Document:

Amendment to License, Development and Supply Agreement

     

    Exhibit
      4.13

    

    AMENDMENT
      TO LICENSE, DEVELOPMENT AND SUPPLY AGREEMENT

     

    THIS
      AMENDMENT AGREEMENT effective
      as of December
      9, 2005 is made by and between PREMD
      INC. (previously
      known as IMI
      International Medical Innovations Inc.),
      a corporation incorporated under the laws of Canada, and having its principal
      place of business at Suite 615, 4211 Yonge Street, Toronto, Ontario, M2P 2A9,
      Canada (“PreMD-Canada”),
      PREMD
      INTERNATIONAL INC. (previously
      known as IMI
      International Medical Innovations Inc.,
      a corporation incorporated under the laws of Switzerland, and having its office
      c/o Schmid Attorneys at Law, Stockerstrasse 38 Schwanengasse 1, CH-3011 Berne,
      Switzerland (“PreMD-Switzerland”)
      (PreMD-Canada together with PreMD-Switzerland being herein referred to
      collectively as “PreMD”
      or “Party”)
      and McNEIL Consumer & Specialty Pharmaceuticals Division of McNEIL-PPC,
      Inc., incorporated under the laws of the State of New Jersey, the United States
      of America, and having its principal place of business at 7050 Camp Hill Road,
      Pennsylvania, PA 19034 (“McNEIL-US”),
      and McNEIL PDI Inc., a corporation incorporated under the laws of Canada, with
      and having its principal place of business at 768 Hebert Street, Desbiens,
      Quebec, Canada (acting through its McNEIL Consumer Healthcare division)
      (“McNEIL-Canada”
      )(MCNEIL-US together with MCNEIL-Canada being herein referred to collectively
      as
“MCNEIL”
      or “Party”).
      McNEIL
      and PreMD may also be referred to as“Parties.”
      

    

    Whereas:

    A. The
      Parties are parties to a License, Development And Supply Agreement dated as
      of
      May 28th,
      2004 (the “International
      Agreement”);

    B.
       The
      Parties wish to waive certain rights and obligations that they may have pursuant
      to certain provisions contained in the Agreement and to amend the provisions
      of
      the Agreement, in each case as specifically contemplated herein;
      and

    C. Capitalized
      terms used herein which are not otherwise defined shall have their respective
      meanings ascribed thereto in the Agreement. 

    

    

    Portions
      of this Exhibit were omitted, as indicated by ********, and have been filed
      separately with the Secretary of the Commission pursuant to the Company’s
      application requesting confidential treatment under Rule 24b-2 of the Securities
      Exchange Act of 1934, as amended.

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    

    NOW,
      THEREFORE, in consideration of the mutual covenants and obligations contained
      herein and for other good and valuable consideration, the receipt and
      sufficiency of which is hereby acknowledged, the Parties agree as
      follows:

     

    Sales
      Minimums

    
      	 	
              1.

            	
              PreMD
                hereby waives any rights which it may have as a result of McNeil’s not
                having cumulative Net Sales of Products pursuant to section 17.3(a)
                for
                the 2004, 2005 and 2006 Calendar Years (it being understood that
                the
                obligations of McNeil pursuant to section 17.3(a) shall arise only
                in
                respect of the 2007 and subsequent Calendar Years), *****.
                

            

    

    
      	 	
              2.

            	
              PreMD
                hereby waives any rights which it may have as a result of McNeil’s not
                having cumulative Net Sales of Products pursuant to section 17.3
                (b) for
                the 2004 and 2005 Calendar Years (it being understood that the obligations
                of McNeil pursuant to section 17.3(b) shall arise only in respect
                of the
                2006 and subsequent Calendar Years), *****..

            

    

    
      	 	
              3.

            	
              *****.

            

    

    
      	 	
              a.

            	
              *****

            

    

    
      	 	
              b.

            	
              *****

            

    

     

    US
      Patent Matters

    
      	 	
              4.

            	
              In
                the event that both US Patent No. 5,489,510 and US Patent No. 5,587,295
                (collectively, the “Expired Patents”)
                are not reinstated by the United States Patent Office by 1
                August in a given Calendar Year, then the reference subsection 17.3(a)
                to
                ***** in respect of such Calendar Year shall be read as
                *****.

            

      	 	
              5.

            	
              In
                the event that one but not both of the Expired Patents is reinstated
                by
                the United States Patent Office by 1
                August in a given Calendar Year, then the reference subsection 17.3(a)
                to
                ***** in respect of such Calendar Year shall be read as
                *****.

            

    

     

     

    *****

    
      	 	
              6.

            	
              The
                provisions of section 8.7 of the Agreement (other than the first
                sentence
                thereof) shall not apply in respect of the Product in circumstances
                where
                the Product is *****.

            

      	 	
              7.

            	
              *****.

            

    

    
      	 	
              a)

            	
              *****

            

    

    
      	 	
              b)

            	
              *****

            

    

    
      	 	
              c)

            	
              *****

            

    

     

     

    
      Portions
        of this Exhibit were omitted, as indicated by ********, and have been filed
        separately with the Secretary of the Commission pursuant to the Company’s
        application requesting confidential treatment under Rule 24b-2 of the Securities
        Exchange Act of 1934, as amended.

    

    

    
      
        
          
          

        

        
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          8.    PreMD
      agrees to use
      commercially reasonable efforts,
      which for purposes of clarity may, at a minimum, include the need to expend
      funds or make payments (other than PreMD’s attorneys fees and any other PreMD’s
      out-of-pocket expenses in connection with the negotiations thereof) of
      up to ***** to
      renegotiate the development agreement with ***** to further define the rights
      of
      PreMD in Collaboration IP ***** in
      the
      event that intellectual property is created during development work
      in order to provide that PreMD will be granted a worldwide, irrevocable,
      royalty-free, non-exclusive license,
      with the right to grant a
      sublicense, to use and sell Design Elements *****.

     

    
      	 	
              8.1

            	
              *****.
                

            

    

    
      	 	
              8.2

            	
              *****.
                

            

    

    
      	 	
              8.3

            	
              *****.

            

    

    
      	 	
              8.4

            	
              *****.

            

    

     

    Royalty
      on ***** Sales

    
      	 	
              9.

            	
              The
                parties acknowledge and agree that for the purposes of provisions
                of
                Article IV of the Agreement the Net Sales of the Product are to include
                any Net Sales attributed to the sales of
                *****.

            

    

     

    *****-
      PreMD Collaboration IP

    
      	 	
              10.

            	
              To
                the extent commercially practicable, PreMD shall offer to include
                a
                designated representative of McNeil (the “McNeil
                Designate”)
                in all meetings with ***** and persons from whom ***** licenses any
                patents or rights to patent applications to the extent that such
                meetings
                relate to Collaboration IP *****, in all cases to the extent that
                McNeil
                shall wish to participate in such meetings. PreMD shall provide the
                McNeil
                Designate with such advance notice of such meetings as PreMD shall
                have
                received and PreMD shall use commercially reasonable efforts to schedule
                such meetings at least 48 hours after notice of such meeting has
                been
                provided to the McNeil Designate. McNeil acknowledges that this advance
                notice shall not always be possible, and that the obligations of
                PreMD
                under this section 10 shall
                be subject to PreMD’s need and desire to proceed with meetings with such
                persons on a commercially reasonable and timely and efficient basis.
                If
                such a meeting occurs and McNeil has not been provided with such
                advance
                notice, PreMD will as soon as reasonably practicable after such meeting
                provide the McNeil Designate with a summary of the material matters
                discussed and agreed upon at such
                meeting.

            

    

     

     

    Portions
      of this Exhibit were omitted, as indicated by ********, and have been filed
      separately with the Secretary of the Commission pursuant to the Company’s
      application requesting confidential treatment under Rule 24b-2 of the Securities
      Exchange Act of 1934, as amended.

    
      
        
          
          

        

        
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              11.

            	
              Subject
                to compliance with the terms and conditions of the *****, the parties
                agree that the Collaboration IP shall be considered as IMI Improvement
                Intellectual Property under Section 2.5.4 of the International
                Agreement.

            

    

    
      	 	
              12.

            	
              The
                provisions of 14.1 and 14.2 of the Agreement shall apply in respect
                of the
                Collaboration IP.

            

    

    

    Milestone
      Payments

    
      	 	
              13.

            	 

    

    
      	 	
              a.

            	
              McNeil
                shall pay PreMD-Canada a payment of 1) ***** upon completion of the
                Principal Design Review Meetings (within the meaning of the *****);
                and 2)
                $ ***** upon completion of the Critical Design Review Meeting *****
                in
                consideration of IMI’s costs incurred in developing the ***** and for
                McNEIL’s right to obtain a ***** unit cost pursuant to Paragraphs 7 and
                8
                herein. 

            

    

    

    Miscellaneous

    
      	 	
              14.

            	
              In
                all other respects, the terms and conditions of the Agreement shall
                remain
                in full force and effect,
                unamended.

            

    

    
      	 	
              15.

            	
              The
                provisions of sections 19.4 and 19.7 shall apply, mutatis
                mutandis,
                to this amending agreement. 

            

    

     

    IN
      WITNESS WHEREOF, the Parties have duly executed this Agreement as of the day
      and
      year first written above. 

    

    MCNEIL
      PDI INC.

    (acting
      through its McNEIL Consumer Healthcare

    division
      on behalf of McNEIL PDI Inc.)

    

    By:
      /s/______________________

    Name:

    Title:

    Authorized
      Signing Officer

     

    Portions
      of this Exhibit were omitted, as indicated by ********, and have been filed
      separately with the Secretary of the Commission pursuant to the Company’s
      application requesting confidential treatment under Rule 24b-2 of the Securities
      Exchange Act of 1934, as amended.

    

    
      
        
          
          

        

        
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    MCNEIL
      CONSUMER & SPECIALTY PHARMACEUTICAL DIVISION OF MCNEIL-PPC,
      INC.

    

    By:
      /s/______________________

    Name:

    Title:

    Authorized
      Signing Officer

    

    PREMD
      INC.

    A
      Canadian corporation

    

    By:
      /s/______________________

    Name:

    Title:

    Authorized
      Signing Officer

     

    PREMD
      INTERNATIONAL INC.

    A
      Swiss corporation

    

    By:
      /s/______________________

    Name:

    Title:

    Authorized
      Signing Officer

    

    
Portions
      of this Exhibit were omitted, as indicated by ********, and have been filed
      separately with the Secretary of the Commission pursuant to the Company’s
      application requesting confidential treatment under Rule 24b-2 of the Securities
      Exchange Act of 1934, as amended.

     

    
      -
        5
        -Underwriting Agreement

     

    Exhibit
      4.16

    

    UNDERWRITING
      AGREEMENT

     

     

    August
      30, 2005

     

    IMI
      International Medical Innovations Inc.

    4211
      Yonge Street, Suite 615

    Toronto,
      Ontario M2P 2A9

     

    Attention:        Brent
      Norton, President and Chief Executive Officer

     

    Dear
      Sirs:

     

    We
      understand that IMI International Medical Innovations Inc. (the “Company”)
      proposes to offer and sell 8,210 units (the “Underwritten
      Units”)
      of the Company, each Underwritten Unit being comprised of a US$1,000 principal
      amount Debenture (as hereinafter defined) and 157 Warrants (as hereinafter
      defined). Each Warrant shall be exercisable for a period of five years following
      the Closing Date (as hereinafter defined) at a price of US$2.93 per
      share.

     

    Upon
      and subject to the terms and conditions hereof, Orion Securities Inc.
      (“Orion”),
      as lead underwriter and Loewen, Ondaatje, McCutcheon Limited (collectively
      the
“Underwriters”)
      hereby agree to purchase from the Company and the Company hereby agrees to
      issue
      and sell to the Underwriters, the Underwritten Units for an aggregate purchase
      price of US$8,210,000 for sale to the public on a private placement basis and
      to
      solicit subscriptions therefor.

     

    In
      consideration of the agreement of the Underwriters to purchase the Underwritten
      Units hereunder and of the services rendered and to be rendered by the
      Underwriters in connection with the Offering (as hereinafter defined), including
      (i) assisting and advising the Company with respect to the distribution and
      sale of the Underwritten Units; (ii) purchasing or obtaining commitments
      from substitute Purchasers (as hereinafter defined) of the Underwritten Units;
      and (iii) providing such other financial advisory services relating to the
      Offering as the Company and the Underwriters agree are appropriate in the
      circumstances, the Company agrees to pay the Underwriters’ Fee (as hereinafter
      defined) to the Underwriters at the Closing Date (as hereinafter
      defined).

