Document:

ex428.htm

    Exhibit
4.28

     

    
      
        	
                NORTHCORE
      TECHNOLOGIES INC.

              	
                             Series
      (K) Debenture
Subscription

              

      

    

    
      	
              TO SUBSCRIBE, EACH SUBSCRIBER
      MUST RETURN THE FOLLOWING:

              a.            □ Duly completed and
      executed Subscription Agreement (complete cover page):

              b.            □ Subscription Funds by
      direction, certified cheque, bank draft, money order or wire
      transfer;

              c.            □ Duly completed and
      executed Accredited Investor Certificate (attached as schedule “D”);
      and

              d.            □ Duly completed and
      executed Offshore Subscriber Certificate (attached as schedule “E”, if
      applicable).

            

    

    

    

    SUBSCRIPTION
AGREEMENT

    (for
Ontario, Alberta and Non-Canadian/Non-U.S. Subscribers)

     

    
      	
              TO:

            	
              Northcore
      Technologies Inc.  (the “Corporation”)

            
	
              RE:

            	
              Sale
      of Series (K) secured subordinate convertible debentures, convertible into
      common shares in the capital of the
Corporation.

            

    

     

    Details
of Subscription

     

    The
undersigned (the “Subscriber”) hereby
irrevocably subscribes, subject to the terms and conditions set forth in this
subscription agreement, for secured subordinate convertible debentures (the
“Debentures”) of the
Corporation with the following specific purchase instructions.  The
particulars of the Debentures and the securities issuable upon conversion of the
Debentures (together with certain other material covenants and acknowledgements)
are set out in Schedules “A” and “B” to this subscription agreement and certain
representations and warranties to be made by the Subscriber so that the
Corporation can ensure compliance with applicable securities laws are set out in
Schedule “C” to this subscription agreement, all of which form part of and are
hereby incorporated as part of this subscription agreement.

     

    Ontario and Alberta
Subscribers:

     

    Complete
and sign the Subscription Agreement and the Accredited Investor Certificate -
Schedule “D”.

     

    Non Canadian and Non U.S.
Subscribers:

     

    Complete
and sign the Subscription Agreement and the Offshore Subscriber Certificate -
Schedule “E”.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
       

    

    Please print all information
(other than signatures), as applicable, in the spaces provided
below.

     

    
      	
               

              RE: Northcore Technologies Inc. - Series (K)
      Debenture Subscription

               

            
	
               

              Principal
      Amount of Debentures Subscribed for (to be issued at
      par):_______________________________________________________________________________________________________________________________

               

            
	 
      	 
      	 
      
	
              Subscriber
      Details

               

               

                
      

              Name
      of Subscriber

               

              By: _________________________________________________________________________  

                                                  Authorized
      Signature

               

               

                
      

              Official
      Capacity or Title (if Subscriber is not an individual)

               

               

                
      

              Name
      of individual whose signature appears above if different from name of
      Subscriber printed above

               

                    
                
      

               

            	 
      	
              Registration
      Instructions (if different from name of Subscriber and
      address set out in the box to the left):

               

               

              Name
      

                
      

               

                
      

              In
      Trust For, if applicable

              Account
      Reference, if applicable

               

               

                
      

               

                
      

               

                
      

              Address,
      including postal code

            
	 
      
	 
      
	 
                    
              
      	 
      	 
      
	
               

               

                
      

              Address
      of Subscriber, including province and postal code

               

               

               

              Telephone
      Number:_______________________________________________________

               

              Fax
      Number:____________________________________________________________

               

              E-mail
      Address:__________________________________________________________

            	 
      	
              Delivery
      Instructions (if different from name of Purchaser and address set
      out in the box to the left):

               

              

                
      

              Name

               

              

                
      

              Account
      Reference, if applicable

               

               

                
      

               

              

                
      

              Address,
      including province and postal code

               

            
	 
      
	
              Disclosed Principal (please complete if purchasing
      as agent or trustee for a disclosed
      principal

               

              Name of
      Principal:___________________________________________________

               

               

              Principal’s
      Address:___________________________________________________________

                (Street
      Address)

               

                               
      ____________________________________________

                                   (City and
      Province)  (Postal
      Code)

               

              
                                 
      ____________________________________________

                                     (Postal
      Code)

              

            	 
      	 
      

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    The
Subscriber acknowledges its consent and request that this subscription agreement
(including all schedules hereto) and all other documents evidencing or relating
in any way to its purchase of Debentures be drawn up in the English language
only.  Nous
reconnaissons par les présentes avoir consenti et demandé à ce que la présente
convention de souscription (et les annexes s’y rapportant) et tous les autres
documents faisant foi ou se rapportant de quelque manière à notre souscription
soient rédigés en anglais seulement.

     

    IN WITNESS WHEREOF the
Subscriber has executed, or caused its duly authorized representative to
execute, this subscription agreement on this            
day of                                 
, 2007.

     

    
      	
               

              _____________________________________

            	 
      	
               

              ______________________________________

            
	
              Signature
      of Subscriber (if an individual)

            	 
      	
              Name
      of Subscriber (if an individual)

            
	 
      	 
      	 
      
	
              _____________________________________

            	 
      	
              Per:

            	
              ______________________________________

            
	
              Name
      of Subscriber (if an individual)

            	 
      	
              (signature
      of authorized representative)

            
	 
      	 
      	 
      
	 
      	 
      	
              ______________________________________

            
	 
      	 
      	
              Name
      and Title of Authorized
Representative

            

    

    

     

    ACCEPTANCE

     

    The
foregoing is acknowledged, accepted and agreed to this                
day  of                                 
, 2007.

     

     

    
      	
              NORTHCORE
      TECHNOLOGIES INC.

               

            
	
              Per:

            	 
      
	 
      	 
      

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    SCHEDULE
“A”

     

    This
is Schedule “A” to the subscription agreement relating to the purchase of Series
(K) Debentures of Northcore Technologies Inc. (the “Corporation”).

     

    TERMS
OF THE OFFERING

     

    1.            
Offering.  Secured
subordinate convertible debentures (the “Debentures”) of the
Corporation subscribed for hereunder form the total sale by the Corporation (the
“Offering”) of a maximum
of $1,629,333 principal amount of
Debentures. The Offering is being made on a best efforts private placement
basis.

     

    The
Debentures will bear simple interest at an annual rate of 11% of the principal
amount of the Debentures outstanding from time to time, calculated and payable
in arrears upon the earlier of quarter end, or Conversion (as defined below) of
the Debentures or the second anniversary of the Closing Date (the “Maturity Date”) and payable in full by
the issuance of a number of Common Shares calculated pursuant to the following
formula:

     

    A÷B,
where:

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

    B
= the greater of:

    
      	
               
      

            	
              i)

            	
              $0.15;
      and

            

    

    
      	
               
      

            	
              ii)

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

            

    

     

    Interest
will continue to accrue until paid.  At any time up to and including
the Maturity Date, all or any portion of the principal amount of the Debentures
outstanding from time to time will be convertible (“Conversion”), at the option
of the holder, provided that the holder complies with the notice provision
therefor, into common shares in the capital of the Corporation (“Common Shares”)
at a conversion price of $0.12 per Common Share, subject to adjustments for
stock splits, consolidations, other capital reorganizations, extraordinary
dividends or distributions among other anti-dilution provisions providing
adjustments for events that will affect all security holders
equally.

     

    In
the event that at any time from and after the Closing Date the volume weighted
average trading price of the Common Shares through its principal trading market
for a 10 consecutive trading day period is $0.30 or more, all then outstanding
Debentures, including any accrued interest thereon, will be automatically
converted into Common Shares at the Conversion Price.

     

    The
material terms of the Offering, and the Debentures (as hereinafter defined) are
set out in this schedule and in Schedule “B” to this subscription
agreement.

     

    The
foregoing description of the Debentures is a summary only and the Subscriber
acknowledges that the definitive terms and conditions of the Debentures sold
under the Offering will be set forth in the Debenture Certificates (as
hereinafter defined).

     

    2.            
Definitions.  In
this subscription agreement and the schedules to this subscription agreement the
defined terms set out in the first page of this subscription agreement or as set
out in Section 1 above shall apply and, unless the context otherwise
requires:

     

    “Applicable Securities Laws”
means the applicable securities laws of the Provinces of Ontario and Alberta as
the case may be, and the regulations and rules made and forms prescribed
thereunder, together with all applicable instruments, published policy
statements, blanket orders, notices, rulings and rules of the Ontario Securities
Commission and the Alberta Securities Commission.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Business Day” means a day
other than a Saturday, Sunday or statutory or banking holiday in Toronto,
Ontario;

     

    “Closing Date” means on or
about June 15, 2007, or such other date or dates as the Corporation may
designate;

     

    “Closing Time” means 10:00 a.m.
(Toronto time) on the Closing Date, or such other time on the Closing Date as
the Corporation may designate;

     

    “Common Share” means one common
share in the capital of the Corporation;

     

    “Corporation’s Information
Record” means any statement contained in any press release, material
change report, financial statements or other document of the Corporation which
has been or is publicly disseminated, whether pursuant to any Applicable
Securities Laws or otherwise, prior to the Closing Time;

     

    “Debenture Certificates” means
the definitive certificates representing the Debentures;

     

    “Hold Period” means four months
and one day from the Closing Date and in the case of a purchaser who is an
insider of the Issuer for the purposes of the Securities Act (Ontario)
means 6 months from the Closing Date;

     

    “including” means including
without limitation;

     

    “material” means material in
relation to the Corporation;

     

    “material change” means any
change in the business, operations, assets, liabilities, ownership or capital of
the Corporation, on a consolidated basis, that would reasonably be expected to
have a significant effect on the market price or value of the Common Shares and
includes a decision to implement such a change made by the board of directors of
the Corporation or by senior management of the Corporation who believe that
confirmation of the decision by the board of directors is probable;

     

    “material fact” means any fact
that significantly affects or would reasonably be expected to have a significant
effect on the market price or value of the Common Shares;

     

    “misrepresentation” means an
untrue statement of material fact, or an omission to state a material fact that
is required to be stated or that is necessary to make a statement not misleading
in the light of the circumstances in which it was made;

     

    “Purchasers” means those
persons who subscribe for Debentures under the Offering, including the
Subscriber;

     

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

     

    “TSX” means the Toronto Stock
Exchange;

     

    “Underlying Securities” means
the Common Shares issuable upon the exercise of the conversion rights under the
Debentures;

     

    “United States” means the
United States as that term is defined in Regulation S;

     

    “U.S. Person” means a U.S.
Person as that term is defined in Regulation S;

     

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

     

    
      
        
        

      

      
        A -
2

        
          

        

      

      
        
        

      

    

    3.            
Currency.  All
dollar amounts referred to in this subscription agreement and the schedules
thereto are expressed in Canadian funds.

