Document:

EX-10.11.3

Exhibit 10.11.3

Unless permitted under securities legislation, the holder of this security must not trade the
security before June 5, 2008.

The securities represented hereby have not been registered under the United States Securities Act
of 1933, as amended (the “U.S. Securities Act”). The holder hereof, by purchasing such securities,
agrees for the benefit of Ceramic Protection Corporation (the “Corporation”) that such securities
may be offered, sold, pledged or otherwise transferred only (A) to the Corporation, (B) outside the
United States in compliance with Rule 904 of Regulation S under the U.S. Securities Act, if
available, or (C) in a transaction that does not require registration under the U.S. Securities Act
or any applicable state securities laws, provided that, in the case of transfers pursuant to the
foregoing clause (C), the transferor shall have furnished to the Corporation a written opinion of
counsel of recognized standing in form and substance satisfactory to the Corporation to the effect
that such registration is not required. Delivery of this certificate may not constitute “good
delivery” in settlement of transactions on stock exchanges in Canada. If, at any time, the
Corporation is a “foreign issuer” as defined in Regulation S under the U.S. Securities Act, these
securities are being sold in compliance with Rule 904 of Regulation S under the U.S. Securities
Act, a new certificate bearing no legend, delivery of which will constitute “good delivery”, may be
obtained from the Corporation’s transfer agent upon delivery of this certificate and a duly
executed declaration, in a form satisfactory to the Corporation’s transfer agent and the
Corporation, to the effect that the sale of the securities represented hereby is being made in
compliance with Rule 904 of Regulation S under the U.S. Securities Act.

CERAMIC PROTECTION CORPORATION

SECURED SUBORDINATED CONVERTIBLE DEBENTURE

	 	 	 
	Principal Sum:

	 	USD$200,000
	 
	 	 
	Interest Rate:

	 	10% per annum, payable monthly
	 
	 	 
	Due:

	 	February 4, 2011

ARTICLE 1

PROMISE TO PAY

1.1 Ceramic Protection Corporation (the “Corporation”), a corporation incorporated under the laws
of Alberta, for value received hereby acknowledges itself indebted and promises to pay to:

Brian L. Stafford Trust dated February 7, 2005

1537 East Hillsboro Boulevard, #542

Deerfield Beach, Florida 33441

(the “Holder”) the principal sum of USD$200,000 on February 4, 2011 (the “Stated Maturity
Date”), or on such earlier date as such principal sum may become due in accordance with the terms
and conditions hereof, on presentation and surrender of this Debenture to the principal office of
the Corporation in Sunrise, Florida, and to pay interest on such principal sum at 10% per annum
for the period commencing on the date hereof and ending on the Stated Maturity Date (the
“Indebtedness”).

1.2 Interest on the principal sum of this Debenture shall be due and payable monthly in arrears on
the last business day of each month until the Stated Maturity Date, on which date any remaining
unpaid interest shall be due and payable. If the Corporation fails to make an interest payment
when due under the terms of this Debenture, the amount of such overdue interest shall be added to
and become part of the principal sum of this Debenture, with interest due and payable on such
increased principal sum in accordance with this Section 1.2. The total amount of such increased
principal sum shall be due and payable on the Stated Maturity Date.

 

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1.3 The principal sum of and all interest under this Debenture shall be payable in
lawful money of the United States to the Holder at the address set forth in Section 9.4
hereof or at such other place as the Holder may designate in writing from time to time.

1.4 This Debenture is a direct and unconditional obligation of the Corporation.

ARTICLE 2

SECURITY FOR INDEBTEDNESS

2.1 As security for the due payment of the Indebtedness and the performance by the
Corporation of its obligations and covenants hereunder, the Corporation hereby charges as and by way of a
floating charge, to and in favour of the Holder and its successors and assigns, all of
the undertaking, business, property and assets of the Corporation, both present and
future, of every nature and kind and wherever situate including, without limitation, all
of its present and future personal and real property, goodwill, trademarks, inventions,
processes, patents and patent rights, materials, supplies, inventories, motor vehicles,
trucks, trailers, machinery, implements, equipment and apparatus of every kind,
furniture, rent, revenues, income, money, rights, powers, privileges, franchises,
benefits, amenities, contracts, agreements, leases of real and personal property,
licenses, permits, book debts, accounts receivable, negotiable and non-negotiable
instruments, judgments, securities, choses in action, unpaid capital and all other
property and things of value of every kind and nature, tangible and intangible, legal or
equitable, which the Corporation now has, may be possessed of, entitled to, or acquire,
by way of amalgamation or otherwise, now or hereafter and any and all proceeds of any of
the foregoing.

          In this Debenture, the charge created and provided for is called the “Charge” and
the subject matter of the Charge is called the “Charged Premises”.

          The Corporation acknowledges that value has been given and agrees that: (i) the
Charge shall attach when the Corporation signs this Debenture; and (ii) the Corporation
has rights in the Charged Premises.

2.2 Until there shall occur an Event of Default or the Charge becomes enforceable, and subject to
the express provisions of this Debenture, the Corporation may dispose of or deal with the
Charged Premises in the ordinary course of business and for the purpose of carrying on
the same, so that purchasers thereof or parties dealing with the Corporation take title
thereto free and clear of the Charge, provided that in each case such action is in the
ordinary course of its business and for the purpose of carrying on the same and is not
in breach of any express provision hereof.

2.3 The Charge shall not extend or apply to the last day of the term of any lease or
agreement to lease but upon the enforcement of the Charge the Corporation shall stand
possessed of such last day in trust for the Holder to assign the same to any person
acquiring such term in the course of enforcement of the Charge.

2.4 The Charge does not and shall not extend to, and the Charged Premises shall not
include, any agreement, right, franchise, licence or permit (the “Contractual Rights”)
to which the Corporation is a party or of which the Corporation has the benefit, to the
extent that the creation of the Charge herein would constitute a breach of the terms of
or permit any person to terminate the Contractual Rights, but the Corporation shall hold
its interest therein in trust for the Holder.

2.5 Upon the occurrence of an Event of Default as described in Article 7 hereof, the
Charge shall immediately become enforceable.

2.6

	 	(a)	 	Whenever the Charge has become enforceable, the Holder may realize upon the
Charged Premises and shall have the following rights and remedies, which rights and remedies
may be exercised from time to time separately or in combination:

	 	(i)	 	the Holder may by appointment in writing appoint a receiver or
receiver and manager (each herein referred to as the “Receiver”) of all or any part of the Charged

 

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	 	 	 	Premises and of the rents, incomes, royalties and profits therefrom and may remove or
replace such Receiver from time to time or may institute proceedings in any court of
competent jurisdiction for the appointment of a Receiver of the Charged Premises or any
part thereof; and the term “Holder” when used in this Section 2.6 shall include any
Receiver so appointed and the Holders, officers and employees of such Receiver;
	 
	 	(ii)	 	the Holder may take all such steps as the Holder may consider necessary or desirable for
the purpose of preserving, maintaining and completing all or any part of the Charged
Premises and making such replacements thereof and improvements and additions thereto as
the Holder shall consider expedient;
	 
	 	(iii)	 	the Holder may take possession of the Charged Premises with power to exclude the
Corporation and its officers, employees and agents therefrom;
	 
	 	(iv)	 	the Holder may carry on or concur in the carrying on of all or any part of the
business of the Corporation relating to the Charged Premises;
	 
	 	(v)	 	the Holder may enjoy and exercise all of the powers of the Corporation as the Holder
considers necessary or desirable for the exercise of any and all of the remedies of the
Holder provided herein, including, without limitation, the power to make any arrangement or
compromise on behalf and in the name of the Corporation which the Holder considers expedient;
	 
	 	(vi)	 	the Holder may, with or without taking possession, sell, lease or otherwise dispose of,
either as a whole or in separate parcels, the Charged Premises at public auction, by private
tender or by private sale at such times and places either for cash or upon, credit upon such
terms and conditions as the Holder may determine and without notice to the Corporation unless
required by law and may execute and deliver to the purchaser or purchasers of the Charged
Premises or any part thereof a good and sufficient deed or conveyance or deeds or conveyances
for the same, any officer of the Holder being hereby constituted the irrevocable attorney of
the Corporation for the purpose of making such sale and executing such deeds or conveyances,
and any such sale made as aforesaid shall be a perpetual bar both in law and in equity
against the Corporation and all other persons claiming all or any part of the Charged
Premises by, from, through or under the Corporation, the Holder or any of its agents or
affiliates may be a purchaser or otherwise acquire the right, title and interest in all or
any of the Charged Premises at any such sale or disposition;
	 
	 	(vii)	 	the Holder may accept the Charged Premises in satisfaction or partial satisfaction of the
Charge upon notice to the Corporation of its intention to do so in the manner required by
law;
	 
	 	(viii)	 	the Holder may borrow money on the security of the Charged Premises for the purpose of the
carrying on of the business of the Corporation or for the maintenance, preservation,
protection or realization of the Charged Premises in priority to the Charge;
	 
	 	(ix)	 	the Holder may receive the rents, royalties, incomes and profits of any kind whatsoever
from the Charged Premises and pay therefrom (i) any expenses of preserving, maintaining and
completing the Charged Premises, of making such replacements thereof and improvements and
additions thereto as the Holder may consider expedient and of carrying on all or any part of
the business of the Corporation relating to the Charged Premises, and (ii) any charges
against the Charged Premises ranking in priority to the security created by this debenture
or the payment of which may be necessary or desirable to preserve or protect all or any part
of the Charged Premises or the interest of the Holder therein; and

 

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	 	(x)	 	the Holder may exercise any other right or remedy permitted by law or
equity, including, without limitation, all rights and remedies of a secured party
under the Personal Property Security Act (Alberta).

	 	(b)	 	The Corporation further agrees with the Holder that:

	 	(i)	 	the Holder shall not be liable or responsible for any failure to seize, collect,
realize, sell or obtain payment of all or any part of the Charged Premises and shall not be
bound to institute proceedings or to take other steps for the purpose of seizing,
collecting, realizing or obtaining possession or payment of all or any part of
the Charged Premises or for the purpose of preserving any rights of the Holder,
the Corporation or any other person, firm or corporation in respect of the
Charged Premises;
	 
	 	(ii)	 	the Holder may grant extensions of time, take, abstain from taking and perfecting and
give up securities, accept compositions, grant releases and discharges, release
any part of the Charged Premises and otherwise deal with the Corporation,
creditors of the Corporation, sureties and others and with the Charged Premises
and other securities as the Holder may see fit without prejudice to the liability
of the Corporation to the Holder or the Holder’s rights hereunder;
	 
	 	(iii)	 	to facilitate the realization of the Charged Premises, the Holder may enter
upon, occupy and use all or any of the premises, buildings and plant comprising the
Charged Premises and use all or any of the equipment and other personal property of
the Corporation for such time as the Holder requires to facilitate such realization,
free of charge (as between the Corporation and the Holder), and the Holder shall not
be liable to the Corporation for any neglect in so doing or in respect of any rent,
charges or depreciation in connection with such actions;
	 
	 	(iv)	 	the Holder may charge on its own behalf and pay to others all reasonable
amounts for expenses incurred and for services rendered in connection with the
exercise of the rights and remedies of the Holder hereunder, including, without
limiting the generality of the foregoing, reasonable legal, Receiver and accounting
fees and expenses, and in every such case the amounts so paid together with all
costs, charges and expenses incurred in connection therewith shall be added to the
amounts due hereunder and shall be secured by the Charge;
	 
	 	(v)	 	the Holder may discharge any claim, lien, mortgage, charge, security
interest, encumbrance or any rights of others that may exist or be threatened against the
Charged Premises, and in every such case the amounts so paid together with costs,
charges and expenses incurred in connection therewith shall be added to the
amounts due hereunder and shall be secured by the Charge; and
	 
	 	(vi)	 	any proceeds of realization of the Charged Premises may be applied by the
Holder to the payment of expenses in connection with the preservation and realization
of the Charged Premises as above described and any balance of such proceeds shall be
applied by the Holder to payment of any amount owing by the Corporation to the Holder
in such order as the Holder may see fit; if there is any surplus remaining, it may be
paid to any person having a claim thereto in priority to the Corporation of whom the
Holder has knowledge and may be applied or retained as reserves against potential
claims that the Holder or the Receiver in good faith believes should be maintained
and the balance remaining, if any, shall (subject to applicable law) be paid to the
Corporation,

	 	(c)	 	Any Receiver shall be entitled to exercise all rights and powers of the Holder hereunder. To
the extent permitted by law, any Receiver shall for all purposes be deemed to be the agent of
the Corporation and not of the Holder and the Corporation shall be solely responsible for
the Receiver’s acts or defaults and remuneration.

 

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	 	(d)	 	The Corporation hereby irrevocably appoints the Holder attorney on its behalf to sell
or transfer the Charged Premises and to execute all instruments, and do all acts, matters and
things that may be necessary for carrying out the powers hereby given and for the
recovery of all rents and sums of money that may become or are now due or owing to
the Corporation in respect of the Charged Premises and for the enforcement of all
contracts, covenants or conditions binding on any lessee or occupier of the Charged
Premises or on any person in respect of it and this appointment shall take effect
if the Charge has become enforceable.

2.7 The Corporation shall pay to the Holder forthwith on demand all costs, charges and expenses,
including all legal fees, incurred by the Holder in connection with the recovery or enforcement of
payment of any moneys owing hereunder whether by realization or otherwise. All such sums not paid
in accordance with this Section 2.7 shall be added to the amount payable hereunder and shall be
secured by the Charge.

2.8 No failure on the part of the Holder to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right
hereunder preclude the other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies provided by law or in
equity.

ARTICLE 3

CONVERSION

3.1 Subject to and upon compliance with the provisions of this Debenture and subject to the
approval of the Toronto Stock Exchange, the Holder shall have the right, at the option of the
Holder, at any time after the issue of this Debenture up to the close of business on the business
day immediately preceding the Stated Maturity Date, or, if this Debenture shall have been called
for redemption pursuant to Article 4, the business day immediately preceding the date of such
redemption, to convert this Debenture or any portion of the principal amount hereof, provided such
amount is not less than USD$5,000 or the fall amount of this Debenture, whichever is less, into
fully paid and non-assessable common shares in the capital of the Corporation (the “Common
Shares”) at a conversion price, subject to adjustment as provided herein, (the “Conversion Price”)
of USD$6.57 per Common Share. The Corporation shall at all times reserve and allot a sufficient
number of Common Shares to permit and facilitate the Holder’s conversion of this Debenture.

3.2 In order to exercise the right to convert this Debenture or a part hereof into Common Shares
as provided in this Article 3 (the “Conversion Privilege”), the Holder shall surrender this
Debenture to the Corporation at its principal office in Sunrise, Florida accompanied by written
notice (which shall be irrevocable) in the form attached hereto as Schedule “A” (the “Conversion
Notice”) signed by such Holder stating that the Holder elects to convert this Debenture or a
stated portion of the principal amount hereof constituting not less than USD$5,000 or the full
amount of this Debenture, whichever is less. The certificate or certificates representing Common
Shares issuable on such conversion shall be issued in the name stipulated in the Conversion
Notice. The date of receipt by the Corporation of this Debenture together with the Conversion
Notice is herein referred to as the “Date of Conversion”.

3.3 As promptly as practicable after the Date of Conversion, but in any event no later than five
business days after receipt of the Conversion Notice, the Corporation shall issue or cause to be
issued and deliver or cause to be delivered to the Holder a certificate or certificates registered
in accordance with the instructions provided in the Conversion Notice for the number of Common
Shares issuable upon the conversion of this Debenture (or specified portion hereof) and provision
shall be made in respect of any fraction of a share in the manner hereinafter provided.

