideration, unless any cheque comprising part of such Exchangeable Share Consideration is not paid on due presentation.  If only a part of the Exchangeable Shares represented by any certificate is redeemed, a new certificate for the balance of such Exchangeable Shares shall be issued to the holder at the expense of the Company.  On and after the close of business on the Retraction Date, the holder of the Retracted Shares shall cease to be a holder of such Retracted Shares and shall not be entitled to exercise any of the rights of a holder in respect thereof, other than the right to receive the total Retraction Price in respect thereof, unless upon presentation and surrender of certificates in accordance with the foregoing provisions, payment of the aggregate Retraction Price payable to such holder shall not be made, in which case the rights of such holder shall remain unaffected until such aggregate Retraction Price has been paid in the manner hereinbefore provided.  On and after the close of business on the Retraction Date, provided that presentation and surrender of certificates and payment of such aggregate Retraction Price has been made in accordance with the foregoing provisions, the holder of the Retracted Shares so redeemed by the Company shall thereafter be considered and deemed for all purposes to be a holder of the Parent Shares delivered to such holder.

(iii)

Notwithstanding any other provision of this Section , the Company shall not be obligated to redeem Retracted Shares specified by a holder in a Retraction Request if and to the extent that such redemption of Retracted Shares would be contrary to solvency requirements or other provisions of applicable laws.  If the Company believes that on any Retraction Date it would not be permitted by any of such provisions to redeem the Retracted Shares tendered for redemption on such date, and neither the Parent nor Callco has exercised the Retraction Call Right with respect to such Retracted Shares, the Company shall only be obligated to redeem Retracted Shares specified by a holder in a Retraction Request to the extent of the maximum number that may be so redeemed (rounded down to a whole number of shares) as would not be contrary to such provisions and shall notify the holder and the Trustee at least two Business Days prior to the Retraction Date as to the number of Retracted Shares which will not be redeemed by the Company.  In any case in which the redemption by the Company of Retracted Shares would be contrary to solvency requirements or other provisions of applicable laws, the Company shall redeem Retracted Shares in accordance with Section  on a pro rata basis and shall issue to each holder of Retracted Shares a new certificate, at the expense of the Company, representing the Retracted Shares not redeemed by the Company pursuant to Section .  If the Company would otherwise be obligated to redeem Retracted Shares pursuant to Section  but is not obligated to do so as a result of solvency requirements or other provisions of applicable laws, the holder of any such Retracted Shares not redeemed by the Company pursuant to Section  as a result of solvency requirements or other provisions of applicable laws shall be deemed, by delivery of the Retraction Request to have instructed the Transfer Agent to require the Parent or Callco to purchase such Retracted Shares from such holder on the Retraction Date or as soon as practicable thereafter on payment by the Parent or Callco to such holder of the total Retraction Price in respect of such Retracted Shares, all as more specifically provided for in the Voting and Exchange Trust Agreement.

(iv)

A holder of Retracted Shares may, by notice in writing given by the holder to the Company before the close of business on the Business Day immediately preceding the Retraction Date, withdraw its Retraction Request, in which event such Retraction Request shall be null and void and, for greater certainty, the revocable offer constituted by the Retraction Request to sell the Retracted Shares to the Parent or Callco shall be deemed to have been revoked.

(v)

Notwithstanding any other provision of this Section , if:

(A)

exercise of the rights of the holders of the Exchangeable Shares, or any of them, to require the Company to redeem any Exchangeable Shares pursuant to this Section  on any Retraction Date would require listing particulars or any similar document to be issued in order to obtain the approval of the OTCQB to the listing and trading (subject to official notice of issuance) of the Parent Shares that would be required to be delivered to such holders of Exchangeable Shares in connection with the exercise of such rights; and

(B)

as a result of (A) above, it would not be practicable (notwithstanding the reasonable endeavours of the Parent) to obtain such approvals in time to enable all or any of such Parent Shares to be admitted to listing and trading by the OTCQB (subject to official notice of issuance) when so delivered,

the Retraction Date shall, notwithstanding any other date specified or otherwise deemed to be specified in any relevant Retraction Request, be deemed for all purposes to be the earlier of (x) the second Business Day immediately following the date the approvals referred to in Section  are obtained and (y) the date which is 30 Business Days after the date on which the relevant Retraction Request is received by the Company, and references in these Exchangeable Share Provisions to such Retraction Date shall be construed accordingly.

(b)

Retraction Call Rights

(i)

In the event that a holder of Exchangeable Shares delivers a Retraction Request pursuant to Section , and subject to the limitations set forth in Section  (including that Callco shall only be entitled to exercise its Retraction Call Right with respect to those holders of Exchangeable Shares, if any, in respect of which the Parent has not exercised its Retraction Call Right), the Parent and Callco shall each have the overriding right (the "Retraction Call Right"), notwithstanding the proposed redemption of the Exchangeable Shares by the Company pursuant to Section , to purchase from such holder on the Retraction Date all but not less than all of the Retracted Shares held by such holder on payment by the Parent or Callco, as the case may be, of an amount per share equal to the Exchangeable Share Price applicable on the last Business Day prior to the Retraction Date (the "Retraction Call Right Purchase Price"), which price shall be satisfied in full by the Parent or Callco, as the case may be, delivering or causing to be delivered to such holder the Exchangeable Share Consideration representing the Retraction Call Right Purchase Price. Upon the exercise of the Retraction Call Right in respect of Retracted Shares, the holder of such shares shall be obligated to sell all of such Retracted Shares to the Parent or Callco, as the case may be, on the Retraction Date on payment by the Parent or Callco, as the case may be, of the total Retraction Call Right Purchase Price in respect of such Retracted Shares as set forth in this Section .

(ii)

Upon receipt by the Company of a Retraction Request, the Company shall immediately notify the Parent and Callco thereof and shall provide the Parent and Callco with a copy of the Retraction Request.  Callco shall only be entitled to exercise its Retraction Call Right with respect to those holders of Retracted Shares, if any, in respect of which the Parent has not exercised its Retraction Call Right.  In order to exercise its Retraction Call Right, the Parent or Callco, as the case may be, must notify the Company in writing of its determination to do so (a "Retraction Call Notice") within five Business Days after the Company notifies the Parent and Callco of the Retraction Request.  If neither the Parent nor Callco so notifies the Company within such five Business Day period, the Company shall notify the holder as soon as possible thereafter that neither the Parent nor Callco will exercise the Retraction Call Right.  If one or both of the Parent and Callco delivers a Retraction Call Notice within such five Business Day period and duly exercises its Retraction Call Right in accordance with this Section , the obligation of the Company to redeem the Retracted Shares shall terminate and, provided that the Retraction Request is not revoked by the holder of such Retracted Shares in the manner specified in Section , the Parent or Callco, as the case may be, shall purchase from such holder and such holder shall sell to the Parent or Callco, as the case may be, on the Retraction Date the Retracted Shares for an amount per share equal to the Retraction Call Right Purchase Price.  Provided that the aggregate Retraction Call Right Purchase Price has been so deposited with the Transfer Agent as provided in Section , the closing of the purchase and sale of the Retracted Shares pursuant to the Retraction Call Right shall be deemed to have occurred as at the close of business on the Retraction Date and, for greater certainty, no redemption by the Company of such Retracted Shares shall take place on the Retraction Date.

(iii)

For the purpose of completing a purchase of Retracted Shares pursuant to the exercise of the Retraction Call Right, the Parent or Callco, as the case may be, shall deliver or cause to be delivered to the holder of such Retracted Shares, at the address of the holder recorded in the securities register of the Company for the Exchangeable Shares or at the address specified in the holder's Retraction Request or by holding for pick-up by the holder at the registered office of the Company or at any office of the Transfer Agent as may be specified by the Company by notice to the holders of Exchangeable Shares, the Exchangeable Share Consideration representing the Retraction Call Right Purchase Price to which such holder is entitled and such delivery of Exchangeable Share Consideration on behalf of the Parent or Callco, as the case may be, shall be deemed to be payment of and shall satisfy and discharge all liability for the Retraction Call Right Purchase Price to the extent that the same is represented by such Exchangeable Share Consideration, unless such cheque comprising part of such Exchangeable Share Consideration is not paid on due presentation.

(iv)

On and after the close of business on the Retraction Date, the holder of the Retracted Shares shall cease to be a holder of such Retracted Shares and shall not be entitled to exercise any of the rights of a holder in respect thereof, other than the right to receive the total Retraction Call Right Purchase Price in respect thereof, unless payment of the aggregate Retraction Call Right Purchase Price payable to such holder shall not be made upon presentation and surrender of certificates in accordance with the foregoing provisions in which case the rights of such holder shall remain unaffected until such aggregate Retraction Call Right Purchase Price has been paid in the manner hereinbefore provided.  On and after the close of business on the Retraction Date, provided that presentation and surrender of certificates and payment of such aggregate Retraction Call Right Purchase Price has been made in accordance with the foregoing provisions, the holder of the Retracted Shares so purchased by the Parent or Callco, as the case may be, shall thereafter be considered and deemed for all purposes to be a holder of the Parent Shares delivered to such holder.

6.

Redemption of Exchangeable Shares by the Company.

(a)

Redemption Amount.  Subject to applicable laws and the due exercise by the Parent or Callco of the Redemption Call Right, the Company shall on the Redemption Date redeem all but not less than all of the then outstanding Exchangeable Shares for an amount per share (the "Redemption Price") equal to the Exchangeable Share Price on the last Business Day prior to the Redemption Date, which price shall be satisfied in full by the Company delivering or causing to be delivered to each holder of Exchangeable Shares the Exchangeable Share Consideration for each Exchangeable Share held by such holder.