     

    The
      following are the additional terms and conditions of this Agreement between
      the
      Company and the Underwriters:

     

    
      	
              1.

            	
              Definitions

            

    

     

    
      	
              1.1

            	
              Definitions.
                In addition to the terms defined elsewhere in this Agreement: (a)
                capitalized terms that are not otherwise defined herein have the
                meanings
                given to such terms in the Debentures (as defined herein), (b) unless
                otherwise provided, all references to dollars or currency in this
                Agreement are to Canadian dollars; and (c) the following terms have
                the
                meanings indicated in this
                Section 1.1:

            

    

     

    “1933
      Act”
      means the Securities Act of 1933, as amended.

     

     

     

    
      	
              Execution
                Copy

            

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    

     

    “Accredited
      Investor”
      means an investor that is an “accredited investor” as that term is defined in
      each of (a) Rule 501(a) of Regulation D promulgated under the 1933 Act; and
      (b)
      Section 1.1 of OSC Rule 45-501, and includes Quebec Exempt
      Purchasers.

     

    “Action”
      shall have the meaning ascribed to such term in
      Section 3.1.10.

     

    “Affiliate”
      means any Person that, directly or indirectly through one or more
      intermediaries, controls or is controlled by or is under common control with
      a
      Person, as such terms are used in and construed under Rule 144 under the 1933
      Act.
      With respect to a Purchaser, any investment fund or managed account that is
      managed on a discretionary basis by the same investment manager as such
      Purchaser will be deemed to be an Affiliate of such Purchaser.

     

    “Business
      Day”
      means a day other than a Saturday, Sunday or a statutory holiday in the Province
      of Ontario;

     

    “Canadian
      Bought Deal”
      means an offering of securities by the Company to Canadian purchasers by way
      of
      a firmly underwritten placement or a firmly underwritten public offering by
      short form prospectus.

     

    “Canadian
      Commission”
      means either or both of the OSC, and the Autorité des marchés financiers
      (Quebec), as the context may require.

     

    “Canadian
      Securities Laws”
      means the Securities Act (Ontario), and the Securities Act (Quebec), all rules,
      regulations and policies promulgated thereunder or otherwise adopted from time
      to time by any Canadian Commission or other authority having jurisdiction,
      and
      the rules and policies of the TSX. 

     

    “Closing”
      means the closing of the purchase and sale of the Securities pursuant to
      Section 6.

     

    “Closing
      Date”
      means August 30, 2005 or such other Trading Day when all of the Transaction
      Documents have been executed and delivered by the applicable parties thereto
      and
      all conditions precedent hereto have been satisfied or waived.

     

    “Closing
      Price”
      means the closing market price for the Common Stock on the Trading Day
      immediately prior to the Notice Date.

     

    “Common
      Stock”
      means the common shares of the share capital of the Company, no par value,
      and
      any other class of securities into which such securities may hereafter have
      been
      reclassified or changed into.

     

    “Common
      Stock Equivalents”
      means any securities of the Company or the Subsidiaries which would entitle
      the
      holder thereof to acquire at any time Common Stock, including, without
      limitation, any debt, preferred stock, rights, options, warrants or other
      instrument that is at any time convertible into or exercisable or exchangeable
      for, or otherwise entitles the holder thereof to receive, Common
      Stock.

     

    
       

       

      
        	
                Execution
                  Copy

              

      

       

    
      
        
          
          

        

        
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    “Company
      Counsel”
      means Aird & Berlis LLP, with respect to Canadian matters, and Mintz, Levin,
      Ferris, Cohn, Glovsky and Popeo, P.C., with respect to U.S. matters.

     

    “Continuous
      Disclosure Reports”
      shall have the meaning ascribed to such term in Section 3.1.8 hereof.

     

    “Conversion
      Price”
      shall have the meaning ascribed to such term in the Debentures.

     

    “Debentures”
      means, the 7% Convertible Debentures due, subject to the terms therein, four
      years from their date of issuance, issued by the Company to the Purchasers
      hereunder in the form of Schedule A.

     

    “Disclosure
      Schedules”
      shall have the meaning ascribed to such term in Section 3.1.

     

    “Exchange
      Act”
      means the Securities Exchange Act of 1934, as amended, and the rules and
      regulations promulgated thereunder.

     

    “Exempt
      Issuance”
      means the issuance of (a) shares of Common Stock or options to employees,
      officers or directors of the Company pursuant to any stock option or purchase
      plan duly adopted by the Board of Directors of the Company (a majority of which
      are non-employees in accordance with TSX guidelines), (b) securities upon the
      exercise or exchange of or conversion of any Securities issued hereunder and/or
      securities exercisable or exchangeable for or convertible into shares of Common
      Stock issued and outstanding on the date of this Agreement, provided that such
      securities have not been amended since the date of this Agreement to increase
      the number of such securities or to decrease the exercise, exchange or
      conversion price of any such securities, and (c) securities issued pursuant
      to
      acquisitions or strategic transactions, provided any such issuance shall only
      be
      to a Person which is, itself or through its subsidiaries, an operating company
      in a business synergistic with the business of the Company or holding company
      or
      individual with proprietary ownership of rights in technology or research and
      in
      which the Company receives benefits in addition to the investment of funds,
      but
      shall not include a transaction in which the Company is issuing securities
      primarily for the purpose of raising capital or to an entity whose primary
      business is investing in securities.

     

    “GAAP”
      shall have the meaning ascribed to such term in Section 3.1.8.

     

    “Intellectual
      Property Rights”
      shall have the meaning ascribed to such term in
      Section 3.1.15.

     

    “Legend
      Removal Date”
      shall have the meaning ascribed to such term in Section 4.1.3.

     

    “Liens”
      means a lien, charge, security interest, encumbrance, right of first refusal,
      pre-emptive right or other restriction. 

     

    
       

       

      
        	
                Execution
                  Copy

              

      

       

    
      
        
          
          

        

        
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    “Market
      Price”
      means CDN$3.10,
      subject to adjustment for reverse and forward stock splits, stock dividends,
      stock combinations and other similar transactions of the Common Stock that
      occur
      after the date of this Agreement but
      prior to the Closing Date.

     

    “Material
      Adverse Effect”
      shall have the meaning assigned to such term in Section 3.1.2.

     

    “Material
      Permits”
      shall have the meaning ascribed to such term in
      Section 3.1.13.

     

    “MI
      45-102”
      means Multilateral Instrument 45-102, Resale of Securities, adopted by the
      OSC
      and effective March 30, 2004, as such Instrument may be amended from time to
      time, or any similar instrument, decision, rule or regulation hereafter adopted
      by any Canadian Commission having substantially the same effect as such
      instrument.

     

    “MI
      52-109”
      means Multilateral Instrument 52-109, Certification of Disclosure in Issuer’s
      Annual and Interim Filings, adopted by the OSC and effective March 30, 2004,
      as
      such Instrument may be amended from time to time, or any similar instrument,
      rule or regulation hereafter adopted by any Canadian Commission having
      substantially the same effect as such instrument.

     

    “NI
      51-102”
      means National Instrument 51-102, Continuous Disclosure Obligations, adopted
      by
      the OSC and effective March 30, 2004, as such Instrument may be amended from
      time to time, or any similar instrument, rule or regulation hereafter adopted
      by
      any Canadian Commission having substantially the same effect as such
      instrument.

     

    “Notice
      Date”
      shall mean the date upon which the Company gives notice to the TSX of the
      transactions contemplated in this Agreement as required by Section 602(a) of
      the
      TSX Company Manual.

     

    “Offering”
      means the offering of Debentures and Warrants pursuant to this
      Agreement.

     

    “Orion”
      means Orion Securities Inc.

     

    “OSC”
      means the Ontario Securities Commission.

     

    “OSC
      45-501”
      means OSC Rule 45-501, Exempt Distributions, adopted by the OSC effective
      January 12, 2004, as such Rule may be amended from time to time, or any similar
      rule or regulation hereafter adopted by the OSC having substantially the same
      effect as such Rule. 

     

    “Participation
      Maximum”
      shall have the meaning ascribed to such term in
      Section 4.11.1.

     

    
       

       

      
        	
                Execution
                  Copy

              

      

       

    
      
        
          
          

        

        
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    “Person”
      means an individual or corporation, partnership, trust, incorporated or
      unincorporated association, joint venture, limited liability company, joint
      stock company, government (or an agency or subdivision thereof) or other entity
      of any kind.

     

    “Pre-Notice”
      shall have the meaning ascribed to such term in
      Section 4.11.2.

     

    “Proceeding”
      means an action, claim, suit, investigation or proceeding (including, without
      limitation, an investigation or partial proceeding, such as a deposition),
      whether commenced or threatened.

     

    “Purchase
      Agreement”
      means the securities purchase agreements to be entered into between the Company
      and each Purchaser.

     

    “Purchaser”
      shall have the meaning ascribed to such term in Section 2.2
      hereof.

     

    “Quebec
      Exempt Purchaser”
      means a Purchaser who is resident in the Province of Quebec and the total cost
      of the Debentures to it is at least CDN$150,000, acting for its own account
      and,
      if a company, was not established solely to acquire the Debentures; or a
      Purchaser who is otherwise exempt from the prospectus requirements of the
      Securities Act (Quebec).

     

    “Regulation
      S”
      means Rules 901 through 905 promulgated by the SEC pursuant to the 1933 Act,
      17
      C.F.R. Sections 230.901-905, as such Rules may be amended from time to time,
      or
      any similar rules or regulations hereafter adopted by the SEC having
      substantially the same effect as such Rules. 

     

    “Required
      Approvals”
      shall have the meaning ascribed to such term in Section 3.1.5.

     

    “Required
      Minimum”
      means, as of any date, the maximum aggregate number of shares of Common Stock
      then issued or potentially issuable in the future pursuant to the Transaction
      Documents, including any Underlying Shares issuable upon exercise or conversion
      in full of all Warrants and Debentures (including Underlying Shares issuable
      as
      payment of interest); 

     

    “Rule
      144”
      means Rule 144 promulgated by the SEC pursuant to the 1933 Act, as such Rule
      may
      be amended from time to time, or any similar rule or regulation hereafter
      adopted by the SEC having substantially the same effect as such
      Rule.

     

    “SEC”
      means the Securities and Exchange Commission. 

     

    “Securities”
      means the Debentures, the Warrants, the Warrant Shares and the Underlying
      Shares.

     

    “Securities
      Act (Ontario)”
      means the Securities Act (Ontario), R.S.O. 1990, Chapter S.5.

     

    
       

       

      
        	
                Execution
                  Copy

              

      

       

    
      
        
          
          

        

        
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    “SEDAR”
      means the System For Electronic Document Analysis and Retrieval developed by
      the
      Canadian Securities Administrators. 

     

    “Shareholder
      Approval”
      means such approval as may be required by the applicable rules and regulations
      of the American Stock Exchange or the TSX (or any successor entity) from the
      shareholders of the Company with respect to the transactions contemplated by
      the
      Transaction Documents, including the issuance of all of the Underlying Shares
      in
      excess of 19.99% of the issued and outstanding Common Stock on the Closing
      Date.

     

    “Subscription
      Amount”
      means,
      as to each Purchaser, the aggregate amount
      to be paid for Debentures and Warrants purchased hereunder as specified in
      the
      Purchase Agreement, in US dollars and in immediately available
      funds.

     

    “Subsequent
      Financing”
      shall have the meaning ascribed to such term in
      Section 4.11.1.

     

    “Subsequent
      Financing Notice”
      shall have the meaning ascribed to such term in
      Section 4.11.2.

     

    “Subsidiary”
      means any subsidiary of the Company as set forth on Schedule 3.1(a) of the
      Disclosure Schedules.

     

    “Trading
      Day”
      means a day on which the Common Stock is traded on a Trading Market, except
      so
      long as the Common Stock is traded on the TSX, in the case of
      Sections 4.1.3 and 4.1.4 of this Agreement and Section 2 of the Warrants,
“Trading Day” means a day on which the Common Stock is traded on the TSX
      only.