     

    4.            
Representations and Warranties
of the Corporation.  The Corporation hereby represents and
warrants for the benefit of the Subscribers as follows:

     

    (a)           the
Corporation is (and will be at the Closing Time) a reporting issuer in the
Provinces of Ontario, Alberta and British Columbia, and is in compliance with
all material obligations under Applicable Securities Laws of such
jurisdictions;

     

    (b)           the
Corporation has been duly incorporated and organized and is validly subsisting
under the laws of the Province of Ontario and has all requisite corporate power
and authority to own its assets and to carry on its business as currently
conducted;

     

    (c)           the
Corporation is conducting its business in material compliance with all
applicable laws, rules and regulations of each jurisdiction in which its
business is carried on and is duly licensed, registered or qualified in all
jurisdictions in which it owns, leases or operates its property or carries on
business to enable its business to be carried on as now conducted and its
property and assets to be owned, leased and operated and all such licences,
registrations and qualifications are and will at the Closing Time be valid,
subsisting and in good standing, except in respect of matters which do not and
will not result in any adverse material change in respect of the Corporation,
and except for the failure to be so qualified or the absence of any such
license, registration or qualification which does not and will not have a
material adverse effect on the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the Corporation
and its subsidiaries, on a consolidated basis;

     

    (d)           the
Corporation has all required corporate power and authority to enter into and
carry out the provisions of this subscription agreement and the transactions
contemplated hereby and all necessary corporate action has been taken or will
have been taken prior to the Closing Time by the Corporation to duly authorize
the execution and delivery of this subscription agreement and such other
agreements and instruments and the consummation of the transactions contemplated
thereby and so as to validly create, issue and deliver the Debentures subscribed
thereby and to validly create and irrevocably allot for issuance the Underlying
Securities;

     

    (e)           the
Corporation is neither in default or in breach in any material respect of, and
the execution and delivery of this subscription agreement by the Corporation,
the performance and compliance with the terms of this subscription agreement,
the issue and sale of the Debentures, and the issue of the Underlying Securities
will not result in any breach of, or be in conflict with or constitute a default
under, or create a state of facts which, after notice or lapse of time, or both,
would constitute a default either directly or indirectly under any term or
provision of the constating documents, by-laws or resolutions of the Corporation
or any material mortgage, note, indenture, contract, agreement, instrument,
lease or other document to which it is a party or by which it is
bound;

     

    (f)           the
Common Shares issuable upon exercise of the conversion rights under its
Debentures, if and when issued in accordance with the Debentures, as applicable,
will be validly issued and outstanding as fully paid and
non-assessable;

     

    (g)           no
approval, authorization, consent or other order of, and no filing, registration
or recording with, any governmental authority is required by the Corporation in
connection with the execution and delivery or with the performance by the
Corporation of this subscription agreement except in compliance with and the
rules of the TSX;

     

    (h)           to
the best of the Corporation’s knowledge, information and belief, no portion of
the Corporation’s Information Record contained a misrepresentation as at its
date of public dissemination;

     

    
      
        
        

      

      
        A -
3

        
          

        

      

      
        
        

      

    

    (i)           there
has been no adverse material change in relation to the Corporation since March
23, 2007, and no adverse material fact exists in relation to the Corporation or
its securities which, in either case, has not been generally disclosed or
disclosed in the Corporation’s Information Record;

     

    (j)           this
subscription agreement and all other agreements required in connection with the
issue and sale of the Debentures have been or will be, at or prior to the
Closing Time, duly authorized, executed and delivered by the Corporation and
will be valid and binding obligations of the Corporation enforceable in
accordance with their respective terms (except as the enforceability thereof may
be limited by (i) bankruptcy, insolvency or similar laws affecting creditors’
rights generally, (ii) general equitable principles or (iii) limitations under
applicable law in respect of rights of indemnity, contribution and waiver of
contribution); and

     

    (k)           the
Corporation intends that the net proceeds of the Offering will be used
substantially in the manner specified in Schedule “B” hereto.

     

    (l)           Forthwith
after the Closing, the Corporation shall file such forms and documents as may be
required under the Applicable Securities Laws relating to the Offering and any
further documents as may be required by any applicable regulatory authority
which, without limiting the generality of the foregoing, shall include a Form
45-501F1 as prescribed by the Securities Act (Ontario) and a Form 45-106F1 as
prescribed by National Instrument 45-106.

     

    5.            
Reliance upon Representations,
Warranties and Covenants of the Corporation.  The Corporation
further agrees that, by delivering the Debentures to the Subscriber, the
Corporation will be representing and warranting that the representations,
warranties and covenants contained in this subscription agreement are true as at
the Closing Time with the same force and effect as if they had been made by the
Corporation at the Closing Time.

     

    6.            
Closing of
Purchase.  The Subscriber acknowledges and agrees that delivery
of and payment for the Debentures will be completed at the offices of the
Corporation or its legal counsel at 10:00 a.m. (Toronto time) on the Closing
Date.

     

    7.            
Payment and
Delivery.  The Subscriber acknowledges and agrees to deliver to
the Corporation at the Valhalla Executive Centre, 302 The East Mall, Suite 300,
Toronto, Ontario M9B 6C7, (Attention: Oliver Jaakkola (fax number: (416)
640-0412), prior to the Closing Time:

     

    (a)           his
or her duly completed and executed subscription agreement (including Schedule
“D” or Schedule “E”, as applicable);

     

    (b)           payment
for the principal amount of Debentures subscribed for under this subscription
agreement, in the form of a direction signed by the
Subscriber directing the Corporation to apply the principal amount of
Subscriber’s Series (G) Note held by the Corporation as payment for the principal
amount of Series (K) Debentures subscribed for, or payment of the same
amount in such other manner as is acceptable to the Corporation;
and

     

    (c)           such
other documents as may be required pursuant to the terms of this subscription
agreement.

     

    8.            
Conditions of
Closing.  This subscription is subject to acceptance by the
Corporation (as described below) and the receipt of consents from certain prior
investors.  The Offering is conditional upon, among other things, the
Corporation obtaining TSX approval and the Underlying Securities not being
subject to a hold period of more than four months and one day from the Closing
Date and the Common Shares being freely tradable on the TSX following the
expiration of such hold period.

     

     

    The
Subscriber acknowledges and agrees that the obligations of the Corporation
hereunder are conditional on the accuracy of the representations and warranties
of the Subscriber contained in this subscription agreement as of the date of
this subscription agreement, and as of the Closing Time as if made at and as of
the Closing Time, and the fulfillment of the following additional conditions as
soon as possible and in any event not later than the Closing Time unless other
arrangements acceptable to the Corporation have been made:

     

    
      
        
        

      

      
        A -
4

        
          

        

      

      
        
        

      

    

    

    (a)           the
Corporation shall have received all necessary approvals and consents, including
all necessary regulatory approvals and consents (including the approval of the
TSX) required for the completion of the transaction contemplated by this
subscription agreement;

     

    (b)           the
representations and warranties of the Corporation contained herein being true
and correct as of the Closing Time with the same force and effect as if made at
and as of the Closing Time after giving effect to the transactions contemplated
hereby;

     

    (c)           the
Corporation having complied with all covenants, and satisfied all terms and
conditions contained herein to be complied with and satisfied by the Corporation
at or prior to the Closing;

     

    (d)           the
Subscriber having completed this subscription agreement in full and having paid
the principal amount of the Debentures subscribed for hereunder to the
Corporation in the manner contemplated in this subscription
agreement.

     

     

    If,
at the Closing Time, the terms and conditions contained herein have been
complied with, this completed subscription agreement has been delivered to the
Corporation and accepted by the Corporation and, unless other arrangements
acceptable to the Corporation have been made, the aggregate subscription proceeds
representing the principal amount of Debentures subscribed for hereunder have
been paid in accordance with Section 7 hereof, unless other arrangements have
been made with the Corporation, Debenture Certificates endorsed by the
Corporation representing Debentures subscribed for hereunder will be available
for delivery to the Subscriber in Toronto, Ontario at the Closing Time. The
Corporation will deliver such Debenture Certificates to the address set out for
delivery on page 2 of this subscription agreement promptly after the closing of
its Offering.