If the Conversion Privilege is exercised, in whole or in part, prior to the date that is four
months and a day after the date of issue of this Debenture, any certificate issued upon such
conversion shall bear the following legend:

“Unless permitted under securities legislation, the holder of this security must
not trade the security before [the date that is 4 months and a day after the
distribution date].”

 

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In addition, any certificate issued upon such conversion shall bear the following legend, unless
otherwise directed by the Corporation:

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

In addition, any certificate issued upon such conversion shall bear the following U.S. legend
(“U.S. Legend”), unless otherwise directed by the Corporation:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”). THE HOLDER HEREOF,
BY ACQUIRING SUCH SECURITIES, AGREES FOR THE BENEFIT OF CERAMIC PROTECTION
CORPORATION (THE “CORPORATION”) THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES
IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, IF
AVAILABLE, OR (C) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE
U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, PROVIDED THAT, IN THE
CASE OF TRANSFERS PURSUANT TO THE FOREGOING CLAUSE (C), THE TRANSFEROR SHALL HAVE
FURNISHED TO THE CORPORATION A WRITTEN OPINION OF COUNSEL OF RECOGNIZED STANDING IN
FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD
DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA. IF, AT ANY
TIME THE CORPORATION IS A “FOREIGN ISSUER” AS DEFINED EST REGULATION S UNDER THE
U.S. SECURITIES ACT, THESE SECURITIES ARE BEING SOLD IN COMPLIANCE WITH RULE 904 OF
REGULATION S UNDER THE U.S. SECURITIES ACT, A NEW CERTIFICATE BEARING NO LEGEND,
DELIVERY OF WHICH WILL CONSTITUTE “GOOD DELIVERY,” MAY BE OBTAINED FROM THE
CORPORATION’S TRANSFER AGENT UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED
DECLARATION, IN A FORM SATISFACTORY TO THE CORPORATION’S TRANSFER AGENT AND THE
CORPORATION, TO THE EFFECT THAT THE SALE OF THE SECURITIES REPRESENTED HEREBY IS
BEING MADE IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES
ACT.”;

provided that, if this Debenture or the Common Shares issuable upon conversion of this Debenture
(or any portion hereof) are being sold outside the United States in accordance with Rule 904 of
Regulation S under the U.S. Securities Act, and provided that the Corporation is a “foreign issuer”
within the meaning of Regulation S under the U.S. Securities Act at the time of sale, the U.S.
Legend may be removed by providing a declaration to the Corporation or its transfer agent, as
applicable, to the effect set forth in Schedule “B” hereto (or as the Corporation may prescribe
from time to time); provided, further, that the U.S. Legend may also be removed, apart from the
effect set forth in Schedule “B” hereto, by delivery to the Corporation or its transfer agent, as
applicable, of an opinion of counsel, of recognized standing reasonably satisfactory to the
Corporation, to the effect that such legend is no longer required under applicable requirements of
the U.S. Securities Act or state securities laws.

Such conversion shall be deemed to have been effected immediately prior to the close of business
on the Date of Conversion and, at such time, the rights of the Holder as a holder of the portion
of this Debenture subject to conversion shall cease and the Holder shall be deemed to have become
on such date the holder of record of the Common Shares represented thereby; provided, however,
that no such surrender on any date when the share transfer registers for Common Shares of the
Corporation shall be closed shall be effective to constitute the person or persons entitled to
receive the Common Shares upon such conversion as the holder or holders of record of such Common

 

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Shares on such date, but such surrender shall be effective to constitute the person entitled to
receive such Common Shares as the holder of record thereof for all purposes at the close of
business on the next succeeding day on which such share transfer registers are open. No payment or
adjustment shall be made upon any conversion on account of any cash dividends on the Common Shares
issuable upon conversion or any interest accrued thereon.

3.4 Upon surrender to the Corporation of this Debenture for conversion in part only, the Holder
shall be entitled to and shall receive, without expense to the Holder, one or more new debentures
for the unconverted portion of the principal amount of this Debenture.

3.5 Notwithstanding anything herein contained, the Corporation shall in no case be required to
issue fractional Common Shares upon the conversion of this Debenture (or any portion hereof). If
any fractional interest in a Common Share would, except for the provisions hereof, be deliverable
upon the conversion of this Debenture, the Corporation shall adjust such fractional interest by
issuing to the Holder one whole Common Share for any such fractional interest, subject to any
required regulatory approvals.

3.6 Subject to Section 3.7 hereof, the Conversion Price (and accordingly, the number of Common
Shares issuable upon exercising the Conversion Privilege) shall be subject to adjustment from time
to time as follows:

	 	(a)	 	If and whenever the Corporation shall:

	 	(i)	 	issue Common Shares, or securities convertible into or
exchangeable for Common Shares, as a stock dividend or other distribution to all or substantially all
of the holders of Common Shares by way of a stock dividend;
	 
	 	(ii)	 	subdivide, redivide, reclassify or change its outstanding Common Shares into a
greater number of shares; or
	 
	 	(iii)	 	reduce, combine, reclassify, consolidate or change its
outstanding Common Shares into a smaller number of shares (any such event in
clauses (i), (ii) and (iii) being herein referred to as a “Share
Reorganization”),

the Conversion Price shall be adjusted, effective immediately after the record date
for the Share Reorganization or, if no record date is fixed, the effective date of
the Share Reorganization, by multiplying the Conversion Price in effect on such
record or effective date, as the case may be, by a fraction of which:

	 	(A)	 	the numerator shall be the number of Common
Shares outstanding on such record or effective date before giving
effect to such Share Reorganization; and
	 
	 	(B)	 	the denominator shall be the number of Common
Shares outstanding after completion of such Share Reorganization (but
before giving effect to the issue of any Common Shares issued after
such record date otherwise than as part of such Share Reorganization),
including, in the case of a dividend or distribution of securities
convertible into or exchangeable for Common Shares, the number of
Common Shares that would have been outstanding if such securities had
been converted into or exchanged for Common Shares on such record or
effective date.

	 	(b)	 	If and whenever at any time the Corporation shall fix a record date for the issuance of
rights, options or warrants to the holders of all or substantially all of its Common Shares
entitling them to subscribe for or purchase Common Shares (or securities
convertible into or exchangeable for Common Shares) at a price per share (or having
a conversion or exchange price per share) equal to or less than 95% of: (i) the
market price of a Common Share on such record date; or (ii) the Conversion Price
(each such event being herein referred to as a “Rights Offering”), the

 

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	 	 	 	Conversion Price shall be adjusted effective immediately after such record date by
multiplying the Conversion Price in effect on such record date by a fraction of which:

	 	(i)	 	the numerator shall be the sum of:

	 	(A)	 	the number of Common Shares outstanding on such record date, and
	 
	 	(B)	 	the number obtained by dividing the product of the total
number of Common Shares so offered for subscription or purchase and the
price at which such shares are so offered (or, in the case of securities
convertible into or exchangeable for Common Shares, the product of the
maximum number of Common Shares into or for which securities so offered for
subscription or purchase may be converted or exchanged and the conversion or
exchange price of such securities) by the market price of Common Shares on
such record date or the Conversion Price, as the case may be; and

	 	(ii)	 	the denominator shall be the number of Common Shares outstanding on such record date
plus the number of Common Shares so offered for subscription or purchase (or, in
the case of securities convertible into or exchangeable for Common Shares, the
maximum number of Common Shares for or into which the securities so offered for
subscription or purchase may be converted or exchanged).

Any Common Shares owned by or held for the account of the Corporation shall be deemed not
to be outstanding for the purpose of any such computation. If such rights, options or
warrants are not so issued or if, at the date of expiry of the rights, options or warrants
subject to the Rights Offering, less than all the rights, options or warrants have been
exercised, then the Conversion Price shall be readjusted effective immediately after the
date of expiry to the Conversion Price which would have been in effect if such record date
had not been fixed, or to the Conversion Price which would then be in effect on the date
of expiry if the only rights, options or warrants issued had been those that were
exercised, as the case may be.

	 	(c)	 	If and whenever at any time the Corporation shall fix a record date for the making of an
issuance or distribution to all or substantially all of the holders of its Common Shares of:

	 	(i)	 	shares of the Corporation of any class (other than Common Shares);
	 
	 	(ii)	 	rights, options or warrants to acquire Common Shares;
	 
	 	(iii)	 	evidence of indebtedness; or
	 
	 	(iv)	 	any other assets,

and such issuance or distribution does not constitute a Share Reorganization or a Rights
Offering (each such event being herein referred to as a “Special Distribution”), the
Conversion Price shall be adjusted effective immediately after such record date by
multiplying the Conversion Price in effect on such record date by a fraction:

	 	(i)	 	the numerator of which is the difference obtained when the amount by which the
aggregate fair market value (as determined by the auditors, which determination
shall be conclusive) of the shares, rights, options, warrants, evidences of
indebtedness or assets, as the case may be, distributed in the Special Distribution
exceeds the fair market value (as determined by the auditors, which determination
shall be conclusive) of the consideration, if any, received therefor by the
Corporation, is subtracted from the product obtained when the number of Common
Shares outstanding on the record date is multiplied by the current market price of
a Common Share on such date; and

 

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	 	(ii)	 	the denominator of which is the product obtained when the number of Common
Shares outstanding on the record date is multiplied by the market price of a Common
Share on such date,

provided that no such adjustment shall be made if the result of such adjustment would be
to increase the Conversion Price above the Conversion Price in effect immediately before
such record date. Any Common Shares owned by or held for the account of the Corporation
shall be deemed not to be outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed. To the extent
that such distribution is not so made, the Conversion Price shall be readjusted effective
immediately to the Conversion Price which would then be in effect based upon such shares
or rights, options or warrants or evidences of indebtedness or assets actually
distributed.

	 	(d)	 	Subject to subsection (e) of this Section 3.6, if and whenever there shall occur:

	 	(i)	 	a reclassification or redesignation of the Common Shares or any change of the Common
Shares into other shares, otherwise than as the result of a Share Reorganization;
	 
	 	(ii)	 	a consolidation, arrangement, merger, amalgamation or other business combination of
the Corporation with or into another individual, partnership, limited partnership,
association, trust, joint venture, trustee, executor, administrator, legal
representative, government, regulatory authority or body corporate (except with a
wholly-owned subsidiary of the Corporation which does not result in a
reclassification of the Common Shares or a change of the Common Shares into other
 shares) or other entity (each of the foregoing, a “Person”); or
	 
	 	(iii)	 	the transfer of all or substantially all of the assets of the Corporation to
another Person,

	 	 	 	(each such event being herein referred to as a “Capital Reorganization”) the Holder shall,
after the effective date of such Capital Reorganization, be entitled to receive and shall
accept upon exercise of the Conversion Privilege, in lieu of the number of Common Shares
to which such holder was theretofore entitled upon such exercise, the aggregate number of
 shares or other securities or property of the Corporation or of the body corporate
resulting from such Capital Reorganization that such Holder would have been entitled to
receive as a result of such Capital Reorganization if, on the effective date thereof, such
Holder had been the holder of the number of Common Shares to which such Holder was
previously entitled upon conversion; provided that no Capital Reorganization shall be
carried into effect unless all necessary steps shall have been taken so that the Holder
shall thereafter be entitled to receive such shares or other securities or property,
subject to adjustment thereafter in accordance with provisions the same, as nearly as may
be possible, as those contained in this Section 3.6 and in Section 3.7.
	 
	 	(e)	 	If and whenever there shall be a Capital Reorganization pursuant to which the Common Shares
are, directly or indirectly, exchanged for, converted into or otherwise replaced by
securities of another entity such as a trust (other than in the context of an acquisition
of control of the Corporation by any other third party corporation, trust or other entity
or person), the Corporation shall use commercially reasonable efforts to implement
customary exchangeable security arrangements not resulting in any Canadian taxes, customs
duties, fees, assessments or charges of any kind whatsoever to be due or payable by the
Holder, through a special purpose exchange entity so that the Holder, where it has not
exercised the right of conversion hereunder prior to the effective date or record date, as
the case may be, of such Capital Reorganization, shall be entitled to receive, directly or
indirectly, and shall accept upon the exercise of such right for the same aggregate
consideration, in lieu of the number of Common Shares to which such holder was theretofore
entitled upon such exercise, the aggregate number of shares or other securities in the
surviving publicly traded entity resulting from the Capital Reorganization which such
holder would have been entitled to receive as a result of such Capital Reorganization if,
on the effective

 

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	 	 	 	date thereof, it had been the registered holder of the number of Common Shares to
which such holder was theretofore entitled to subscribe for and purchase.
	 
	 	(f)	 	There will be no adjustments as provided herein in respect of any Share
Reorganization, Rights Offering, Special Distribution or Capital Reorganization if the
Holder is allowed to participate as though it had converted its Debentures prior to
the applicable record date or effective date. Such participation by the Holder will be
subject to the approval of the Toronto Stock Exchange or, if the Common Shares are not
listed on such exchange, such other stock exchange on which the Common Shares may then
be listed and posted for trading (collectively, the “Exchange”).
	 
	 	(g)	 	Whenever an adjustment to the Conversion Price is required under this
Debenture, the Corporation shall promptly cause to be issued and delivered to the
Holder a certificate of an officer of the Corporation specifying the nature of the
event requiring the adjustment, the amount of that adjustment and reasonable details
as to the method of calculating the adjustment, including the facts upon which that
calculation is based.

3.7 The following shall be applicable to adjustments to the Conversion Privilege made pursuant to
Section 3.6 hereof:

	 	(a)	 	In any case in which the provisions of this Debenture shall require that an
adjustment shall become effective immediately after a record date for an event, the
Corporation may defer, until the occurrence of such event, issuing to the Holder (in
the event the Conversion Privilege has been exercised after such record date and before
the occurrence of such event) the additional Common Shares issuable by reason of the
adjustment required by such event, provided, however, that the Corporation shall
deliver to the Holder such additional Common Shares forthwith upon the occurrence of
the event.
	 
	 	(b)	 	Adjustments to the Conversion Privilege shall be cumulative, shall in the case
of adjustments to the Conversion Price be computed to the nearest one-tenth of one cent
and shall be made successively whenever an event referred to herein shall occur,
provided that:

	 	(i)	 	no adjustment to the Conversion Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in the Conversion Price then
in effect and no adjustment shall be made in the number of Common Shares
issuable on exercise of the Conversion Privilege unless it would result in a
change of at least one one-hundredth of a Common Share, and
	 
	 	(ii)	 	any adjustment which by reason of paragraph 3.7(b)(i) is not
required to be made shall be carried forward and aggregated until such time as
the cumulative change would be greater than the thresholds set forth in
paragraph 3.7(b)(i).

	 	(c)	 	No adjustment to the Conversion Price shall be made in respect of the issue from
time to time of Common Shares:

	 	(i)	 	pursuant to this Debenture or any debentures ranking pari passu with this
Debenture; or
	 
	 	(ii)	 	pursuant to any stock option or stock purchase plan(s) in force
from time to time for officers or employees of the Corporation and any such
issue shall be deemed not to be a Share Reorganization.

	 	(d)	 	In the event of any question arising with respect to the adjustments provided in
this Article 3, such question shall be conclusively determined by a firm of chartered accountants
appointed by the Corporation (who may be the auditors of the Corporation); such accountants shall
have access to all necessary records of the Corporation and such determination shall be binding
upon the Corporation and the Holder.

 

-11-

	 	(e)	 	If the Corporation shall take a record of the holders of the Common Shares for
the purpose of entitling them to receive any dividend or distribution or any subscription
or purchase rights and shall, thereafter and before the distribution to such shareholders
of any such dividend, distribution or subscription or purchase rights, legally abandon its
plan to pay or deliver such dividend, distribution or subscription or purchase rights, then
no adjustment to the Conversion Price shall be required by reason of taking such record.
	 