     

    “Trading
      Market”
      means the following markets or exchanges on which the Common Stock is listed
      or
      quoted for trading on the date in question: the American Stock Exchange and
      the
      TSX.

     

    “Transaction
      Documents”
      means this Agreement, the Purchase Agreements, the Debentures, the Warrants
      and
      any other documents or agreements executed in connection with the transactions
      contemplated hereunder.

     

    “TSX”
      means the Toronto Stock Exchange.

     

    “TSX
      Company Manual”
      means the Toronto Stock Exchange Company Manual. 

     

    “Underwriter’s
      Fee”
      means the fee to be paid to the Underwriters equal to 6.5% of the gross proceeds
      raised pursuant to the Offering or US$65.00 per Underwritten Unit;

     

    “Underlying
      Shares”
      means the shares of Common Stock issued and issuable upon conversion of the
      Debentures and upon exercise of the Warrants and issued and issuable in lieu
      of
      the cash payment of interest on the Debentures in accordance with the terms
      of
      the Debentures.

     

    
       

       

      
        	
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    “VWAP”
      means, for any Trading Day, the price determined by the first of the following
      clauses that applies: (a) if the Common Stock is then listed or quoted on the
      TSX, the daily volume weighted average price of the Common Stock for such date
      (or the nearest preceding date) on the TSX; (b)  if the Common Stock is not
      then listed or quoted on the TSX and if prices for the Common Stock are then
      listed on the American Stock Exchange, the volume weighted average price of
      the
      Common Stock for such date (or the nearest preceding date) on the American
      Stock
      Exchange; (c) if the Common Stock is not then listed or quoted on a Trading
      Market and if prices for the Common Stock are then quoted or listed on the
      Nasdaq National Market, the Nasdaq Small-Cap Market, the New York Stock Exchange
      or the OTC Bulletin Board, the volume weighted average price of the Common
      Stock
      for such date (or the nearest preceding date) on the market, exchange or
      bulletin board; (d) if the Common Stock is not then listed or quoted on any
      of
      the above and if prices for the Common Stock are then reported in the “Pink
      Sheets” published by the Pink Sheets, LLC (or a similar organization or agency
      succeeding to its functions of reporting prices), the most recent bid price
      per
      share of the Common Stock so reported; or (e) in all other cases, the fair
      market value of a share of Common Stock as determined by an independent
      appraiser selected in good faith by the Purchasers and reasonably acceptable
      to
      the Company.

     

    “Warrants”
      means collectively the Common Stock purchase warrants in the form of
      Schedule B delivered to the Purchasers at the Closing in accordance with
      Section 6.2 hereof, which Warrants shall be exercisable immediately and
      have a term of exercise equal to five years.

     

    “Warrant
      Shares”
      means the shares of Common Stock issuable upon exercise of the
      Warrants.

     

    
      	
              2.

            	
              Nature
                of Transaction

            

    

     

    
      	
              2.1

            	
              The
                Company understands that although this offer is presented by the
                Underwriters as Purchasers, the Underwriters will endeavour to arrange
                for
                substituted Purchasers of Underwritten Units or to resell the Underwritten
                Units, as principal, to ultimate Purchasers. 

            

    

     

    
      	
              2.2

            	
              Any
                reference in this Agreement to a “Purchaser” or “Purchasers” shall be
                taken to be a reference to the Underwriters and to any such substituted
                and ultimate Purchaser, provided that nothing in this sentence shall
                affect the obligation of the Underwriters, subject to the terms and
                conditions hereof, to purchase all of the Underwritten Units not
                purchased
                on the Closing Date by substituted Purchasers or an ultimate
                Purchaser.

            

    

     

    
      	
              2.3

            	
              The
                offering and sale of the Underwritten Units is to be effected in
                a manner
                exempt from any prospectus filing or delivery requirements under
                Canadian
                Securities Laws, without the necessity of obtaining any order or
                ruling of
                any Canadian
                Commission. Each substituted Purchaser shall purchase Underwritten
                Units
                from the Company under the prospectus exemptions more fully described
                in
                the Purchase Agreement (the “Exemptions”).

            

    

     

    
       

       

      
        	
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              2.4

            	
              The
                Underwriters will notify the Company with respect to the identity
                and
                jurisdiction of residence of each substituted Purchaser as soon as
                practicable (and in any event not later than the Business Day prior
                to the
                Closing Date) with a view to affording sufficient time to allow the
                Company to secure compliance with all applicable regulatory requirements
                in connection with the offering and sale of the Underwritten Units
                to such
                Purchasers.

            

    

     

    
      	
              2.5

            	
              The
                Underwriters shall conduct their activities in connection with the
                Offering in compliance with all applicable laws and regulatory
                requirements, including the Canadian Securities Laws, and, without
                limiting the foregoing, the Underwriters represent, warrant and covenant
                to the Company as follows, and acknowledges that the Company is relying
                on
                such representations, warranties and covenants in entering into this
                Agreement:

            

    

     

    
      	 	
              2.5.1

            	
              all
                solicitation, offering and other selling efforts carried out by it
                in
                connection with the Offering have been and will be made in accordance
                with
                the provisions of the Exemptions in a manner such that no prospectus
                need
                be filed or delivered by the Company in connection therewith;
                and

            

    

     

    
      	 	
              2.5.2

            	
              no
                advertising of the Underwritten Units has been or will be made by
                it in
                any media whatsoever (except as may be permitted under the Canadian
                Securities Laws).

            

    

     

    
      	
              2.6

            	
              The
                Underwriters shall obtain from each Purchaser a completed and executed
                Purchase Agreement and (if applicable) other forms prescribed or
                required
                under Canadian Securities Laws or by the Company in connection with
                the
                Offering. In order to facilitate organization of the closing of the
                Offering, the Underwriters will use their reasonable best efforts
                to
                provide copies of such documents to Company Counsel not less than
                24 hours
                prior to the Closing Date, provided that provision of such documents
                shall
                not constitute a delivery thereof for purposes of
                Section 6.2.

            

    

     

    
      	
              3.

            	
              Representations
                and Warranties

            

    

     

    
      	
              3.1

            	
              Representations
                and Warranties of the Company.
                Except as set forth under the corresponding section of the disclosure
                schedules delivered to Orion concurrently herewith, on behalf of
                the
                Purchasers (the “Disclosure
                Schedules”),
                which Disclosure Schedules shall be deemed a part hereof, the Company
                hereby makes the representations and warranties set forth below to
                the
                Underwriters and each Purchaser.

            

    

     

    
      	 	
              3.1.1

            	
              Subsidiaries.
                All of the direct and indirect subsidiaries of the Company are set
                forth
                on Schedule 3.1(a) to the Disclosure Schedules. Except as disclosed
                on
                Schedule 3.1(a) to the Disclosure Schedules, the Company owns, directly
                or
                indirectly, all of the capital stock or other equity interests of
                each
                Subsidiary free and clear of any Liens, and all the issued and outstanding
                shares of capital stock of each Subsidiary are validly issued and
                are
                fully paid, non-assessable and free of pre-emptive and similar rights
                to
                subscribe for or purchase
                securities.

            

    

     

    
       

       

      
        	
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              3.1.2

            	
              Organization
                and Qualification.
                The Company and each of the Subsidiaries is an entity duly incorporated
                or
                otherwise organized, validly existing and in good standing under
                the laws
                of the jurisdiction of its incorporation or organization (as applicable),
                with the requisite power and authority to own and use its properties
                and
                assets and to carry on its business as currently conducted. Neither
                the
                Company nor any Subsidiary is in violation or default of any of the
                provisions of its respective certificate or articles of incorporation,
                bylaws or other organizational or charter documents. Each of the
                Company
                and the Subsidiaries is duly qualified to conduct business and is
                in good
                standing as a foreign corporation or other entity in each jurisdiction
                in
                which the nature of the business conducted or property owned by it
                makes
                such qualification necessary, except where the failure to be so qualified
                or in good standing, as the case may be, could not have or reasonably
                be
                expected to result in (i) a material adverse effect on the legality,
                validity or enforceability of any Transaction Document, (ii) a material
                adverse effect on the results of operations, assets, business, prospects
                or condition (financial or otherwise) of the Company and the Subsidiaries,
                taken as a whole, or (iii) a material adverse effect on the Company’s
                ability to perform in any material respect on a timely basis its
                obligations under any Transaction Document (any of (i), (ii) or (iii),
                a
                “Material
                Adverse Effect”)
                and no Proceeding has been instituted in any such jurisdiction revoking,
                limiting or curtailing or seeking to revoke, limit or curtail such
                power
                and authority or qualification.

            

    

     

    
      	 	
              3.1.3

            	
              Authorization;
                Enforcement.
                The Company has the requisite corporate power and authority to enter
                into
                and to consummate the transactions contemplated by each of the Transaction
                Documents and otherwise to carry out its obligations hereunder and
                thereunder. The execution and delivery of each of the Transaction
                Documents by the Company and the consummation by it of the transactions
                contemplated thereby have been duly authorized by all necessary action
                on
                the part of the Company and no further action is required by the
                Company,
                its board of directors or its stockholders in connection therewith
                other
                than in connection with the Required Approvals. Each Transaction
                Document
                has been (or upon delivery will have been) duly executed by the Company
                and, when delivered in accordance with the terms hereof and thereof,
                will
                constitute the valid and binding obligation of the Company enforceable
                against the Company in accordance with its terms except (i) as limited
                by
                general equitable principles and applicable bankruptcy, insolvency,
                reorganization, moratorium and other laws of general application
                affecting
                enforcement of creditors’ rights generally, (ii) as limited by laws
                relating to the availability of specific performance, injunctive
                relief or
                other equitable remedies and (iii) insofar as indemnification and
                contribution provisions may be limited by applicable
                law.

            

    

     

    
       

       

      
        	
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              3.1.4

            	
              No
                Conflicts.
                The execution, delivery and performance of the Transaction Documents
                by
                the Company and the consummation by the Company of the other transactions
                contemplated hereby and thereby do not and will not: (i) conflict
                with or
                violate any provision of the Company’s or any Subsidiary’s certificate or
                articles of incorporation, bylaws or other organizational or charter
                documents, or (ii) conflict with, or constitute a default (or an
                event
                that with notice or lapse of time or both would become a default)
                under,
                result in the creation of any Lien upon any of the properties or
                assets of
                the Company or any Subsidiary, or give to others any rights of
                termination, amendment, acceleration or cancellation (with or without
                notice, lapse of time or both) of, any agreement, credit facility,
                debt or
                other instrument (evidencing a Company or Subsidiary debt or otherwise)
                or
                other understanding to which the Company or any Subsidiary is a party
                or
                by which any property or asset of the Company or any Subsidiary is
                bound
                or affected, or (iii) subject to the Required Approvals, conflict
                with or
                result in a violation of any law, rule, regulation, order, judgment,
                injunction, decree or other restriction of any court or governmental
                authority to which the Company or a Subsidiary is subject (including
                federal, provincial and state securities laws and regulations), or
                by
                which any property or asset of the Company or a Subsidiary is bound
                or
                affected; except in the case of each of clauses (ii) and (iii), such
                as
                could not have or reasonably be expected to result in a Material
                Adverse
                Effect.

            

    

     

    
      	 	
              3.1.5

            	
              Filings,
                Consents and Approvals.
                The Company is not required to obtain any consent, waiver, authorization
                or order of, give any notice to, or make any filing or registration
                with,
                any court or other federal, state, provincial, local or other governmental
                authority or other Person in connection with the execution, delivery
                and
                performance by the Company of the Transaction Documents, other than
                (i)
                filings required pursuant to Section 4.6, (ii) the notice and/or
                application(s) to each applicable Trading Market for the issuance
                and sale
                of the Debentures and Warrants and the listing of the Underlying
                Shares
                for trading thereon in the time and manner required thereby, (iv)
                the
                filing of Form D with the SEC and such filings as are required to
                be made
                under applicable provincial and state securities laws and (v) Shareholder
                Approval (collectively, the “Required
                Approvals”).