     

    

    9.            
Acceptance or
Rejection.  The Corporation will have the right to accept or
reject in its sole discretion (in whole or in part) this subscription at any
time at or prior to the Closing Time, and the right is reserved to the
Corporation to allot to any Purchaser less than the principal amount of
Debentures subscribed for.  If this subscription is rejected in whole,
any cheques or other forms of payment delivered to the Corporation representing
the principal amount of the Debentures subscribed for will be promptly returned
to the Subscriber without interest or deduction.  If this subscription
is accepted only in part, a cheque representing any refund of the principal
amount of the Debentures for that portion of the subscription for the Debentures
which is not accepted, will be promptly delivered to the Subscriber without
interest or deduction.  The Subscriber acknowledges and agrees that
the acceptance of this subscription agreement will be conditional upon the sale
of the Debentures to the Subscriber being exempt from any prospectus and
registration requirements of Applicable Securities Laws.  The
Corporation be deemed to have accepted this subscription agreement upon the
delivery at closing of the Debenture Certificate referred to in Section 8 above
in accordance with the provisions hereof.

     

    10.           Information and
Documents.  The Subscriber acknowledges that pursuant to
Applicable Securities Laws, the Subscriber may be required to file a report with
a Securities Commission in the required form within 10 days of each disposition
of all or any of the Debentures purchased hereunder or any of the Underlying
Securities issued upon the exercise of the conversion rights under such
Debentures and, if so required, the Subscriber, undertakes to file the required
report.  The Corporation is not in any way responsible for such
filings or the payment of any related fees.

     

    11.           Resale
Restrictions.  The Subscriber understands and acknowledges that
the Debentures and in certain circumstances the Underlying Securities will be
subject to certain resale restrictions under Applicable Securities Laws and the
Subscriber agrees to comply with such restrictions.  Subscribers are
advised to consult their own legal advisors in this regard and no
representations have been made to the Subscriber by the Corporation with respect
to such matters. The Subscriber also acknowledges that it has been advised to
consult its own legal advisors with respect to applicable resale restrictions
and that it is solely responsible for complying with such restrictions (the
Corporation is not in any manner responsible for ensuring compliance by the
Subscriber with such restrictions).

     

    
      
        
        

      

      
        A -
5

        
          

        

      

      
        
        

      

    

    12.           No Revocation.  The
Subscriber agrees that this offer is made for valuable consideration and may not
be withdrawn, cancelled, terminated or revoked by the Subscriber.

     

    13.           Indemnity.  The
Subscriber agrees to indemnify and hold harmless the Corporation, and its
directors, officers, employees, agents, advisers and shareholders from and
against any and all loss, liability, claim, damage and expense whatsoever
(including, any and all fees, costs and expenses whatsoever reasonably incurred
in investigating, preparing or defending against any claim, lawsuit,
administrative proceeding or investigation whether commenced or threatened)
arising out of or based upon any representation, warranty or covenant of the
Subscriber contained herein or in any document furnished by the Subscriber to
the Corporation in connection herewith being untrue in any material respect or
any breach or failure by the Subscriber to comply with any covenant or agreement
made by the Subscriber herein or in any document furnished by the Subscriber to
the Corporation in connection herewith.

     

    14.           Modification.  Neither
this subscription agreement nor any provision hereof shall be modified, changed,
discharged or terminated except by an instrument in writing signed by the party
against whom any waiver, change, discharge or termination is
sought.

     

    15.           Miscellaneous.

     

    (a)           The
agreement resulting from the acceptance of this subscription agreement by the
Corporation contains the whole agreement between the parties hereto in respect
of the subject matter hereof and there are no warranties, representations,
terms, conditions or collateral agreements, express, implied or statutory, other
than as expressly set forth herein and in any amendments hereto.

     

    (b)           All
representations, warranties, agreements and covenants made or deemed to be made
by the Subscriber in this subscription agreement will survive the execution and
delivery, and acceptance, of this subscription agreement and the closing of the
Offering.

     

    (c)           Time
shall be of the essence of this subscription agreement.

     

    (d)           This
subscription agreement may be executed in any number of counterparts, each of
which when delivered, either in original or facsimile form, shall be deemed to
be an original and all of which together shall constitute one and the same
document.

     

    (e)           This
subscription agreement shall be construed and enforced in accordance with, and
the rights and obligations of the parties shall be governed by, the laws of the
province of Ontario and the laws of Canada applicable therein. Any and all
disputes arising under this subscription agreement, whether as to
interpretation, performance or otherwise, shall be subject to the non-exclusive
jurisdiction of the courts of the province of Ontario and each of the parties
hereto hereby irrevocably attorns to the jurisdiction of the courts of such
province.

     

    (f)           This
subscription agreement shall be construed and enforced in accordance with, and
the rights and obligations of the parties shall be governed by, the laws of the
province of Ontario and the laws of Canada applicable therein. Any and all
disputes arising under this subscription agreement, whether as to
interpretation, performance or otherwise, shall be subject to the non-exclusive
jurisdiction of the courts of the province of Ontario and each of the parties
hereto hereby irrevocably attorns to the jurisdiction of the courts of such
province.

     

    16.           Notices.

     

    (a)           Any
notice, direction or other instrument required or permitted to be given to
Corporation shall be in writing and shall be sufficiently given if delivered
personally, or transmitted by facsimile tested prior to transmission to the
Corporation, as follows:

     

    
      
        
        

      

      
        A -
6

        
          

        

      

      
        
        

      

    

    (i)
in the case of the Corporation to:

     

    Northcore
Technologies Inc.

    302
The East Mall, Suite 300

    Toronto,
Ontario

    M9B
6C7

    

    Attention:   
Oliver Jaakkola

    Fax:               416-640-0412

    

    (ii)
in the case of the Subscriber, at the address specified on the face page
hereof.

    

    (b)           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, 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.

     

    (c)           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.

     

    
      
        
        

      

      
        A -
7

        
          

        

      

      
        
        

      

    

     

     

    SCHEDULE
“B”

     

    This
is Schedule “B” to the subscription agreement relating to the purchase of Series
(K) Debentures of Northcore Technologies Inc. (the “Corporation”). Capitalized
terms used but not defined in this schedule are intended to have the meanings
ascribed thereto, as applicable, on the first page of this subscription
agreement and sections 1 and 2 of Schedule “A” to this subscription
agreement

     

    NORTHCORE
TECHNOLOGIES INC.

    

    Summary
of Proposed Terms of the

    Offering
of Series (K) Secured Subordinate Convertible Debentures

    by
way of Private Placement

    

     

    
      	
              Issuer:

            	
              Northcore
      Technologies Inc. (“Northcore” or the “Corporation”)

            	 
      
	 
      	 
      	 
      
	
              Offering:

            	
              Offering
      of up to $1,629,333 principal
      amount of secured subordinate convertible debentures (the “Debentures”) to
      be issued by way of private placement exemptions from prospectus and
      registration requirements in the Provinces of Ontario and Alberta and such
      applicable Non-Canadian/Non-U.S. jurisdictions, subject to the receipt of
      any applicable regulatory and stock exchange approvals.

            	 
      
	 
      	 
      	 
      
	
              Offered
      Securities

            	
              The
      Debentures will have the following material terms:

              a)           The
      debentures will be issued at par in integral multiples of
      $1,000.

               

              b)           At
      any time up to and including the Maturity Date (as defined below), all or
      any portion of the principal amount of the Debentures will be convertible
      (“Conversion”) into one common share “Common Share”) at the option of the
      holder at a conversion price of $0.12 per Common Share,
      subject to adjustments for any stock splits, consolidations, or other
      capital reorganizations, extraordinary dividends or distributions among other anti-dilution provisions providing
      adjustment for events that will affect all security holders equally
      (the “Conversion Price”).

               

              c)           
      In the event that at any time from and after the Closing Date the volume
      weighted average trading price of the Common Shares through its principal
      trading market for a 10 consecutive trading day period is $0.30 or more,
      all then outstanding Debentures, including any accrued interest thereon,
      will be automatically converted into Common Shares at the Conversion
      Price.

               

            	 
      
	 
      	 
      	 
      
	
              Interest:

            	
              Interest
      payable on the Debentures shall be simple interest calculated at 11% per annum and
      payable quarterly by the issuance of the number of Common Shares
      calculated on the basis of:

               

              A÷B,
      where:

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

              B
      = the greater of:

              i)            $0.15;
      and

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

            	 
      

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 
      	 
      	 
      
	
              Security:

            	
              The
      Debentures will provide general security over the Corporation’s
      assets.

            	 
      
	 
      	 
      	 
      
	
              Agreements:

            	
              Subscription
      Agreement, Secured Subordinate Convertible Debenture Certificate and
      Security Agreement.

            	 
      
	 
      	 
      	 
      
	
              Maturity
      Date:

            	
              Two
      years from the Closing Date (as defined below).

            	 
      
	 
      	 
      	 
      
	
              Hold
      Period:

            	
              The
      Corporation will be a “reporting issuer” on the Closing Date, such that it
      is expected that the Debentures and the Common Shares, will be subject to
      a restricted period expiring four months and one day following the Closing
      Date.

            	 
      
	 
      	 
      	 
      
	
              Form
      of Offering:

            	
              Private
      placement to accredited investors in Ontario under OSC Rule 45-501 or in
      such other jurisdictions in Canada, and outside North America under equivalent
    rules.