	 	(f)	 	The Corporation shall forthwith give notice of any adjustment to the Conversion Price
to the Holder, which notice shall specify the Conversion Price after such adjustment and
the event requiring such adjustment.

3.8 If the Corporation shall fix a record date for:

	 	(a)	 	any Share Reorganization (other than the subdivision of its outstanding
Common Shares into a greater number of shares or the consolidation of its outstanding
Common Shares into a smaller number of shares);
	 
	 	(b)	 	any Rights Offering;
	 
	 	(c)	 	any Special Distribution;
	 
	 	(d)	 	any Capital Reorganization;
	 
	 	(e)	 	any dividend; or
	 
	 	(f)	 	a voluntary or involuntary dissolution, liquidation or winding up of the Corporation;

which, in the case of any event referred to in paragraphs (a) to (e) of this Section 3.8, would
require an adjustment to the Conversion Privilege pursuant to this Article 3, the Corporation
shall, not less than 21 days prior to such record date or, if no record date is fixed, prior to
the effective date of any such event, give to the Holder, in the manner hereinafter specified,
notice of the particulars of the proposed event to the extent that such particulars have been
determined at the time of giving the notice.

3.9 In the event that a proposed action by or on behalf of the Corporation is likely to trigger an
adjustment to the Conversion Price or the Conversion Privilege in accordance with this Article 3,
the Corporation shall provide the Exchange with notice of such proposed action.

ARTICLE 4

REDEMPTION

4.1 After one year from the date of issue of this Debenture and before the Stated Maturity Date,
this Debenture may be redeemed for all or part of the initial principal amount of this Debenture
(the “Redemption Amount”), at the option of the Corporation, provided that the Common Shares have
traded on the Exchange, for a period of 30 consecutive trading days (the “Trading Period”), at a
Weighted Average Trading Price (as defined in Section 4.5 hereof) equal to or greater than
USD$9.10 per share (the “Trading Price”).

4.2 In the event the Trading Price is achieved for
a Trading Period (the “Eligible Period”), the
Corporation may redeem this Debenture for an amount equal to the Redemption Amount by issuing to
the Holder that number of Common Shares at USD$6.57 per share (the “Forced Redemption Price”)
which is equal to the Redemption Amount (a “Forced Redemption”).

4.3 Notice of intention to exercise the right of Forced Redemption, shall be given by the
Corporation to the Holder in the manner herein specified at any time within 10 days of the end of
the Eligible Period. Notice having been so given, the Redemption Amount shall become due and
payable on the date specified in such notice and, upon presentation and surrender of this
Debenture to the Corporation at its principal office in Sunrise, Florida, the Corporation shall
issue or cause to be issued to the Holder in full satisfaction of its obligations:

 

-12-

	 	(a)	 	a new debenture for the principal amount outstanding prior to the Forced
Redemption less the Redemption Amount; and
	 
	 	(b)	 	a share certificate, or share certificates, registered in the name of the
Holder and representing the number of Common Shares at the Forced Redemption Price
which is equal to the Redemption Amount.

4.4 Notwithstanding any provision of this Article 4 to the contrary, the Corporation’s right to
exercise a Forced Redemption shall be restricted in the following manner:

	 	(a)	 	no Forced Redemption may be exercised if an Event of Default (as defined
herein) has occurred and is continuing; and
	 
	 	(b)	 	each Forced Redemption shall be exercised against all holders of Debentures on a pro
rata basis,

4.5 For the purposes of this Article 4, unless the context otherwise requires:

“Weighted Average Trading Price” means, with respect to the Common Shares traded
during a specified period, the quotient obtained by dividing (i) the aggregate sale
price of all Common Shares sold on the Exchange during such period by (ii) the total
number of Common Shares sold on the Exchange during such period, as determined from
time to time by the Corporation based on the trading statistics for such period
issued by the Exchange or, upon the request of the Holder, as determined by an
independent member of the Investment Dealers Association of Canada.

ARTICLE 5

COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE CORPORATION

5.1 The Corporation represents and warrants to the Holder, with the intention that the Holder shall
rely on those representations and warranties in connection with the purchase of this Debenture, as
follows:

	 	(a)	 	Corporate Status

That it:

	 	(i)	 	is duly incorporated and validly existing under the laws of Alberta; and
	 
	 	(ii)	 	has filed all annual reports and financial statements required of it to be
filed in  accordance with the securities laws of each of the provinces of British
Columbia, Alberta, Manitoba and Ontario; and
	 
	 	(iii)	 	has the power and authority to carry on its business as now
being conducted by it and the full power to perform its obligations set forth
in this agreement and in the security documents;

and nothing contained in this Debenture or the security documents if performed by
the Corporation will result in any breach of or be in conflict with any term or
provision of its constating documents nor in any existing arrangement, agreement or
contract, written or verbal, to which it is a party nor, to the best of its
information, knowledge and belief, any statute, governmental order, judgment, decree
or regulatory authority having jurisdiction over the business of the Corporation.

 

-13-

	 	(b)	 	Corporate Authorization
	 
	 	 	 	That all necessary resolutions have been enacted and proceedings taken to enable
the Corporation to execute and deliver this Debenture and to grant the security to
the Holder contemplated by this Debenture.
	 
	 	(c)	 	Capitalization
	 
	 	 	 	As at the date hereof, no securities in the capital of the Corporation are issued
and outstanding other than:

	 	(i)	 	10,232,557 Common Shares;
	 
	 	(ii)	 	options to purchase an aggregate of 861,168 Common
Shares under the Corporation’s existing stock option plan, as amended from
time to time;
	 
	 	(iii)	 	warrants to purchase an aggregate of 510,000 Common Shares.

	 	 	 	There are no other outstanding rights, options, warrants, conversion rights or
agreements for the purchase or acquisition from the Corporation of any shares of
its capital stock.
	 
	 	(d)	 	Exchange and Regulatory Approvals
	 
	 	 	 	That all consents, approvals, orders or authorizations which the Corporation is
required to obtain in connection with the execution and delivery of this Debenture,
subject only to the filing of certain customary documents and forms with the
relevant securities regulatory authorities under applicable securities laws.
	 
	 	(e)	 	Binding Effect
	 
	 	 	 	That the obligations of the Corporation hereunder are valid and binding and
enforceable against the Corporation in accordance with their terms, subject only to
bankruptcy, insolvency or other laws of general application affecting the
enforcement of creditor’s rights generally, and to general principles of equity.
	 
	 	(f)	 	No Judgments
	 
	 	 	 	That there are no material judgments, writs of execution, work orders, injunctions
or directives outstanding against the Corporation or its properties or assets.
	 
	 	(g)	 	No Breach
	 
	 	 	 	That the Corporation is not in material breach of any material agreement to which
it is a party or by which it is bound.

5.2 The Corporation covenants in favour of the Holder that:

	 	(a)	 	Payment
	 
	 	 	 	It will duly and punctually pay or cause to be paid to the Holder all amounts
payable in respect of this Debenture including the principal at the places in the
manner described herein.

 

-14-

	 	(b)	 	Notice of Default
	 
	 	 	 	The Corporation shall notify the holder of this Debenture immediately upon obtaining
knowledge of an Event of Default (as defined herein).
	 
	 	(c)	 	Conduct of Business
	 
	 	 	 	Subject to the express provisions hereof, the Corporation will carry on and conduct its
activities, and cause its subsidiaries to carry on and conduct their businesses, in a
proper and business-like manner, and will do or cause to be done all things necessary to
maintain its and their existence.
	 
	 	(d)	 	Books and Accounts
	 
	 	 	 	It will keep or cause to be kept proper books of record and accounts in accordance with
generally accepted accounting principles consistently applied in Canada.
	 
	 	(e)	 	Maintenance of Status
	 
	 	 	 	It will use commercially reasonable efforts to maintain the listing of the Common Shares
on the Exchange and to maintain the Corporation’s status as a “reporting issuer” not in
default of the requirements of the securities legislation and regulations of each of the
provinces of British Columbia, Alberta, Manitoba and Ontario.
	 
	 	(f)	 	Financial Statements
	 
	 	 	 	It will furnish to the holder of this Debenture a copy of all consolidated financial
statements of the Corporation, whether annual or interim and the report, if any, of the
Corporation’s auditors thereon and all annual or periodic financial reports of the
Corporation, which are furnished to the holders of Common Shares promptly upon the
distribution thereof to the holders of Common Shares, provided that for so long as the
Corporation is a “reporting issuer” in good standing or the equivalent in any jurisdiction
in Canada, the Corporation’s obligation to deliver such financial information shall be
satisfied by filing such financial information on SEDAR in accordance with applicable
regulatory requirements.
	 
	 	(g)	 	No Distributions
	 
	 	 	 	It shall not declare or make any distribution to the holders of its issued and outstanding
Common Shares after the occurrence of an Event of Default unless and until such default
shall have been cured or waived or shall have ceased to exist. In addition, the
Corporation shall not declare any distribution to the holders of its issued and
outstanding Common Shares if at the time the directors of the Corporation or a committee
thereof resolves to make the said declaration, the Corporation has actual knowledge that
the paying of said distribution on the applicable distribution payment date will result in
an Event of Default.
	 
	 	(h)	 	Maintenance of Property
	 
	 	 	 	It will at all times, repair and keep in repair and good order and condition, or cause to
be so repaired and kept in repair and good order and condition, all buildings, erections,
machinery, plant and equipment used in or in connection with its business which are
necessary for efficient operation up to a modern standard of usage, and renew and replace
or cause to be renewed and replaced all and any of the same which may become worn,
dilapidated, unserviceable, inconvenient, obsolete or destroyed, even by a fortuitous
event, fire or other cause, and which are necessary for efficient operation, and, at all
reasonable times during normal business hours, allow the Holder or its duly authorized
agent access to its premises in order to view the state and condition of the same.

 

-15-

	 	(i)	 	No Sale or Merger
	 
	 	 	 	It shall not:

	 	(i)	 	sell, lease or otherwise transfer the undertaking, property and assets of any of its
operating divisions as an entirety or substantially as an entirety in one or more
transactions, or, sell, lease or otherwise dispose of its undertaking, property
and assets as an entirety or substantially as an entirety in one or more
transactions; or
	 
	 	(ii)	 	amalgamate or merge with any other corporation or effect any corporate
reorganization;

without the prior written consent of the Holder.

	 	(j)	 	Insurance
	 
	 	 	 	It will maintain insurance coverage on its property and assets in accordance with industry
practice.
	 
	 	(k)	 	Compliance with Law

It will:

	 	(i)	 	comply, in all material respects, with all applicable federal, provincial, municipal
or other laws, regulations, ordinances, rules, codes, standards and directions which may
apply to the Charged Premises or its business including, without limitation, those
relating to the protection, preservation or restoration of the environment; and
	 
	 	(ii)	 	obtain and maintain all necessary permits, licenses and authorizations
necessary for the lawful conduct of its business as carried on from time to time.

	 	(l)	 	Retain Charged Premises
	 
	 	 	 	Except in the ordinary course of business, it will not sell, dispose of or part with
possession of all or substantially all of the Charged Premises without the prior written
consent of the Holder.
	 
	 	(m)	 	Completing Security
	 
	 	 	 	It will perform all such acts and things as are reasonably necessary to complete any and
all security documents and supporting agreements identified or referred to herein.
	 
	 	(n)	 	Taxes
	 
	 	 	 	It will pay and discharge all taxes, accessions and governmental charges levied against the
Corporation or its property when due and payable.
	 
	 	(o)	 	Litigation
	 
	 	 	 	It will promptly give notice to the Holder of any litigation which could materially
adversely affect the business or financial condition of the Corporation,
	 
	 	(p)	 	 Change of Name
	 
	 	 	 	It will give to the Holder written notification of any change of name of the Corporation no
later than 10 days before the effective date of that change.

 

-16-

	 	(q)	 	Place of Business
	 
	 	 	 	If the Corporation changes its principal place of business or the location of its
inventory or equipment or the location of its offices where it keeps its records
respecting accounts receivable or acquires other places of business, it will
promptly notify the Holder.
	 
	 	(r)	 	Unpaid Amounts
	 
	 	 	 	It will pay duly and punctually all employees of the Corporation and all other
amounts which if unpaid might under any applicable provincial, state or federal law
obtain or gain priority over the security granted herein by the Corporation to the
Holder.
	 
	 	(s)	 	Future Grants of Security Interests
	 
	 	 	 	It will not grant any new security interests that would rank ahead of the security
interest granted to the Holder hereunder without the approval of holders of a
majority of the principal amount of debentures of the Corporation.

ARTICLE 6

POSTPONEMENT AND SUBORDINATION

6.1 The payment of the principal on the Debentures (the “Subordinated Debt”) will be postponed and
subordinated in right of payment to the prior payment in full of all Senior Indebtedness (as that
term is herein defined), whether outstanding on the date of the Debenture or subsequently incurred in the manner
and to the extent herein set forth. “Senior Indebtedness” means the principal amount of, premium, if any, and
interest on any all obligations and liabilities of the Corporation in respect of:

	 	(a)	 	indebtedness for money borrowed by the Corporation from the Canadian
Imperial Bank of Commerce (“CIBC”) pursuant to credit facilities as amended from time
to time for up to USD$55,000,000 (the “CIBC Facilities”) and any future renewals,
extensions or other amendments to the CIBC Facilities on similar credit terms for the
purposes of financing the Corporation’s operations;
	 
	 	(b)	 	any replacement of the CIBC Facilities, should the Corporation elect to
replace CIBC as its principal lender while the Corporation remains indebted to the
Holder under this Debenture, provided that the material terms to such facilities
shall in no way be amended; and
	 
	 	(c)	 	indebtedness for money borrowed by the Corporation pursuant to previously
issued and currently outstanding secured subordinated debentures in the aggregate of
USD$5,100,000.

6.2
Notwithstanding any provision of this Debenture to the contrary, should the Corporation wish
to increase the Senior Indebtedness to an amount greater than USD$60,100,000, it must obtain the
approval of holders of a majority of the principal amount of
debentures of the Corporation.

6.3 So long as any Senior Indebtedness is outstanding and until the Senior Indebtedness shall have
been paid, performed and indefeasibly satisfied in full:

	 	(a)	 	upon the Holder receiving notice from the holder of the Senior Indebtedness (the “Senior
Creditor”) of the occurrence of a default or an event of default under or in
respect of the Senior Indebtedness or any security provided therefor (the “Senior
Security”):

	 	(i)	 	the payment of all Subordinated Debt is postponed and subordinated to the
indefeasible payment and performance in full and final satisfaction of all Senior
Indebtedness and the Holder will not thereafter directly or indirectly,
accept from the Corporation, in any manner, directly or indirectly, payment
of, or consideration for the reduction of, the whole or any part of the
Subordinated Debt and if any such payment is received or made

 

-17-

	 		 	on the Subordinated Debt, the Holder will hold such payment in trust for the
benefit of, and shall forthwith pay over such payment in the form received
(duly endorsed, if necessary, to the Senior Creditor) to, the Senior
Creditor; and
	 
	 	(ii)	 	the Senior Security shall have priority over the security constituted hereby,
and the security constituted hereby is hereby postponed and subordinated in all
respects to the Senior Security;

	 	(b)	 	the Holder shall not dispute or contest in any manner the priority of any of
the Senior Security over the Subordinated Debt and any security therefor, provided the
Senior Security is duly perfected, valid and enforceable. The Holder hereby consents
to the Senior Security; and
	 
	 	(c)	 	the Holder shall not take or hold, directly or through any trustee or nominee,
any security interest as security for the payment or performance of any of the
Subordinated Debt other than the security constituted by this
Debenture.