(b)

Notice of Redemption.  In the case of a redemption of Exchangeable Shares pursuant to Section , the Company shall, at least 30 days before the Redemption Date (other than a Redemption Date established in connection with a Parent Control Transaction, an Exchangeable Share Voting Event or an Exempt Exchangeable Share Voting Event), send or cause to be sent to each holder of Exchangeable Shares a notice in writing of the redemption by the Company or the purchase by the Parent or Callco under the Redemption Call Right, as the case may be, of the Exchangeable Shares held by such holder.  In the case of a Redemption Date established in connection with a Parent Control Transaction, an Exchangeable Share Voting Event or an Exempt Exchangeable Share Voting Event, the written notice of the redemption by the Company or the purchase by the Parent or Callco, as the case may be, of the Exchangeable Shares under the Redemption Call Right will be sent on or before the Redemption Date, on as many days prior written notice as may be determined by the Board of Directors to be reasonably practicable in the circumstances.  In any such case, such notice shall set out the formula for determining the Redemption Price or the Redemption Call Purchase Price, as the case may be, the Redemption Date and, if applicable, particulars of the Redemption Call Right.  In the case of any notice given in connection with a possible Redemption Date, such notice will be given contingently and will be withdrawn if the contingency does not occur.

(c)

Payment of Redemption Price.  On or after the Redemption Date, and provided that the Redemption Call Right has not been exercised by the Parent or Callco, the Company shall deliver or cause to be delivered to the holders of the Exchangeable Shares to be redeemed the Redemption Price for each such Exchangeable Share, upon presentation and surrender of the certificates representing such Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the BCA(BC) and the constating documents of the Company and such additional documents, instruments and payments as the Transfer Agent and the Company may reasonably require, at the registered office of the Company or at any office of the Transfer Agent as may be specified by notice to the holders of the Exchangeable Shares.  Payment of the Redemption Price for such Exchangeable Shares shall be made by delivery to each holder, at the address of the holder recorded in the securities register of the Company for the Exchangeable Shares or by holding for pick-up by the holder at the registered office of the Transfer Agent as may be specified by the Company by notice to the holders of Exchangeable Shares, the Exchangeable Share Consideration representing the Redemption Price.  On and after the Redemption Date, the holders of the Exchangeable Shares called for redemption shall cease to be holders of such Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof (including any rights under the Voting and Exchange Trust Agreement) other than the right to receive their proportionate part of the total Redemption Price, unless payment of the total Redemption Price for such Exchangeable Shares shall not be made upon presentation and surrender of certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected until the Redemption Price has been paid in the manner hereinbefore provided.  The Company shall have the right at any time after the sending of notice of its intention to redeem the Exchangeable Shares as aforesaid to deposit or cause to be deposited the total Redemption Price (in the form of Exchangeable Share Consideration) of the Exchangeable Shares so called for redemption, or of such of the said Exchangeable Shares represented by certificates that have not at the date of such deposit been surrendered by the holders thereof in connection with such redemption, in a custodial account with any chartered bank or trust company in Canada named in such notice and any interest earned on such deposit shall belong to the Company.  Provided that such total Redemption Price has been so deposited prior to the Redemption Date, on and after the Redemption Date, the Exchangeable Shares shall be redeemed and the rights of the holders thereof after the Redemption Date shall be limited to receiving their proportionate part of the total Redemption Price for such Exchangeable Shares so deposited, against presentation and surrender of the certificates for the Exchangeable Shares held by them, respectively, in accordance with the foregoing provisions.

7.

Purchase for Cancellation.

(a)

Private Agreement.  Subject to applicable laws and the constating documents of the Company, and notwithstanding Section , the Company may at any time and from time to time purchase for cancellation all or any part of the Exchangeable Shares by private agreement with the holder thereof.

(b)

Tender Offer.  Subject to applicable laws and the constating documents of the Company, the Company may at any time and from time to time purchase for cancellation all or any part of the outstanding Exchangeable Shares at any price per share by tender to all the holders of record of Exchangeable Shares then outstanding together with an amount equal to all declared and unpaid dividends thereon for which the record date has occurred prior to the date of purchase.  If in response to an invitation for tenders under the provisions of this Section  more Exchangeable Shares are tendered at a price or prices acceptable to the Company than the Company is prepared to purchase, the Exchangeable Shares to be purchased by the Company shall be purchased as nearly as may be pro rata according to the number of shares tendered by each holder who submits a tender to the Company, provided that when shares are tendered at different prices the pro rating shall be effected (disregarding fractions) only with respect to the shares tendered at the price at which more shares were tendered than the Company is prepared to purchase after the Company has purchased all the shares tendered at lower prices.  If only part of the Exchangeable Shares represented by any certificate are purchased pursuant to this Section , a new certificate for the balance of such shares shall be issued at the expense of the Company.

8.

Voting Rights.

Except as required by applicable laws and by Section , the holders of the Exchangeable Shares shall not be entitled as such to receive notice of or to attend any meeting of the shareholders of the Company or to vote at any such meeting.  Without limiting the generality of the foregoing, the holders of the Exchangeable Shares shall not have class votes except as required by applicable law.

9.

Amendment and Approval.

(a)

Amendment.  The rights, privileges, restrictions and conditions attaching to the Exchangeable Shares may be added to, changed or removed only with the approval of the holders of the Exchangeable Shares given as hereinafter specified.

(b)

Approval.  Any approval given by the holders of the Exchangeable Shares to add to, change or remove any right, privilege, restriction or condition attaching to the Exchangeable Shares or any other matter requiring the approval or consent of the holders of the Exchangeable Shares in accordance with applicable laws shall be deemed to have been sufficiently given if it shall have been given in accordance with applicable laws, subject to a minimum requirement that such approval be evidenced by resolution passed by not less than two-thirds of the votes cast on such resolution at a meeting of holders of Exchangeable Shares duly called and held at which the holders of at least 10% of the outstanding Exchangeable Shares at that time are present or represented by proxy; provided, however, that if at any such meeting the holders of at least 10% of the outstanding Exchangeable Shares at that time are not present or represented by proxy within one-half hour after the time appointed for such meeting, then the meeting shall be adjourned to such date not less than five days thereafter and to such time and place as may be designated by the Chairman of such meeting.  At such adjourned meeting, the holders of Exchangeable Shares present or represented by proxy thereat may transact the business for which the meeting was originally called and a resolution passed thereat by the affirmative vote of not less than two-thirds of the votes cast on such resolution at such meeting shall constitute the approval or consent of the holders of the Exchangeable Shares.

10.

Reciprocal Changes, etc in Respect of Parent Shares.. 

(a)

Each holder of an Exchangeable Share acknowledges that the Support Agreement provides, in part, that the Parent will not, except as provided in the Support Agreement, without the prior approval of the Company and the prior approval of the holders of the Exchangeable Shares given in accordance with Section :

(i)

issue or distribute Parent Shares (or securities exchangeable for or convertible into or carrying rights to acquire Parent Shares) to the holders of all or substantially all of the then outstanding Parent Shares by way of stock dividend or other distribution, other than an issue of Parent Shares (or securities exchangeable for or convertible into or carrying rights to acquire Parent Shares) to holders of Parent Shares (i) who exercise an option to receive dividends in Parent Shares (or securities exchangeable for or convertible into or carrying rights to acquire Parent Shares) in lieu of receiving cash dividends or (ii) pursuant to any dividend reinvestment plan or similar arrangement;

(ii)

issue or distribute rights, options or warrants to the holders of all or substantially all of the then outstanding Parent Shares entitling them to subscribe for or to purchase Parent Shares (or securities exchangeable for or convertible into or carrying rights to acquire Parent Shares); or

(iii)

issue or distribute to the holders of all or substantially all of the then outstanding Parent Shares:

(A)

shares or securities of the Parent of any class other than Parent Shares (or securities convertible into or exchangeable for or carrying rights to acquire Parent Shares);

(B)

rights, options or warrants other than those referred to in Section , above;

(C)

evidence of indebtedness of the Parent; or

(D)

assets of the Parent,

unless, in each case, (A) the Company is permitted under applicable law to issue or distribute the economic equivalent on a per share basis of such rights, options, warrants, securities, shares, evidences of indebtedness or other assets to the holders of the Exchangeable Shares and (B) the Company shall issue or distribute the economic equivalent of such rights, options, warrants, securities, shares, evidences of indebtedness or other assets simultaneously to holders of the Exchangeable Shares; provided, however, that, for greater certainty, the above restrictions shall not apply to any securities issued or distributed by the Parent in order to give effect to and to consummate the transactions contemplated by, and in accordance with, the Exchange Agreement.

(b)

Each holder of an Exchangeable Share acknowledges that the Support Agreement further provides, in part, that for so long as any Exchangeable Shares not owned by the Parent or its affiliates are outstanding, the Parent will not without the prior approval of the Company and the prior approval of the holders of the Exchangeable Shares given in accordance with Section ):

(i)

subdivide, redivide or change the then outstanding Parent Shares into a greater number of Parent Shares;

(ii)

reduce, combine, consolidate or change the then outstanding Parent Shares into a lesser number of Parent Shares; or

(iii)

reclassify or otherwise change the Parent Shares or effect an amalgamation, merger, reorganization or other transaction affecting the Parent Shares,

(iv)

unless, in each case, (A) the Company is permitted under applicable law to make the same or an economically equivalent change to, or in the rights of holders of, the Exchangeable Shares and (B) the same or an economically equivalent change is made simultaneously to, or in the rights of the holders of, the Exchangeable Shares; provided, however, that, for greater certainty, the above restrictions shall not apply to any securities issued or distributed by the Parent in order to give effect to and to consummate the transactions contemplated by, and in accordance with the Exchange Agreement.  The Support Agreement further provides, in part, that the aforesaid provisions of the Support Agreement shall not be changed without the approval of the holders of the Exchangeable Shares given in accordance with Section .