            	 
      
	 
      	 
      	 
      
	
              Use
      of Proceeds:

            	
              To
      refinance the Series (G) Notes debt.

               

            	 
      
	 
      	 
      	 
      
	
              Closing
      Date:

            	
              On
      or about June 15, 2007 or such other date or dates as the Corporation may
      determine (the “Closing Date”).

            	 
      
	 
      	 
      	 
      

    

    

    

    
      
        
        

      

      
        B -
2

        
          

        

      

      
        
        

      

    

    SCHEDULE
“C”

     

    SUBSCRIBER’S
REPRESENTATIONS AND WARRANTIES

     

    This
is Schedule “C” to the subscription agreement relating to the purchase of Series
(K) Debentures of Northcore Technologies Inc. (the “Corporation”). Capitalized
terms used but not defined in this schedule are intended to have the meanings
ascribed thereto, as applicable, on the first page of this subscription
agreement and sections 1 and 2 of Schedule “A” to this subscription
agreement.

     

    By
executing this subscription agreement, the Subscriber represents and warrants to
the Corporation, which representations and warranties are true as of the date of
this subscription agreement and will be true as of the Closing Date,
that:

     

    
      	
              1.

            	
              Representations and
      Warranties

            

    

     

    
      	
               
      

            	
              (a)

            	
              Authorization and
      Effectiveness.  If the Subscriber is a corporation, the
      Subscriber is a valid and subsisting corporation, has the necessary
      corporate capacity and authority to execute and deliver this subscription
      agreement and to observe and perform its covenants and obligations
      hereunder and has taken all necessary corporate action in respect
      thereof.  If the Subscriber is a partnership, syndicate or other
      form of unincorporated organization, the Subscriber has the necessary
      legal capacity and authority to execute and deliver this subscription
      agreement and to observe and perform its covenants and obligations
      hereunder and has obtained all necessary approvals in respect
      thereof.  If the Subscriber is a natural person, he or she has
      obtained the age of majority and is legally competent to execute this
      subscription agreement and to take all actions required pursuant
      thereto.

            

    

     

    Whether
the Subscriber is a natural person or a corporation, partnership or other
entity, upon acceptance by the Corporation, this subscription agreement will
constitute a legal, valid and binding contract of the Subscriber, and any
beneficial purchaser for whom it is purchasing, enforceable against the
Subscriber and any such beneficial purchaser in accordance with its
terms.

     

    
      	
               
      

            	
              (b)

            	
              Residence.  The
      Subscriber or any beneficial purchaser on whose behalf the Subscriber is
      acting hereunder is a resident of, or otherwise subject to, the
      jurisdiction referred to under “Name and Address of Subscriber” on the
      first page of this subscription agreement, which address is the residence
      or place of business of the Subscriber or such beneficial purchaser and
      has not been created or used solely for the purpose of acquiring
      Debentures, and neither the Subscriber or such beneficial
      purchaser:

            

    

     

    
      	
               
      

            	
              (i)

            	
              is  (or  is
      purchasing Debentures for the account or benefit of) a U.S.
      Person;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              was
      offered the Debentures in the United States;
and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              executed
      or delivered this agreement in the United
  States.

            

    

     

    
      	
               
      

            	
              (c)

            	
              Investment
      Intent.  The Subscriber on its own behalf and on behalf
      of any beneficial purchaser on whose behalf the Subscriber is acting
      hereunder is acquiring Debentures to be held for investment only and not
      with a view to resale or
distribution.

            

    

     

    
      	
               
      

            	
              (d)

            	
              Prospectus
      Exemptions.  The Subscriber or any beneficial purchaser
      on whose behalf the Subscriber is acting hereunder acknowledges and agrees
      that:

            

    

     

    the
sale and delivery of the Debentures to the Subscriber is conditional upon such
sale being exempt from the requirements under Applicable Securities Laws
requiring the filing of a prospectus in connection with the distribution of the
Debentures. The Subscriber acknowledges that it is aware that it is purchasing
the Debenture pursuant to an exemption from the prospectus requirement under
applicable securities legislation and, as a consequence, (i) it is restricted
from using most of the civil remedies available under securities legislation;
(ii) it may not receive information that would otherwise be required to be
provided to it under securities legislation; and (iii) the Corporation is
relieved from certain obligations that would otherwise apply under securities
legislation.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (e)

            	
              Offering
      Documents.  The Subscriber has not received, nor does the
      Subscriber need to receive, any document purporting to describe the
      business and affairs of the Corporation that has been prepared for
      delivery to and review by prospective investors (including a prospectus or
      offering memorandum) so as to assist those investors to make an investment
      decision in respect of securities being sold in a distribution of
      securities of the Corporation.

            

    

     

    
      	
               
      

            	
              (f)

            	
              No Solicitation or
      Advertising.  The Subscriber on its own behalf and on
      behalf of any beneficial purchaser on whose behalf the Subscriber is
      acting hereunder acknowledges that it has not purchased the Debentures as
      a result of any general solicitation or general advertising, including
      advertisements, articles, notices or other communications published in any
      newspaper, magazine or similar media or broadcast over radio or television
      or other telecommunications (including electronic display), or any seminar
      or meeting whose attendees have been invited by any general solicitation
      or general advertising.

            

    

     

    
      	
               
      

            	
              (g)

            	
              No Undisclosed
      Information.  The Debentures are not being purchased by
      the Subscriber as a result of any material information concerning the
      Corporation that has not been publicly disclosed and the Subscriber’s
      decision to tender this offer and acquire Debentures has not been made as
      a result of any verbal or written representation as to fact or otherwise
      made by or on behalf of the Corporation, or any other person and is based
      entirely upon the currently available public information concerning the
      Corporation.

            

    

     

    
      	
               
      

            	
              (h)

            	
              Investment
      Suitability.  The Subscriber and any beneficial purchaser
      on whose behalf the Subscriber is acting hereunder have such knowledge and
      experience in financial and business affairs as to be capable of
      evaluating the merits and risks of the investment hereunder in Debentures
      (and the Underlying Securities in respect thereof) and are able to bear
      the economic risk of loss of such investment.  The Subscriber
      and any beneficial purchaser on whose behalf the Subscriber is acting
      hereunder acknowledge and agree that the Subscriber and such beneficial
      purchaser are responsible for obtaining such legal advice as the
      Subscriber or such beneficial purchaser considers appropriate in
      connection with the execution, delivery and performance by the Subscriber
      of this agreement and the transactions contemplated
    hereunder.

            

    

     

    
      	
               
      

            	
              (i)

            	
              Subscription
      Agreement.  The Subscriber on its own behalf and on
      behalf of any beneficial purchaser on whose behalf the Subscriber is
      acting hereunder has read and understands the contents of this agreement
      (including the Schedules hereto) and agrees to be legally bound
      hereby.

            

    

     

    
      	
               
      

            	
              (j)

            	
              No Conversion or Transfer of
      Debentures or Underlying Securities in U.S.  The
      Subscriber on its own behalf and on behalf of any beneficial purchaser on
      whose behalf the Subscriber is acting hereunder acknowledges that the
      Debentures and Underlying Securities may not be offered, sold or otherwise
      transferred to persons in the United States or to U.S. Persons and may not
      be exercised in the United States or by or on behalf of a U.S. Person and
      the Subscriber and such beneficial purchaser understand that certificates
      representing the Debentures and Underlying Securities issued to it will so
      indicate.

            

    

     

    
      	
               
      

            	
              (k)

            	
              Ontario and Alberta
      Subscribers.  If the Subscriber or any beneficial
      purchaser on whose behalf the Subscriber is acting hereunder is a resident
      of Ontario or Alberta, the Subscriber or its disclosed principal is an
      “accredited investor” within the meaning of National Instrument 45-106 -
      Prospectus and Registration Exemptions and falls within one or more of the
      sub-paragraphs of the definition of “Accredited Investor” set out in
      Schedule “D” hereto and the Subscriber or such beneficial purchaser has
      concurrently executed and delivered to the Corporation a certificate in
      the form attached as Schedule “D” (the Subscriber having checked the
      applicable subparagraph(s)).

            

    

     

     

    
      
        
        

      

      
        C -
2

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (l)

            	
              Non-Canadian / Non-US
      Subscriber. If the Subscriber, or any beneficial purchaser for whom
      it is acting, is a resident of a non-Canadian/non-US jurisdiction, the
      Subscriber and its disclosed principal, if applicable, is recognized by
      the securities regulatory authority of such jurisdiction as an exempt
      subscriber, the subscription for the Debentures by the Subscriber, or such
      beneficial purchaser, does not contravene any of the applicable securities
      legislation in the jurisdiction in which the Subscriber or such beneficial
      purchaser resides and does not give rise to any obligation of the
      Corporation to prepare and file a prospectus or similar document or to
      register the Debentures or to be registered with or to file any report or
      notice with any governmental or regulatory authority, and the Subscriber
      or its disclosed principal has concurrently executed and delivered to the
      Corporation a certificate in the form attached as Schedule
      “E”.

            

    

     

    
      	
               
      

            	
              (m)

            	
              The
      execution and delivery of this subscription agreement, the performance and
      compliance with the terms hereof, the subscription for the Debentures and
      the completion of the transactions described herein by the Subscriber will
      not result in any material breach of, or be in conflict with or constitute
      a material default under, or create a state of facts which, after notice
      or lapse of time, or both, would constitute a material default under any
      term or provision of the constating documents, by-laws or resolutions of
      the Subscriber, the Applicable Securities Laws or any other laws
      applicable to the Subscriber, any agreement to which the Subscriber is a
      party, or any judgment, decree, order, statute, rule or regulation
      applicable to the Subscriber.