6.4 Notwithstanding any provision of this Debenture to the contrary, the Holder hereby covenants
and agrees with the Corporation that it will at any time and from time to time, upon the request of
the Corporation, execute and deliver such agreements and instruments and/or provide such
acknowledgments and undertakings to any holder of Senior Indebtedness confirming the subordination
of the Holder’s rights under this Debenture (including the Charge) to such Senior Indebtedness,
all such agreements, instruments, acknowledgments and undertakings to be in form reasonably
satisfactory to the holder of such Senior Indebtedness.

ARTICLE 7

DEFAULT

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

	 	(a)	 	if the Corporation (or any of its subsidiaries) is in default of any material
agreement or obligation imposed by contract, by law, or by regulatory authority and
such default is not remedied within 30 days of notice thereof to the Corporation from
the Holder;
	 
	 	(b)	 	if any distributions of cash or property are made to holders of Common Shares
without the prior written consent of the Holders;
	 
	 	(c)	 	if the Corporation fails to maintain its status as a reporting issuer in
Alberta or fails to maintain the listing of its Common Shares on the Exchange and the
Corporation fails to restore its status or its listing, as the case may be, within 30
days of notice thereof to the Corporation from the Holder;
	 
	 	(d)	 	if a writ, execution, attachment or similar process is issued against all or a
substantial portion of the property and assets of the Corporation as a result of a
judgment against the Corporation, in an amount which materially affects the assets of
the Corporation and such writ, execution, attachment or similar process is not
released, satisfied, discharged, vacated or stayed within 30 days after its issue or
entry or the Corporation initiates any material litigation without the prior written
consent of the Holder;
	 
	 	(e)	 	if the Corporation institutes proceedings to be adjudicated a bankrupt or
insolvent, or consents to the institution of bankruptcy or insolvency proceedings, or
consents to the filing of any such petition or the petition commencing such
proceedings is not contested, or appoints or consents to the appointment of a receiver
of all, or a substantial part, of the property of the Corporation, or makes a general
assignment for the benefit of creditors, or admits in writing its inability to pay its
debts generally as they become due;
	 
	 	(f)	 	if a Change of Control (as defined herein) of the Corporation occurs, or any
material change to the Corporation’s senior management occurs as a result of death,
disability or termination in accordance with any applicable employment agreements;

 

-18-

	 	(g)	 	if there exists a provision in any agreement (other than a credit agreement relating to
the CIBC Facilities or any replacement thereof) by which the Corporation is bound and which
conflicts with the terms of the Debentures in a material manner and such conflict
is not removed or corrected within 30 days of notice thereof to the Corporation
from the Holder;
	 
	 	(h)	 	if the Corporation mortgages, pledges or charges its properties or leasehold interests
to secure any indebtedness, other than in the ordinary course of business where such indebtedness
individually or in the aggregate is not material or under the Senior Indebtedness,
without the prior written consent of the Holder, or if an event of default under
the Senior Indebtedness occurs and such mortgage, pledge or charge, or such event
of default under the Senior Indebtedness, is not discharged or remedied, as
applicable, within 10 days of notice thereof to the Corporation from the Holder;
	 
	 	(i)	 	if the Corporation defaults in the payment of the principal of this Debenture when the
same becomes due, whether at maturity or otherwise and such default continues for a
period of three business days;
	 
	 	(j)	 	if the Corporation, except as permitted hereby, ceases or threatens to cease, to carry
on its business or any substantial portion thereof;
	 
	 	(k)	 	an encumbrancer taking possession of or appointing a receiver for all or substantially
all property of the Corporation;
	 
	 	(1)	 	if the Corporation neglects to carry out or observe any other material covenant or
condition herein contained to be carried out or observed on its part and such default continues for
10 days after notice thereof to the Corporation from the Holder;
	 
	 	(m)	 	if a resolution is passed for the winding up or liquidation of the Corporation;
or
	 
	 	(n)	 	if any proceedings with respect to the Corporation are taken with respect to a
compromise or arrangement with respect to creditors of the Corporation generally, under the
applicable legislation of any jurisdiction.

7.2 For the purposes of this Debenture, unless the context otherwise requires, “Change of Control”
means the acquisition of voting control or direction over 50.1% or more of the aggregate voting
rights attached to the issued share capital of the Corporation then outstanding by a person or
group of persons acting in concert other than the Holder or any of its affiliates if such
acquisition occurs without the consent or acquiescence of the Holder.

7.3 In case any Event of Default shall have occurred and is continuing, the principal amount of
this Debenture shall, at the option of, and upon written notice to the Corporation by, the Holder,
become immediately due and payable and the Charge shall become enforceable upon the date that such
written notice is given to the Corporation.

7.4 The Corporation acknowledges that if a stay of proceedings is issued against the Corporation
pursuant to the Bankruptcy and Insolvency Act (Canada), the Companies Creditors Arrangements Act
(Canada) or otherwise, the Holder would be irreparably harmed and materially prejudiced if any
proceeds from the Charged Premises were used for any purpose other than the repayment of the debt
secured by this Debenture, and the Corporation hereby acknowledges and agrees that the proceeds
from the Charged Premises received by the Corporation while any such stay is in effect shall be
received and held by the Corporation in trust for the Holder.

7.5 Within 30 days following the occurrence of a Change of Control, and subject to the provisions
and conditions of this Section 7.5, the Corporation shall be obligated to offer to purchase this
Debenture (a “Change of Control Redemption”). The terms and conditions of such obligation are as
follows:

	 	(a)	 	Within 30 days following the occurrence of a Change of Control, the Corporation shall
deliver to the Holder a notice stating that there has been a Change of Control and specifying the

 

-19-

	 	 	 	circumstances surrounding such event (a “Change of
Control Notice”) together with an
offer in writing (the “Offer”) to purchase this Debenture made in accordance with
the requirements of applicable securities legislation at a price equal to 105% of
the principal amount thereof, on this Debenture up to, but excluding, the date of
acquisition by the Corporation or a related party of this Debenture (the “Offer
Price”). The Change of Control Notice shall specify (i) that if this Debenture is
validly tendered it will be accepted for payment; (ii) the Offer Price and date of
acquisition by the Corporation; (iii) that if the Holder elects to have this
Debenture purchased pursuant to the Offer it will be required to surrender this
Debenture to the Corporation at the address specified in the Change of Control
Notice prior to the close of business on the business day immediately preceding the
date of acquisition by the Corporation; and (iv) that the Holder will be entitled to
withdraw its election if the Corporation receives, not later than the close of
business on the third business day immediately preceding the date of acquisition by
the Corporation, a facsimile transmission or letter from the Holder withdrawing its
election to have this Debenture purchased.
	 
	 	(b)	 	If this Debenture is to be purchased or redeemed by the Corporation on
expiry of the Offer, the Corporation shall, on or before 11:00 a.m. (Sunrise, Florida
time) on the date of the expiry of the Offer, pay to the Holder by electronic
transfer or certified cheque, such sums of money as may be sufficient to pay the
aggregate Offer Price for this Debenture.
	 
	 	(c)	 	In the event that this Debenture is being purchased or redeemed by the
Corporation on expiry of the Offer in part only, upon surrender of this Debenture for
payment of the Offer Price, the Corporation shall execute and deliver without charge
to the Holder, one or more new debentures in the form hereof for the portion of the
principal amount of this Debenture not purchased.
	 
	 	(d)	 	In case the Holder of any Debenture to be purchased or redeemed in
accordance with this Section 7.5 of this Debenture shall fail on or before the date
specified in paragraph (b) above to surrender this Debenture or shall not within such
time accept payment of the monies payable, or give such receipt therefor, if any, as
the Corporation may reasonably require, such monies may be set aside in trust in a
chartered bank, and such setting aside shall for all purposes be deemed a payment to
the Holder of the sum so set aside and the Holder shall have no other right except to
receive payment of the monies so paid and deposited, upon surrender and delivery up
of this Debenture. In the event that any such monies remain so deposited for a period
of six years from the date of expiry of the Offer, then such monies, together with
any accumulated interest thereon, shall at the end of such period be paid over to the
Corporation and the Corporation shall not be responsible to the Holder for any
amounts owing to it hereunder.

7.6 Except as provided below, the Corporation shall not enter into any transaction or series of
transactions whereby all or substantially all of its undertaking, property or assets would become
the property of any other Person (a “Successor”) whether by way of reorganization, consolidation,
amalgamation, arrangement, merger, conveyance, lease, sale or otherwise, unless:

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

	 	(i)	 	the Successor will have assumed in writing all the covenants and obligations of
the Corporation under this Debenture;
	 
	 	(ii)	 	this Debenture will be valid and binding obligations of the Successor entitling
the Holder, as against the Successor, to all the rights of the Holder hereunder;
	 
	 	(iii)	 	the Successor is a corporation, partnership, limited liability
company or trust organized or existing under the laws of Canada or the United
States of America or any province, state or territory thereof, and

 

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	 	(iv)	 	in the case of an entity organized otherwise than under the
laws of the Province of Alberta, the Successor shall attorn to the
jurisdiction of the courts of the Province of Alberta;

	 	(b)	 	such transaction shall be on such terms as to substantially preserve and
not impair any of the rights and powers of the Holder hereunder;
	 
	 	(c)	 	no condition or event shall exist as to the Corporation (at the time of
such transaction) or the Successor (immediately after such transaction), and after
giving full effect thereto or immediately after the Successor shall become liable to
pay the principal monies and other monies due or which may become due hereunder,
which constitutes or would with the giving of notice or lapse of time constitute an
Event of Default hereunder; and
	 
	 	(d)	 	the Corporation shall have delivered to the Holder an officer’s
certificate confirming that all requirements of this Section 7.6 have been complied
with in respect of such transaction or series of transactions.

Whenever the conditions of this Section 7.6 shall have been duly observed and performed, any
Successor formed by or resulting from such transaction or series of transactions shall succeed
to, and be substituted for, and may exercise every right and power of the Corporation under this
Debenture with the same effect as though the Successor had been named as the Corporation herein
and thereafter, except in the case of a lease or other similar disposition of property to the
Successor, the Corporation shall be relieved of all obligations and covenants under this
Debenture forthwith upon the Corporation delivering to the Holder an opinion of counsel to the
effect that the transaction or series of transactions shall not result in any material adverse
tax consequences to the Corporation or the Successor. The Holder will, at the expense of the
Successor, execute any documents which it may be advised by counsel are necessary or advisable
for effecting or evidencing such release and discharge.

ARTICLE 8

REGISTRATION, TRANSFER, EXCHANGE AND OWNERSHIP OF DEBENTURE

8.1 With respect to this Debenture, the Corporation shall maintain at its principal office in the
City of Calgary or at such other place in Canada or the United States as it may designate by
notice in writing, a register in which shall be entered the names and addresses of the Holders
(the “Register”). Such registration shall be noted on this Debenture by an officer of the
Corporation.

8.2 The person in whose name this Debenture is registered shall for all purposes be and be deemed
to be the owner thereof and payment of or on account of the principal of this Debenture shall be
made only to or upon the order in writing of such Holder.

8.3 No transfer of this Debenture shall be valid unless (i) made by the Holder or his executors
or administrators or other legal representatives or his or their attorney duly appointed by an
instrument in writing in such form as is satisfactory to the Corporation and (ii) such transfer
shall have been duly entered in the Register.

8.4 A Holder may at any time and from time to time have a transfer of this Debenture entered in
the Register pursuant to the provisions of this Article 8 in accordance with such reasonable
regulations as the Corporation may prescribe; provided, however, that the Corporation shall not
be required to accept any transfer of this Debenture within five business days of a scheduled
interest payment date.

8.5 The Corporation shall not be bound to take notice of or see to the execution of any trust,
whether express, implied or constructive, in respect of this Debenture and may transfer the same
on the direction of the Holder, whether named as trustee or otherwise, as though the Holder were
the beneficial owner thereof.

8.6 The Holder for the time being of this Debenture shall be entitled to the principal evidenced
by this Debenture free from all equities or rights of set-off or counter-claim between the
Corporation and the Holder and all persons may act accordingly. The receipt of any such Holder
for any such principal shall be a good discharge to the

 

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Corporation for the same and the Corporation shall not be bound to inquire into the title or
authority of any such Holder.

ARTICLE 9

MISCELLANEOUS

9.1 In case this Debenture shall at any time become mutilated, destroyed, stolen or lost and this
Debenture, or evidence of the loss, theft or destruction thereof (together with the indemnity
hereinafter referred to and such other documents or proof as may be required in the premises) shall
be delivered to the Corporation, a new Debenture of like tenor and date will be issued by the
Corporation in exchange for this Debenture, but, in case this Debenture has been destroyed, stolen
or lost, only upon receipt of evidence satisfactory to the Corporation that this Debenture was
destroyed or stolen or lost, and in any ease, if required by the Corporation, upon receipt also of
indemnity satisfactory to the Corporation. All expenses and reasonable charges associated with
obtaining such indemnity and with the preparation, authentication and delivery of a new debenture
shall be borne by the Holder.

9.2 The Corporation hereby certifies and warrants that all acts, conditions and things required to
be done and performed and to have happened in respect of the creation and issuance of and to
constitute the same the valid and legally binding obligation of the Corporation enforceable in
accordance with its terms, have been done and performed and have happened in due and strict
compliance with all applicable laws.

9.3 No failure on the part of the Holder to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right
hereunder preclude the other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies provided by law or in
equity.

9.4 Any demand, notice or other communication (a “Communication”) to be given in connection with
this Debenture shall be given in writing and may be given by personal delivery or by registered
mail addressed to the Corporation as follows:

Ceramic Protection Corporation.

530 Sawgrass Corporate Parkway

Sunrise, Florida 33325

Attention: Mr. Stephen Giordanella

or such other address as may be designated by notice by the Corporation to the Holder and, if to
the Holder, to it at:

Brian L. Stafford Trust dated February 7, 2005

1537 East Hillsboro Boulevard, 542

Deerfield Beach, Florida 33441

Attention: Mr. Brian Stafford

The Corporation or the Holder may change its address at any time by giving notice thereof in
accordance with this Section 9.4. Any Communication given by personal delivery shall be
conclusively deemed to have been given on the day of actual delivery thereof and, if given by
registered mail, on the third day following the deposit thereof in the mail. If the party giving
any Communication knows or ought reasonably to know of any difficulties with the postal system
which might affect the delivery of mail, any such Communication shall not be mailed but shall be
given by personal delivery.

9.5 This Debenture shall be governed by and construed in accordance with the laws applicable in the
Province of Alberta.

 

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9.6 This Debenture may be amended only by an agreement in writing signed by the Corporation and
the Holder.

          IN WITNESS WHEREOF the Corporation has caused this Debenture to be signed by its duly
authorized officer as of the 4 day of February, 2008.

	 	 	 	 	 
	 	CERAMIC PROTECTION CORPORATION

 	 
	 	Per: 	 /s/ Randall Paulfus
 	 
	 	  	Name: RANDALL PAULFUS 	 
	 	 	Title:   CHIEF FINANCIAL OFFICER 	 
	 

 

 

SCHEDULE “A”

EXERCISE OF CONVERSION PRIVILEGE

The undersigned hereby irrevocably elects to convert
USD$___________ in principal amount of the
Debenture to which this Schedule “A” is attached (the “Debenture”) into common shares in the capital of
Ceramic Protection Corporation at the prevailing Conversion Price (as defined in the Debenture) in
accordance with the terms and conditions of the Debenture. Please issue share certificates for the
number of Common Shares to be issued upon this conversion and deliver and register such
certificates to the addresses indicated below:

	 	 	 	 	 	 	 
	Delivery:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Name (please print)

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Address

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Registration:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Name (please print)

	 	 
	 	Denominations of Share Certificates to be Issued

	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Address

	 	 
	 	 	 	 
	
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

DATED at ____________________________________, this
______ day of _______________, ______.