            

    

     

    
      	 	
              3.1.6

            	
              Issuance
                of the Securities.
                The Securities are duly authorized and, when issued and paid for
                in
                accordance with the applicable Transaction Documents, will be duly
                and
                validly issued, fully paid and non-assessable, free and clear of
                all Liens
                imposed by the Company other than restrictions on transfer provided
                for in
                the Transaction Documents. The Underlying Shares, when issued in
                accordance with the terms of the Transaction Documents, will be validly
                issued, fully paid and non-assessable, free and clear of all Liens
                imposed
                by the Company. The Company has reserved from its duly authorized
                capital
                stock a sufficient number of shares of Common Stock for the issuance
                of
                the Underlying Shares.

            

    

     

    
       

       

      
        	
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              3.1.7

            	
              Capitalization.
                The capitalization of the Company is as described in the Company’s most
                recent financial statements filed on SEDAR. The Company has not issued
                any
                capital stock that is not disclosed in such filing,
                other than pursuant to the exercise of employee stock options under
                the
                Company’s stock option plans, the issuance of shares of Common Stock to
                employees pursuant to the Company’s employee stock purchase plan and
                pursuant to the conversion or exercise of outstanding Common Stock
                Equivalents. No Person has any right of first refusal, pre-emptive
                right,
                right of participation, or any similar right to participate in the
                transactions contemplated by the Transaction Documents. Except as
                a result
                of the purchase and sale of the Securities or otherwise as disclosed
                in
                Schedule 3.1(g), there are no outstanding options, warrants, script
                rights
                to subscribe to, calls or commitments of any character whatsoever
                relating
                to, or securities, rights or obligations convertible into or exercisable
                or exchangeable for, or giving any Person any right to subscribe
                for or
                acquire, any shares of Common Stock, or contracts, commitments,
                understandings or arrangements by which the Company or any Subsidiary
                is
                or may become bound to issue additional shares of Common Stock or
                Common
                Stock Equivalents. The issuance and sale of the Securities will not
                obligate the Company to issue shares of Common Stock or other securities
                to any Person (other than the Purchasers) and will not result in
                a right
                of any holder of Company securities to adjust the exercise, conversion,
                exchange or reset price under such securities. All of the outstanding
                shares of capital stock of the Company are validly issued, fully
                paid and
                non-assessable, have been issued in compliance with all applicable
                federal
                and state securities laws and Canadian Securities Laws, and none
                of such
                outstanding shares was issued in violation of any pre-emptive rights
                or
                similar rights to subscribe for or purchase securities. No further
                approval or authorization of any stockholder, the Board of Directors
                of
                the Company or others is required for the issuance and sale of the
                Securities. There are no stockholders agreements, voting agreements
                or
                other similar agreements with respect to the Company’s capital stock to
                which the Company is a party or, to the knowledge of the Company,
                between
                or among any of the Company’s
                stockholders.

            

    

     

    
      	 	
              3.1.8

            	
              Continuous
                Disclosure Reports and SEC Reports; Financial
                Statements.
                The Company has filed all reports, schedules, forms, statements and
                other
                documents required to be filed by it under the Canadian Securities
                Laws,
                the 1933 Act and the Exchange Act, including pursuant to Section 
                13(a) or 15(d) thereof, for the two years preceding the date hereof
                (or
                such shorter period as the Company was required by law to file such
                material) (the foregoing materials, including the exhibits thereto
                and
                documents incorporated by reference therein, being collectively referred
                to herein as the “Continuous
                Disclosure Reports”)
                on a timely basis or has received a valid extension of such time
                of filing
                and has filed any such Continuous Disclosure Reports prior to the
                expiration of any such extension. As of their respective dates, the
                Continuous Disclosure Reports complied in all material respects with
                the
                requirements of the applicable securities laws, and none of the Continuous
                Disclosure Reports, when filed, contained any untrue statement of
                a
                material fact or omitted to state a material fact required to be
                stated
                therein or necessary in order to make the statements therein, in
                the light
                of the circumstances under which they were made, not misleading.
                The
                financial statements of the Company included in the Continuous Disclosure
                Reports comply in all material respects with applicable accounting
                requirements and the applicable securities laws with respect thereto
                as in
                effect at the time of filing. Such financial statements have been
                prepared
                in accordance with Canadian generally accepted accounting principles
                applied on a consistent basis during the periods involved (“GAAP”),
                except as may be otherwise specified in such financial statements
                or the
                notes thereto and except that unaudited financial statements may
                not
                contain all footnotes required by GAAP, and fairly present in all
                material
                respects the financial position of the Company and its consolidated
                subsidiaries as of and for the dates thereof and the results of operations
                and cash flows for the periods then ended, subject, in the case of
                unaudited statements, to normal, immaterial, year-end audit
                adjustments.

            

    

     

     

     

    
      	
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              3.1.9

            	
              Material
                Changes.
                Since the date of the latest audited financial statements included
                within
                the Continuous Disclosure Reports, except as specifically disclosed
                in the
                Continuous Disclosure Reports, (i) there has been no event, occurrence
                or
                development that has had or that could reasonably be expected to
                result in
                a Material Adverse Effect, (ii) the Company has not incurred any
                liabilities (contingent or otherwise) other than (A) trade payables
                and
                accrued expenses incurred in the ordinary course of business consistent
                with past practice and (B) liabilities not required to be reflected
                in the
                Company’s financial statements pursuant to GAAP or required to be
                disclosed in filings made or required to be made pursuant to U.S.
                securities laws and the Canadian Securities Laws, (iii) the Company
                has
                not altered its method of accounting, (iv) the Company has not declared
                or
                made any dividend or distribution of cash or other property to its
                stockholders or purchased, redeemed or made any agreements to purchase or
                redeem any shares of its capital stock and (v) the Company has not
                issued
                any equity securities to any officer, director or Affiliate, except
                pursuant to existing Company stock option or share purchase plans.
                The
                Company does not have pending before any Canadian Commission or the
                SEC
                any request for confidential treatment of
                information.

            

    

     

    
      	 	
              3.1.10

            	
              Litigation.
                There is no action, suit, inquiry, notice of violation, proceeding
                or
                investigation pending or, to the knowledge of the Company, threatened
                against or affecting the Company, any Subsidiary or any of their
                respective properties before or by any court, arbitrator, governmental
                or
                administrative agency or regulatory authority (federal, provincial,
                state,
                county, local or foreign) or a Trading Market (collectively, an
                “Action”)
                which (i) adversely affects or challenges the legality, validity
                or
                enforceability of any of the Transaction Documents or the Securities
                or
                (ii) could, if there were an unfavorable decision, have or reasonably
                be
                expected to result in a Material Adverse Effect. Neither the Company
                nor
                any Subsidiary, nor to the knowledge of the Company, any director
                or
                officer thereof, is or has been the subject of any Action involving
                a
                claim of violation of or liability under federal, provincial or state
                securities laws or a claim of breach of fiduciary duty. There has
                not
                been, and to the knowledge of the Company, there is not pending or
                contemplated, any investigation by a Canadian Commission or the SEC
                involving the Company or any current or former director or officer
                of the
                Company. No Canadian Commission or the SEC has issued any stop order
                or
                other order suspending the effectiveness of any document filed by
                the
                Company or any Subsidiary pursuant to U.S. securities laws or any
                of the
                Canadian Securities Laws.

            

    

     

    
      	 	
              3.1.11

            	
              Labor
                Relations.
                No material labor dispute exists or, to the knowledge of the Company,
                is
                imminent with respect to any of the employees of the Company which
                could
                reasonably be expected to result in a Material Adverse
                Effect.

            

    

     

    
       

       

      
        	
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              3.1.12

            	
              Compliance.
                Neither the Company nor any Subsidiary (i) is in default under or
                in
                violation of (and no event has occurred that has not been waived
                that,
                with notice or lapse of time or both, would result in a default by
                the
                Company or any Subsidiary under), nor has the Company or any Subsidiary
                received notice of a claim that it is in default under or that it
                is in
                violation of, any indenture, loan or credit agreement or any other
                agreement or instrument to which it is a party or by which it or
                any of
                its properties is bound (whether or not such default or violation
                has been
                waived), (ii) is in violation of any order of any court, arbitrator
                or
                governmental body, or (iii) is or has been in violation of any statute,
                rule or regulation of any governmental authority, including without
                limitation all foreign, federal, provincial, state and local laws
                applicable to its business except in each case as could not have
                a
                Material Adverse Effect.

            

    

     

    
      	 	
              3.1.13

            	
              Regulatory
                Permits.
                The Company and the Subsidiaries possess all certificates, authorizations
                and permits issued by the appropriate federal, provincial, state,
                local or
                foreign regulatory authorities necessary to conduct their respective
                businesses as described in the Continuous Disclosure Reports, except
                where
                the failure to possess such permits could not have or reasonably
                be
                expected to result in a Material Adverse Effect (“Material
                Permits”),
                and neither the Company nor any Subsidiary has received any notice
                of
                proceedings relating to the revocation or modification of any Material
                Permit.

            

    

     

    
      	 	
              3.1.14

            	
              Title
                to Assets.
                The Company and the Subsidiaries have good and marketable title in
                fee
                simple to all real property owned by them that is material to the
                business
                of the Company and the Subsidiaries and good and marketable title
                in all
                personal property owned by them that is material to the business
                of the
                Company and the Subsidiaries, in each case free and clear of all
                Liens,
                except for Liens as do not materially affect the value of such property
                and do not materially interfere with the use made and proposed to
                be made
                of such property by the Company and the Subsidiaries and Liens for
                the
                payment of federal, provincial, state or other taxes, the payment
                of which
                is neither delinquent nor subject to penalties. Any real property
                and
                facilities held under lease by the Company and the Subsidiaries are
                held
                by them under valid, subsisting and enforceable leases of which the
                Company and the Subsidiaries are in
                compliance.

            

    

     

    
      	 	
              3.1.15

            	
              Patents
                and Trademarks.
                The Company and the Subsidiaries have, or have rights to use, all
                patents,
                patent applications, trademarks, trademark applications, service
                marks,
                trade names, copyrights, licenses and other similar rights necessary
                or
                material for use in connection with their respective businesses as
                described in the Continuous Disclosure Reports and which the failure
                to so
                have could have a Material Adverse Effect (collectively, the “Intellectual
                Property Rights”).
                Neither the Company nor any Subsidiary has received a written notice
                that
                the Intellectual Property Rights used by the Company or any Subsidiary
                violates or infringes upon the rights of any Person. To the knowledge
                of
                the Company, all such Intellectual Property Rights are enforceable
                and
                there is no existing infringement by another Person of any of the
                Intellectual Property Rights of
                others.

            

    

     

    
       

       

      
        	
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              3.1.16

            	
              Insurance.
                The Company and the Subsidiaries are insured by insurers of recognized
                financial responsibility against such losses and risks and in such
                amounts
                as are prudent and customary in the businesses in which the Company
                and
                the Subsidiaries are engaged, including, but not limited to, directors
                and
                officers insurance coverage with a coverage limitation of CDN$5,000,000.
                To the best knowledge of the Company, such insurance contracts and
                policies are accurate and complete. Neither the Company nor any Subsidiary
                has any reason to believe that it will not be able to renew its existing
                insurance coverage as and when such coverage expires or to obtain
                similar
                coverage from similar insurers as may be necessary to continue its
                business without a significant increase in
                cost.

            

    

     

    
      	 	
              3.1.17

            	
              Transactions
                With Affiliates and Employees.
                Except as set forth in the Continuous Disclosure Reports, none of
                the
                officers, directors or to the knowledge of the Company, none of the
                employees of the Company is presently a party to any transaction
                with the
                Company or any Subsidiary (other than for services as employees,
                officers
                and directors), including any contract, agreement or other arrangement
                providing for the furnishing of services to or by, providing for
                rental of
                real or personal property to or from, or otherwise requiring payments
                to
                or from any officer, director or such employee or, to the knowledge
                of the
                Company, any entity in which any officer, director, or any such employee
                has a substantial interest or is an officer, director, trustee or
                partner,
                in each case in excess of CDN$60,000 other than (i) for payment of
                salary
                or consulting fees for services rendered, (ii) reimbursement for
                expenses
                incurred on behalf of the Company and (iii) for other employee benefits,
                including stock option agreements under any stock option plan of
                the
                Company.

            

    

     

    
      	 	
              3.1.18

            	
              Sarbanes-Oxley;
                Internal Accounting Controls.
                The Company is in material compliance with all requirements of the
                Sarbanes-Oxley Act of 2002 and the Canadian Securities Laws in each
                case,
                which are applicable to it as of the Closing Date.