            

    

     

    
      	
               
      

            	
              (n)

            	
              The
      Subscriber is subscribing for the Debentures as principal for its own
      account and not for the benefit of any other person (within the meaning of
      Applicable Securities Laws) and not with a view to the resale or
      distribution of all or any of the Debentures or Underlying Securities or
      if it is not subscribing as principal, it acknowledges that the
      Corporation may be required by law to disclose to certain regulatory
      authorities the identity of each beneficial purchaser of the Debentures
      for whom it is acting.

            

    

     

    
      	
               
      

            	
              (o)

            	
              In
      the case of a subscription for the Debentures by the Subscriber acting as
      trustee or agent (including, for greater certainty, a portfolio manager or
      comparable adviser) for a principal, the Subscriber is duly authorized to
      execute and deliver this subscription agreement and all other necessary
      documentation in connection with such subscription on behalf of each such
      beneficial purchaser, each of whom is subscribing as principal for its own
      account, not for the benefit of any other person and not with a view to
      the resale or distribution of the Debentures or Underlying Securities, and
      this subscription agreement has been duly authorized, executed and
      delivered by or on behalf of and constitutes a legal, valid and binding
      agreement of, such principal, and the Subscriber acknowledges that the
      Corporation may be required by law to disclose the identity of each
      beneficial purchaser for whom the Subscriber is
  acting.

            

    

     

    
      	
               
      

            	
              (p)

            	
              In
      the case of a subscription for the Debentures by the Subscriber acting as
      principal, this subscription agreement has been duly authorized, executed
      and delivered by, and constitutes a legal, valid and binding agreement of,
      the Subscriber.  This subscription agreement is enforceable in
      accordance with its terms against the Subscriber and any beneficial
      purchasers on whose behalf the Subscriber is
  acting.

            

    

     

    
      	
               
      

            	
              (q)

            	
              There
      is no person acting or purporting to act in connection with the
      transactions contemplated herein who is entitled to any brokerage or
      finder’s fee.  If any person establishes a claim that any such
      fee or other compensation is payable in connection with this subscription
      for the Debentures, the Subscriber covenants to indemnify and hold
      harmless the Corporation with respect thereto and with respect to all
      costs reasonably incurred in the defence
  thereof.

            

    

     

    
      	
               
      

            	
              (r)

            	
              The
      Subscriber is not, with respect to the Corporation or any of its
      affiliates, a control person (as defined in Applicable Securities
      Laws).

            

    

     

    
      	
               
      

            	
              (s)

            	
              If
      required by Applicable Securities Laws or the Corporation, the Subscriber
      will execute, deliver and file or assist the Corporation in filing such
      reports, undertakings and other documents with respect to the issue of the
      Debentures or Underlying Securities as may be required by any securities
      commission, stock exchange or other regulatory
  authority.

            

    

     

     

    
      
        
        

      

      
        C -
3

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (t)

            	
              The
      Subscriber acknowledges that no representation has been made respecting
      the applicable hold periods imposed by the Applicable Securities Laws or
      other resale restrictions applicable to the Debentures or Underlying
      Securities which restrict the ability of the Subscriber (or others for
      whom it is contracting hereunder) to resell such securities, that the
      Subscriber (or others for whom it is contracting hereunder) is solely
      responsible to find out what these restrictions are and the Subscriber is
      solely responsible (and the Corporation is not in any way responsible) for
      compliance with applicable resale restrictions and the Subscriber is aware
      that it (or beneficial purchasers for whom it is contracting hereunder)
      may not be able to resell such securities except in accordance with
      limited exemptions under the Applicable Securities Laws and other
      applicable laws.

            

    

     

    
      	
               
      

            	
              (u)

            	
              No
      person has made any written or oral
  representations:

            

    

     

    
      	
               
      

            	
              (i)

            	
              that
      any person will resell or repurchase the Debentures or the Underlying
      Securities;

            

    

     

    (ii)           that
any person will refund the purchase price of the Debentures; or

     

    
      	
               
      

            	
              (iii)

            	
              as
      to the future price or value of the Debentures or the Underlying
      Securities.

            

    

     

    
      	
               
      

            	
              (v)

            	
              The
      Subscriber, on its own behalf and, if applicable, on behalf of others for
      whom it is acting hereunder, acknowledges and agrees as
      follows:

            

    

     

    
      	
               
      

            	
              (i)

            	
              No
      securities commission, agency, governmental authority, regulatory body,
      stock exchange or other regulatory body has reviewed or passed on the
      merits of the Debentures or the Underlying
  Securities.

            

    

     

    
      	
               
      

            	
              (ii)

            	
              The
      Subscriber’s ability to transfer the Debentures or Underlying Securities
      is limited by, among other things, Applicable Securities
    Laws.

            

    

     

    
      	
               
      

            	
              (iii)

            	
              The
      certificates representing the Debentures will bear, as of the Closing
      Date, legends substantially in the following form and with the necessary
      information inserted:

            

    

     

    UNLESS PERMITTED UNDER
SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY
BEFORE <INSERT DATE THAT IS FOUR (4) MONTHS AND ONE (1) DAY AFTER CLOSING
DATE>.”

     

    
      	
               
      

            	
              (iv)

            	
              In
      the event that holders of Debentures convert such Debentures prior to the
      expiry of the hold periods applicable to the Underlying Securities, the
      Underlying Securities, as applicable, will bear legends substantially in
      the following form and with the necessary information
      inserted:

            

    

     

    “UNLESS PERMITTED UNDER
SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY
BEFORE <INSERT DATE THAT IS FOUR (4) MONTHS AND ONE (1) DAY AFTER CLOSING
DATE>.

     

    
      	
               
      

            	
              (v)

            	
              In
      addition, the Common Shares will also bear a legend substantially in the
      following form:

            

    

     

     

    “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK
EXCHANGE (THE “TSX”); HOWEVER THE SAID SECURITIES CANNOT BE TRADED THROUGH THE
FACILITIES OF THE TSX SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY
ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY” IN
SETTLEMENT OF TRANSACTIONS ON THE TSX.”

    

    
      
        
        

      

      
        C -
4

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (vi)

            	
              There
      is no government or other insurance covering the Debentures or Underlying
      Securities.

            

    

     

    
      	
               
      

            	
              (vii)

            	
              There
      are risks associated with the purchase of the Debentures or the Underlying
      Securities.

            

    

     

    
      	
              2.

            	
              Reliance Upon Representations,
      Warranties and Covenants. The Subscriber acknowledges that the
      representations and warranties contained herein are made by the Subscriber
      with the intention that they may be relied upon by the Corporation in
      determining the Subscriber’s eligibility to purchase Debentures under
      Applicable Securities Laws.  The Subscriber agrees that by
      accepting delivery of the Debentures on the Closing Date, the Subscriber
      will be representing and warranting that the foregoing representations and
      warranties are true and correct as at the Closing Time with the same force
      and effect as if they had been made by the Subscriber at the Closing Time
      and that they will survive the purchase by the Subscriber of Debentures
      and will continue in full force and effect notwithstanding any subsequent
      disposition by the Subscriber of such
  Debentures.

            

    

     

    
      	
              3.

            	
              Personal
      Information.  The Subscriber and (if applicable) each
      disclosed principal understands that the Corporation may be required to
      provide any one or more of the Canadian securities regulators, stock
      exchanges, or other regulatory
      agencies or the Corporation’s transfer agent with the name, residential
      address, telephone number and e-mail address of the Subscriber and (if
      applicable) any disclosed principals as well as information regarding the
      number, aggregate purchase price and type of Debenture, Underlying
      Securities and/or Common Shares purchased under this subscription
      agreement and the identities of any beneficial purchasers of the
      Debenture, Underlying Securities and/or Common Shares (collectively, the
      "Information"),
      and may make any other filings of the Information as the Corporation or
      the Corporation’s counsel deems appropriate. In addition, the Information
      may be used by the Corporation for the purposes
      of:

            

    

     

    
      	
               
      

            	
              (a)

            	
              completing
      the purchase of the Debenture pursuant to this subscription
      agreement;

            

    

     

    
      	
               
      

            	
              (b)

            	
              complying
      with all corporate governance and continuous disclosure requirements under
      applicable securities laws; and

            

    

     

    
      	
               
      

            	
              (c)

            	
              contacting
      the Subscriber in its capacity as an
investor.

            

    

     

    The
Subscriber and (if applicable) any disclosed principals hereby consent to and
authorize the foregoing use and disclosure of such
Information.  Notwithstanding that the Subscriber may be purchasing
the Debenture as agent on behalf of one or more undisclosed principals, the
Subscriber agrees to provide, on request, all particulars as to the identity of
such undisclosed principals as may be required by the Corporation in order to
comply with the foregoing.