	 	 	 	 	 
	 
	 
	 	(Name of Holder)

 	 
	 	Per:  	 	 
	 	 	 	 
	 	 	 	 
	 

 

 

SCHEDULE “B”

FORM OF DECLARATION FOR REMOVAL OF LEGEND

	TO:	 	 CERAMIC PROTECTION CORPORATION, as registrar for the Debentures
	 
	AND TO:	 	 VALIANT TRUST COMPANY, as registrar and transfer agent for the common shares in the
capital of Ceramic Protection Corporation
	 
	 	 	The undersigned (a) acknowledges that the sale of the securities of Ceramic Protection
Corporation (the “Corporation”) to which this declaration relates is being made in
reliance on Rule 904 of Regulation S under the United States Securities Act of 1933, as
amended (the “U.S. Securities Act”) and (b) certifies that (i) the undersigned is not
an “affiliate” of the Corporation as that term is defined in Rule 405 under the U.S.
Securities Act, (ii) the offer of such securities was not made to a person in the
United States and either (A) at the time the buy order was originated, the buyer was
outside the United States, or the seller and any person acting on its behalf reasonably
believed that the buyer was outside the United States, or (B) the transaction was
executed in, on or through the facilities of a Designated Offshore Securities Market as
defined in Regulation S under the U.S. Securities Act and neither the seller nor any
person acting on its behalf knows that the transaction has been prearranged with a
buyer in the United States, (iii) neither the seller nor any affiliate of the seller
nor any person acting on any of their behalf, has engaged or will engage in any
“directed selling efforts” in connection with the offer and sale of such securities,
(iv) the sale is bona fide and not for the purpose of
“washing off” the resale
restrictions imposed because the securities are “restricted securities” (as such term
is defined in Rule 144(a)(3) under the U.S. Securities Act), (v) the seller does not
intend to replace the securities sold in reliance on Rule 904 of Regulation S with
fungible unrestricted securities, and (vi) the contemplated sale is not a transaction,
or part of a series of transactions which, although in technical compliance with
Regulation S, is part of a plan or scheme to evade the registration provisions of the
U.S. Securities Act. Terms used herein have the meanings given to them by Regulation S
under the U.S. Securities Act unless otherwise indicated.

	 	 	 	 	 
	Dated: ____________________________________ 	

Name of Seller

 	 
	 	By:  	 	 
	 	 	Name:	 
	 	 	Title:EX-10.11.4

Exhibit 10.11.4

Unless permitted under securities legislation, the holder of this security must not trade the security before June 5, 2008.

CERAMIC PROTECTION CORPORATION

SECURED SUBORDINATED CONVERTIBLE DEBENTURE

	 	 	 
	Principal Sum:

	 	USD$1,000,000
	 
	 	 
	Interest Rate:

	 	10% per annum, payable monthly
	 
	 	 
	Due:

	 	February 4, 2011

ARTICLE 1

PROMISE TO PAY

1.1 Ceramic Protection Corporation (the “Corporation”), a corporation incorporated under the
laws of Alberta, for value received hereby acknowledges itself indebted and promises to pay to:

Balinhard Capital Corporation

3220 255 5th Avenue SW

Calgary, Alberta T2P 3G6

(the “Holder”) the principal sum of USD$1,000,000 on February 4, 2011 (the “Stated Maturity
Date”), or on such earlier date as such principal sum may become due in accordance with the
terms and conditions hereof, on presentation and surrender of this Debenture to the
principal office of the Corporation in Sunrise, Florida, and to pay interest on such
principal sum at 10% per annum for the period commencing on the date hereof and ending on
the Stated Maturity Date (the “Indebtedness”).

1.2 Interest on the principal sum of this Debenture shall be due and payable monthly in
arrears on the last business day of each month until the Stated Maturity Date, on which date any remaining
unpaid interest shall be due and payable. If the Corporation fails to make an interest payment when due under the terms of this Debenture,
the amount of such overdue interest shall be added to and become part of the principal sum of this Debenture, with
interest due and payable on such increased principal sum in accordance with this Section 1.2. The total amount of
such increased principal sum shall be due and payable on the Stated Maturity Date.

1.3 The principal sum of and all interest under this Debenture shall be payable in lawful money of the
United States to the Holder at the address set forth in Section 9.4 hereof or at such other place as the Holder may
designate in writing from time to time.

1.4 This Debenture is a direct and unconditional obligation of the Corporation.

ARTICLE 2

SECURITY FOR INDEBTEDNESS

2.1 As security for the due payment of the Indebtedness and the performance by the Corporation of
its obligations and covenants hereunder, the Corporation hereby charges as and by way of a
floating charge, to and in favour of the Holder and its successors and assigns, all of the
undertaking, business, property and assets of the Corporation, both present and future, of
every nature and kind and wherever situate including, without limitation, all of its present
and future personal and real property, goodwill, trademarks, inventions, processes, patents
and patent rights, materials, supplies, inventories, motor vehicles, trucks, trailers,
machinery, implements, equipment and apparatus of every kind, furniture, rent, revenues,
income, money, rights, powers, privileges, franchises, benefits,

 

-2-

amenities, contracts, agreements, leases of real and personal property, licenses, permits, book
debts, accounts receivable, negotiable and non-negotiable instruments, judgments, securities,
choses in action, unpaid capital and all other property and things of value of every kind and
nature, tangible and intangible, legal or equitable, which the Corporation now has, may be
possessed of, entitled to, or acquire, by way of amalgamation or otherwise, now or hereafter and
any and all proceeds of any of the foregoing.

          In this Debenture, the charge created and provided for is called the “Charge” and the subject
matter of the Charge is called the “Charged Premises”.

          The Corporation acknowledges that value has been given and agrees that: (i) the Charge shall
attach when the Corporation signs this Debenture; and (ii) the Corporation has rights in the
Charged Premises.

2.2 Until there shall occur an Event of Default or the Charge becomes enforceable, and subject to
the express provisions of this Debenture, the Corporation may dispose of or deal with the Charged
Premises in the ordinary course of business and for the purpose of carrying on the same, so that purchasers thereof
or parties dealing with the Corporation take title thereto free and clear of the Charge, provided that in each case
such action is in the ordinary course of its business and for the purpose of carrying on the same and is not in breach of
any express provision hereof.

2.3 The Charge shall not extend or apply to the last day of the term of any lease or agreement to
lease but upon the enforcement of the Charge the Corporation shall stand possessed of such last day in
trust for the Holder to assign the same to any person acquiring such term in the course of enforcement of the Charge.

2.4 The Charge does not and shall not extend to, and the Charged Premises shall not include, any
agreement, right, franchise, licence or permit (the “Contractual Rights”) to which the Corporation
is a party or of which the Corporation has the benefit, to the extent that the creation of the Charge herein would
constitute a breach of the terms of or permit any person to terminate the Contractual Rights, but the Corporation shall
hold its interest therein in trust for the Holder.

2.5 Upon the occurrence of an Event of Default as described in Article 7 hereof, the Charge shall
immediately become enforceable.

2.6

	 	(a)	 	Whenever the Charge has become enforceable, the Holder may realize upon the
Charged Premises and shall have the following rights and remedies, which rights and
remedies may be exercised from time to time separately or in combination:

	 	(i)	 	the Holder may by appointment in writing appoint a receiver or receiver and
manager (each herein referred to as the “Receiver”) of all or any part of
the Charged Premises and of the rents, incomes, royalties and profits
therefrom and may remove or replace such Receiver from time to time or may
institute proceedings in any court of competent jurisdiction for the
appointment of a Receiver of the Charged Premises or any part thereof; and
the term “Holder” when used in this Section 2.6 shall include any Receiver
so appointed and the Holders, officers and employees of such Receiver;
	 
	 	(ii)	 	the Holder may take all such steps as the Holder may consider
necessary or desirable for the purpose of preserving, maintaining and
completing all or any part of the Charged Premises and making such replacements
thereof and improvements and additions thereto as the Holder shall consider
expedient;
	 
	 	(iii)	 	the Holder may take possession of the Charged Premises with
power to exclude the Corporation and its officers, employees and agents
therefrom;
	 
	 	(iv)	 	the Holder may carry on or concur in the carrying on of all or
any part of the business of the Corporation relating to the Charged Premises;

 

-3-

	 	(v)	 	the Holder may enjoy and exercise all of the powers of the Corporation as
the Holder considers necessary or desirable for the exercise of any and all of the
remedies of the Holder provided herein, including, without limitation, the power to
make any arrangement or compromise on behalf and in the name of the Corporation which
the Holder considers expedient;
	 
	 	(vi)	 	the Holder may, with or without taking possession, sell, lease or otherwise
dispose of, either as a whole or in separate parcels, the Charged Premises at public
auction, by private tender or by private sale at such times and places either for
cash or upon credit upon such terms and conditions as the Holder may determine and
without notice to the Corporation unless required by law and may execute and deliver
to the purchaser or purchasers of the Charged Premises or any part thereof a good and
sufficient deed or conveyance or deeds or conveyances for the same, any officer of
the Holder being hereby constituted the irrevocable attorney of the Corporation for
the purpose of making such sale and executing such deeds or conveyances, and any such
sale made as aforesaid shall be a perpetual bar both in law and in equity against the
Corporation and all other persons claiming all or any part of the Charged Premises
by, from, through or under the Corporation, the Holder or any of its agents or
affiliates may be a purchaser or otherwise acquire the right, title and interest in
all or any of the Charged Premises at any such sale or disposition;
	 
	 	(vii)	 	the Holder may accept the Charged Premises in satisfaction or partial
satisfaction of the Charge upon notice to the Corporation of its intention to do so
in the manner required by law;
	 
	 	(viii)	 	the Holder may borrow money on the security of the Charged Premises for the purpose
of the carrying on of the business of the Corporation or for the maintenance,
preservation, protection or realization of the Charged Premises in priority to the
Charge;
	 
	 	(ix)	 	the Holder may receive the rents, royalties, incomes and profits of any kind
whatsoever from the Charged Premises and pay therefrom (i) any expenses of
preserving, maintaining and completing the Charged Premises, of making such
replacements thereof and improvements and additions thereto as the Holder may
consider expedient and of carrying on all or any part of the business of the
Corporation relating to the Charged Premises, and (ii) any charges against the
Charged premises ranking in priority to the security created by this debenture or the
payment of which may be necessary or desirable to preserve or protect all or any part
of the Charged Premises or the interest of the Holder therein; and
	 
	 	(x)	 	the Holder may exercise any other right or remedy permitted by law or
equity, including, without limitation, all rights and remedies of a secured party
under the Personal Property Security Act (Alberta).

	 	(b)	 	The Corporation further agrees with the Holder that:

	 	(i)	 	the Holder shall not be liable or responsible for any failure to seize, collect,
realize, sell or obtain payment of all or any part of the Charged Premises and shall not be
bound to institute proceedings or to take other steps for the purpose of seizing,
collecting, realizing or obtaining possession or payment of all or any part of the
Charged Premises or for the purpose of preserving any rights of the Holder, the
Corporation or any other person, firm or corporation in respect of the Charged
Premises;
	 
	 	(ii)	 	the Holder may grant extensions of time, take, abstain from taking and
perfecting and give up securities, accept compositions, grant releases and discharges,
release any part of the Charged Premises and otherwise deal with the Corporation,
creditors of the Corporation, sureties and others and with the Charged Premises and
other securities as

 

-4-

	 	 	 	the Holder may see fit without prejudice to the liability of the Corporation
to the Holder or the Holder’s rights hereunder;
	 
	 	(iii)	 	to facilitate the realization of the Charged Premises, the
Holder may enter upon, occupy and use all or any of the premises, buildings
and plant comprising the Charged Premises and use all or any of the equipment
and other personal property of the Corporation for such time as the Holder
requires to facilitate such realization, free of charge (as between the
Corporation and the Holder), and the Holder shall not be liable to the
Corporation for any neglect in so doing or in respect of any rent, charges or
depreciation in connection with such actions;
	 
	 	(iv)	 	the Holder may charge on its own behalf and pay to others
all reasonable amounts for expenses incurred and for services rendered in
connection with the exercise of the rights and remedies of the Holder
hereunder, including, without limiting the generality of the foregoing,
reasonable legal, Receiver and accounting fees and expenses, and in every
such case the amounts so paid together with all costs, charges and expenses
incurred in connection therewith shall be added to the amounts due hereunder
and shall be secured by the Charge;
	 
	 	(v)	 	the Holder may discharge any claim, lien, mortgage, charge,
security interest, encumbrance or any rights of others that may exist or be
threatened against the Charged Premises, and in every such case the amounts
so paid together with costs, charges and expenses incurred in connection
therewith shall be added to the amounts due hereunder and shall be secured by
the Charge; and
	 
	 	(vi)	 	any proceeds of realization of the Charged Premises may be
applied by the Holder to the payment of expenses in connection with the
preservation and realization of the Charged Premises as above described and
any balance of such proceeds shall be applied by the Holder to payment of any
amount owing by the Corporation to the Holder in such order as the Holder may
see fit; if there is any surplus remaining, it may be paid to any person
having a claim thereto in priority to the Corporation of whom the Holder has
knowledge and may be applied or retained as reserves against potential claims
that the Holder or the Receiver in good faith believes should be maintained
and the balance remaining, if any, shall (subject to applicable law) be paid
to the Corporation.

	 	(c)	 	Any Receiver shall be entitled to exercise all rights and powers of the
Holder hereunder. To the extent permitted by law, any Receiver shall for all purposes be deemed to be the
agent of the Corporation and not of the Holder and the Corporation shall be solely responsible
for the Receiver’s acts or defaults and remuneration.
	 
	 	(d)	 	The Corporation hereby irrevocably appoints the Holder attorney on its behalf
to sell or transfer the Charged Premises and to execute all instruments, and do all acts, matters and
things that may be necessary for carrying out the powers hereby given and for the recovery of all
rents and sums of money that may become or are now due or owing to the Corporation in respect of the
Charged Premises and for the enforcement of all contracts, covenants or conditions binding
on any lessee or occupier of the Charged Premises or on any person in respect of it and this
appointment shall take effect if the Charge has become enforceable.

2.7 The Corporation shall pay to the Holder forthwith on demand all costs, charges and expenses,
including all legal fees, incurred by the Holder in connection with the recovery or enforcement of
payment of any moneys owing hereunder whether by realization or otherwise. All such sums not paid in accordance with this
Section 2.7 shall be added to the amount payable hereunder and shall be secured by the Charge.

2.8 No failure on the part of the Holder to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder
preclude the other or

 

-5-

further exercise thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law or in equity.

ARTICLE 3

CONVERSION

3.1 Subject to and upon compliance with the provisions of this Debenture and subject to the
approval of the Toronto Stock Exchange, the Holder shall have the right, at the option of the Holder, at any
time after the issue of this Debenture up to the close of business on the business day immediately preceding the
Stated Maturity Date, or, if this Debenture shall have been called for redemption pursuant to Article 4, the
business day immediately preceding the date of such redemption, to convert this Debenture or any portion of the principal
amount hereof, provided such amount is not less than USD$5,000 or the full amount of this Debenture, whichever is
less, into fully paid and non-assessable common shares in the capital
of the Corporation (the “Common Shares”) at a
conversion price, subject to adjustment as provided herein, (the “Conversion Price”) of USD$6.57 per Common
Share. The Corporation shall at all times reserve and allot a sufficient number of Common Shares to permit and facilitate the
Holder’s conversion of this Debenture.