(c)

Notwithstanding the foregoing provisions of this Section , in the event of a Parent Control Transaction:

(i)

in which the Parent merges or amalgamates with, or in which all or substantially all of the then outstanding Parent Shares are acquired by one or more other corporations to which the Parent is, immediately before such merger, amalgamation or acquisition, related within the meaning of the Income Tax Act (Canada) (otherwise than virtue of a right referred to in paragraph 251(5)(b) thereof);

(ii)

which does not result in an acceleration of the Redemption Date in accordance with paragraph (b) of the definition of such term in Section ; and 

(iii)

in which all or substantially all of the then outstanding Parent Shares are converted into or exchanged for shares or rights to receive such shares (the "Other Shares") of another corporation (the "Other Corporation") that, immediately after such Parent Control Transaction, owns or controls, directly or indirectly, the Parent;

then all references herein to "Parent" shall thereafter be and be deemed to be references to "Other Corporation" and all references herein to "Parent Shares" shall thereafter be and be deemed to be references to "Other Shares" (with appropriate adjustments, if any, as are required to result in a holder of Exchangeable Shares on the exchange, redemption or retraction of shares pursuant to these Exchangeable Share Provisions or the exchange of shares pursuant to the Voting and Exchange Trust Agreement immediately subsequent to the Parent Control Transaction being entitled to receive that number of Other Shares equal to the number of Other Shares such holder of Exchangeable Shares would have received if the exchange, option or retraction of such shares pursuant to these Exchangeable Share Provisions or the exchange of such shares pursuant to the Voting and Exchange Trust Agreement had occurred immediately prior to the Parent Control Transaction and the Parent Control Transaction was completed) but subject to subsequent adjustments to reflect any subsequent changes in the share capital of the issuer of the Other Shares, including without limitation, any subdivision, consolidation or reduction of share capital, without any need to amend the terms and conditions of the Exchangeable Shares and without any further action required.

11.

Actions by the Company under Support Agreement.

(a)

Actions by the Company.  The Company will take all such actions and do all such things as shall be necessary or advisable to perform and comply with and to ensure performance and compliance by the Parent, Callco and the Company with all provisions of the Support Agreement applicable to the Parent, Callco and the Company, respectively, in accordance with the terms thereof including taking all such actions and doing all such things as shall be necessary or advisable to enforce to the fullest extent possible for the direct benefit of the Company all rights and benefits in favour of the Company under or pursuant to such agreement.

(b)

Changes to the Support Agreement.  The Company shall not propose, agree to or otherwise give effect to any amendment to, or waiver or forgiveness of its rights or obligations under, the Support Agreement without the approval of the holders of the Exchangeable Shares given in accordance with Section  other than such amendments, waivers and/or forgiveness as may be necessary or advisable for the purposes of:

(i)

adding to the covenants of any or all of the other parties to the Support Agreement if the board of directors of each of the Parent, Callco and the Company shall be of the good faith opinion that such additions will not be prejudicial in any material respect to the rights or interests of the holders of the Exchangeable Shares as a whole;

(ii)

evidencing the succession of successors to the Parent either by operation of law or agreement to the liabilities and covenants of the Parent under the Support Agreement ("Parent Successors") and the covenants of and obligations assumed by each such the Parent Successor in accordance with the provisions of Article 3 of the Support Agreement;

(iii)

making such amendments or modifications not inconsistent with the Support Agreement as may be necessary or desirable with respect to matters or questions arising thereunder which, in the good faith opinion of the board of directors of each of the Parent, Callco and the Company, having in mind the interests of the holders of the Exchangeable Shares as a whole, it may be expedient to make, provided that each such board of directors shall be of the good faith opinion, after consultation with counsel, that such amendments and modifications will not be prejudicial in any material respect to the rights or interests of the holders of the Exchangeable Shares as a whole; or

(iv)

making such changes in or corrections to the Support Agreement which, on the advice of counsel to the Parent, Callco and the Company, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error contained therein, provided that the board of directors of each of the Parent, Callco and the Company shall be of the good faith opinion that such changes or corrections will not be prejudicial in any material respect to the rights or interests of the holders of the Exchangeable Shares as a whole.

12.

Legend; Call Rights; Withholding Rights.

(a)

Legend.  The certificates evidencing the Exchangeable Shares shall contain or have affixed thereto a legend in form and on terms approved by the Board of Directors with respect to the Support Agreement, the provisions of the Exchange Agreement relating to the Liquidation Call Right, the Redemption Call Right and the Change of Law Call Right, the Voting and Exchange Trust Agreement (including the provisions with respect to the voting rights and automatic exchange thereunder) and the Retraction Call Right.

(b)

Call Rights.  Each holder of an Exchangeable Share, whether of record or beneficial, by virtue of becoming and being such a holder shall be deemed to acknowledge each of the Liquidation Call Right, the Redemption Call Right, the Change of Law Call Right and the Retraction Call Right, in each case, in favour of the Parent and Callco, and the overriding nature thereof in connection with the liquidation, dissolution or winding-up of the Company or any other distribution of the assets of the Company among its shareholders for the purpose of winding up its affairs, or the retraction or redemption of Exchangeable Shares, as the case may be, and to be bound thereby in favour of the Parent and Callco as provided herein and in the Exchange Agreement.

(c)

Withholding Rights.  the Parent, Callco, the Company and the Transfer Agent shall be entitled to deduct and withhold from any dividend, distribution or other consideration otherwise payable to any holder of Exchangeable Shares such amounts as the Parent, Callco, the Company or the Transfer Agent, as the case may be, is required to deduct and withhold with respect to such payment under the Income Tax Act (Canada) or United States tax laws or any provision of provincial, territorial, state, local or foreign tax law, in each case, as amended. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes hereof as having been paid to the holder of the Exchangeable Shares in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing agency.  To the extent that the amount so required to be deducted or withheld from any payment to a holder exceeds the cash portion of the consideration otherwise payable to the holder, the Parent, Callco, the Company and the Transfer Agent are hereby authorized to sell or otherwise dispose of such portion of the consideration as is necessary to provide sufficient funds to the Parent, Callco, the Company or the Transfer Agent, as the case may be, to enable it to comply with such deduction or withholding requirement and the Parent, Callco, the Company or the Transfer Agent, as the case may be, shall notify the holder thereof and remit any unapplied balance of the net proceeds of such sale.

13.

Notices.

(a)

Notices.  Subject to applicable laws, any notice, request or other communication to be given to the Company by a holder of Exchangeable Shares shall be in writing and shall be valid and effective if given by first class mail (postage prepaid) or by telecopy or by delivery to the registered office of the Company and addressed to the attention of the Secretary of the Company.  Any such notice, request or other communication, if given by mail, telecopy or delivery, shall only be deemed to have been given and received upon actual receipt thereof by the Company.

(b)

Certificates.  Any presentation and surrender by a holder of Exchangeable Shares to the Company or the Transfer Agent of certificates representing Exchangeable Shares in connection with the liquidation, dissolution or winding-up of the Company or the retraction or redemption of Exchangeable Shares shall be made by first class mail (postage prepaid) or by delivery to the registered office of the Company or to such office of the Transfer Agent as may be specified by the Company, in each case, addressed to the attention of the Secretary of the Company.  Any such presentation and surrender of certificates shall only be deemed to have been made and to be effective upon actual receipt thereof by the Company or the Transfer Agent, as the case may be.  Any such presentation and surrender of certificates made by first class mail (postage prepaid) shall be at the sole risk of the holder mailing the same.

(c)

Notice to Shareholders.

(i)

Subject to applicable laws, any notice, request or other communication to be given to a holder of Exchangeable Shares by or on behalf of the Company shall be in writing and shall be valid and effective if given by first class mail (postage prepaid) or by delivery to the address of the holder recorded in the register of shareholders of the Company or, in the event of the address of any such holder not being so recorded, then at the last known address of such holder.  Any such notice, request or other communication, if given by mail, shall be deemed to have been given and received on the third Business Day following the date of mailing and, if given by delivery, shall be deemed to have been given and received on the date of delivery.  Accidental failure or omission to give any notice, request or other communication to one or more holders of Exchangeable Shares shall not invalidate or otherwise alter or affect any action or proceeding to be taken by the Company pursuant thereto.

(ii)

In the event of any interruption of mail service immediately prior to a scheduled mailing or in the period following a mailing during which delivery normally would be expected to occur, the Company shall make reasonable efforts to disseminate any notice by other means, such as publication.  Except as otherwise required or permitted by law, if post offices in Canada are not open for the deposit of mail, any notice which the Company or the Transfer Agent may give or cause to be given hereunder will be deemed to have been properly given and to have been received by holders of Exchangeable Shares if it is published once in any daily newspaper of general circulation published in the City of Toronto.

(iii)

Notwithstanding any other provisions of these Exchangeable Share Provisions, notices, other communications and deliveries need not be mailed if the Company determines that delivery thereof by mail may be delayed.  Persons entitled to any deliveries (including certificates and cheques) which are not mailed for the foregoing reason may take delivery thereof at the office of the Transfer Agent to which the deliveries were made, upon application to the Transfer Agent, until such time as the Company has determined that delivery by mail will no longer be delayed.  The Company will provide notice of any such determination not to mail made hereunder as soon as reasonably practicable after the making of such determination and in accordance with this Section .  Such deliveries in such circumstances will constitute delivery to the persons entitled thereto.

14.

Disclosure of Interests in Exchangeable Shares.