            

    

     

    
      	 	
              3.1.19

            	
              Certain
                Fees.
                Other than as disclosed in Schedule 3.1(s), no brokerage or finder’s fees
                or commissions are or will be payable by the Company to any broker,
                financial advisor or consultant, finder, placement agent, investment
                banker, bank or other Person with respect to the transactions contemplated
                by the Transaction Documents. The Purchasers shall have no obligation
                with
                respect to any fees or with respect to any claims made by or on behalf
                of
                other Persons for fees of a type contemplated in this Section that
                may be
                due in connection with the transactions contemplated by the Transaction
                Documents.

            

    

     

    
      	 	
              3.1.20

            	
              Private
                Placement.
                Assuming the accuracy of the Purchasers’ representations and warranties
                set forth herein or in the Purchaser Agreement, no registration under
                the
                1933 Act, and no prospectus under Canadian Securities Laws are required
                for the offer and sale of the Securities by the Company to the Purchasers
                as contemplated hereby. The issuance and sale of the Securities hereunder
                does not contravene any U.S. federal or state securities laws or
                any of
                the Canadian Securities Laws or the rules and regulations of the
                Trading
                Market.

            

    

     

    
       

       

      
        	
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              3.1.21

            	
              Investment
                Company.
                The Company is not, and is not an Affiliate of, and immediately after
                receipt of payment for the Securities, will not be or be an Affiliate
                of,
                an “investment company” within the meaning of the Investment Company Act
                of 1940, as amended. The Company shall conduct its business in a
                manner so
                that it will not become subject to the Investment Company Act of
                1940, as
                amended.

            

    

     

    
      	 	
              3.1.22

            	
              Registration
                Rights.
                Other than each of the Purchasers, no Person has any right to cause
                the
                Company to effect the registration under the 1933 Act of any securities
                of
                the Company.

            

    

     

    
      	 	
              3.1.23

            	
              Listing
                and Maintenance Requirements.
                The Common Stock is registered pursuant to Section 12(b) of the Exchange
                Act and the Common Stock is listed on the TSX and the American Stock
                Exchange, and the Company has taken no action designed to, or which
                to its
                knowledge is likely to have the effect of, terminating the listing
                of the
                Common Stock on either Trading Market nor has the Company received
                any
                notification that any Trading Market is contemplating terminating
                such
                listing. The Company has not, in the 12 months preceding the date
                hereof,
                received notice from any Trading Market on which the Common Stock
                is or
                has been listed or quoted to the effect that the Company is not in
                compliance with the listing or maintenance requirements of such Trading
                Market. The Company is, and has no reason to believe that it will
                not in
                the foreseeable future continue to be, in compliance with all such
                listing
                and maintenance requirements.

            

    

     

    
      	 	
              3.1.24

            	
              Application
                of Takeover Protections.
                The Company and its Board of Directors have taken all necessary action,
                if
                any, in order to render inapplicable any control share acquisition,
                business combination, poison pill (including any distribution under
                a
                rights agreement) or other similar anti-takeover provision under
                the
                Company’s Certificate of Incorporation (or similar charter documents) or
                the laws of its state of incorporation that is or could become applicable
                to the Purchasers as a result of the Purchasers and the Company fulfilling
                their obligations or exercising their rights under the Transaction
                Documents, including without limitation as a result of the Company’s
                issuance of the Securities and the Purchasers’ ownership of the
                Securities.

            

    

     

    
      	 	
              3.1.25

            	
              Disclosure.
                The Company confirms that neither it nor any other Person acting
                on its
                behalf has provided any of the Purchasers or their agents or counsel
                with
                any information that constitutes or might constitute material, non-public
                information. The Company understands and confirms that the Purchasers
                will
                rely on the foregoing representations and covenants in effecting
                transactions in securities of the Company. All disclosure provided
                to the
                Purchasers regarding the Company, its business and the transactions
                contemplated hereby, including the Disclosure Schedules to this Agreement,
                furnished by or on behalf of the Company with respect to the
                representations and warranties made herein are true and correct in
                all
                material respects with respect to such representations and warranties
                and
                do not contain any untrue statement of a material fact or omit to
                state
                any material fact necessary in order to make the statements made
                therein,
                in light of the circumstances under which they were made, not
                misleading.

            

    

     

    
       

       

      
        	
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              3.1.26

            	
              No
                Integrated Offering.
                Assuming the accuracy of the Purchasers’ representations and warranties
                set forth herein or in the Purchase Agreements, neither the Company,
                nor
                any of its affiliates, nor any Person acting on its or their behalf
                has,
                directly or indirectly, made any offers or sales of any security
                or
                solicited any offers to buy any security, under circumstances that
                would
                cause this offering of the Securities to be integrated with prior
                offerings by the Company as contemplated by Rule 502(a) of Regulation
                D
                promulgated under the 1933 Act, or for purposes of any applicable
                shareholder approval provisions, including, without limitation, under
                the
                rules and regulations of any Trading Market on which any of the securities
                of the Company are listed or
                designated.

            

    

     

    
      	 	
              3.1.27

            	
              Solvency.
                Based on the financial condition of the Company as of the Closing
                Date
                after giving effect to the receipt by the Company of the proceeds
                from the
                sale of the Securities hereunder, (i) the Company’s fair saleable value of
                its assets exceeds the amount that will be required to be paid on
                or in
                respect of the Company’s existing debts and other liabilities (including
                known contingent liabilities) as they mature; (ii) the Company’s assets do
                not constitute unreasonably small capital to carry on its business
                for the
                current fiscal year as now conducted and as proposed to be conducted
                including its capital needs taking into account the particular capital
                requirements of the business conducted by the Company, and projected
                capital requirements and capital availability thereof; and (iii)
                to the
                knowledge of the Company, the anticipated cash flow of the Company,
                together with the proceeds the Company would receive, were it to
                liquidate
                all of its assets, after taking into account all anticipated uses
                of the
                cash, would be sufficient to pay all amounts on or in respect of
                its debt
                when such amounts are required to be paid. The Company does not intend
                to
                incur debts beyond its ability to pay such debts as they mature (taking
                into account the timing and amounts of cash to be payable on or in
                respect
                of its debt). The Company has no knowledge of any facts or circumstances
                which lead it to believe that it will file for reorganization or
                liquidation under the bankruptcy or reorganization laws of any
                jurisdiction within one year from the Closing Date. The Continuous
                Disclosure Reports set forth as of the dates thereof all outstanding
                secured and unsecured Indebtedness of the Company or any Subsidiary,
                or
                for which the Company or any Subsidiary has commitments. For the
                purposes
                of this Agreement, “Indebtedness”
                shall mean (a) any liabilities for borrowed money or amounts owed
                in
                excess of CDN$50,000 (other than trade accounts payable incurred
                in the
                ordinary course of business), (b) all guaranties, endorsements and
                other
                contingent obligations in respect of Indebtedness of others, whether
                or
                not the same are or should be reflected in the Company’s balance sheet (or
                the notes thereto), except guaranties by endorsement of negotiable
                instruments for deposit or collection or similar transactions in
                the
                ordinary course of business; and (c) the present value of any lease
                payments
                in excess of CDN$50,000 due under leases required to be capitalized
                in
                accordance with GAAP. Neither
                the Company nor any Subsidiary is in default with respect to any
                Indebtedness.

            

    

     

    
       

       

      
        	
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              3.1.28

            	
              Tax
                Status.
                Except for matters that would not, individually or in the aggregate,
                have
                or reasonably be expected to result in a Material Adverse Effect
                or as
                otherwise disclosed on Schedule 3.1(bb) of the Disclosure Schedules,
                the
                Company and each Subsidiary has filed all necessary federal, provincial,
                state and foreign income and franchise tax returns and has paid or
                accrued
                all taxes shown as due thereon, and the Company has no knowledge
                of a tax
                deficiency which has been asserted or threatened against the Company
                or
                any Subsidiary.

            

    

     

    
      	 	
              3.1.29

            	
              No
                General Solicitation.
                Neither the Company nor any person acting on behalf of the Company
                has
                offered or sold any of the Securities by any form of general solicitation
                or general advertising. The Company has offered the Securities for
                sale
                only to the Purchasers and certain other Accredited
                Investors.

            

    

     

    
      	 	
              3.1.30

            	
              Foreign
                Corrupt Practices.
                Neither the Company, nor to the knowledge of the Company, any agent
                or
                other person acting on behalf of the Company, has (i) directly or
                indirectly, used any funds for unlawful contributions, gifts,
                entertainment or other unlawful expenses related to foreign or domestic
                political activity, (ii) made any unlawful payment to foreign or
                domestic
                government officials or employees or to any foreign or domestic political
                parties or campaigns from corporate funds, (iii) failed to disclose
                fully
                any contribution made by the Company (or made by any person acting
                on its
                behalf of which the Company is aware) which is in violation of law,
                or
                (iv) violated in any material respect any provision of the U.S. Foreign
                Corrupt Practices Act of 1977, as
                amended.

            

    

     

    
      	 	
              3.1.31

            	
              Accountants.
                The Company’s accountants are Ernst & Young LLP. To the knowledge of
                the Company, such accountants, who the Company expects will express
                their
                opinion with respect to the annual financial statements to be filed
                on
                SEDAR for the year ended December 31, 2005, are independent accountants
                as
                required by the Canada Business Corporations Act and the Canadian
                Securities Laws.

            

    

     

    
      	 	
              3.1.32

            	
              Seniority.
                As of the Closing Date, no indebtedness or other equity of the Company
                is
                senior to the Debentures in right of payment, whether with respect
                to
                interest or upon liquidation or dissolution, or otherwise, other
                than
                indebtedness secured by purchase money security interests (which
                is senior
                only as to underlying assets covered thereby) and capital lease
                obligations (which is senior only as to the property covered
                thereby).

            

    

     

    
      	 	
              3.1.33

            	
              No
                Disagreements with Accountants and Lawyers.
                There are no disagreements of any kind presently existing, or reasonably
                anticipated by the Company to arise, between the accountants and
                lawyers
                formerly or presently employed by the Company and the Company is
                current
                with respect to any fees owed to its accountants and
                lawyers.

            

    

     

    
       

       

      
        	
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              3.1.34

            	
              Acknowledgment
                Regarding Purchasers’ Purchase of Securities.
                The Company acknowledges and agrees that each of the Purchasers is
                acting
                solely in the capacity of an arm’s length purchaser with respect to the
                Transaction Documents and the transactions contemplated hereby. The
                Company further acknowledges that no Purchaser is acting as a financial
                advisor or fiduciary of the Company (or in any similar capacity)
                with
                respect to this Agreement and the transactions contemplated hereby
                and any
                advice given by any Purchaser or any of their respective representatives
                or agents in connection with this Agreement and the transactions
                contemplated hereby is merely incidental to the Purchasers’ purchase of
                the Securities. The Company further represents to each Purchaser
                that the
                Company’s decision to enter into this Agreement has been based solely on
                the independent evaluation of the transactions contemplated hereby
                by the
                Company and its representatives.

            

    

     

    
      	 	
              3.1.35

            	
              Manipulation
                of Price.
                The Company has not, and to its knowledge no one acting on its behalf
                has,
                (i) taken, directly or indirectly, any action designed to cause or
                to
                result in the stabilization or manipulation of the price of any security
                of the Company to facilitate the sale or resale of any of the Securities,
                (ii) sold, bid for, purchased, or, paid any compensation for soliciting
                purchases of, any of the Securities (other than for the placement
                agent’s
                placement of the Securities), or (iii) paid or agreed to pay to any
                person
                any compensation for soliciting another to purchase any other securities
                of the Company.

            

    

     

    
      	
              4.

            	
              Other
                Agreements of the
                Parties

            

    

     

    
      	
              4.1

            	
              Transfer
                Restrictions.

            

    

     

    
      	 	
              4.1.1

            	
              The
                Securities may only be disposed of in compliance with the Canadian
                Securities Laws and the 1933 Act or pursuant to an available exemption.
                In
                connection with any transfer of Securities other than (i) pursuant
                to the
                Canadian Securities Laws or (ii) to the Company or to an Affiliate
                of a
                Purchaser or in connection with a pledge as contemplated in
                Section 4.1.2 of this Agreement, the Company may require the
                transferor thereof to provide to the Company an opinion of counsel
                selected by the transferor and reasonably acceptable to the Company,
                the
                form and substance of which opinion shall be reasonably satisfactory
                to
                the Company, to the effect that such transfer does not require
                registration of such transferred Securities under the 1933 Act. As
                a
                condition of transfer, any such transferee shall agree in writing
                to be
                bound by the terms of this Agreement and shall have the rights of
                a
                Purchaser under this Agreement.