3.2 In order to exercise the right to convert this Debenture or a part hereof into Common Shares as
provided in this Article 3 (the “Conversion Privilege”), the Holder shall surrender this Debenture
to the Corporation at its principal office in Sunrise, Florida accompanied by written notice (which shall be
irrevocable) in the form attached hereto as Schedule “A” (the “Conversion Notice”) signed by such Holder stating that the
Holder elects to convert this Debenture or a stated portion of the principal amount hereof constituting not less
than USD$5,000 or the full amount of this Debenture, whichever is less. The certificate or certificates representing
Common Shares issuable on such conversion shall be issued in the name stipulated in the Conversion Notice. The
date of receipt by the Corporation of this Debenture together with the Conversion Notice is herein referred to as the “Date of
Conversion”.

3.3 As promptly as practicable after the Date of Conversion, but in any event no later than five
business days after receipt of the Conversion Notice, the Corporation shall issue or cause to be
issued and deliver or
cause to be delivered to the Holder a certificate or certificates registered in accordance with the
instructions provided
in the Conversion Notice for the number of Common Shares issuable upon the conversion of this
Debenture (or
specified portion hereof) and provision shall be made in respect of any fraction of a share in the
manner hereinafter
provided.

If the Conversion Privilege is exercised, in whole or in part, prior to the date that is four
months and a day after the date of issue of this Debenture, any certificate issued upon such
conversion shall bear the following legend:

“Unless permitted under securities legislation, the holder of this security must
not trade the security before [the date that is 4 months and a day after the
distribution date].”

Such conversion shall be deemed to have been effected immediately prior to the close of business
on the Date of Conversion and, at such time, the rights of the Holder as a holder of the portion
of this Debenture subject to conversion shall cease and the Holder shall be deemed to have become
on such date the holder of record of the Common Shares represented thereby; provided, however,
that no such surrender on any date when the share transfer registers for Common Shares of the
Corporation shall be closed shall be effective to constitute the person or persons entitled to
receive the Common Shares upon such conversion as the holder or holders of record of such Common
Shares on such date, but such surrender shall be effective to constitute the person entitled to
receive such Common Shares as the holder of record thereof for all purposes at the close of
business on the next succeeding day on which such share transfer registers are open. No payment or
adjustment shall be made upon any conversion on account of any cash dividends on the Common Shares
issuable upon conversion or any interest accrued thereon.

3.4 Upon surrender to the Corporation of this Debenture for conversion in part only, the Holder
shall be entitled to and shall receive, without expense to the Holder, one or more new debentures for
the unconverted portion of the principal amount of this Debenture.

 

-6-

3.5 Notwithstanding anything herein contained, the Corporation shall in no case be required to
issue
fractional Common Shares upon the conversion of this Debenture (or any portion hereof). If any
fractional interest
in a Common Share would, except for the provisions hereof, be deliverable upon the conversion of
this Debenture,
the Corporation shall adjust such fractional interest by issuing to the Holder one whole Common
Share for any such fractional interest, subject to any required regulatory approvals.

3.6 Subject to Section 3.7 hereof, the Conversion Price (and accordingly, the number of Common
Shares issuable upon exercising the Conversion Privilege) shall be subject to adjustment from time
to time as follows:

	 	(a)	 	If and whenever the Corporation shall:

	 	(i)	 	issue Common Shares, or securities convertible into or exchangeable for Common
Shares, as a stock dividend or other distribution to all or substantially
all of the holders of Common Shares by way of a stock dividend;
	 
	 	(ii)	 	subdivide, redivide, reclassify or change its outstanding
Common Shares into a greater number of shares; or
	 
	 	(iii)	 	reduce, combine, reclassify, consolidate or change its
outstanding Common Shares into a smaller number of shares (any such event in
clauses (i), (ii) and (iii) being herein referred to as a “Share
Reorganization”),

	 	 	 	the Conversion Price shall be adjusted, effective immediately after the record date
for the Share Reorganization or, if no record date is fixed, the effective date of
the Share Reorganization, by multiplying the Conversion Price in effect on such
record or effective date, as the case may be, by a fraction of which:

	 	(A)	 	the numerator shall be the number of Common
Shares outstanding on such
record or effective date before giving effect to such Share
Reorganization; and
	 
	 	(B)	 	the denominator shall be the number of Common
Shares outstanding after
completion of such Share Reorganization (but before giving effect to
the issue of
any Common Shares issued after such record date otherwise than as
part of such
Share Reorganization), including, in the case of a dividend or
distribution of
securities convertible into or exchangeable for Common Shares, the
number of
Common Shares that would have been outstanding if such securities had
been
converted into or exchanged for Common Shares on such record or
effective
date.

	 	(b)	 	If and whenever at any time the Corporation shall fix a record date for the
issuance of rights, options or warrants to the holders of all or substantially all of
its Common Shares entitling them to subscribe for or purchase Common Shares (or
securities convertible into or exchangeable for Common Shares) at a price per share (or
having a conversion or exchange price per share) equal to or less than 95% of: (i) the
market price of a Common Share on such record date; or (ii) the Conversion Price (each
such event being herein referred to as a “Rights Offering”), the Conversion Price shall
be adjusted effective immediately after such record date by multiplying the Conversion
Price in effect on such record date by a fraction of which:

	 	(i)	 	the numerator shall be the sum of:

	 	(A)	 	the number of Common Shares outstanding on such record date, and
	 
	 	(B)	 	the number obtained by dividing the product of
the total number of Common
    Shares so offered for subscription or purchase and the price at which
such shares

 

-7-

	 	 	 	are so offered (or, in the case of securities convertible into or
exchangeable for Common Shares, the product of the maximum number of
Common Shares into or for which securities so offered for subscription or
purchase may be converted or exchanged and the conversion or exchange
price of such securities) by the market price of Common Shares on such
record date or the Conversion Price, as the case may be; and

	 	(ii)	 	the denominator shall be the number of Common Shares outstanding on such
record date plus the number of Common Shares so offered for subscription or purchase
(or, in the case of securities convertible into or exchangeable for Common Shares,
the maximum number of Common Shares for or into which the securities so offered for
subscription or purchase may be converted or exchanged).

	 	 	 	Any Common Shares owned by or held for the account of the Corporation shall be deemed not
to be outstanding for the purpose of any such computation. If such rights, options or
warrants are not so issued or if, at the date of expiry of the rights, options or warrants
subject to the Rights Offering, less than all the rights, options or warrants have been
exercised, then the Conversion Price shall be readjusted effective immediately after the
date of expiry to the Conversion Price which would have been in effect if such record date
had not been fixed, or to the Conversion Price which would then be in effect on the date
of expiry if the only rights, options or warrants issued had been those that were
exercised, as the case may be.
	 
	 	(c)	 	If and whenever at any time the Corporation shall fix a record date for the making of
an issuance or distribution to all or substantially all of the holders of its Common Shares
of:

	 	(i)	 	shares of the Corporation of any class (other than Common Shares);
	 
	 	(ii)	 	rights, options or warrants to acquire Common Shares;
	 
	 	(iii)	 	evidence of indebtedness; or
	 
	 	(iv)	 	any other assets,

	 	 	 	and such issuance or distribution does not constitute a Share Reorganization or a Rights
Offering (each such event being herein referred to as a “Special Distribution”), the
Conversion Price shall be adjusted effective immediately after such record date by
multiplying the Conversion Price in effect on such record date by a fraction:

	 	(i)	 	the numerator of which is the difference obtained when the amount by which the
aggregate fair market value (as determined by the auditors, which determination shall
be conclusive) of the shares, rights, options, warrants, evidences of indebtedness or
assets, as the case may be, distributed in the Special Distribution exceeds the fair
market value (as determined by the auditors, which determination shall be conclusive)
of the consideration, if any, received therefor by the Corporation, is subtracted from
the product obtained when the number of Common Shares outstanding on the record date
is multiplied by the current market price of a Common Share on such date; and
	 
	 	(ii)	 	the denominator of which is the product obtained when the number of Common
Shares outstanding on the record date is multiplied by the market price of a Common
Share on such date,

	 	 	 	provided that no such adjustment shall be made if the result of such adjustment would be
to increase the Conversion Price above the Conversion Price in effect immediately before
such record date. Any Common Shares owned by or held for the account of the Corporation
shall be deemed not to be outstanding for the purpose of any such computation. Such
adjustment shall be

 

-8-

	 	 	 	made successively whenever such a record date is fixed. To the extent that such
distribution is not so made, the Conversion Price shall be readjusted effective
immediately to the Conversion Price which would then be in effect based upon such shares
or rights, options or warrants or evidences of indebtedness or assets actually
distributed.
	 
	 	(d)	 	Subject to subsection (e) of this Section 3.6, if and whenever there shall occur:

	 	(i)	 	a reclassification or redesignation of the Common Shares or any change of the Common
Shares into other shares, otherwise than as the result of a Share Reorganization;
	 
	 	(ii)	 	a consolidation, arrangement, merger, amalgamation or other business
combination of the Corporation with or into another individual, partnership, limited
partnership, association, trust, joint venture, trustee, executor, administrator,
legal representative, government, regulatory authority or body corporate (except
with a wholly-owned subsidiary of the Corporation which does not result in a
reclassification of the Common Shares or a change of the Common Shares into other
shares) or other entity (each of the foregoing, a “Person”); or
	 
	 	(iii)	 	the transfer of all or substantially all of the assets of the Corporation to
another Person,

	 	 	 	(each such event being herein referred to as a “Capital Reorganization”) the Holder shall,
after the effective date of such Capital Reorganization, be entitled to receive and shall
accept upon exercise of the Conversion Privilege, in lieu of the number of Common Shares
to which such holder was theretofore entitled upon such exercise, the aggregate number of
shares or other securities or property of the Corporation or of the body corporate
resulting from such Capital Reorganization that such Holder would have been entitled to
receive as a result of such Capital Reorganization if, on the effective date thereof, such
Holder had been the holder of the number of Common Shares to which such Holder was
previously entitled upon conversion; provided that no Capital Reorganization shall be
carried into effect unless all necessary steps shall have been taken so that the Holder
shall thereafter be entitled to receive such shares or other securities or property,
subject to adjustment thereafter in accordance with provisions the same, as nearly as may
be possible, as those contained in this Section 3.6 and in Section 3.7.
	 
	 	(e)	 	If and whenever there shall be a Capital Reorganization pursuant to which the Common Shares
are, directly or indirectly, exchanged for, converted into or otherwise replaced by
securities of another entity such as a trust (other than in the context of an acquisition of
control of the Corporation by any other third party corporation, trust or other entity or
person), the Corporation shall use commercially reasonable efforts to implement customary
exchangeable security arrangements not resulting in any Canadian taxes, customs duties, fees,
assessments or charges of any kind whatsoever to be due or payable by the Holder, through a
special purpose exchange entity so that the Holder, where it has not exercised the right of
conversion hereunder prior to the effective date or record date, as the case may be, of such
Capital Reorganization, shall be entitled to receive, directly or indirectly, and shall
accept upon the exercise of such right for the same aggregate consideration, in lieu of the
number of Common Shares to which such holder was theretofore entitled upon such exercise, the
aggregate number of shares or other securities in the surviving publicly traded entity
resulting from the Capital Reorganization which such holder would have been entitled to
receive as a result of such Capital Reorganization if, on the effective date thereof, it had
been the registered holder of the number of Common Shares to which such holder was
theretofore entitled to subscribe for and purchase.
	 
	 	(f)	 	There will be no adjustments as provided herein in respect of any Share Reorganization, Rights
    Offering, Special Distribution or Capital Reorganization if the Holder is allowed to
participate as though it had converted its Debentures prior to the applicable record date
or effective date. Such participation by the Holder will be subject to the approval of the
Toronto Stock Exchange or, if the Common Shares are not listed on such exchange, such
other stock exchange on which the Common Shares may then be listed and posted for trading
(collectively, the “Exchange”).

 

-9-

	 	(g)	 	Whenever an adjustment to the Conversion Price is required under this
Debenture, the Corporation shall promptly cause to be issued and delivered to the
Holder a certificate of an officer of the Corporation specifying the nature of the
event requiring the adjustment, the amount of that adjustment and reasonable details as
to the method of calculating the adjustment, including the facts upon which that
calculation is based.

3.7 The following shall be applicable to adjustments to the Conversion Privilege made pursuant to
Section 3.6 hereof:

	 	(a)	 	In any case in which the provisions of this Debenture shall require that an
adjustment shall
become effective immediately after a record date for an event, the Corporation may
defer, until the
occurrence of such event, issuing to the Holder (in the event the Conversion
Privilege has been
exercised after such record date and before the occurrence of such event) the
additional Common
Shares issuable by reason of the adjustment required by such event, provided,
however, that the
Corporation shall deliver to the Holder such additional Common Shares forthwith upon
the
occurrence of the event.
	 
	 	(b)	 	Adjustments to the Conversion Privilege shall be cumulative, shall in the case
of adjustments to
the Conversion Price be computed to the nearest one-tenth of one cent and shall be
made successively whenever an event referred to herein shall occur, provided that:

	 	(i)	 	no adjustment to the Conversion Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in the Conversion Price then
in effect and no adjustment shall be made in the number of Common Shares
issuable on exercise of the Conversion Privilege unless it would result in a
change of at least one one-hundredth of a Common Share, and
	 
	 	(ii)	 	any adjustment which by reason of paragraph 3.7(b)(i) is not
required to be made shall be carried forward and aggregated until such time as
the cumulative change would be greater than the thresholds set forth in
paragraph 3.7(b)(i).

	 	(c)	 	No adjustment to the Conversion Price shall be made in respect of the issue from
time to time of Common Shares:

	 	(i)	 	pursuant to this Debenture or any debentures ranking pari passu with this
Debenture; or
	 
	 	(ii)	 	pursuant to any stock option or stock purchase plan(s) in force
from time to time for officers or employees of the Corporation and any such
issue shall be deemed not to be a Share Reorganization.

	 	(d)	 	In the event of any question arising with respect to the adjustments provided in
this Article 3, such
question shall be conclusively determined by a firm of chartered accountants appointed
by the
Corporation (who may be the auditors of the Corporation); such accountants shall have
access to
all necessary records of the Corporation and such determination shall be binding upon
the
Corporation and the Holder.
	 
	 	(e)	 	If the Corporation shall take a record of the holders of the Common Shares for
the purpose of
entitling them to receive any dividend or distribution or any subscription or purchase
rights and
shall, thereafter and before the distribution to such shareholders of any such
dividend, distribution
or subscription or purchase rights, legally abandon its plan to pay or deliver such
dividend,
distribution or subscription or purchase rights, then no adjustment to the Conversion
Price shall be
required by reason of taking such record.

 

-10-

	 	(f)	 	The Corporation shall forthwith give notice of any adjustment to the
Conversion Price to the Holder, which notice shall specify the Conversion Price after
such adjustment and the event requiring such adjustment.

3.8 If the Corporation shall fix a record date for:

	 	(a)	 	any Share Reorganization (other than the subdivision of its outstanding
Common Shares into a
greater number of shares or the consolidation of its outstanding Common Shares into
a smaller
number of shares);
	 
	 	(b)	 	any Rights Offering;
	 
	 	(c)	 	any Special Distribution;
	 
	 	(d)	 	any Capital Reorganization;
	 
	 	(e)	 	any dividend; or
	 
	 	(f)	 	a voluntary or involuntary dissolution, liquidation or winding up of the Corporation;

which, in the case of any event referred to in paragraphs (a) to (e) of this Section 3.8, would
require an adjustment to the Conversion Privilege pursuant to this Article 3, the Corporation
shall, not less than 21 days prior to such record date or, if no record date is fixed, prior to
the effective date of any such event, give to the Holder, in the manner hereinafter specified,
notice of the particulars of the proposed event to the extent that such particulars have been
determined at the time of giving the notice.