The Company shall be entitled to require any holder of an Exchangeable Share or any person whom the Company knows or has reasonable cause to believe holds any interest whatsoever in an Exchangeable Share to (a) confirm that fact or (b) give such details as to whom has an interest in such Exchangeable Share, in each case as would be required (if the Exchangeable Shares were a class of "equity shares" of the Company) under the constating documents of the Parent or any laws or regulations applicable to the Company and/or the Parent, or pursuant to the rules or regulations of any regulatory agency applicable to the Company and/or the Parent, if and only to the extent that the Exchangeable Shares were Parent Shares.

15.

No Fractional Shares.

A holder of Exchangeable Shares shall not be entitled to any fraction of a Parent Share upon the exchange or purchase of such holder's Exchangeable Shares and no certificates representing any such fractional interest shall be issued and such holder otherwise entitled to a fractional interest will receive for such fractional interest from the Company, Callco or Parent, as the case may be, on the designated payment date a cash payment equal to such fractional interest multiplied by the Exchangeable Share Price.

WSLegal\075024\00001\12753188v6 

APPENDIX I

RETRACTION REQUEST

[TO BE PRINTED ON EXCHANGEABLE SHARE CERTIFICATES]

To:

Biotricity Inc. ("Parent"), 1061806 B.C. Ltd. ("Callco") and ____________B.C. Ltd. (the "Company")

This notice is given pursuant to Section  of the share provisions (the "Exchangeable Share Provisions") attaching to the Exchangeable Shares of the Company represented by this certificate and all capitalized words and expressions used in this notice that are defined in the Exchangeable Share Provisions have the meanings ascribed to such words and expressions in such Exchangeable Share Provisions.

The undersigned hereby notifies the Company that, subject to the Retraction Call Right referred to below, the undersigned desires to have the Company redeem in accordance with Section  of the Exchangeable Share Provisions:

o

all share(s) represented by this certificate; or

o

_____ share(s) only represented by this certificate.

The undersigned acknowledges the overriding Retraction Call Right of the Parent and Callco to purchase all but not less than all the Retracted Shares from the undersigned and that this notice is and shall be deemed to be a revocable offer by the undersigned to sell the Retracted Shares to the Parent or Callco in accordance with the Retraction Call Right on the Retraction Date for the Retraction Call Purchase Price and on the other terms and conditions set out in Section  of the Exchangeable Share Provisions. If neither the Parent nor Callco exercise the Retraction Call Right, the Company will notify the undersigned of such fact as soon as possible.  This Retraction Request, and this offer to sell the Retracted Shares to the Parent or Callco, may be revoked and withdrawn by the undersigned only by notice in writing given to the Company at any time before the close of business on the Business Day immediately preceding the Retraction Date.

The undersigned acknowledges that if, as a result of solvency provisions of applicable law, the Company is unable to redeem all Retracted Shares, and provided that neither the Parent nor Callco has exercised the Retraction Call Right with respect to the Retracted Shares, the Retracted Shares will be automatically exchanged pursuant to the Voting and Exchange Trust Agreement so as to require the Parent to purchase the unredeemed Retracted Shares.

The undersigned hereby represents and warrants to the Parent, Callco and the Company that the undersigned:

o

is

(select one)

o

is not

a resident of Canada for purposes of the Income Tax Act (Canada).  The undersigned acknowledges that in the absence of an indication that the undersigned is not a non-resident of Canada, withholding on account of Canadian tax may be made from amounts payable to the undersigned on the redemption or purchase of the Retracted Shares.

The undersigned hereby represents and warrants to the Parent, Callco and the Company that the undersigned has good title to, and owns, the share(s) represented by this certificate to be acquired by the Parent, Callco or the Company, as the case may be, free and clear of all liens, claims and encumbrances.

					
	 
	 
	 
	 
	 

	(Date)

	 
	(Signature of Shareholder)

	 
	(Guarantee of Signature)

		
	o

	Please check box if the securities and any cheque(s) resulting from the retraction or purchase of the Retracted Shares are to be held for pick-up by the shareholder from the Transfer Agent at the principal office of the Transfer Agent, failing which such certificates and cheque(s) will be mailed to the last address of the shareholder as it appears on the register.

	NOTE:

	This panel must be completed and this certificate, together with such additional documents and payments (including, without limitation, any applicable Stamp Taxes) as the Transfer Agent and the Company may require, must be deposited with the Transfer Agent at its principal transfer office.  The securities and any cheque(s) resulting from the retraction or purchase of the Retracted Shares will be issued and registered in, and made payable to, respectively, the name of the shareholder as it appears on the register of the Company and the certificates for the securities and any cheque(s) resulting from such retraction or purchase will be delivered to such shareholder as indicated above, unless the form appearing immediately below is duly completed.

		
	Date:

	 

Name of Person in Whose Name Securities or Cheque(s)

Are to be Registered, Issued or Delivered (please print):________________________________

	
	 

	 

	 

		
	Street Address or P.O. Box:

	 

	Signature of Shareholder:

	 

	City, Province and Postal Code:

	 

	Signature Guaranteed by:

	 

		
	NOTE:

	If this Retraction Request is for less than all of the shares represented by this certificate, a certificate representing the remaining share(s) of the Company represented by this certificate will be issued and registered in the name of the shareholder as it appears on the register of the Company, unless the share transfer power on the share certificate is duly completed in respect of such share(s).

WSLegal\075024\00001\12753188v6Converted by EDGARwiz

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY, OR ANY OTHER SECURITIES ISSUABLE UPON THE CONVERSION THEREOF, BEFORE THE DATE THAT IS FOUR MONTHS AND ONE DAY AFTER THE LATER OF (I) SEPTEMBER 21, 2015, AND (II) THE DATE THE CORPORATION BECAME A REPORTING ISSUER

Debenture Certificate No.:

Principal Amount: 

Issue Date: September 21, 2015

SECURED CONVERTIBLE DEBENTURE DUE SEPTEMBER 21, 2017

IMEDICAL INNOVATION INC.

A corporation existing under the laws of the Province of Ontario

ARTICLE 1

INTERPRETATION

1.1

Definitions

In this Debenture, the following expressions shall have the following meanings, namely:

(a)

"Affiliate" has the meaning ascribed to such term in the OBCA;

(b)

"Business Day" means a day other than a Saturday, Sunday or any other day on which the principal chartered banks located in Toronto, Ontario are not open for business;

(c)

"Common Shares" means the common shares in the capital of the Corporation;

(d)

"Corporation" means iMedical Innovation Inc., a corporation existing under the laws of the Province of Ontario;

(e)

"Debenture" or "Debentures" means, as the context requires, this instrument issued to the Holder or all of the secured convertible debentures of the Corporation issued to Debentureholders collectively;

(f)

"Debentureholders" has the meaning ascribed in Section 2.2;

(g)

"Event of Default" means the occurrence of any one or more of the following events or circumstances:

(i)

Default under Debenture. The Corporation defaults in the payment of any Principal Amount or any interest owing under the Debenture as and when it becomes due and payable, whether at the Maturity Date or otherwise, or any other amount due under this Debenture, and any such default with respect to the nonpayment of interest under this Debenture continues for  5 Business Days thereafter;

(ii)

Cross-Default. The Corporation or any of its Affiliates defaults under any other agreement, bond, hypothec, debenture, note or other evidence of indebtedness for money borrowed, under any guarantee hypothec, mortgage or indenture pursuant to which there shall be issued or by which there shall be secured or evidenced any indebtedness for money borrowed by the Corporation or any Affiliate, whether such indebtedness now exists or shall hereafter be created;

(iii)

Breaches of Representations and Warranties. Any representation or warranty made or deemed to be made in the subscription agreement, this Debenture or any Security Document by the Corporation proves to have been incorrect or misleading in any material 

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respect when made or deemed to be made hereunder and not cured within 5 Business Days after notice in writing thereof is delivered to the Corporation; 

(iv)

Breaches of Other Covenants. The Corporation fails to observe or perform any other covenant, obligation, condition or agreement in any material respect contained in this Debenture or any other Security Document, and such failure continues for 5 Business Days after notice in writing thereof is delivered to the Corporation;

(v)

Voluntary Bankruptcy or Insolvency Proceedings. The Corporation:

(A)

applies for or consents to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property; 

(B)

is unable, or admits in writing its inability, to pay its debts generally as they mature; 

(C)

makes a general assignment for the benefit of its creditors;

(D)

is wound-up, dissolved or liquidated;

(E)

becomes insolvent (as such term may be defined or interpreted under any applicable bankruptcy, insolvency or related statute);

(F)

commences a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it; or

(G)

takes any action for the purpose of effecting any of the foregoing;

(vi)

Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or custodian of the Corporation or of all or a substantial part of the property thereof, or an involuntary case or other proceeding seeking liquidation, reorganization or other relief with respect to the Corporation or the debts thereof under any bankruptcy, insolvency or other similar law now or hereafter in effect shall be commenced and an order for relief entered, or such case or proceeding shall not be dismissed or discharged within 60 days of commencement;

(h)

"Forced Conversion" has the meaning ascribed in Section 4.2 hereto;

(i)

"Forced Conversion Notice" has the meaning ascribed in Section 4.2 hereto;

(j)

"Holder" has the meaning ascribed in Section 2.1 hereto;

(k)

"Issue Date" means September 21, 2015

(l)

"Maturity Date" means September 21, 2017;

(m)

"OBCA" means the Business Corporations Act (Ontario);

(n)

"Principal Office" means the principal office of the Corporation located at 75 International Blvd., Suite 300, Toronto, Ontario M9W 6L0;

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(o)

"person" includes an individual, corporation, partnership, unincorporated syndicate, unincorporated organization, trust, trustee, executor, administrator, or other legal representative, or any group or combination thereof;

(p)

"Security" means that security interest granted to the Security Agent by the Corporation pursuant to the Security Documents;

(q)

"Security Agent" has the meaning ascribed in Section 8.1;

(r)

"Security Documents" means the general security agreement entered into by the Corporation in favour of the Security Agent on or about the date hereof; and

(s)

"Term Sheet" means the amended and restated term sheet dated June 24, 2015 among the Corporation and International Capital Management, Inc and attached hereto as Schedule "A".

Capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Term Sheet.

1.2

Currency

Unless otherwise indicated herein, "$" or "dollars" shall refer to lawful currency of Canada and "US$" shall refer to lawful currency of the United States of America.

1.3

Schedules

The following schedules are incorporated by reference in and deemed to form an integral part of this Debenture:

Schedule "A" – Term Sheet; and

Schedule "B" – Conversion Form.

ARTICLE 2

PROMISE TO PAY

2.1

Indebtedness

The Corporation, for value received, hereby acknowledges itself indebted and promises and covenants to pay to [_____]having an address at [_____], the registered holder hereof for the time being (the "Holder"):

(a)

the principal sum of US$[___] (the "Principal Amount") on the Maturity Date or upon such other date as specified herein at the Corporation's Principal Office;

(b)

interest on any monies owing by the Corporation to the Holder hereunder, all as specifically calculated hereunder; and

(c)

all other monies which may be owing by the Corporation to the Holder pursuant to this Debenture.

2.2

Ranking

This Debenture is one of a series of Debentures designated as "Convertible Secured Debentures due September 21, 2017" of the Corporation. The Debentures consist of and are limited to an aggregate principal amount of up to US$2,000,000. This Debenture will rank pari passu with all other Convertible Secured Debentures due September 21, 2017 Debentures, and for such purpose each holder of such Debentures (each a "Debentureholder") shall be equally and rateably entitled to the benefits as set forth in 

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the Debenture of such Holder together with the Debentures of all other Debentureholders in the manner and to the extent herein set forth.

2.3

Upon the occurrence or existence of any Event of Default and at any time thereafter during the continuance of such Event of Default, subject to Section 8.6, the Debentureholder may declare all outstanding obligations payable by the Corporation hereunder to be immediately due and payable without presentment, demand, protest or any other notice of any kind (save for notices that are required to trigger an Event of Default), all of which are hereby expressly waived, anything contained herein or in the other Security Documents to the contrary notwithstanding. Upon the occurrence or existence of any Event of Default described in paragraphs (v) and (vi) of the definition of "Event of Default", immediately and without notice, all outstanding obligations payable by the Corporation hereunder shall automatically become immediately due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the other transaction documents to the contrary notwithstanding. In addition to the foregoing remedies, upon the occurrence or existence of any Event of Default, the Debentureholder may exercise any other right, power or remedy granted to it by the transaction documents or otherwise permitted to it by law, either by suit in equity or by action at law, or both.

ARTICLE 3

INTEREST

3.1

Calculation and Payment of Interest, etc.

The Corporation shall pay interest monthly, on the first date of such relevant month, on that portion of the Principal Amount outstanding from time to time from the Issue Date up to and including the date of repayment of the Principal Amount at the rate of 11% per annum, in like money at the Corporation's Principal Office, calculated monthly in arrears until the Principal Amount is repaid in full or this Debenture is converted in its entirety in accordance with the terms hereof. Unless otherwise set out herein, interest is payable on the Maturity Date.

3.2

Taxation

The Corporation shall make all payments of the Principal Amount and interest on this Debenture, free and clear of, and without withholding of or deduction for or on account of any present or future taxes, levies, imposts, deductions, charges, withholdings and all related liabilities ("Taxes") imposed or levied by any taxing authority with jurisdiction over the payment ("Taxing Authority") unless such Taxes are required to be withheld or deducted by the Corporation by law or by interpretation or administration thereof, or upon demand of any such Taxing Authority. The Corporation shall make any withholdings or deductions in respect of the Taxes required by law or by the interpretation or administration thereof, and shall remit the full amount withheld or deducted to the relevant Taxing Authority in accordance with applicable law and shall provide the Holder with full particulars thereof in writing.

3.3

No Merger In Judgement

The covenant of the Corporation to pay interest at the rate provided herein shall not merge in any judgement in respect of any obligation of the Corporation hereunder and such judgement shall bear interest in the manner set out in this Section 3.1 and be payable on the same days when interest is payable hereunder.

ARTICLE 4

CONVERSION OF DEBENTURE

4.1

Conversion by Holder

The Principal Amount of Debentures will be convertible, at the Holder's option, in whole or in part, at any time and from time to time from the Issue Date until the Maturity Date, into Common Shares at a 

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conversion price of US$1.78 per Common Share (the "Conversion Price"), subject to the adjustment provisions outlined in Section 4.6. At the time of conversion, any and all accrued interest on the Debentures so converted may, at the option of the Holder, also be convertible into Common Shares at the Conversion Price as determined above.

4.2

Forced Conversion

(1)

To the extent that this Debenture has not otherwise been converted in full pursuant to Section 4.2, at any time prior to the Maturity Date if the Corporation: 

(a)

completes a listing on a public stock exchange or is quoted on an over-the-counter market (an "Exchange"); and 

(b)

the closing price  of the Common Shares on the Exchange equals or exceeds the Conversion Price (as may be adjusted in accordance with the adjustment provisions outlined in Section 4.6) for at least 20 consecutive trading days, 

the Corporation may deliver a written notice to the holder of Debenture (a "Forced Conversion Notice") to cause the holder of this Debenture to convert all or part of the then outstanding Principal Amount of the Debenture, in accordance with the instructions provided in the Forced Conversion Notice, at the deemed conversion price of US$1.78 per Common Share (a "Forced Conversion") without any further action required on the part of the Holder.

4.3

Manner of Exercise of Right of Conversion. 

(1)

If the Holder wishes to convert this Debenture into Common Shares, either in whole or in part, in accordance with Section 4.1 or if the Corporation executes a Forced Conversion, the Holder shall surrender such Debenture certificate to the Corporation together with the Conversion Form attached hereto as Schedule "B", duly executed by the Holder or its executors or administrators or other legal representatives or its or their attorney duly appointed by an instrument in form and substance satisfactory to the Corporation, irrevocably exercising its right to convert such Debenture in accordance with the provisions of this Article 4. Thereupon, the Holder, or its nominee or assignee, shall be entitled to be entered in the books of the Corporation as at the date of conversion as the holder of the number of Common Shares into which such Debenture is convertible in accordance with the provisions hereof and, as soon as practicable thereafter, the Corporation shall deliver to the Holder or, subject as aforesaid, its nominee or assignee, a certificate for such Common Shares or proof of a non-certificated issuance, at the sole discretion of the Corporation.

(2)

If only part of this Debenture is converted by the Holder under Section 4.1, the Holder shall, upon the exercise of its right of conversion, surrender this Debenture to the Corporation, and the Corporation shall cancel the same and shall, without charge, forthwith certify and deliver to the Holder a new Debenture in the aggregate principal amount equal to the unconverted part of the Principal Amount of this Debenture.

(3)

Upon surrender of this Debenture for conversion in accordance with this Section 4.3, unless the Holder elected to convert the accrued and unpaid interest pursuant to Section 4.1, the Holder shall be entitled to receive accrued and unpaid interest in respect of the portion so converted only for the period up to the date of conversion. The Common Shares issued upon conversion, shall from and after the date of conversion, for all purposes be and be deemed to be issued and outstanding as fully paid and non-assessable Common Shares.

4.4

No Requirement to Issue Fractional Shares.

The Corporation shall not be required to issue fractional Common Shares upon the conversion of this Debenture. If any fractional interest in a Common Share would be deliverable upon the conversion of any Debentures, then the number of Common Shares otherwise issued shall be rounded down, without any additional consideration provided to the Holder, to the nearest whole number of Common Shares.

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4.5

Reservation of Common Shares Issuable Upon Conversion

The Corporation shall at all times while this Debenture remains outstanding reserve and keep available out of its authorized but unissued Common Shares, solely for the purpose of effecting the conversion of this Debenture such number of its Common Shares as would from time to time be sufficient to effect the conversion of this Debenture into Common Shares, and if at any time the number of authorized but unissued Common Shares shall not be sufficient to effect the conversion of this Debenture, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued Common Shares to such number as shall be sufficient for such purpose.

4.6

Capital Adjustments

In the event that the Common Shares are subject to any stock dividend, stock split, combination or exchange of shares, merger, amalgamation, arrangement, reverse merger, reverse take-over, consolidation, spin-off, listing on an Exchange or other distribution (other than normal cash dividends) of the Corporation's assets to shareholders, or any other change in the capital of the Corporation affecting the Common Shares, the number of Common Shares which are the subject of being converted under this Debenture and the Conversion Price therefore shall be likewise adjusted in order to reflect the change (for the purpose of preserving the value of the conversion).

ARTICLE 5

SECURITY/SENIORITY

5.1

The Debentures shall be secured by all of the present and after-acquired property of the Corporation (the "Security"). The Debentures shall rank first in seniority and priority as against all other loans and indebtedness of the Corporation and none of the Security may be used or pledged in respect of any other financing of the Corporation without the prior written consent of the Security Agent, such consent not to be unreasonably withheld.

5.2

The Corporation agrees to sign such further documents and do such further acts and things as the Holder or the Security Agent may deem reasonably necessary or desirable in order to allow the Holder to establish enforceable security over the Corporation.

5.3

To the extent that the Corporation is obligated to repay any outstanding indebtedness prior to the Maturity Date or the Corporation or its respective assets are subject to any prior security registrations, liens or other encumbrances of any nature or kind, the Corporation shall deliver evidence of postponement or subordination of same satisfactory to the Security Agent, in its sole discretion.