     

    Each
Subscriber of Debentures in Ontario authorizes the indirect collection of
Information by the Ontario Securities Commission and confirms that it has been
notified by the Corporation: (i) that the Corporation will be delivering the
Information to the Ontario Securities Commission; (ii) that such Information is
being collected indirectly by the Ontario Securities Commission under the
authority granted to it in Applicable Securities Laws; (iii) that such
Information is being collected for the purpose of the administration and
enforcement of Applicable Securities Laws; and (iv) that the title, business
address and business telephone number of the public official in the Province of
Ontario, who can answer questions about the Ontario Securities Commission’s
indirect collection of the Information as follows:

     

    
      	
               
      

            	
              Administrative
      Assistant to the Director of Corporate
Finance

            

    

    
      	
               
      

            	
              Ontario
      Securities Commission

            

    

    
      	
               
      

            	
              18th
      Floor, 20 Queen Street West

            

    

    
      	
               
      

            	
              Toronto,
      Ontario  M5H 2S8

            

    

    
      	
               
      

            	
              Telephone:
      (416) 597-0681

            

    

     

     

    
      
        
        

      

      
        C -
5

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
“D”

     

     

    This
is Schedule “D” to the subscription agreement relating to the purchase of Series
(K) Debentures of Northcore Technologies Inc. (the “Corporation”).  Capitalized
terms used but not defined in this Schedule are intended to have the meanings
ascribed thereto, as applicable, on the first page of this subscription
agreement and section 1 and 2 of Schedule “A” to this Subscription
Agreement.

     

    ACCREDITED
INVESTOR CERTIFICATE

     

    In
connection with the purchase of Debentures, the undersigned hereby represents,
warrants and certifies to the Corporation that the undersigned (and each
disclosed principal, if applicable) is an “accredited investor” as defined in
Section 1.1 of National Instrument 45-106 - Prospectus and Registration
Exemptions and is purchasing the Debentures as principal.

     

    The
undersigned has indicated below the categories that the undersigned (or the
disclosed principal) satisfies to qualify as an “accredited
investor”.

     

    The
undersigned understands that the Corporation and its counsel are relying on the
information contained in this certificate in order to determine whether the
Corporation may sell Debentures to the undersigned in a manner exempt from the
prospectus and registration requirements of Applicable Securities
Laws.

     

    ACCREDITED
INVESTOR STATUS

     

    The
undersigned represents, warrants and certifies that it, he or she (or the
disclosed principal) is:  [initial each
applicable item]:

     

    
      	
              _____

            	
              (a)

            	
              a
      Canadian financial institution, or a Schedule III
    bank;

            
	 	 	 
	
              _____

            	
              (b)

            	
              the
      Business Development Bank of Canada incorporated under the Business Development Bank of
      Canada Act (Canada);

            
	 	 	 
	
              _____

            	
              (c)

            	
              a
      subsidiary of any person referred to in paragraphs (a) to (b), if the
      person owns all of the voting securities of the subsidiary, except the
      voting securities required by law to be owned by directors of that
      subsidiary;

            
	 	 	 
	
              _____

            	
              (d)

            	
              a
      person registered under the securities legislation of a jurisdiction of
      Canada as an adviser or dealer, other than a person registered solely as a
      limited market dealer under one or both of the Securities Act
      (Ontario) or the Securities Act
      (Newfoundland and Labrador);

            
	 	 	 
	
              _____

            	
              (e)

            	
              an
      individual registered or formerly registered under the securities
      legislation of a jurisdiction of Canada, as a representative of a person
      referred to in paragraph (d);

            
	 	 	 
	
              _____

            	
              (f)

            	
              the
      Government of Canada or a jurisdiction of Canada, or any crown
      corporation, agency or wholly owned entity of the Government of Canada or
      a jurisdiction of Canada;

            
	 	 	 
	
              _____

            	
              (g)

            	
              a
      municipality, public board or commission in Canada and a metropolitan
      community, school board, the Comité de gestion de la taxe scolaire de
      l'île de Montréal or an intermunicipal management board in
      Québec;

            
	 	 	 
	
              _____

            	
              (h)

            	
              any
      national, federal, state, provincial, territorial or municipal government
      of or in any foreign jurisdiction, or any agency of that
      government;

            

    

     

     

    
      
        
        

      

      
        D -
1

        
          

        

      

      
        
        

      

    

     

    
      	
              _____

            	
              (i)

            	
              a
      pension fund that is regulated by either the Office of the Superintendent
      of Financial Institutions (Canada) or a pension commission or similar
      regulatory authority of a jurisdiction of Canada;

            
	 	 	 
	
              _____

            	
              (j)

            	
              an
      individual who, either alone or with a spouse, beneficially owns, directly
      or indirectly, financial assets having an aggregate realizable value that
      before taxes, but net of any related liabilities, exceeds
      $1,000,000;

            
	 	 	 
	
              _____

            	
              (k)

            	
              an
      individual whose net income before taxes exceeded $200,000 in each of the
      two most recent calendar years or whose net income before taxes combined
      with that of a spouse exceeded $300,000 in each of the two most recent
      calendar years and who, in either case, reasonably expects to exceed that
      net income level in the current calendar year;

            
	 	 	 
	
              _____

            	
              (l)

            	
              an
      individual who, either alone or with a spouse, has net assets of at least
      $5,000,000;

            
	 	 	 
	
              _____

            	
              (m)

            	
              a
      person, other than an individual or investment fund, that has net assets
      of at least $5,000,000 as shown on its most recently prepared financial
      statements;

            
	 	 	 
	
              _____

            	
              (n)

            	
              an
      investment fund that distributes or has distributed its securities only
      to

               

              (i)   
      a person that is or was an accredited investor at the time of the
      distribution,

               

              (ii)   a person that
      acquires or acquired securities in the circumstances referred to under
      sections 2.10 [Minimum
      Amount Investment] and 2.19 [Additional Investment in
      Investment Funds] of National Instrument 45-106, or

               

              (iii)  
      a person described in paragraph (i) or (ii) that acquires or acquired
      securities under section 2.18 [Investment Fund Reinvestment]
      of National Instrument 45-106;

            
	 	 	 
	
              _____

            	
              (o)

            	
              an
      investment fund that distributes or has distributed securities under a
      prospectus in a jurisdiction of Canada for which the regulator or, in
      Québec, the securities regulatory authority, has issued a
      receipt;

            
	 	 	 
	
              _____

            	
              (p)

            	
              a
      trust company or trust corporation registered or authorized to carry on
      business under the Trust
      and Loan Companies Act (Canada) or under comparable legislation in
      a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a
      fully managed account managed by the trust company or trust corporation,
      as the case may be;

            
	 	 	 
	
              _____

            	
              (q)

            	
              a
      person acting on behalf of a fully managed account managed by that person,
      if that person

               

              (i)    is
      registered or authorized to carry on business as an adviser or the
      equivalent under the securities legislation of a jurisdiction of Canada or
      a foreign jurisdiction, and

               

              (ii)    in
      Ontario, is purchasing a security that is not a security of an investment
      fund;

            
	 	 	 
	
              _____

            	
              (r)

            	
              a
      registered charity under the Income Tax Act (Canada)
      that, in regard to the trade, has obtained advice from an eligibility
      adviser or an adviser registered under the securities legislation of the
      jurisdiction of the registered charity to give advice on the securities
      being traded;

            
	 	 	 
	
              _____

            	
              (s)

            	
              an
      entity organized in a foreign jurisdiction that is analogous to any of the
      entities referred to in paragraphs (a) through (d) or paragraph (i)
      in form and function;

            

    

     

     

    
      
        
        

      

      
        D -
2

        
          

        

      

      
        
        

      

    

     

    
      	
              _____

            	
              (t)

            	
              a
      person in respect of which all of the owners of interests, direct,
      indirect or beneficial, except the voting securities required by law to be
      owned by directors, are persons that are accredited
    investors;

            
	 	 	 
	
              _____

            	
              (u)

            	
              an
      investment fund that is advised by a person registered as an adviser or a
      person that is exempt from registration as an adviser;
  or

            
	 	 	 
	
              _____

            	
              (v)

            	
              a
      person that is recognized or designated by the securities regulatory
      authority or, except in Ontario and Québec, the regulator as

               

              i.    an
      accredited investor, or

               

              ii.    an
      exempt purchaser in Alberta or British Columbia after National Instrument
      45-106 comes into force.

            

    

     

    For
the purposes hereof, the following terms shall have the following
meanings:

     

    "Affiliate" - a person is an
affiliate of another person if:

     

    
      	
               
      

            	
              (d)

            	
              one
      of them is the subsidiary of the other,
or

            

    

     

    
      	
               
      

            	
              (e)

            	
              each
      of them is controlled by the same
person.

            

    

     

    "Canadian financial
institution" means:

     

    
      	
               
      

            	
              (f)

            	
              an
      association governed by the Cooperative Credit
      Associations Act (Canada) or a central cooperative credit society
      for which an order has been made under section 473(1) of that Act;
      or

            

    

     

    
      	
               
      

            	
              (g)

            	
              a
      bank named in Schedule I or II of the Bank Act (Canada), loan
      corporation, trust company, trust corporation, insurance company, treasury
      branch, credit union, caisse populaire, financial services cooperative, or
      league that, in each case, is authorized by an enactment of Canada or a
      jurisdiction of Canada to carry on business in Canada or a jurisdiction in
      Canada.

            

    

     

    "control person" means any
person that holds or is one of a combination of persons that holds:

     

    
      	
               
      

            	
              (h)

            	
              a
      sufficient number of any of the securities of an issuer so as to affect
      materially the control of the issuer,
or

            

    

     

    
      	
               
      

            	
              (i)

            	
              more
      than 20% of the outstanding voting securities of an issuer except where
      there is evidence showing that the holding of those securities does not
      affect materially the control of the
issuer.