3.9 In the event that a proposed action by or on behalf of the Corporation is likely to trigger an
adjustment to the Conversion Price or the Conversion Privilege in accordance with this Article 3,
the Corporation shall provide the Exchange with notice of such proposed action.

ARTICLE 4

REDEMPTION

4.1 After one year from the date of issue of this Debenture and before the Stated Maturity Date,
this
Debenture may be redeemed for all or part of the initial principal amount of this Debenture (the
“Redemption
Amount”), at the option of the Corporation, provided that the Common Shares have traded on the
Exchange, for a
period of 30 consecutive trading days (the “Trading
Period”), at a Weighted Average Trading Price
(as defined in
Section 4.5 hereof) equal to or greater than USD$9.10 per share (the “Trading Price”).

4.2 In the
event the Trading Price is achieved for a Trading Period (the “Eligible Period”), the
Corporation may redeem this Debenture for an amount equal to the Redemption Amount by issuing to
the Holder
that number of Common Shares at USD$6.57 per share (the “Forced Redemption Price”) which is equal
to the
Redemption Amount (a “Forced Redemption”).

4.3 Notice of intention to exercise the right of Forced Redemption, shall be given by the
Corporation
to the Holder in the manner herein specified at any time within 10 days of the end of the Eligible
Period. Notice
having been so given, the Redemption Amount shall become due and payable on the date specified in
such notice
and, upon presentation and surrender of this Debenture to the Corporation at its principal office
in Sunrise, Florida,
the Corporation shall issue or cause to be issued to the Holder in full satisfaction of its
obligations:

	 	(a)	 	a new debenture for the principal amount outstanding prior to the Forced
Redemption less the
Redemption Amount; and
	 
	 	(b)	 	a share certificate, or share certificates, registered in the name of the
Holder and representing the
number of Common Shares at the Forced Redemption Price which is equal to the
Redemption
Amount.

 

 

-11-

4.4 Notwithstanding any provision of this Article 4 to the contrary, the Corporation’s right
to exercise
a Forced Redemption shall be restricted in the following manner:

	 	(a)	 	no Forced Redemption may be exercised if an Event of Default
(as defined herein) has occurred
and is continuing; and
	 
	 	(b)	 	each Forced Redemption shall be exercised against all holders of Debentures on
a pro rata basis.

4.5 For the purposes of this Article 4, unless the context otherwise requires:

“Weighted Average Trading Price” means, with respect to the Common Shares
traded during a specified period, the quotient obtained by dividing (i) the
aggregate sale price of all Common Shares sold on the Exchange during such
period by (ii) the total number of Common Shares sold on the Exchange
during such period, as determined from time to time by the Corporation
based on the trading statistics for such period issued by the Exchange or,
upon the request of the Holder, as determined by an independent member of
the Investment Dealers Association of Canada.

ARTICLE 5

COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE CORPORATION

5.1 The Corporation represents and warrants to the Holder, with the intention that the
Holder shall
rely on those representations and warranties in connection with the purchase of this
Debenture, as follows:

	 	(a)	 	Corporate Status
	 
	 	 	 	That it:

	 	(i)	 	is duly incorporated and validly existing under the laws of
Alberta; and
	 
	 	(ii)	 	has filed all annual reports and financial
statements required of it to be filed in accordance with the securities
laws of each of the provinces of British Columbia, Alberta, Manitoba
and Ontario; and
	 
	 	(iii)	 	has the power and authority to carry on its
business as now being conducted by it and the full power to perform its
obligations set forth in this agreement and in the security documents;

	 	 	 	and nothing contained in this Debenture or the security documents if
performed by the Corporation will result in any breach of or be in conflict
with any term or provision of its constating documents nor in any existing
arrangement, agreement or contract, written or verbal, to which it is a
party nor, to the best of its information, knowledge and belief, any
statute, governmental order, judgment, decree or regulatory authority having
jurisdiction over the business of the Corporation.

	 	(b)	 	Corporate Authorization
	 
	 	 	 	That all necessary resolutions have been enacted and proceedings taken to
enable the Corporation to execute and deliver this Debenture and to grant
the security to the Holder contemplated by this Debenture.
	 
	 	(c)	 	Capitalization
	 
	 	 	 	As at the date hereof, no securities in the capital of the Corporation are
issued and outstanding other than:

 

 

-12-

	 	(i)	 	10,232,557 Common Shares;
	 
	 	(ii)	 	options to purchase an aggregate of
861,168 Common Shares under the Corporation’s existing stock option
plan, as amended from time to time;
	 
	 	(iii)	 	warrants to purchase an aggregate of 510,000 Common Shares.

	 	 	 	There are no other outstanding rights, options, warrants, conversion
rights or agreements for the purchase or acquisition from the Corporation
of any shares of its capital stock.
	 
	 	(d)	 	Exchange and Regulatory Approvals
	 
	 	 	 	That all consents, approvals, orders or authorizations which the
Corporation is required to obtain in connection with the execution and
delivery of this Debenture, subject only to the filing of certain customary
documents and forms with the relevant securities regulatory authorities
under applicable securities laws.
	 
	 	(e)	 	Binding Effect
	 
	 	 	 	That the obligations of the Corporation hereunder are valid and binding
and enforceable against the Corporation in accordance with their terms,
subject only to bankruptcy, insolvency or other laws of general
application affecting the enforcement of creditor’s rights generally, and
to general principles of equity.
	 
	 	(f)	 	No Judgments
	 
	 	 	 	That there are no material judgments, writs of execution, work orders,
injunctions or directives outstanding against the Corporation or its
properties or assets.
	 
	 	(g)	 	No Breach
	 
	 	 	 	That the Corporation is not in material breach of any material agreement to
which it is a party or by which it is bound.

5.2 The Corporation covenants in favour of the Holder that:

	 	(a)	 	Payment
	 
	 	 	 	It will duly and punctually pay or cause to be paid to the Holder all
amounts payable in respect of this Debenture including the principal at the
places in the manner described herein.
	 
	 	(b)	 	Notice of Default
	 
	 	 	 	The Corporation shall notify the holder of this Debenture immediately upon
obtaining knowledge of an Event of Default (as defined herein).
	 
	 	(c)	 	Conduct of Business
	 
	 	 	 	Subject to the express provisions hereof, the Corporation will carry on and
conduct its activities, and cause its subsidiaries to carry on and conduct
their businesses, in a proper and business-like manner, and will do or
cause to be done all things necessary to maintain its and their existence.

 

 

-13-

	 	(d)	 	Books and Accounts
	 
	 	 	 	It will keep or cause to be kept proper books of record and accounts in accordance with
generally accepted accounting principles consistently applied in Canada.
	 
	 	(e)	 	Maintenance of Status
	 
	 	 	 	It will use commercially reasonable efforts to maintain the listing of the Common Shares
on the Exchange and to maintain the Corporation’s status as a “reporting issuer” not in
default of the requirements of the securities legislation and regulations of each of the
provinces of British Columbia, Alberta, Manitoba and Ontario.
	 
	 	(f)	 	Financial Statements
	 
	 	 	 	It will furnish to the holder of this Debenture a copy of all consolidated financial
statements of the Corporation, whether annual or interim and the report, if any, of the
Corporation’s auditors thereon and all annual or periodic financial reports of the
Corporation, which are furnished to the holders of Common Shares promptly upon the
distribution thereof to the holders of Common Shares, provided that for so long as the
Corporation is a “reporting issuer” in good standing or the equivalent in any jurisdiction
in Canada, the Corporation’s obligation to deliver such financial information shall be
satisfied by filing such financial information on SEDAR in accordance with applicable
regulatory requirements.
	 
	 	(g)	 	No Distributions
	 
	 	 	 	It shall not declare or make any distribution to the holders of its issued and outstanding
Common Shares after the occurrence of an Event of Default unless and until such default
shall have been cured or waived or shall have ceased to exist. In addition, the
Corporation shall not declare any distribution to the holders of its issued and
outstanding Common Shares if at the time the directors of the Corporation or a committee
thereof resolves to make the said declaration, the Corporation has actual knowledge that
the paying of said distribution on the applicable distribution payment date will result in
an Event of Default.
	 
	 	(h)	 	Maintenance of Property
	 
	 	 	 	It will at all times, repair and keep in repair and good order and condition, or cause to
be so repaired and kept in repair and good order and condition, all buildings, erections,
machinery, plant and equipment used in or in connection with its business which are
necessary for efficient operation up to a modern standard of usage, and renew and replace
or cause to be renewed and replaced all and any of the same which may become worn,
dilapidated, unserviceable, inconvenient, obsolete or destroyed, even by a fortuitous
event, fire or other cause, and which are necessary for efficient operation, and, at all
reasonable times during normal business hours, allow the Holder or its duly authorized
agent access to its premises in order to view the state and condition of the same.
	 
	 	(i)	 	No Sale or Merger
	 
	 	 	 	It shall not:

	 	(i)	 	sell, lease or otherwise transfer the undertaking, property and assets of
any of its operating divisions as an entirety or substantially as an entirety in one
or more transactions, or, sell, lease or otherwise dispose of its undertaking,
property and assets as an entirety or substantially as an entirety in one or more
transactions; or
	 
	 	(ii)	 	amalgamate or merge with any other corporation or effect any corporate
reorganization;

 

 

-14-

	 	 	 	without the prior written consent of the Holder.
	 
	 	(j)	 	Insurance
	 
	 	 	 	It will maintain insurance coverage on its property and assets in accordance with industry
practice.
	 
	 	(k)	 	Compliance with Law
	 
	 	 	 	It will:

	 	(i)	 	comply, in all material respects, with all applicable federal, provincial, municipal
or other laws, regulations, ordinances, rules, codes, standards and directions which may
apply to the Charged Premises or its business including, without limitation,
those relating to the protection, preservation or restoration of the environment;
and
	 
	 	(ii)	 	obtain and maintain all necessary permits, licenses and
authorizations necessary for the lawful conduct of its business as carried on from
time to time.

	 	(l)	 	Retain Charged Premises
	 
	 	 	 	Except in the ordinary course of business, it will not sell, dispose of or part with
possession of all or substantially all of the Charged Premises without the prior written
consent of the Holder.
	 
	 	(m)	 	Completing Security
	 
	 	 	 	It will perform all such acts and things as are reasonably necessary to complete any and
all security documents and supporting agreements identified or referred to herein.
	 
	 	(n)	 	Taxes
	 
	 	 	 	It will pay and discharge all taxes, accessions and governmental charges levied against
the Corporation or its property when due and payable.
	 
	 	(o)	 	Litigation
	 
	 	 	 	It will promptly give notice to the Holder of any litigation which could materially
adversely affect the business or financial condition of the Corporation.
	 
	 	(p)	 	Change of Name
	 
	 	 	 	It will give to the Holder written notification of any change of name of the Corporation
no later than 10 days before the effective date of that change.
	 
	 	(q)	 	Place of Business
	 
	 	 	 	If the Corporation changes its principal place of business or the location of its
inventory or equipment or the location of its offices where it keeps its records
respecting accounts receivable or acquires other places of business, it will promptly
notify the Holder.
	 
	 	(r)	 	Unpaid Amounts
	 
	 	 	 	It will pay duly and punctually all employees of the Corporation and all other amounts
which if unpaid might under any applicable provincial, state or federal law obtain or gain
priority over the security granted herein by the Corporation to the Holder.

 

 

-15-

	 	(s)	 	Future Grants of Security Interests
	 
	 	 	 	It will not grant any new security interests that would rank ahead of the security
interest granted to the Holder hereunder without the approval of holders of a
majority of the principal amount of debentures of the Corporation.

ARTICLE 6

POSTPONEMENT AND SUBORDINATION

6.1 The payment of the principal on the Debentures (the “Subordinated Debt”) will be postponed and
subordinated in right of payment to the prior payment in full of all Senior Indebtedness (as that
term is herein
defined), whether outstanding on the date of the Debenture or subsequently incurred in the manner
and to the extent
herein set forth. “Senior Indebtedness” means the principal amount of, premium, if any, and
interest on any all
obligations and liabilities of the Corporation in respect of:

	 	(a)	 	indebtedness for money borrowed by the Corporation from the Canadian Imperial
Bank of
Commerce (“CIBC”) pursuant to credit facilities as amended from time to time for up
to
USD$55,000,000 (the “CIBC Facilities”) and any future renewals, extensions or
other
amendments to the CIBC Facilities on similar credit terms for the purposes of
financing the
Corporation’s operations;
	 
	 	(b)	 	any replacement of the CIBC Facilities, should the Corporation elect to replace
CIBC as its
principal lender while the Corporation remains indebted to the Holder under this
Debenture,
provided that the material terms to such facilities shall in no way be amended; and
	 
	 	(c)	 	indebtedness for money borrowed by the Corporation pursuant to previously
issued and currently
outstanding secured subordinated debentures in the aggregate of USD$5,100,000.

6.2 Notwithstanding any provision of this Debenture to the contrary, should the Corporation wish to
increase the Senior Indebtedness to an amount greater than USD$60,100,000, it must obtain the
approval of holders
of a majority of the principal amount of debentures of the Corporation.

6.3 So long as any Senior Indebtedness is outstanding and until the Senior Indebtedness shall have
been paid, performed and indefeasibly satisfied in full:

	 	(a)	 	upon the Holder receiving notice from the holder of the Senior Indebtedness
(the “Senior
Creditor”) of the occurrence of a default or an event of default under or in respect
of the Senior
Indebtedness or any security provided therefor (the “Senior Security”):

	 	(i)	 	the payment of all Subordinated Debt is postponed and subordinated to the
indefeasible
payment and performance in full and final satisfaction of all Senior
Indebtedness and the Holder will not thereafter directly or indirectly,
accept from the Corporation, in any manner, directly or indirectly, payment
of, or consideration for the reduction of, the whole or any part of the
Subordinated Debt and if any such payment is received or made on the
Subordinated Debt, the Holder will hold such payment in trust for the
benefit of, and shall forthwith pay over such payment in the form received
(duly endorsed, if necessary, to the Senior Creditor) to, the Senior
Creditor; and
	 
	 	(ii)	 	the Senior Security shall have priority over the security
constituted hereby, and the security constituted hereby is hereby postponed
and subordinated in all respects to the Senior Security;

	 	(b)	 	the Holder shall not dispute or contest in any manner the priority of any of
the Senior Security
over the Subordinated Debt and any security therefor, provided the Senior Security is
duly
perfected, valid and enforceable. The Holder hereby consents to the Senior Security;
and

 

 

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	 	(c)	 	the Holder shall not take or hold, directly or through
any trustee or nominee, any security interest as security for the payment or
performance of any of the Subordinated Debt other than the security
constituted by this Debenture.

6.4 Notwithstanding any provision of this Debenture to the contrary, the Holder hereby
covenants and agrees with the Corporation that it will at any time and from time to time,
upon the request of the Corporation, execute and deliver such agreements and instruments
and/or provide such acknowledgments and undertakings to any holder of Senior Indebtedness
confirming the subordination of the Holder’s rights under this Debenture (including the
Charge) to such Senior Indebtedness, all such agreements, instruments, acknowledgments
and undertakings to be in form reasonably satisfactory to the holder of such Senior
Indebtedness.