            

    

     

    
      	 	
              4.1.2

            	
              The
                Purchasers agree to the imprinting, so long as is required by this
                Section 4.1.2, of a legend on any of the Securities in the following
                form:

            

    

     

    UNLESS
      PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES MUST NOT
      TRADE THE SECURITIES BEFORE [Insert the date that is four months and a day
      after
      the distribution date.]

     

    
       

       

      
        	
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    THE
      SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
      THE
      UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933
      SECURITIES ACT”);
      AND MAY BE OFFERED FOR SALE, SOLD, OR OTHERWISE TRANSFERRED OR ASSIGNED FOR
      VALUE ONLY (A) TO THE CORPORATION; (B) OUTSIDE THE UNITED STATES IN COMPLIANCE
      WITH RULE 904 OF REGULATION S UNDER THE 1933 SECURITIES ACT; (C) IN COMPLIANCE
      WITH RULE 144 OR RULE 144A UNDER THE 1933 SECURITIES ACT; OR (D) IN A
      TRANSACTION THAT IS OTHERWISE EXEMPT FROM REGISTRATION UNDER THE ACT AND STATE
      SECURITIES LAWS, PROVIDED, IN EACH CASE, THE CORPORATION SHALL HAVE RECEIVED
      AN
      OPINION OF COUNSEL SATISFACTORY TO IT AS TO THE AVAILABILITY OF THE EXEMPTIONS
      RELIED ON.

     

    DELIVERY
      OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF
      TRANSACTIONS ON STOCK EXCHANGES IN CANADA.

     

    The
      Company acknowledges and agrees that a Purchaser may from time to time pledge
      pursuant to a bona fide margin agreement with a registered broker-dealer or
      grant a security interest in some or all of the Securities to a financial
      institution in the United States that is an “accredited investor” as defined in
      Rule 501(a) under the 1933 Act and who agrees to be bound by the provisions
      of
      this Agreement and, if required under the terms of such arrangement, such
      Purchaser may transfer pledged or secured Securities to the pledgees or secured
      parties. Such a pledge or transfer would not be subject to approval of the
      Company and no legal opinion of legal counsel of the pledgee, secured party
      or
      pledgor shall be required in connection therewith. Further, no notice shall
      be
      required of such pledge. At the appropriate Purchaser’s expense, the Company
      will execute and deliver such reasonable documentation as a pledgee or secured
      party of Securities may reasonably request in connection with a pledge or
      transfer of the Securities.

     

    
      	 	
              4.1.3

            	
              Certificates
                evidencing the Underlying Shares shall not contain any legend including
                the legend in Section 4.1.2 (the “Legend”)
                if they are issued more than four months and one day following the
                Closing
                Date. The Company shall cause its counsel to issue a legal opinion
                to the
                Company’s transfer agent if required by the Company’s transfer agent to
                effect the removal of the Legend hereunder. If all or any portion
                of a
                Debenture or Warrant is converted or exercised (as applicable) at
                a time
                when no legend is required hereunder, then such Underlying Shares
                shall be
                issued free of the Legend. At such time as the Legend is no longer
                required hereunder, the Company will, no later than three Trading
                Days
                following the delivery by a Purchaser to the Company or the Company's
                transfer agent of a certificate representing Underlying Shares (including
                upon conversion of the Debentures or exercise of the Warrants), as
                applicable, issued with a Legend and a cover letter from such Purchaser
                requesting the removal of such Legend (such third Trading Day, the
                “Legend
                Removal Date”),
                deliver or cause to be delivered to such Purchaser a certificate
                representing such shares that is free from the Legend. The Company
                may not
                make any notation on its records or give instructions to any transfer
                agent of the Company that enlarge the restrictions on transfer set
                forth
                in this Section. If available, certificates for Securities subject
                to
                legend removal hereunder shall be transmitted by the transfer agent
                of the
                Company to the Purchasers by crediting the account of the Purchaser’s
                prime broker with the Depository Trust Company System, or another
                established clearing corporation performing similar functions. Each
                Purchaser acknowledges that the Company has agreed to issue Underlying
                Shares without the Legend after four months and one day in reliance
                on
                such Purchaser's (i) representation to the Company that such Purchaser
                has
                requested certificates without the Legend to enable prompt sales
                of the
                Underlying Shares on the Trading Market as permitted by Canadian
                Securities Laws and U.S. securities laws (and each Purchaser hereby
                so
                represents) and (ii) acknowledgement that any such sales must be made
                in compliance with the 1933 Act and the rules and regulations thereunder
                (and each Purchaser hereby so
                acknowledges).

            

    

     

    
       

       

      
        	
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              4.1.4

            	
              In
                addition to such Purchaser’s other available remedies, the Company shall
                pay to a Purchaser, in cash, as partial liquidated damages and not
                as a
                penalty, for each $1,000 of Underlying Shares (based on the VWAP
                of the
                Common Stock on the date such Securities are submitted to the Company’s
                transfer agent) delivered for removal of the restrictive legend and
                subject to Section 4.1.3, $10 per Trading Day (increasing to $20 per
                Trading Day five Trading Days after such damages have begun to accrue)
                for
                each Trading Day after the second Trading Day following the Legend
                Removal
                Date until such certificate is delivered without a legend. Nothing
                herein
                shall limit such Purchaser’s right to pursue actual damages for the
                Company’s failure to deliver certificates representing any Securities as
                required by the Transaction Documents, and such Purchaser shall have
                the
                right to pursue all remedies available to it at law or in equity
                including, without limitation, a decree of specific performance and/or
                injunctive relief.

            

    

     

    
      	 	
              4.1.5

            	
              Each
                Purchaser, severally and not jointly with the other Purchasers, agrees
                that the removal of the restrictive legend from certificates representing
                Securities as set forth in this Section 4.1 is predicated upon the
                Company’s reliance that the Purchaser will sell any Securities pursuant to
                either the registration requirements of the 1933 Act, including any
                applicable prospectus delivery requirements, an exemption therefrom
                or in
                accordance with the applicable Canadian Securities
                laws.

            

    

     

    
      	 	
              4.1.6

            	
              Until
                the one year anniversary of the date hereof, the Company shall not
                undertake a reverse or forward stock split or reclassification of
                the
                Common Stock without the prior written consent of the Purchasers
                holding a
                majority in principal amount outstanding of the Debentures, acting
                reasonably.

            

    

     

    
      	
              4.2

            	
              Acknowledgment
                of Dilution.
                The Company acknowledges that the issuance of the Securities may
                result in
                dilution of the outstanding shares of Common Stock, which dilution
                may be
                substantial under certain market conditions. The Company further
                acknowledges that its obligations under the Transaction Documents,
                including without limitation its obligation to issue the Underlying
                Shares
                pursuant to the Transaction Documents, are unconditional and absolute
                and
                not subject to any right of set off, counterclaim, delay or reduction,
                regardless of the effect of any such dilution or any claim the Company
                may
                have against any Purchaser and regardless of the dilutive effect
                that such
                issuance may have on the ownership of the other stockholders of the
                Company.

            

    

     

    
       

       

      
        	
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              4.3

            	
              Furnishing
                of Information.
                As long as any Purchaser owns Securities, the Company covenants to
                timely
                file (or obtain extensions in respect thereof and file within the
                applicable grace period) all reports required to be filed by the
                Company
                after the date hereof pursuant to the Canadian Securities Laws and
                the
                Exchange Act. As long as any Purchaser owns Securities, if the Company
                is
                not required to file reports pursuant to the Canadian Securities
                Laws or
                the Exchange Act, it will prepare and furnish to the Purchasers and
                make
                publicly available in accordance with Rule 144(c) such information
                as is
                required for the Purchasers to sell the Securities under Rule 144.
                The
                Company further covenants that it will take such further action as
                any
                holder of Securities may reasonably request, all to the extent required
                from time to time to enable such Person to sell such Securities without
                registration under the 1933 Act within the limitation of the exemptions
                provided by Rule 144.

            

    

     

    
      	
              4.4

            	
              Integration.
                The Company shall not sell, offer for sale or solicit offers to buy
                or
                otherwise negotiate in respect of any security (as defined in Section
                2 of
                the 1933 Act) that would be integrated with the offer or sale of
                the
                Securities in a manner that would require the registration under
                the 1933
                Act of the sale of the Securities to the Purchasers or that would
                be
                integrated with the offer or sale of the Securities for purposes
                of the
                rules and regulations of any Trading
                Market.

            

    

     

    
      	
              4.5

            	
              Conversion
                and Exercise Procedures.
                The form of Notice of Exercise included in the Warrants and the form
                of
                Notice of Conversion included in the Debentures set
                forth the totality of the procedures required of the Purchasers in
                order
                to exercise the Warrants or convert the Debentures. No additional
                legal
                opinion or other information or instructions shall be required of
                the
                Purchasers to exercise their Warrants or convert their Debentures.
                The
                Company shall honor exercises of the Warrants and conversions of
                the
                Debentures and shall deliver Underlying Shares in accordance with
                the
                terms, conditions and time periods set forth in the Transaction
                Documents.

            

    

     

    
      	
              4.6

            	
              Securities
                Laws Disclosure; Publicity.
                The Company shall, by 8:30 a.m. Eastern time on the Trading Day following
                the date hereof, issue a press release and, within ten calendar days
                after
                the Closing Date, file a Material Change Report on Form 51-102F3,
                in each
                case, reasonably acceptable to each Purchaser disclosing the material
                terms of the transactions contemplated hereby, and file the Transaction
                Documents thereto. The Company and each Purchaser shall consult with
                each
                other in issuing any other press releases with respect to the transactions
                contemplated hereby, and neither the Company nor any Purchaser shall
                issue
                any such press release or otherwise make any such public statement
                without
                the prior consent of the Company, with respect to any press release
                of any
                Purchaser, or without the prior consent of each Purchaser, with respect
                to
                any press release of the Company, which consent shall not unreasonably
                be
                withheld, except if such disclosure is required by law, in which
                case the
                disclosing party shall promptly provide the other party with prior
                notice
                of such public statement or communication. Notwithstanding the foregoing,
                except for the disclosure of this Agreement to the TSX and the Canadian
                Commission, the Company shall not publicly disclose the name of any
                Purchaser, or include the name of any Purchaser in any filing with
                the SEC
                or the Canadian Commission or any regulatory agency or Trading Market,
                without the prior written consent of Purchaser, except to the extent
                such
                disclosure is required by law or Trading Market regulations, in which
                case
                the Company shall provide the Purchasers with prior notice of such
                disclosure.

            

    

     

    
       

       

      
        	
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              4.7

            	
              Shareholder
                Rights Plan.
                No claim will be made or enforced by the Company or, to the knowledge
                of
                the Company, any other Person that any Purchaser is an “Acquiring Person”
                under any shareholder rights plan or similar plan or arrangement
                in effect
                or hereafter adopted by the Company, or that any Purchaser could
                be deemed
                to trigger the provisions of any such plan or arrangement, by virtue
                of
                receiving Securities under the Transaction Documents or under any
                other
                agreement between the Company and the Purchasers. The Company shall
                conduct its business in a manner so that it will not become subject
                to the
                Investment Company Act.

            

    

     

    
      	
              4.8

            	
              Non-Public
                Information.
                The Company covenants and agrees that neither it nor any other Person
                acting on its behalf will provide any Purchaser or its agents or
                counsel
                with any information that the Company believes constitutes material
                non-public information, unless prior thereto such Purchaser shall
                have
                executed a written agreement regarding the confidentiality and use
                of such
                information. The Company understands and confirms that each Purchaser
                shall be relying on the foregoing representations in effecting
                transactions in securities of the
                Company.