            

    

     

    "director" means:

    

    
      	
               
      

            	
              (j)

            	
              a
      member of the board of directors of a company or an individual who
      performs similar functions for a company,
and

            

    

     

    
      	
               
      

            	
              (k)

            	
              with
      respect to a person that is not a company, an individual who performs
      functions similar to those of a director of a
  company.

            

    

     

    "eligibility adviser"
means:

     

    
      	
               
      

            	
              (l)

            	
              a
      person that is registered as an investment dealer or in an equivalent
      category of registration under the securities legislation of the
      jurisdiction of a purchaser and authorized to give advice with respect to
      the type of security being distributed;
and

            

    

     

     

    
      
        
        

      

      
        D -
3

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (m)

            	
              in
      Saskatchewan or Manitoba, also means a lawyer who is a practising member
      in good standing with a law society of a jurisdiction of Canada or a
      public accountant who is a member in good standing of an institute or
      association of chartered accountants, certified general accountants or
      certified management accountants in a jurisdiction of Canada provided that
      the lawyer or public accountant must
not:

            

    

     

    
      	
               
      

            	
              (i)

            	
              have
      a professional, business or personal relationship with the issuer, or any
      of its directors, executive officers, founders of control persons;
      and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              have
      acted for or been retained personally or otherwise as an employee,
      executive officer, director, associate or partner of a person that has
      acted for or been retained by the issuer or any of its directors,
      executive officers, founders or control persons within the previous 12
      months.

            

    

     

    "executive officer" means, for
an issuer, an individual who is:

    

    
      	
               
      

            	
              (n)

            	
              a
      chair, vice-chair or president,

            

    

     

    
      	
               
      

            	
              (o)

            	
              a
      vice-president in charge of a principal business unit, division, or
      function including sales, finance or
production,

            

    

     

    
      	
               
      

            	
              (p)

            	
              an
      officer of the issuer or any of its subsidiaries and who performs a
      policy-making function in respect of the issuer,
  or

            

    

     

    
      	
               
      

            	
              (q)

            	
              performing
      a policy-making function in respect of the
  issuer.

            

    

     

    "financial assets"
means:

     

    
      	
               
      

            	
              (r)

            	
              cash;

            

    

     

    
      	
               
      

            	
              (s)

            	
              securities;
      or

            

    

     

    
      	
               
      

            	
              (t)

            	
              a
      contract of insurance, a deposit or an evidence of a deposit that is not a
      security for the purposes of securities
  legislation;

            

    

     

    "founder" means, in respect of
an issuer, a person who:

     

    
      	
               
      

            	
              (u)

            	
              acting
      alone, in conjunction, or in concert with one or more persons, directly or
      indirectly, takes the initiative in founding, organizing or substantially
      reorganizing the business of the issuer,
and

            

    

     

    
      	
               
      

            	
              (v)

            	
              at
      the time of the trade is actively involved in the business of the
      Issuer.

            

    

     

    "fully managed account" means
an account for which a person makes the investment decisions if that person has
full discretion to trade in securities for the account without requiring the
client's express consent to a transaction.

     

    "investment fund" means a
mutual fund or a non-redeemable investment fund;

     

    "mutual fund " means an issuer
whose primary purpose is the invest money provided by its security holders and
whose securities entitle the holder to receive on demand, or within a specified
period after demand, an amount computed by reference to the value of a
proportionate interest in the whole or in part of the net assets, including a
separate fund or trust account, of the issuer;

     

    "non-redeemable investment
fund" means an issuer:

     

    
      	
               
      

            	
              (w)

            	
              whose
      primary purpose is to invest money provided by its security
      holders;

            

    

     

     

    
      
        
        

      

      
        D -
4

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (x)

            	
              that
      does not invest:

            

    

     

    
      	
               
      

            	
              (i)

            	
              for
      the purpose of exercising or seeking to exercise control of an issuer,
      other than an issuer that is a mutual fund or a non-redeemable investment
      fund, or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              for
      the purpose of being actively involved in the management of any issuer in
      which it invests, other than an issuer that is a mutual fund or a
      non-redeemable investment fund, and

            

    

     

    
      	
               
      

            	
              (y)

            	
              that
      is not a mutual fund.

            

    

     

    "person" includes:

     

    
      	
               
      

            	
              (z)

            	
              an
      individual;

            

    

     

    
      	
               
      

            	
              (aa)

            	
              a
      corporation;

            

    

     

    
      	
               
      

            	
              (bb)

            	
              a
      partnership, trust, fund and an association, syndicate, organization or
      other organized group of person, whether incorporated or not;
      and

            

    

     

    
      	
               
      

            	
              (cc)

            	
              an
      individual or other person in that person's capacity as a trustee,
      executor, administrator, or personal or other legal
      representative.

            

    

     

    "related liabilities"
means:

     

    
      	
               
      

            	
              (dd)

            	
              liabilities
      incurred or assumed for the purpose of financing the acquisition or
      ownership of financial assets, or

            

    

     

    
      	
               
      

            	
              (ee)

            	
              liabilities
      that are secured by financial
assets.

            

    

     

    "spouse" means an individual
who:

    

    
      	
               
      

            	
              (ff)

            	
              is
      married to another individual and is not living separate and apart within
      the meaning of the Divorce Act (Canada),
      from the other individual;

            

    

     

    
      	
               
      

            	
              (gg)

            	
              is
      living with another individual in a marriage-like relationship, including
      a marriage-like relationship between individuals of the same gender;
      or

            

    

     

    
      	
               
      

            	
              (hh)

            	
              in
      Alberta, is an individual referred to in paragraph (a) or (b), or is in an
      adult interdependent partner within the meaning of the Adult Interdependent
      Relationships Act (Alberta).

            

    

     

    "subsidiary" means an issuer
that is controlled directly or indirectly by another issuer an includes a
subsidiary of that subsidiary.

    

    For
purposes of the definitions of “affiliates” and “subsidiary” a person (first
person) is considered to control another person (second person) if:

    

    
      	
               
      

            	
              (ii)

            	
              the
      first person, directly or indirectly, beneficially owns or exercises
      control or direction over securities of the second person carrying votes
      which, if exercised, would entitle the first person to elect a majority of
      the directors of the second person, unless that first person holds the
      voting securities only the secure an
obligation;

            

    

     

    
      	
               
      

            	
              (jj)

            	
              the
      second person is a partnership, other than a limited partnership, and the
      first person holds more than 50% of the interests of the partnership;
      or

            

    

     

     

    
      
        
        

      

      
        D -
5

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (kk)

            	
              the
      second person is a limited partnership and the general partner of the
      limited partnership is the first
person.

            

    

     

    

     

    EXECUTED by the Subscriber at
                                      
this               
day of                                
, 2007.

     

    
      	
              If
      a corporation, partnership or other entity:

            	
              If
      an individual:

            
	 
      	 
      
	
              __________________________________________

            	 
      	
              ______________________________________________

            
	
              (Print
      Name of Subscriber)

            	
              (Print
      Name)

            
	 
      	 
      
	
              __________________________________________

            	 
      	
              ______________________________________________

            
	
              (Signature
      of Authorized Signatory)

            	
              (Signature)

            
	 
      	 
      
	
              __________________________________________

            	 
      	
              ______________________________________________

            
	
              (Name
      and Position of Authorized Signatory)

            	
              (Jurisdiction
      of Residence)

            
	 
      	 
      
	
              __________________________________________

            	 
      	
              ______________________________________________

            
	
              (Jurisdiction
      of Residence)

            	
              (Print
      Name of Witness)

            
	 
      	 
      
	
              __________________________________________

            	 
      	
              ______________________________________________

            
	 
      	
              (Signature
      of Witness)

            

    

     

     

    
      
        
        

      

      
        D -
6

        
          

        

      

      
        
        

      

    

     

    
      SCHEDULE
“E”

    

     

    This
is Schedule “E” to the subscription agreement relating to the purchase of Series
(K) Debentures of Northcore Technologies Inc. (the “Corporation”).  Capitalized
terms used but not defined in this Schedule are intended to have the meanings
ascribed thereto, as applicable, on the first page of this subscription
agreement and section 1 and 2 of Schedule “A” to this Subscription
Agreement

     

    OFFSHORE
SUBSCRIBER CERTIFICATE

    NON-CANADIAN
SUBSCRIBERS

    (OTHER
THAN U.S SUBSCRIBERS)

     

    We,
on our own behalf and (if applicable) on behalf of others for whom we are
contracting hereunder, represent, warrant, covenant and certify to and with the
Corporation (and acknowledge that the Corporation is relying thereon) that we
are, and (if applicable) any beneficial subscriber for whom we are contracting
hereunder is, a resident of, or otherwise subject to, the securities legislation
of a jurisdiction other than
Canada or the United States, and:

     

    
      	
               
      

            	
              (a)

            	
              we,
      and (if applicable) any other subscriber for whom we are contracting
      hereunder, are:

            

    

     

    
      	
               
      

            	
              (i)

            	
              a
      subscriber that is recognized by the securities regulatory authority in
      the jurisdiction in which we are resident, or otherwise subject to the
      securities laws of such jurisdiction, as an exempt subscriber and are
      purchasing the Debenture as principal for our, or (if applicable) each
      such other subscriber’s, own account, and not for the benefit of any other
      person, for investment only and not with a view to resale or distribution;
      or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              a
      subscriber which is purchasing the Debenture pursuant to an exemption from
      any prospectus or securities registration requirements (particulars of
      which are enclosed herewith) available to us and the Corporation, and any
      such other subscriber, under applicable securities laws of our
      jurisdiction of residence or to which we and any such other subscriber are
      otherwise subject to, and we and any such other subscriber shall deliver
      to the Corporation such further particulars of the exemption and our
      qualification thereunder as the Corporation may reasonably
      request;