ARTICLE
7 
DEFAULT

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

	 	(a)	 	if the Corporation (or any of its subsidiaries) is in
default of any material agreement or obligation imposed by contract, by law,
or by regulatory authority and such default is not remedied within 30 days of
notice thereof to the Corporation from the Holder;
	 
	 	(b)	 	if any distributions of cash or property are made to
holders of Common Shares without the prior written consent of the Holders;
	 
	 	(c)	 	if the Corporation fails to maintain its status as a
reporting issuer in Alberta or fails to maintain the listing of its Common
Shares on the Exchange and the Corporation fails to restore its status or its
listing, as the case may be, within 30 days of notice thereof to the
Corporation from the Holder;
	 
	 	(d)	 	if a writ, execution, attachment or similar process is issued against all or a substantial
portion of the property and assets of the Corporation as a result of a judgment against the
Corporation, in an amount which materially affects the assets of the Corporation and such writ,
execution, attachment or similar process is not released, satisfied, discharged, vacated or stayed
within 30 days after its issue or entry or the Corporation initiates any material litigation
without the prior written consent of the Holder;
	 
	 	(e)	 	if the Corporation institutes proceedings to be adjudicated
a bankrupt or insolvent, or consents to the institution of bankruptcy or
insolvency proceedings, or consents to the filing of any such petition or the
petition commencing such proceedings is not contested, or appoints or
consents to the appointment of a receiver of all, or a substantial part, of
the property of the Corporation, or makes a general assignment for the
benefit of creditors, or admits in writing its inability to pay its debts
generally as they become due;
	 
	 	(f)	 	if a Change of Control (as defined herein) of the
Corporation occurs, or any material change to the Corporation’s senior
management occurs as a result of death, disability or termination in
accordance with any applicable employment agreements;
	 
	 	(g)	 	if there exists a provision in any agreement (other than a
credit agreement relating to the CIBC Facilities or any replacement thereof)
by which the Corporation is bound and which conflicts with the terms of the
Debentures in a material manner and such conflict is not removed or corrected
within 30 days of notice thereof to the Corporation from the Holder;
	 
	 	(h)	 	if the Corporation mortgages, pledges or charges its
properties or leasehold interests to secure any indebtedness, other than in
the ordinary course of business where such indebtedness individually or in
the aggregate is not material or under the Senior Indebtedness, without the
prior written consent of the Holder, or if an event of default under the
Senior Indebtedness occurs and such mortgage, pledge or charge, or such event
of default under the Senior Indebtedness, is not

 

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	 	 	 	discharged or remedied, as applicable, within 10 days of notice thereof to the
Corporation from the Holder;
	 
	 	(i)	 	if the Corporation defaults in the payment of the principal of this
Debenture when the same becomes due, whether at maturity or otherwise and such
default continues for a period of three business days;
	 
	 	(j)	 	if the Corporation, except as permitted hereby, ceases or threatens to cease, to carry
on its business or any substantial portion thereof;
	 
	 	(k)	 	an encumbrancer taking possession of or appointing a receiver for all or
substantially all property of the Corporation;
	 
	 	(1)	 	if the Corporation neglects to carry out or observe any other material
covenant or condition herein contained to be carried out or observed on its part and
such default continues for 10 days after notice thereof to the Corporation from the
Holder,
	 
	 	(m)	 	if a resolution is passed for the winding up or liquidation of the Corporation; or
	 
	 	(n)	 	if any proceedings with respect to the Corporation are taken with respect to
a compromise or arrangement with respect to creditors of the Corporation generally,
under the applicable legislation of any jurisdiction.

7.2 For the purposes of this Debenture, unless the context otherwise requires, “Change of Control”
means the acquisition of voting control or direction over 50.1% or more of the aggregate voting
rights attached to the issued share capital of the Corporation then outstanding by a person or
group of persons acting in concert other than the Holder or any of its affiliates if such
acquisition occurs without the consent or acquiescence of the Holder.

7.3 In case any Event of Default shall have occurred and is continuing, the principal amount of
this Debenture shall, at the option of, and upon written notice to the Corporation by, the Holder,
become immediately due and payable and the Charge shall become enforceable upon the date that such
written notice is given to the Corporation.

7.4 The Corporation acknowledges that if a stay of proceedings is issued against the Corporation
pursuant to the Bankruptcy and Insolvency Act (Canada), the Companies Creditors Arrangements Act
(Canada) or otherwise, the Holder would be irreparably harmed and materially prejudiced if any
proceeds from the Charged Premises were used for any purpose other than the repayment of the debt
secured by this Debenture, and the Corporation hereby acknowledges and agrees that the proceeds
from the Charged Premises received by the Corporation while any such stay is in effect shall be
received and held by the Corporation in trust for the Holder.

7.5 Within 30 days following the occurrence of a Change of Control, and subject to the provisions
and conditions of this Section 7.5, the Corporation shall be obligated to offer to purchase this
Debenture (a “Change of Control Redemption”). The terms and conditions of such obligation are as
follows:

	 	(a)	 	Within 30 days following the occurrence of a Change of Control, the
Corporation shall deliver to the Holder a notice stating that there has been a Change
of Control and specifying the circumstances surrounding such event (a “Change of
Control Notice”) together with an offer in writing (the “Offer”) to purchase this
Debenture made in accordance with the requirements of applicable securities
legislation at a price equal to 105% of the principal amount thereof, on this
Debenture up to, but excluding, the date of acquisition by the Corporation or a
related party of this Debenture (the “Offer Price”). The Change of Control Notice
shall specify (i) that if this Debenture is validly tendered it will be accepted for
payment; (ii) the Offer Price and date of acquisition by the Corporation; (iii) that
if the Holder elects to have this Debenture purchased pursuant to the Offer it will be
required to surrender this Debenture to the Corporation at the address specified in
the Change of Control Notice prior to the close of business on the business day
immediately preceding the date of acquisition by the Corporation; and (iv) that the
Holder will

 

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	 	 	 	be entitled to withdraw its election if the Corporation receives, not later than the
close of business on the third business day immediately preceding the date of
acquisition by the Corporation, a facsimile transmission or letter from the Holder
withdrawing its election to have this Debenture purchased.
	 
	 	(b)	 	If this Debenture is to be purchased or redeemed by the Corporation on expiry
of the Offer, the Corporation shall, on or before 11:00 a.m. (Sunrise, Florida time)
on the date of the expiry of the Offer, pay to the Holder by electronic transfer or
certified cheque, such sums of money as may be sufficient to pay the aggregate Offer
Price for this Debenture.
	 
	 	(c)	 	In the event that this Debenture is being purchased or redeemed by the
Corporation on expiry of the Offer in part only, upon surrender of this Debenture for
payment of the Offer Price, the Corporation shall execute and deliver without charge
to the Holder, one or more new debentures in the form hereof for the portion of the
principal amount of this Debenture not purchased.
	 
	 	(d)	 	In case the Holder of any Debenture to be purchased or redeemed in accordance
with this Section 7.5 of this Debenture shall fail on or before the date specified in
paragraph (b) above to surrender this Debenture or shall not within such time accept
payment of the monies payable, or give such receipt therefor, if any, as the
Corporation may reasonably require, such monies may be set aside in trust in a
chartered bank, and such setting aside shall for all purposes be deemed a payment to
the Holder of the sum so set aside and the Holder shall have no other right except to
receive payment of the monies so paid and deposited, upon surrender and delivery up of
this Debenture. In the event that any such monies remain so deposited for a period of
six years from the date of expiry of the Offer, then such monies, together with any
accumulated interest thereon, shall at the end of such period be paid over to the
Corporation and the Corporation shall not be responsible to the Holder for any amounts
owing to it hereunder.

7.6 Except as provided below, the Corporation shall not enter into any transaction or series of
transactions whereby all or substantially all of its undertaking, property or assets would become
the property of any other Person (a “Successor”) whether by way of reorganization, consolidation,
amalgamation, arrangement, merger, conveyance, lease, sale or otherwise, unless:

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

	 	(i)	 	the Successor will have assumed in writing all the covenants
and obligations of the Corporation under this Debenture;
	 
	 	(ii)	 	this Debenture will be valid and binding obligations of the
Successor entitling the Holder, as against the Successor, to all the rights of
the Holder hereunder;
	 
	 	(iii)	 	the Successor is a corporation, partnership, limited
liability company or trust organized or existing under the laws of Canada or
the United States of America or any province, state or territory thereof, and
	 
	 	(iv)	 	in the case of an entity organized otherwise than under the laws
of the Province of Alberta, the Successor shall attorn to the jurisdiction of
the courts of the Province of Alberta;

	 	(b)	 	such transaction shall be on such terms as to substantially preserve and not
impair any of the rights and powers of the Holder hereunder;
	 
	 	(c)	 	no condition or event shall exist as to the Corporation (at the time of such
transaction) or the Successor (immediately after such transaction), and after giving
full effect thereto or immediately

 

-19-

	 	 	 	after the Successor shall become liable to pay the principal monies and other monies due or which
may become due hereunder, which constitutes or would with the giving of notice or lapse of time
constitute an Event of Default hereunder; and
	 
	 	(d)	 	the Corporation shall have delivered to the Holder an
officer’s certificate confirming that all requirements of this Section 7.6
have been complied with in respect of such transaction or series of
transactions.

Whenever the conditions of this Section 7.6 shall have been duly observed and performed,
any Successor formed by or resulting from such transaction or series of transactions
shall succeed to, and be substituted for, and may exercise every right and power of the
Corporation under this Debenture with the same effect as though the Successor had been
named as the Corporation herein and thereafter, except in the case of a lease or other
similar disposition of property to the Successor, the Corporation shall be relieved of
all obligations and covenants under this Debenture forthwith upon the Corporation
delivering to the Holder an opinion of counsel to the effect that the transaction or
series of transactions shall not result in any material adverse tax consequences to the
Corporation or the Successor. The Holder will, at the expense of the Successor, execute
any documents which it may be advised by counsel are necessary or advisable for effecting
or evidencing such release and discharge.

ARTICLE 8

REGISTRATION, TRANSFER, EXCHANGE AND OWNERSHIP OF DEBENTURE

8.1 With respect to this Debenture, the Corporation shall maintain at its principal office
in the City of Calgary or at such other place in Canada or the United States as it may
designate by notice in writing, a register in which shall be entered the names and
addresses of the Holders (the “Register”). Such registration shall be noted on this
Debenture by an officer of the Corporation.

8.2 The person in whose name this Debenture is registered shall for all purposes be and be
deemed to be the owner thereof and payment of or on account of the principal of this
Debenture shall be made only to or upon
the order in writing of such Holder.

8.3 No transfer of this Debenture shall be valid unless (i) made by the Holder or his
executors or administrators or other legal representatives or his or their attorney duly
appointed by an instrument in writing in such form as is satisfactory to the Corporation
and (ii) such transfer shall have been duly entered in the Register.

8.4 A Holder may at any time and from time to time have a transfer of this Debenture
entered in the Register pursuant to the provisions of this Article 8 in accordance with
such reasonable regulations as the Corporation may prescribe; provided, however, that the
Corporation shall not be required to accept any transfer of this Debenture within five
business days of a scheduled interest payment date.

8.5 The Corporation shall not be bound to take notice of or see to the execution of any
trust, whether express, implied or constructive, in respect of this Debenture and may
transfer the same on the direction of the Holder, whether named as trustee or otherwise,
as though the Holder were the beneficial owner thereof.

8.6 The Holder for the time being of this Debenture shall be entitled to the principal
evidenced by this Debenture free from all equities or rights of set-off or counter-claim
between the Corporation and the Holder and all persons may act accordingly. The receipt of
any such Holder for any such principal shall be a good discharge to the Corporation for
the same and the Corporation shall not be bound to inquire into the title or authority of
any such Holder.

ARTICLE 9

MISCELLANEOUS

9.1 In case this Debenture shall at any time become mutilated, destroyed, stolen or lost
and this Debenture, or evidence of the loss, theft or destruction thereof (together with
the indemnity hereinafter referred to and such other documents or proof as may be
required in the premises) shall be delivered to the Corporation, a new Debenture of like
tenor and date will be issued by the Corporation in exchange for this Debenture, but, in
case this

 

-20-

Debenture has been destroyed, stolen or lost, only upon receipt of evidence satisfactory to the
Corporation that this Debenture was destroyed or stolen or lost, and in any case, if required by
the Corporation, upon receipt also of indemnity satisfactory to the Corporation. All expenses and
reasonable charges associated with obtaining such indemnity and with the preparation,
authentication and delivery of a new debenture shall be borne by the Holder.

9.2 The Corporation hereby certifies and warrants that all acts, conditions and things required to
be done and performed and to have happened in respect of the creation and issuance of and to
constitute the same the valid and legally binding obligation of the Corporation enforceable in
accordance with its terms, have been done and performed and have happened in due and strict
compliance with all applicable laws.

9.3 No failure on the part of the Holder to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right
hereunder preclude the other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies provided by law or in
equity.

9.4 Any demand, notice or other communication (a “Communication”) to be given in connection with
this Debenture shall be given in writing and may be given by personal delivery or by registered
mail addressed to the Corporation as follows:

Ceramic Protection Corporation.

530 Sawgrass Corporate Parkway

Sunrise, Florida 33325

Attention: Mr. Stephen Giordanella

or such other address as may be designated by notice by the Corporation to the Holder and, if to
the Holder, to it at:

Balihard Capital Corporation

c/o Edco Financial Holdings Ltd.

3220, 255 - 5th Avenue SW

Calgary, Alberta T2P 3G6

Attention: Mr. Larry Moeller

The Corporation or the Holder may change its address at any time by giving notice thereof in
accordance with this Section 9.4. Any Communication given by personal delivery shall be
conclusively deemed to have been given on the day of actual delivery thereof and, if given by
registered mail, on the third day following the deposit thereof in the mail. If the party giving
any Communication knows or ought reasonably to know of any difficulties with the postal system
which might affect the delivery of mail, any such Communication shall not be mailed but shall be
given by personal delivery.

9.5 This Debenture shall be governed by and construed in accordance with the laws applicable in the
Province of Alberta.

9.6 This Debenture may be amended only by an agreement in writing signed by the Corporation and the
Holder.

 

-21-

          IN WITNESS WHEREOF the Corporation has caused this Debenture to be signed by its duly
authorized officer as of the 4 day of February, 2008.

	 	 	 	 	 
	 	CERAMIC PROTECTION CORPORATION

 	 
	 	Per:  	/s/ Randall Paulfus
 	 
	 	 	Name:  	RANDALL PAULFUS 	 
	 	 	Title:  	CHIEF FINANCIAL OFFICER 	 
	 

 

 

SCHEDULE “A” 
EXERCISE OF
CONVERSION PRIVILEGE

The undersigned hereby irrevocably elects to convert USD$                     in principal amount of the
Debenture
to which this Schedule “A” is attached (the “Debenture”) into common shares in the
capital of Ceramic Protection Corporation at the prevailing Conversion Price (as
defined in the Debenture) in accordance with the terms and conditions of the Debenture.
Please issue share certificates for the number of Common Shares to be issued upon this
conversion and deliver and register such certificates to the addresses indicated below:

	 	 	 	 	 
	Delivery:

	 	 
	 	
	 
	 	 	 	 
	 

	 	 	 	 
	Name (please print)
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	Address
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Registration:
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

	Name (please print)

	 	 	 	Denominations of Share Certificates to be Issued
	 
	 	 	 	 
	 

	 	 	 	 
	Address
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

DATED at
                    
                    
                            ,
this            day of                                         ,           .

	 	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

	 

	 	 
	 	(Name of Holder)
	 
	 	 	 	 
	 

	 	 
	 	Per:

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