            

    

     

    
      	
              4.9

            	
              Use
                of Proceeds.
                Except as set forth on Schedule 4.9 of the Disclosure Schedule, the
                Company shall use the net proceeds from the sale of the Securities
                hereunder for working capital purposes including to: (i) accelerate
                the
                development of the Company’s cancer portfolio; (ii) expand the Company’s
                pipeline of technologies; and (iii) pursue strategic growth opportunities,
                and not for the satisfaction of any portion of the Company’s debt (other
                than payment of trade payables in the ordinary course of the Company’s
                business and prior practices), to redeem any Common Stock or Common
                Stock
                Equivalents or to settle any outstanding
                litigation.

            

    

     

    
      	
              4.10

            	
              Reservation
                and Listing of Securities.

            

    

     

    
      	 	
              4.10.1

            	
              The
                Company shall maintain a reserve from its duly authorized shares
                of Common
                Stock for issuance pursuant to the Transaction Documents in such
                amount as
                may be required to fulfill its obligations in full under the Transaction
                Documents.

            

    

     

    
      	 	
              4.10.2

            	
              The
                Company shall, if applicable: (i) in the time and manner required
                by the
                Trading Market, prepare and file with such Trading Market an additional
                shares listing application covering a number of shares of Common
                Stock at
                least equal to the Required Minimum on the date of such application,
                (ii)
                take all steps necessary to cause such shares of Common Stock to
                be
                approved for listing on the Trading Market as soon as possible thereafter,
                (iii) provide to the Purchasers evidence of such listing, and (iv)
                maintain the listing of the Common Stock representing the Underlying
                Shares on such Trading Market or another Trading
                Market.

            

    

     

     

    
      	
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              4.11

            	
              Right
                of First Refusal for Future
                Financings.

            

    

     

    
      	 	
              4.11.1

            	
              From
                the date hereof until the date that the Debentures are no longer
                outstanding, upon any proposed financing by the Company or any of
                its
                Subsidiaries of Common Stock or Common Stock Equivalents (a “Subsequent
                Financing”),
                each Purchaser shall have the right of first refusal to participate
                in up
                to an amount of the Subsequent Financing equal to the lesser of (i)
                the
                principal amount of all Debentures then outstanding and (ii) 100%
                of the
                Subsequent Financing (the “Participation
                Maximum”).

            

    

     

    
      	 	
              4.11.2

            	
              At
                least 5 Trading Days prior to the closing of the Subsequent Financing
                (except in the case of a Canadian Bought Deal), the Company shall
                deliver
                to each Purchaser a written notice of its intention to effect a Subsequent
                Financing (“Pre-Notice”),
                which Pre-Notice shall ask such Purchaser if it wants to review the
                details of such proposed financing (such additional notice, a
                “Subsequent
                Financing Notice”).
                Upon the request of a Purchaser, and only upon a request by such
                Purchaser, for a Subsequent Financing Notice, the Company shall promptly,
                but no later than 1 Trading Day after such request, deliver a Subsequent
                Financing Notice to such Purchaser. In the case of a Canadian Bought
                Deal,
                the Company shall not be required to deliver a Pre-Notice but instead
                shall be required to deliver a Subsequent Financing Notice and
                telephonically advise the authorized signatory of each Purchaser
                as set
                forth on the signature pages hereto of the terms and conditions of
                the
                Canadian Bought Deal. The Subsequent Financing Notice shall describe
                in
                reasonable detail the proposed terms of such Subsequent Financing,
                the
                amount of proceeds intended to be raised thereunder and, if applicable,
                attached to which shall be a term sheet or similar document relating
                thereto.

            

    

     

    
      	 	
              4.11.3

            	
              Any
                Purchaser desiring to participate in such Subsequent Financing must
                provide written notice to the Company by not later than 5:30 p.m.
                (New
                York City time) on the 5th
                Trading Day after all of the Purchasers have received the Pre-Notice
                (or,
                in the case of a Canadian Bought Deal, as to each Purchaser not less
                than
                two hours from the time the Company telephonically advises the authorized
                signatory of such Purchaser of the terms of such Canadian Bought
                Deal,
                provided that if more time is available to permit such Purchaser’s
                participation, such Purchaser shall not be precluded from participation))
                that the Purchaser agrees, subject to documentation reasonably acceptable
                to such Purchaser and the Company, to participate in the Subsequent
                Financing, the amount of the Purchaser’s participation, and that the
                Purchaser has such funds ready, willing, and available for investment
                on
                the terms set forth in the Subsequent Financing Notice. If the Company
                receives no notice from a Purchaser as of such 5th
                Trading Day (or as to each Purchaser such period not less than two
                hours
                in the case of a Canadian Bought Deal), such Purchaser shall be deemed
                to
                have notified the Company that it does not elect to
                participate.

            

    

     

    
       

       

      
        	
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              4.11.4

            	
              If
                by the time periods set out in paragraph 4.11.3 above, notifications
                by the Purchasers of their agreement, subject to documentation reasonably
                acceptable to such Purchaser and the Company, to participate in the
                Subsequent Financing (or to cause their designees to participate)
                is, in
                the aggregate, less than the total amount of the Subsequent Financing,
                then the Company may effect the remaining portion of such Subsequent
                Financing on the terms set forth in the Subsequent Financing
                Notice.

            

    

     

    
      	 	
              4.11.5

            	
              If
                by the time periods set out in paragraph 4.11.3 above, the Company
                receives responses to a Subsequent Financing Notice from Purchasers
                seeking to purchase more than the aggregate amount of the Participation
                Maximum, each such Purchaser shall have the right to purchase the
                greater
                of (a) their Pro Rata Portion (as defined below) of the Participation
                Maximum and (b) the difference between the Participation Maximum
                and the
                aggregate amount of participation by all other Purchasers. “Pro
                Rata Portion”
                is the ratio of (x) the Subscription Amount of Securities purchased
                on the
                Closing Date by a Purchaser participating under this Section 4.11 and
                (y) the sum of the aggregate Subscription Amounts of Securities purchased
                on the Closing Date by all Purchasers participating under this
                Section 4.11.

            

    

     

    
      	 	
              4.11.6

            	
              The
                Company must provide the Purchasers with a second Subsequent Financing
                Notice, and the Purchasers will again have the right of participation
                set
                forth above in this Section 4.11, if the Subsequent Financing subject
                to the initial Subsequent Financing Notice is not consummated for
                any
                reason on the terms set forth in such Subsequent Financing Notice
                within
                60 Trading Days after the date of the initial Subsequent Financing
                Notice.

            

    

     

    
      	 	
              4.11.7

            	
              Notwithstanding
                the foregoing, this Section 4.11 shall not apply in respect of an
                Exempt Issuance.

            

    

     

    
      	
              4.12

            	
              Subsequent
                Equity Sales.

            

    

     

    
      	 	
              4.12.1

            	
              From
                the date hereof until 90 days after the Legend Removal Date, neither
                the
                Company nor any Subsidiary shall issue shares of Common Stock or
                Common
                Stock Equivalents; provided, however, the 90 day period set forth
                in this
                Section 4.12 shall be extended for the number of Trading Days during
                such period in which trading in the Common Stock is suspended by
                any
                Trading Market.

            

    

     

    
      	 	
              4.12.2

            	
              From
                the date hereof until such time as no Purchaser holds any of the
                Securities, the Company shall be prohibited from effecting or entering
                into an agreement to effect any Subsequent Financing involving a
“Variable
                Rate Transaction”. The term “Variable
                Rate Transaction”
                shall mean a transaction in which the Company issues or sells (i)
                any debt
                or equity securities that are convertible into, exchangeable or
                exercisable for, or include the right to receive additional shares
                of
                Common Stock either (A) at a conversion, exercise or exchange rate
                or
                other price that is based upon and/or varies with the trading prices
                of or
                quotations for the shares of Common Stock at any time after the initial
                issuance of such debt or equity securities, or (B) with a conversion,
                exercise or exchange price that is subject to being reset at some
                future
                date after the initial issuance of such debt or equity security or
                upon
                the occurrence of specified or contingent events directly or indirectly
                related to the business of the Company or the market for the Common
                Stock
                or (ii) enters into any agreement, including, but not limited to,
                an
                equity line of credit, whereby the Company may sell securities at
                a future
                determined price.

            

    

     

    
       

       

      
        	
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              4.12.3

            	
              Notwithstanding
                the foregoing, Section 4.12.1 shall not apply in respect of the
                issuance of (a) shares of Common Stock or options to employees, officers
                or directors of the Company pursuant to any stock option or purchase
                plan
                duly adopted by the Board of Directors of the Company (a majority
                of which
                are non-employees in accordance with TSX guidelines), (b) securities
                upon
                the exercise or exchange of or conversion of any Securities issued
                hereunder and/or securities exercisable or exchangeable for or convertible
                into shares of Common Stock issued and outstanding on the date of
                this
                Agreement, provided that such securities have not been amended since
                the
                date of this Agreement to increase the number of such securities
                or to
                decrease the exercise, exchange or conversion price of any such
                securities.

            

    

     

    
      	 	
              4.12.4

            	
              Notwithstanding
                the foregoing, Section 4.12.2 shall not apply in respect of an Exempt
                Issuance, except that no Variable Rate Transaction shall be an Exempt
                Issuance.

            

    

     

    
      	
              4.13

            	
              Equal
                Treatment of Purchasers.
                No consideration shall be offered or paid to any person to amend
                or
                consent to a waiver or modification of any provision of any of the
                Transaction Documents unless the same consideration is also offered
                to all
                of the parties to the Transaction Documents. Further, the Company
                shall
                not make any payment of principal or interest on the Debentures in
                amounts
                which are disproportionate to the respective principal amounts outstanding
                on the Debentures at any applicable time. For clarification purposes,
                this
                provision constitutes a separate right granted to each Purchaser
                by the
                Company and negotiated separately by each Purchaser, and is intended
                for
                the Company to treat the Purchasers as a class and shall not in any
                way be
                construed as the Purchasers acting in concert or as a group with
                respect
                to the purchase, disposition or voting of Securities or
                otherwise.

            

    

     

    
      	
              4.14

            	
              Piggy-Back
                Registrations.
                If at any time that any of the Securities are outstanding there is
                not an
                effective registration statement filed with the SEC covering all
                of all of
                the shares of Common Stock underlying the Securities and the Company
                shall
                determine to prepare and file with the SEC a registration statement
                relating to an offering for its own account or the account of others
                under
                the 1933 Act of any of its equity securities, other than on Form
                S-4 (or
                F-4) or Form S-8 (or F-8) (each as promulgated under the 1933 Act)
                or
                their then equivalents relating to equity securities to be issued
                solely
                in connection with any acquisition of any entity or business or equity
                securities issuable in connection with the stock option or other
                employee
                benefit plans, then the Company shall send to each Purchaser a written
                notice of such determination and, if within fifteen days after the
                date of
                such notice, any such Purchaser shall so request in writing, the
                Company
                shall include in such registration statement all or any part of such
                Securities such Purchaser requests to be registered, subject to customary
                underwriter cutbacks applicable to all holders of registration
                rights.

            

    

     

    
       

       

      
        	
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              5.

            	
              Closing
                Conditions

            

    

     

    The
      Underwriters’ obligations under this Agreement are conditional upon the
      following:

     

    
      	
              5.1

            	
              the
                Company shall have complied with all the covenants and shall have
                satisfied all the terms and conditions of this Agreement on its part
                to be
                complied with and satisfied at or prior to the Closing Date other
                than
                those which may have been waived by the
                Underwriters;

            

    

     

    
      	
              5.2

            	
              the
                Company shall have delivered to the Underwriters at the Closing Date
                legal
                opinion, of the Company Counsel dated the Closing Date and addressed
                to
                the Underwriters, the Purchasers and the Underwriters’ counsel, in the
                form of Exhibit C attached hereto, the Company Counsel may rely, to
                the extent appropriate in the circumstances, on the opinions of local
                counsel acceptable to them and as to matters of fact on certificates
                of
                officers of the Company and others;

            

    

     

    
      	
              5.3

            	
              the
                Company shall have made all necessary filings with and obtained all
                necessary approvals, consents and acceptances of applicable regulatory
                authorities required to be made or obtained prior to the Closing
                Date in
                order to permit the Company to distribute the Securities to the Purchaser
                on a basis exempt from the registration and prospectus requirements
                under
                the Canadian Securities Laws or the applicable U.S. Securities laws;
                and

            

    

     

    
      	
              5.4

            	
              no
                order, ruling or determination having the effect of ceasing the trading
                or
                suspending the issuance or sale of the Common Stock or any other
                securities of the Company shall have been issued by any stock exchange,
                securities commission or other regulatory authority, and no proceedings
                for such order, ruling or determination shall have been instituted
                or
                shall be contemplated or
                threatened.