ARTICLE 6

ADMINISTRATIVE PROVISIONS

6.1

Registered Holders

The person in whose name this Debenture shall be registered shall be deemed and regarded as the owner and holder hereof for all purposes, and the payment to and/or receipt of any Holder for any Principal Amount or interest hereby evidenced shall be a good discharge of the Corporation for the same, and the Corporation shall not be bound to enter in the register notice of any trust or to enquire into the title of any Holder or to recognize any trust or equity affecting the title hereof save as ordered by some court of competent jurisdiction or as required by statute.

6.2

Transfer

Subject to applicable securities laws, the Debentures are transferrable, in whole or in part, at the Holder's option upon prior written notice to the Corporation.

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6.3

Replacement of Debenture

If this Debenture shall become mutilated or be lost, stolen or destroyed and in the absence of notice that this Debenture has been acquired by a bona fide purchaser, the Corporation in its discretion may issue a new Debenture upon surrender and cancellation of the mutilated Debenture, or, in the event that this Debenture is lost, stolen or destroyed, in lieu of and in substitution for the same, and the substituted Debenture shall be in the form hereof. In case of loss, theft or destruction the Holder shall furnish to the Corporation such evidence of such loss, theft or destruction as shall be satisfactory to it in its discretion acting reasonably and shall also furnish an indemnity in amount and form satisfactory to the Corporation in its discretion acting reasonably.

ARTICLE 7

COVENANTS

7.1

Affirmative Covenants

The Corporation covenants that the Corporation shall, and shall cause its Affiliates, as applicable, to:

(a)

Performance Under the Debenture. Pay, observe or perform any other covenant, obligation, condition or agreement contained in this Debenture;

(b)

Use of Proceeds. Use the proceeds of this Debenture in accordance with the description in the Term Sheet;

(c)

Preservation of Corporate Existence. Preserve and maintain its and its Affiliates' corporate existence, rights and privileges in their respective jurisdictions, and qualify and remain qualified as a foreign corporation in good standing in each jurisdiction in which such qualification is required; 

(d)

Compliance with Applicable Laws. Comply with all applicable laws of any governmental authority, non-compliance with which could materially adversely affect the business or condition of the Corporation, financial or otherwise, on a consolidated basis, except non-compliance being contested in good faith through appropriate proceedings so long as the Corporation has set up and funded sufficient reserves, if any, required under International Financial Reporting Standards with respect to such items; and

7.2

Negative Covenants

The Corporation covenants that the Corporation shall not, and shall cause its Affiliates, as applicable, not to pay any dividend or similar distribution to its shareholders while any debt hereunder remains outstanding.

ARTICLE 8

SECURITY AGENT

8.1

Appointment and Authority

The Holder hereby irrevocably appoints International Capital Management Inc., with its address located at 940 The East Mall, Suite 200, 2nd Floor, Toronto, ON M9B 6J7, to act on its behalf as the security agent ("Security Agent") hereunder and under the Security Documents and authorizes the Security Agent to take such actions on its behalf and to exercise such powers as are delegated to the Security Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Security Agent and the Holder and no other party shall have rights as a third party beneficiary of any of such provisions. Unless otherwise specified herein, the Security Agent shall hold the Security on behalf of the Holder and the other Debentureholders. The Security Agent accepts such appointment.

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8.2

Exculpatory Provisions

(1)

The Security Agent shall not have any duties or obligations except those expressly set forth herein and in the Security Documents. Without limiting the generality of the foregoing, notwithstanding any other term or condition in this Debenture or in any Security Document, the Security Agent:

(a)

shall not be subject to any fiduciary or other implied duties, regardless of whether an Event of Default under this Debenture has occurred and is continuing;

(b)

shall not have any duty to take any discretionary action or exercise any discretionary powers under any Security Document; provided that the Security Agent shall act as directed in writing by the simple majority of the Debentureholders (in proportion to their holdings), but (and notwithstanding the foregoing) the Security Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Security Agent to liability or that is contrary to any Security Document or applicable law; and

(c)

shall not, except as expressly set forth herein and in the Security Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Corporation or any of its affiliates that is communicated to or obtained by the person serving as the Security Agent or any of its directors, officers, agents, representatives or affiliates in any capacity.

(2)

Notwithstanding any other term or condition in this Debenture or in any Security Document, the Security Agent shall not be liable for: (a) any lack of perfection (including without limitation, any lack of perfection by registration or lack of perfection by control) under any applicable laws of any encumbrances granted under any Security Documents or otherwise granted by the Corporation in connection with the Security Documents; or (b) any action taken or not taken by it: (i) with the unanimous written consent or at the unanimous written request of Debentureholders; or (ii) in the absence of its own gross negligence or willful misconduct. The Security Agent shall be deemed not to have knowledge of any Event of Default under this Debenture unless and until notice describing the Event of Default is given to the Security Agent by the Corporation or a Debentureholder.

(3)

Except as otherwise expressly specified in this Debenture, the Security Agent shall not be responsible for or have any duty to ascertain or inquire into: (a) any statement, warranty or representation made in or in connection with this Debenture or any Security Document; (b) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith; (c) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Event of Default under this Debenture; (d) the validity, enforceability, effectiveness or genuineness of this Debenture, any Security Document or any other agreement, instrument or document; or (e) the satisfaction of any condition specified in this Debenture, other than to confirm receipt of items expressly required to be delivered to the Security Agent.

8.3

Reliance by the Security Agent.

The Security Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper person. The Security Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper person, and shall not incur any liability for relying thereon. The Security Agent may consult with legal counsel, independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

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8.4

Indemnification of the Security Agent

Each Debentureholder severally agrees to indemnify the Security Agent and any of its directors, officers, agents, representatives or affiliates and hold each of them harmless (to the extent not reimbursed by the Corporation, as set forth in Section 9.10), in its ratable portion, from and against any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel, which may be incurred by or asserted against the Security Agent and any of its directors, officers, agents, representatives or affiliates in any way relating to or arising out of: (a) the Security Documents or the transactions therein contemplated; and (b) its duties as Security Agent hereunder. The indemnity in this Section 8.4 shall survive the payment and satisfaction of all obligations and the termination of this Debenture.

8.5

Non-Reliance on Security Agent and Debentureholders

The Holder acknowledges that it has, independently and without reliance upon the Security Agent or any other Debentureholder or any of their Affiliates and based on such documents and information as it has deemed appropriate, made its own financial analysis and decision to enter into this Debenture. Each Debentureholder also acknowledges that it will, independently and without reliance upon the Security Agent or any other Debentureholder or any of their Affiliates and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Debenture, any Security Document or any related agreement or any document furnished hereunder or thereunder.

8.6

Collective Action of the Debentureholders

The Holder hereby acknowledges that to the extent permitted by applicable law, any collateral security and the remedies provided under the Security Documents to the Security Agent on behalf of Debentureholders are for the benefit of the Debentureholders collectively and acting together and not severally and further acknowledges that its rights hereunder and under any collateral security are to be exercised not severally, but by the Security Agent upon the decision of the Debentureholders made in accordance with the provisions hereof. Accordingly, notwithstanding any of the provisions contained herein or in any collateral security, the Holder hereby covenants and agrees that it shall not be entitled to take any action hereunder or thereunder including, without limitation, any notice of acceleration of enforcement of the Security Documents hereunder or thereunder, but that any such action shall be taken only by the Security Agent with the prior written agreement of the simple majority of the Debentureholders (in proportion to their holdings); provided however that, should there exist an Event of Default described in paragraph (i) of the definition of "Event of Default" under this Debenture, but not under all of the other Debentures, the Holder shall be entitled to direct the Security Agent to exercise its rights and remedies hereunder and under the Security Documents and the Security Agent shall give notice thereof to all of the Debentureholders. The Holder hereby further represents, covenants and agrees that: (a) upon any such written agreement being given, it shall co-operate fully with the Security Agent to the extent requested by the Security Agent; and (b) it does not currently hold, and it shall not take or obtain, any encumbrance on any property or assets of the Corporation to secure the obligations or any other amounts owing under the Debenture or Security Documents, except to the extent such encumbrance is in favour of the Security Agent on behalf of all the Debentureholders. Notwithstanding the foregoing, in the absence of instructions from the Debentureholders and where in the sole opinion of the Security Agent, acting reasonably and in good faith, the exigencies of the situation warrant such action, the Security Agent may (but shall not be obligated to) without notice to or consent of the Debentureholders take such action on behalf of the Debentureholders as it deems appropriate or desirable in the interest of the Debentureholders. Without limiting the previous sentence, upon notice from the Holder to the Security Agent of the existence of an Event of Default, the Security Agent shall call a meeting of all Debentureholders for the purpose of determining the action to be taken by the Security Agent. 

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8.7

Resignation of Security Agent and Successor Security Agent

The Security Agent may resign as Security Agent upon not less than 30 days' written notice (which shall include the notice addresses of the Debentureholders to facilitate the meeting of the Debentureholders to select a successor Security Agent) to each of the Debentureholders (with a copy to the Corporation), such resignation to take effect upon the acceptance by a successor Security Agent of its appointment as the Security Agent hereunder. Upon any such resignation, the majority of the Debentureholders (in proportion to their holdings) shall have the right to appoint a successor Security Agent which meets the following eligibility requirements (the "Eligibility Requirements"): (i) has no material conflict of interest with regard to fulfillment of its obligations under the Debentures and the Security Documents; and (ii) be willing and able to accept such obligations upon reasonable and customary terms; provided that if no Event of Default has occurred and is continuing, such appointment shall not be effective without the prior written consent of the Corporation, not to be unreasonably withheld, delayed or conditioned. If no successor Security Agent shall have been so appointed and shall have accepted such appointment in writing within 30 days after the retiring Security Agent's giving of notice of resignation, then the retiring Security Agent may, on behalf of the Debentureholders, appoint a successor Security Agent which meets the Eligibility Requirements or apply to a court of competent jurisdiction for the appointment of a successor Security Agent, and the Corporation agrees to pay such reasonable fees and expenses of any such appointee as shall be necessary to induce such appointee to agree to become a successor Security Agent hereunder. Upon acceptance of appointment as Security Agent, such successor shall thereupon and forthwith succeed to and become vested with all the rights, powers and privileges, immunities and duties of the retiring Security Agent, and the retiring Security Agent, upon the signing, transferring and setting over to such successor Security Agent all rights, moneys and other collateral held by it in its capacity as Security Agent, shall be discharged and released from its duties and obligations hereunder and under the Security Documents.  Notwithstanding the resignation of the Security Agent for any reason, the Security Agent shall remain entitled to be reimbursed for all expenses and disbursements (to the extent such fees, expenses and disbursements were earned or incurred on or prior to such resignation or removal) and be entitled to all indemnities that such Security Agent would otherwise have been duly entitled to pursuant to the Debentures if not for such resignation or removal.