            

    

     

    
      	
               
      

            	
              (b)

            	
              the
      purchase of the Debenture by us, and (if applicable) each such other
      subscriber, does not contravene any of the applicable securities laws in
      such jurisdiction and does not trigger: (i) any obligation to prepare and
      file a prospectus, an offering memorandum or similar document, or any
      other ongoing reporting requirements with respect to such purchase or
      otherwise; or (ii) any registration or other obligation on the part of the
      Corporation; and

            

    

     

    
      	
               
      

            	
              (c)

            	
              we,
      and (if applicable) any other subscriber for whom we are contracting
      hereunder will not sell or otherwise dispose of any Debentures, Underlying
      Securities or Common Shares, except in accordance with applicable Canadian
      securities laws and in accordance with the rules and regulations of the
      TSX, and if we, or (if applicable) such beneficial subscriber, sell or
      otherwise dispose of any Debentures, Underlying Securities or Common
      Shares, to a person other than a resident of Canada or the United States ,
      we, and (if applicable) such beneficial subscriber, will obtain from such
      subscriber representations, warranties and covenants in the same form as
      provided in this Schedule “E” and shall comply with such other
      requirements as the Corporation may reasonably require.

               

               

               

            

    

    Dated
at                                     
this                 
day of                                      
, 2007.

    
      	 
      	
              _____________________________________________

            
	 
      	
              (Signature
      of Subscriber)

            
	 	 
	 
      	 
      	
              _____________________________________________

            
	 
      	
              (Print
      Name)

            

    

    

     

    E -
1ex429.htm

    Exhibit
4.29

     

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

     

    NORTHCORE
TECHNOLOGIES INC.

     

    (Organized
under the laws of Ontario)

     

    Series
(K) Convertible Secured Debenture

     

    
      	
              Date of
      Issue:  June 15, 2007

            	
              CDN.
      $•

            
	
              Interest
      Rate:  11.0% per annum

            	
              Certificate
      Number:  [K-•]

            
	 
      	 
      

    

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

     

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

     

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

     

    
      	
              NORTHCORE
      TECHNOLOGIES INC.

               

            
	
              Per:

            	 
      
	 
      	
              Authorized
      Signing Officer

            
	 
      	 
      

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
“A”

     

    Terms
and Conditions applicable to

    Series
‘K’ Convertible Secured Debentures

    dated
as of June 12, ____, 2007 issued by

    NORTHCORE
TECHNOLOGIES INC.

     

    ARTICLE
1-  INTERPRETATION

     

    1.1       Defined
Terms

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Date of Issue” means the date
hereof;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “including” means including
without limitation;

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        A -
2

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “TSX” means the Toronto Stock
Exchange;

     

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

     

    1.2       Statutory
References; Terms defined by the PPSA

     

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

     

    1.3       Gender
and Number

     

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

     

    1.4       Monetary
References

     

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

     

    1.5       Day
Not a Business Day

     

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

     

    
      
        
        

      

      
        A -
3

        
          

        

      

      
        
        

      

    

    1.6       Invalidity
of Provisions

     

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

     

    1.7       Governing
Law

     

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

     

    1.8       Assignment

     

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

     

    ARTICLE
2-  THE DEBENTURES

     

    2.1       Debentures
in Series

     

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

     

    2.2       Denominations

     

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

     

    2.3       Terms
of Debentures

     

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

     

    
      
        
        

      

      
        A -
4

        
          

        

      

      
        
        

      

    

    A÷B,
where:

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

    B
= the greater of:

     

    
      	
               
      

            	
              i)

            	
              $0.15;
      and

            

    

     

    
      	
               
      

            	
              ii)

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

            

    

     

    Interest
will continue to accrue until paid.

     

    2.4       Maturity
Date

     

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

     

    2.5       Debentures
to Rank Equally

     

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

     

    2.6       Registration
of Debentures

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        A -
5

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

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

     

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

     

    2.7       Ownership
of Debentures

     

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

     

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

     

    
      
        
        

      

      
        A -
6

        
          

        

      

      
        
        

      

    

    2.8       Exchange
of Debentures

     

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

     

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

     

    2.9       Replacement
of Debentures

     

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

     

    ARTICLE
3-  PURCHASE FOR CANCELLATION OF DEBENTURES

     

    3.1       Purchase
of Debentures for Cancellation

     

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

     

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

     

    
      
        
        

      

      
        A -
7

        
          

        

      

      
        
        

      

    

    ARTICLE
4-  CONVERSION

     

    4.1       Conversion

     

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

     

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

     

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

     

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

     

    4.2       Manner
of Exercise or Deemed Exercise of Right to Convert

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        A -
8

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

    4.3           Adjustment
of Conversion Price

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        A -
9

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        A -
10

        
          

        

      

      
        
        

      

    

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

     

    (vi)       the
numerator of which will be:

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        A -
11

        
          

        

      

      
        
        

      

    

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

     

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

     

    4.4       Rules
Regarding Calculation of Adjustment of Conversion Price

     

    For
the purposes of Section 4.3:

     

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

     

    
      
        
        

      

      
        A -
12

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

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

     

    4.5      
No Requirement to Issue Fractional Shares or Warrants

     

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

     

    4.6       Corporation
to Reserve Shares

     

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

     

    
      
        
        

      

      
        A -
13

        
          

        

      

      
        
        

      

    

    4.7       Cancellation
of Converted Debentures

     

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

     

    4.8       Certificate
as to Adjustment

     

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

     

    4.9       Notice
of Special Matters

     

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

     

    ARTICLE
5-  COVENANTS OF THE CORPORATION

     

    5.1       General
Covenants

     

    The
Corporation hereby covenants with the Holders as follows:

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

     

    
      
        
        

      

      
        A -
14

        
          

        

      

      
        
        

      

    

     

    
      	
              (d)

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

            

    

     

    
      	
              (e)

            	
              the
      Corporation shall:

            

    

     

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

     

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

     

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

     

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

     

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

     

    
      	
              (f)

            	
              the
      Corporation shall promptly notify the Holder in writing of the details
      of:

            

    

     

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

     

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

     

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

     

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

     

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

     

    
      	
              (g)

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

            

    

     

    
      
        
        

      

      
        A -
15

        
          

        

      

      
        
        

      

    

    5.2       Specific
Covenants

     

    The
Corporation hereby further covenants with the Holders that:

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

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

            

    

     

    
      	
              (d)

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

            

    

     

    
      	
              (e)

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

            

    

     

    
      	
              (f)

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

            

    

     

    
      	
              (g)

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

            

    

     

    
      	
              (h)

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

            

    

     

    5.3       Performance
of Covenants by the Registered Holder

     

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

     

    
      
        
        

      

      
        A -
16

        
          

        

      

      
        
        

      

    

    ARTICLE
6-  SECURITY INTEREST

     

    6.1       Grant
of Security Interest

     

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

     

    ARTICLE
7-  RESTRICTIONS ON DISPOSITIONS OF COLLATERAL

     

    7.1       General
Restrictions

     

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

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    
      	
              (c)

            	
              release,
      surrender or abandon possession of the
  Collateral.

            

    

     

    7.2       Permitted
Dispositions

     

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

     

    
      	
              (a)

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

            

    

     

    
      	
              (b)

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

            

    

     

    ARTICLE
8-  NOTICES

     

    8.1       Notice
to the Corporation

     

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

     

    
      
        
        

      

      
        A -
17

        
          

        

      

      
        
        

      

    

    8.2       Notice
to Holder

     

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

     

    8.3       Mail
Service Interruption

     

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

     

    ARTICLE
9-  SUCCESSOR CORPORATIONS

     

    9.1       Certain
Requirements

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        A -
18

        
          

        

      

      
        
        

      

    

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

     

    9.2       Vesting
of Powers in Successor

     

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

     

    

     

    ARTICLE
10-  GENERAL PROVISIONS

     

    10.1     Further
Assurances

     

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

     

    10.2     Term

     

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

     

    10.3     Non-Substitution

     

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

     

    
      
        
        

      

      
        A -
19

        
          

        

      

      
        
        

      

    

    10.4     No
Merger

     

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

     

    10.5     Entire
Agreement

     

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

     

    10.6     Time
of Essence

     

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

     

    10.7     Disclosure
of Information re Corporation

     

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

     

    
      
        
        

      

      
        A -
20

        
          

        

      

      
        
        

      

    

    EXHIBIT
“1”

     

    FORM
OF TRANSFER

     

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

     

    For
value received, the undersigned hereby assigns and transfers unto

     

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

     

    DATED_____________
in the presence of __________________________.

     

                                                Signed:
___________________________________

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
“2”

     

    FORM
OF ELECTION OF CONVERSION PRIVILEGE

     

    TO:      NORTHCORE
TECHNOLOGIES INC.

    
      	
              RE:

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

            

    

    

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

     

    Principal
amount converted: $ _____________________________

     

    ($1,000
or integral multiple thereof only)

     

    
      	
               
      

            	
              Name:

            	
              ____________________________________

            

    

     

    
      	
               
      

            	
              Address:

            	
              ____________________________________

            

    

     

    ____________________________________

     

    Date:                ____________________________________

     

    Signed:              ____________________________________

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00139-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00139-of-00352.parquet"}]]