ARTICLE 9

MISCELLANEOUS

9.1

Resale restrictions

All securities of the Corporation issuable in connection with the conversion of this Debenture shall be subject to such resale restrictions as may be required under applicable securities law.

9.2

Binding Obligation

This Debenture shall constitute a binding obligation of the Corporation as and from the date hereof until the repayment or conversion of the Debentures in their entirety in accordance with the terms hereof.

9.3

Time

Time shall be of the essence of this Debenture.

9.4

Governing Law

This Debenture shall be governed by, interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. The Holder irrevocably attorns and submits to the non-exclusive jurisdiction of the courts of the Province of Ontario with respect to any matters arising out of this Debenture and waives objection to the venue of any proceeding in such court or that court provides an inconvenient forum.

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9.5

Severability

If any one or more of the provisions or parts thereof contained in this Debenture should be or become invalid, illegal or unenforceable, the remaining provisions or parts thereof contained herein shall be and shall be conclusively deemed to be, severable therefrom and the validity, legality or enforceability of such remaining provisions or parts thereof shall not in any way be affected or impaired by the severance of the provisions or parts thereof severed.

9.6

Headings

The headings of the articles, sections, subsections and clauses of this Debenture have been inserted for convenience and reference only and do not define, limit, alter or enlarge the meaning of any provision of this Debenture.

9.7

No Assignment; Binding Effect

This Debenture may not be transferred or assigned by the Corporation, in whole or in part, without the prior written consent of the Holder and each other Debentureholder. Subject thereto, this Debenture and all of its provisions shall enure to the benefit of the Holder, its successors and assigns, and shall be binding upon the Corporation and its successors and permitted assigns.

9.8

Right of acceleration

The Corporation may not prepay (or accelerate payment of) the Debentures in whole or in part.

9.9

Expenses

The Corporation will pay all reasonable costs and expenses incurred by the Debentureholders and the Security Agent in administering the Debentures, collecting any amount due, and enforcing their rights and remedies under the Debentures, the Security Documents and applicable law, including reasonable legal fees and disbursements.

9.10

Indemnification of the Security Agent and Debentureholders

The Corporation will indemnify the Security Agent and Debentureholders from and against any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel, which may be incurred by or asserted against the Security Agent or Debentureholders in any way relating to or arising out of: (a) the Security Documents or the transactions therein contemplated; and (b) its duties as Security Agent hereunder. The indemnity in this Section 9.10 shall survive the payment and satisfaction of all obligations and the termination of this Debenture. 

9.11

Meetings of Debentureholders

(1)

Right to Convene Meeting. The Corporation may at any time and from time to time and shall, on receipt of a written request of the Corporation or a Debentureholders' Request (as hereinafter defined), convene a meeting of the Debentureholders. For purposes hereof, "Debentureholders' Request" means an instrument, signed in one or more counterparts by Debentureholders holding an aggregate of not less than 25% of the outstanding principal amount of the Debentures then outstanding, requesting the Corporation to take some action or proceeding specified therein. 

(2)

Notice of Meeting. At least 10 days prior notice of any meeting of Debentureholders shall be given to the Debentureholders. Such notice shall state the date (which shall be a business day) and time when and the place where the meeting is to be held, shall state briefly the general nature of the business to be transacted thereat and shall contain such information as is reasonably necessary to enable the Debentureholders to make an informed decision on the matter, but it shall not be necessary for any such 

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notice to set out the terms of any resolution to be proposed or any of the provisions of this Section 9.11. The accidental omission to give notice of a meeting to any Debentureholder shall not invalidate any resolution passed at any such meeting. A Debentureholder may waive notice of a meeting either before or after the meeting. 

(3)

Chairman. The Debentureholders present in person or by proxy shall choose some individual present at the meeting, which individual need not be a Debentureholder, to be chairman. 

(4)

Quorum. At any meeting of the Debentureholders a quorum shall consist of two Debentureholders present in person or by proxy and representing at least 10% of the outstanding principal amount of the Debentures. If a quorum of the Debentureholders is not present within 30 minutes after the time fixed for the holding of any meeting, the meeting, if summoned by the Debentureholders or pursuant to a Debentureholders' Request, shall be dissolved. In any other case, the meeting shall be adjourned to the same day in the next week (unless such day is not a business day, in which case it shall be adjourned to the next following business day thereafter) at the same time and place, if practicable, and no notice shall be required to be given in respect of such adjourned meeting. At the adjourned 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, notwithstanding that they may not represent 10% of the outstanding principal amount of the Debentures. Any business may be brought before or dealt with at an adjourned meeting that might have been brought before or dealt with at the original meeting in accordance with the notice calling such original meeting. Subject to the foregoing, no business shall be transacted at any meeting unless the required quorum is present at the commencement of business.

(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 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. 

(6)

Show of Hands. Every question submitted to a meeting shall, subject to section 9.11(7), be decided in the first place by a majority of the votes given on a show of hands. 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 such 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 her.

(7)

Poll. On every Extraordinary Resolution (as hereinafter defined), 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 is taken, be decided by the votes of the holders of a majority of the outstanding principal amount of the Debentures represented at the meeting and voted on the poll. 

(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 USD$1,000 principal amount of Debentures of which he shall then be the holder. Any fractional amounts resulting from such conversion shall be rounded to the nearest USD$100. 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 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. 

(9)

Regulations. The Corporation, may from time to time make and vary or revoke such regulations as it shall, acting reasonably, consider appropriate providing for and governing: 

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(a)

the form of the instrument appointing a proxy, which shall be in writing, and the manner in which such instrument shall be executed and the production of the authority of any person executing any such instrument on behalf of a Debentureholder; 

(b)

the deposit of instruments appointing proxies at such place as 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 such instruments must be deposited; 

(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 or faxed before the meeting to the Corporation at the place where the meeting is to be held and for the voting of proxies so deposited as though the instruments were produced at the meeting; and 

(d)

generally for the calling of meetings of Debentureholders and the conduct of business thereat.

Any regulations so made shall be binding and effective and the votes given in accordance therewith shall be valid and shall be counted. Except as such regulations may provide, the only persons who shall be recognized at any meeting as the Debentureholders, or as entitled to vote or be present at the meeting in respect thereof, shall be Debentureholders and persons whom Debentureholders have by instrument in writing duly appointed as their proxies. 

(10)

Persons Entitled to Attend Meetings. The Corporation, by its employees, officers and directors, and the legal advisors of the Corporation, or the legal advisors of any Debentureholder, may attend any meeting of the Debentureholders, but shall have no vote as such.

(11)

Powers Exercisable by Extraordinary Resolution. In addition to the powers conferred upon them by any other provisions of this Debenture or by law, the Debentureholders shall have the following powers exercisable from time to time by Extraordinary Resolution: 

(a)

to agree to any modification, abrogation, alteration, compromise or arrangement of the rights of Debentureholders or on behalf of the Debentureholders against the Corporation or against its property or assets or any part thereof, whether such rights arise under this Debenture or otherwise; 

(b)

to amend, alter or repeal any Extraordinary Resolution previously passed or sanctioned by the Debentureholders; 

(c)

to waive any default on the part of the Corporation in complying with any provisions of this Debenture either unconditionally or upon any conditions specified in such Extraordinary Resolution; 

(d)

Subject to Section 8.6, to restrain any Debentureholder from taking or instituting any suit, action or proceeding against the Corporation for the enforcement of any of the covenants of the Corporation in this Debenture or to enforce any of the rights of the Debentureholders; 

(e)

Subject to Section 8.6, to direct any Debentureholder who, as such, has brought any suit, action or proceeding to stay or to discontinue or otherwise to deal with such suit, action or proceeding upon payment of the costs, charges and expenses reasonably and properly incurred by such Debentureholder in connection therewith; and

(f)

to assent to any change in or omission from the provisions contained in this Debenture or any ancillary or supplemental instrument which may be agreed to by the Corporation, 

in any such case subject to compliance with any applicable laws and to any necessary regulatory approvals.

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(12)

Meaning of "Extraordinary Resolution".  

(a)

The expression "Extraordinary Resolution" when used in this Debenture means, subject as hereinafter in this section provided, a resolution proposed to be passed as an Extraordinary Resolution at a meeting of Debentureholders (including an adjourned meeting) duly convened for such purpose and held in accordance with the provisions of this section at which the holders of not less than 25% of the outstanding principal amount of the Debentures then outstanding are present in person or by proxy and passed by the affirmative votes of the holders of not less than a 662/3% of the outstanding principal amount of the Debentures represented at the meeting and voted on a poll upon such resolution. 

(b)

If, at any such meeting, the holders of not less than 25% of the outstanding principal amount of the Debentures outstanding 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. In any other case, the meeting shall be adjourned to such date, being not less than 14 and not more than 60 days later, and to such place and time as may be appointed by the chairman. Not less than 10 days prior notice shall be given of the time and place of such adjourned meeting. Such notice shall state that at the adjourned meeting the Debentureholders present in person or by proxy shall form a quorum. At the adjourned 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 adjourned meeting and passed by the requisite vote as provided in section 9.11(8) shall be an Extraordinary Resolution within the meaning of this Debenture, notwithstanding that the holders of not less than 25% of the outstanding principal amount of the Debentures then outstanding 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. 

(13)

Powers Cumulative. Any one or more of the powers in this Debenture 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. 

(14)

Minutes. Minutes of all resolutions and proceedings at every meeting of Debentureholders shall be made and duly entered in books to be from time to time provided for that purpose by the secretary of the Corporation, and any such minutes, 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 shall be deemed to have been duly passed and taken. 

(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 provided in this section may also be taken and exercised by the holders of 662/3% of the outstanding principal amount of the outstanding Debentures, by an instrument in writing signed in one or more counterparts, by such Debentureholders in person or by attorney duly appointed in writing, and the term "resolution" or the expression "Extraordinary Resolution", as the case may be, when used in this Debenture shall include an instrument so signed. 

(16)

Binding Effect of Resolutions. Every resolution and every Extraordinary Resolution passed in accordance with the provisions of this section 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 9.11(15) shall be binding upon all the Debentureholders, whether signatories thereto or not, and each and every Debentureholders shall be bound to give effect accordingly to every such resolution, Extraordinary Resolution and instrument in writing.

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ARTICLE 10

NOTICE

10.1

Notices

Any notice, direction or other instrument required or permitted to be given to any party hereto shall be in writing and shall be sufficiently given if delivered personally, or transmitted by facsimile tested prior to transmission, or via email to such party, as follows:

(a)

in the case of the Corporation, to:

iMedical Innovations Inc.

75 International Blvd., Suite 300

Toronto, ON  M9W 6L0

Attention:

Mr. Waqaas Al-Siddiq, CEO

Email:

wsiddiqui@sensormobility.com

(b)

in the case of the Holder, to the address specified in Section 2.1.

(c)

in the case of the Security Agent, to:

International Capital Management Inc.

940 The East Mall, 

Suite 200, 2nd Floor

Toronto, ON M9B 6J7

Attention:

Telfer Hanson

Email:

thanson@icm-canada.com

Any such notice, direction or other instrument, if delivered personally, shall be deemed to have been given and received on the day on which it was delivered, provided that if such day is not a Business Day then the notice, direction or other instrument shall be deemed to have been given and received on the first Business Day next following such day and if transmitted by fax or email, shall be deemed to have been given and received on the day of its transmission, provided that if such day is not a Business Day or if it is transmitted or received after the end of normal business hours then the notice, direction or other instrument shall be deemed to have been given and received on the first Business Day next following the day of such transmission.

Any party hereto may change its address for service from time to time by notice given to each of the other parties hereto in accordance with the foregoing provisions

[Remainder of page intentionally left blank.] 

- 16 -

IN WITNESS WHEREOF the Corporation has duly executed this Debenture as of the date first above written.

		
	IMEDICAL INNOVATION INC.

	 
	 

	 
	 

	Per:

	 

	 
	Authorized Signatory

		
	INTERNATIONAL CAPITAL MANAGEMENT INC., as Security Agent

	 
	 

	 
	 

	Per:

	 

	 
	Authorized Signatory

SCHEDULE "A"

TERM SHEET

		
	Issuer:

	iMedical Innovation Inc. (the "Corporation").

	Agents:

	International Capital Management Inc. ("ICM") and any future syndicate members (collectively with ICM, the "Agents")

	Size of Offering:

	Up to US$2,000,000 worth of secured convertible debentures (the "Debentures").

	Term:

	24 months.

	Interest Rate:

	11.0% per annum, payable monthly in arrears.

	Security:

	The Debentures will be secured by all of the present and after acquired property of the Corporation.

	Conversion at Holder's Option:

	Principal may be converted at any time in whole or in part at the subscriber's option into common shares of the Corporation ("Common Shares") at a deemed conversion price of US$1.78 per Common Share (the "Conversion Price").

Upon completion of the Corporation`s anticipated reverse merger, the adjusted conversion price would be approximately US$0.75 per resulting issuer share.

	Forced Conversion by the Corporation:

	The Corporation shall have the option, exercisable upon written notice to the subscribers, to force the conversion of the principal amount of the Debentures into Common Shares at a deemed conversion price of US$1.78 per Common Share in the event that, during the term of the Debentures, the Corporation completes a public listing and the closing price of the Common Shares on the exchange on which the Common Shares (including the common shares of any successor public entity, e.g. in the context of a reverse takeover transaction) may be listed equals or exceeds 100% of the Conversion Price per Common Share (as may be adjusted, e.g. in the context of a reverse takeover transaction) for at least 20 consecutive trading days.

Upon completion of the Corporation`s anticipated reverse merger, the adjusted conversion price would be approximately US$0.75 per resulting issuer share.

	Shareholders Agreement:

	To the extent that the Corporation remains private at the time of conversion of the Debentures into Common Shares, the holders will be required to sign a joinder agreement such that it becomes a party to the shareholders agreement of the Corporation (as may be amended from time to time).

	Resale Restrictions:

	The Corporation is not a reporting issuer (or the equivalent) in any jurisdiction and the Common Shares are not listed for trading on any exchange. Therefore, any resale of the Debentures must be made in accordance with applicable Canadian securities laws, and which may require resales to be made in accordance with prospectus and dealer registration requirements or exemptions from the prospectus and dealer registration requirements. Canadian subscribers are advised to seek legal advice prior to any resale of the Debentures.

	U.S. Registration Requirement:

	If the Corporation completes a U.S. listing during the term of the Debentures, the Common Shares issuable upon exercise of the Debentures will be registered under the Securities Act of 1933, as amended, pursuant to a registration statement to be filed within 60 days following the date of US listing, so as to permit their public resale.

Additionally, absent an available resale exemption and upon the Corporation's request, the parties will cooperate in the preparation of a non-offering prospectus to be filed with the relevant securities regulators in Canada and an application to cross-list the Corporation's shares on a Canadian exchange so as to permit the public resale of the Common Shares issuable to Canadian resident shareholders of the Corporation upon conversion of the Debentures.

	Pre-Issue Capitalization:

	·

Common Shares:

19,014,000

·

Options:

0

·

Warrants:

703,580

	Use of Proceeds:

	Research and Development, FDA Filings, FCC Filings, Pre production and manufacturing preparation, reverse merger expenses, general operating expenses.

	Agents’ Commission:

	At the Closing of the Offering, on purchases of Debentures from investors not forming part of the President's List (as defined below),  the Company shall pay to the Agents a fee equal to:

1.

7% of the aggregate cash proceeds received from the sale of the Debentures; and

2.

a number of warrants (the "Broker Warrants") equal to 7% of the aggregate number of Common Shares into which the Debentures may be converted in accordance with their terms. Each Broker Warrant will entitle the holder to acquire one Common Share at an exercise price of US$1.78 for a period of 24 months from the closing of the Offering (upon completion of the Corporation`s anticipated reverse merger, the adjusted exercise price would be approximately US$0.75 per resulting issuer share).

	Agents' Commission for President's List Subscriptions:

	The Company shall be entitled to provide the Agents with a list of parties to whom a portion of the Offering will be allocated (the "President's List"). At the Closing of the Offering, the Company shall pay to the Agents a fee equal to:

1.

3% of the aggregate cash proceeds received from the sale of the Debentures to parties on the President's List; and

2.

a number of Broker Warrants equal to 3% of the aggregate number of Common Shares into which the Debentures sold to parties on the President's List may be converted in accordance with their terms. Each Broker Warrant will entitle the holder to acquire one Common Share at an exercise price of US$1.78 for a period of 24 months from the closing of the Offering (upon completion of the Company`s anticipated reverse merger, the adjusted exercise price would be approximately US$0.75 per resulting issuer share).

	Conditions Precedent include:

	
1.

Satisfactory due diligence as ICM may reasonably require or consider necessary in performing the services contemplated hereunder.

2.

All required (a) shareholder, director and regulatory approvals; and (b) third party consents being received.

3.

No material adverse change in the Corporation’s business, as determined at the sole discretion of ICM, acting reasonably.

4.

Execution of all requisite definitive agreements including, if determined necessary or appropriate by ICM, an investors’ subscription agreement, form of debenture certificate and security agent agreement, in form and substance satisfactory to ICM and the Corporation, acting reasonably.

	Closing:

	The Offering shall close on or about September 28, 2015 or such other date as ICM and the Corporation may agree and may be closed in one or more tranches.

SCHEDULE "B"

CONVERSION FORM

TO: 

IMEDICAL INNOVATION INC.

The undersigned registered holder of the within Debenture hereby irrevocably elects to convert said Debenture (or US$________________ principal amount thereof*) and the accrued but unpaid interest thereon** into Common Shares of the Corporation in accordance with the terms hereof at a conversion price of US$1.78 per Common Share (subject to adjustment in accordance with the terms of the Debenture certificate) and directs that the Common Shares issuable and deliverable upon the conversion be issued and delivered to the person indicated below.

Date: ________________________

__________________________________________

(Signature of Holder)

*

If less than the full principal amount of the within Debenture is to be converted, indicate in the space provided the principal amount to be converted.

**

Delete the words "and the accrued but unpaid interest thereon" if the Holder is not electing to convert the accrued but unpaid interest.

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 bank, by a trust company, or by a member firm of a recognized stock exchange.

Print name in which Common Shares issued on conversion are to be issued, delivered and registered

Name:_______________________________________________________________________

_____________________________________________________________________________

(Address)

(City, Province/State, Country and Postal Code/Zip)

Name of guarantor:_____________________________________________________________

Authorized signature:___________________________________________________________

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