            

    

     

    
      	
              6.

            	
              Closing

            

    

     

    
      	
              6.1

            	
              The
                purchase and sale of the Debentures and the Warrants shall be completed
                at
                the Closing Date at the Toronto offices of the Company Counsel for
                Canadian matters, or at such other place as the Underwriters and
                the
                Company may agree upon. At or prior to the Closing Date, the Company
                shall, subject to the provisions of this Section 6, duly and validly
                deliver to the Underwriters certificates in definitive form representing
                the Debentures and the Warrants in the names of the Purchasers or
                as
                indicated on their respective Purchase Agreement, against payment
                at the
                direction of the Company of the subscription price therefor, in lawful
                money of the United States by certified cheque or bank draft payable
                at
                par in the City of Toronto. The Underwriters and the Purchasers may
                discharge their payment obligations under this Section 6 by delivery
                of certified cheques or bank drafts from the Underwriters to the
                Company
                equal to the aggregate purchase price for the Debentures and the
                Warrants
                less the Underwriters’ Fee and any expenses incurred by the Underwriters
                in connection with the Offering, including the fees, taxes and
                disbursements of counsel to the
                Underwriters.

            

    

     

    
       

       

      
        	
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              6.2

            	
              On
                the Closing Date:

            

    

     

    
      	 	
              6.2.1

            	
              the
                Underwriters shall deliver to the Company original or facsimile copies
                of
                the Purchase Agreements completed and executed by the
                Purchasers;

            

    

     

    
      	 	
              6.2.2

            	
              subject
                to rejection or allotment by the Company acting reasonably, the Company
                shall accept each Purchase Agreement properly completed and duly
                executed
                by the Purchasers, by the execution thereof by the Company’s duly
                authorized officers and shall deliver a duly executed copy of each
                Purchase Agreement to the Underwriters to be held by the Underwriters
                on
                behalf of the Purchasers;

            

    

     

    
      	 	
              6.2.3

            	
              the
                Company shall deliver or cause to be delivered to the Underwriters
                to be
                held by the Underwriters on behalf of the Purchasers the certificates
                for
                the Debentures and the Warrants sold pursuant to the Purchase Agreements
                registered in the name of the Purchasers or as otherwise provided
                pursuant
                to the Purchase Agreements;

            

    

     

    
      	 	
              6.2.4

            	
              the
                Company shall deliver or cause to be delivered to the Underwriters
                the
                requisite certificates, opinions and other documents as contemplated
                hereby; and

            

    

     

    
      	 	
              6.2.5

            	
              the
                Underwriters shall deliver or cause to be delivered to the Company
                a
                certified cheque or bank draft made payable to the Company or to
                its order
                in an amount equal to the aggregate purchase price of the Units sold
                pursuant to the Offering, less the Underwriters’ Fee and any expenses
                incurred by the Underwriters in connection with the Offering, including
                the fees, taxes and disbursements of counsel to the
                Underwriters.

            

    

     

    
      	
              7.

            	
              Early
                Termination

            

    

     

    
      	
              7.1

            	
              The
                obligations of the Underwriters hereunder may be terminated by written
                notice to that effect given to the Company at or prior to the Closing
                Date, if:

            

    

     

    
      	 	
              7.1.1

            	
              there
                is, in the sole and reasonable opinion of the Underwriters, a material
                change or a change in any Material fact or a new Material fact pertaining
                to the Company shall arise which would be expected to have an adverse
                change or effect on the business, affairs, or profitability of the
                Company
                or on the market price or the value of the securities of the
                Company;

            

    

     

    
      	 	
              7.1.2

            	
              there
                should develop, occur or come into effect any event of any nature,
                including without limitation, accident, governmental law or regulation
                which, in the sole and reasonable opinion of the Underwriters materially
                adversely affects or may materially adversely affect the financial
                markets
                or the business, affairs or profitability of the Company or the market
                price or value of the securities of the
                Company;

            

    

     

    
      	 	
              7.1.3

            	
              any
                order to cease trading in securities of the Company is made or threatened
                by a securities regulatory authority;
                or

            

    

     

    
       

       

      
        	
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              7.1.4

            	
              the
                Company is in material breach of a term, condition or covenant of
                this
                Agreement.

            

    

     

    
      	
              7.2

            	
              If
                the obligations of any Underwriter are terminated pursuant to this
                Section 7, there shall be no further liability on the part of such
                Underwriter to the Company or of the Company to such Underwriter
                except in
                respect of any liability which may have arisen or may thereafter
                arise
                under Sections 11 and 12 of this
                Agreement.

            

    

     

    
      	
              7.3

            	
              The
                right of any Underwriter to terminate its obligations under this
                Agreement
                is in addition to such other remedies as such Underwriter may have
                in
                respect of any default, act or omission of the Company in respect
                of any
                of the matters contemplated by this Agreement. A notice of termination
                signed by one Underwriter under this Section shall not be binding
                on the
                other Underwriters.

            

    

     

    
      	
              8.

            	
              Entitlement
                of Underwriters

            

    

     

    
      	
              8.1

            	
              The
                Underwriters’ rights and obligations under this Agreement are several and
                not solidary in the following
                percentages:

            

    

     

    •         Orion
      Securities Inc.                                                      90%

     

    •         Loewen,
      Ondaatje, McCutcheon Limited                        10%

     

    
      	
              9.

            	
              Underwriters’
                Authority

            

    

     

    
      	
              9.1

            	
              The
                Company shall be entitled to and shall act on any notice, request,
                direction, consent, waiver, extension and other communication given
                or
                agreement entered into by or on behalf of the Underwriters by Orion
                who
                shall represent the Underwriters and have authority to bind the
                Underwriters hereunder except in respect of a notice of termination
                pursuant to Section 7 or the exercise of the indemnity rights
                specified in Section 11. Each of the Underwriters covenants and
                agrees that Orion has been duly authorized in such regard and shall
                incur
                no liability in connection therewith absent negligence or
                fraud.

            

    

     

    
      	
              10.

            	
              Contractual
                Standstill

            

    

     

    
      	
              10.1

            	
              Brent
                Norton, Ron Hosking, Mike Evelegh and Tim Currie shall sign on the
                Closing
                Date the contractual standstill in the form annexed hereto as
                Schedule D.

            

    

     

    
       

       

      
        	
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              11.

            	
              Indemnity
                and Contribution

            

    

     

    
      	
              11.1

            	
              In
                consideration for the Underwriters accepting the engagement (the
                “Engagement”)
                pursuant to this Agreement, the Company agrees to indemnify and hold
                the
                Underwriters and/or any of their affiliates (collectively, the
                “Underwriters”
                for the purposes of this Section 11) and each of their respective
                directors, officers, employees, agents, advisors, shareholders and
                partners (hereinafter referred to as the “Personnel”)
                harmless from and against any and all expenses, losses (other than
                loss of
                profits), claims, actions, damages or liabilities, whether joint
                or
                several (including the aggregate amount paid in reasonable settlement
                of
                any actions, suits, proceedings or claims), and the reasonable fees
                and
                expenses of its counsel that may be incurred in advising with respect
                to
                and/or defending any claim that may be made against the Underwriters
                and/or the Personnel (including in enforcing this indemnity), to
                which the
                Underwriters and/or the Personnel may become subject or otherwise
                involved
                in any capacity under any statute or common law or otherwise
                (collectively, the “Claims”)
                insofar as such Claims arise out of or are based, directly or indirectly,
                upon the performance of professional services rendered to the Company
                by
                the Underwriters and/or the Personnel hereunder or otherwise in connection
                with the Engagement; provided, however, that this indemnity shall
                not
                apply to the extent that a court of competent jurisdiction in a final
                judgment that has become non-appealable shall determine
                that:

            

    

     

    
      	 	
              11.1.1

            	
              the
                Underwriters or the Personnel have been grossly negligent or dishonest
                or
                have committed any fraudulent act in the course of such performance
                or
                that any Underwriter or Personnel was guilty of wilful misconduct
                or acted
                in bad faith; or

            

    

     

    
      	 	
              11.1.2

            	
              the
                Underwriters have breached any material provision of this Agreement;
                and

            

    

     

    
      	 	
              11.1.3

            	
              the
                Claims were caused by the gross negligence or result from the wilful
                misconduct or bad faith, dishonesty or fraud referred to in 11.1.1
                or the
                breach of any material provision of this Agreement referred to in
                11.1.2.

            

    

     

    
      	
              11.2

            	
              If
                for any reason (other than the occurrence of any of the events itemized
                in
                11.1.1 to 11.1.3 above), the foregoing indemnification is unavailable
                to
                the Underwriters or Personnel or insufficient to hold themselves
                harmless,
                then the Company shall contribute to the amount paid or payable by
                the
                Underwriters and/or the Personnel as a result of such Claim in such
                proportion as is appropriate to reflect not only the relative benefits
                received by the Company on the one hand and the Underwriters on the
                other
                hand but also the relative fault of the Company and the Underwriters,
                as
                well as any relevant equitable considerations; provided that the
                Company
                shall in any event contribute to the amount paid or payable by the
                Underwriters and/or the Personnel as a result of such Claim excess
                of such
                amount over the amount of the Underwriters’ Fee received by the
                Underwriters hereunder.

            

    

     

    
      	
              11.3

            	
              The
                Company agrees that in case any legal proceeding shall be brought
                against
                the Company and/or the Underwriters and/or the Personnel by any
                governmental commission or regulatory authority or any stock exchange
                or
                other entity having regulatory authority, either domestic or foreign,
                if
                any Personnel shall be required to testify in connection therewith
                or
                shall be required to respond to procedures designed to discover
                information regarding, in connection with, or by reason of the performance
                of professional services rendered to the Company by the Underwriters,
                the
                Underwriters shall have the right to employ separate counsel in connection
                therewith if the Underwriters, acting reasonably, determine that
                a
                conflict of interest exists or that it is likely that such conflict
                of
                interest will develop, and the reasonable fees and expenses of such
                counsel as well as the reasonable costs (including an amount to reimburse
                the Underwriters from time spend by the Personnel in connection therewith)
                and out-of-pocket expenses incurred by the Underwriters or the Personnel
                in connection therewith shall be paid by the Company as they
                occur.

            

    

     

    
       

       

      
        	
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              11.4

            	
              Promptly
                after receipt of notice of the commencement of any legal proceeding
                against the Underwriters or any of the Personnel or after receipt
                of
                notice of the commencement of any investigation, which is based,
                directly
                or indirectly, upon any matter in respect of which indemnification
                may be
                sought from the Company, the Underwriters will notify the Company
                in
                writing of the commencement thereof and, throughout the course thereof,
                (the “Indemnification
                Notice”).
                The Company shall be entitled (but not required) to assume the defence,
                on
                behalf of the Underwriters or any of the Personnel, of any legal
                proceeding brought to enforce a Claim; provided that the defence
                shall be
                through legal counsel acceptable to the Underwriters, acting reasonably,
                and that the Company shall bear the reasonable fees, costs and expenses
                of
                such defence. The Underwriters covenant and agree that they shall
                use
                their best efforts to cooperate fully with the Company in the
                investigation and defence of any Claim or potential Claim and use
                their
                best efforts to cause any other indemnified party to also
                cooperate.

            

    

     

    
      	
              11.5

            	
              In
                the event that the Company does not assume the defence of a Claim
                within
                30 days of receipt of the Indemnification Notice, the Underwriters
                shall
                have the right to retain their own legal counsel and the Company
                shall
                bear the reasonable fees, costs and expenses of such counsel; provided
                that, throughout the course of any legal proceeding, the Underwriters
                shall provide copies of all relevant documentation to the Company,
                shall
                keep the Company advised of the progress thereof and shall discuss
                with
                the Company all significant actions
                proposed.

            

    

     

    
      	
              11.6

            	
              The
                indemnity and contribution obligations of the Company shall be in
                addition
                to any liability which the Company may otherwise have, shall extend
                upon
                the same terms and conditions to the Personnel and shall be binding
                upon
                and enure to the benefit of any successors, assigns, heirs and personal
                representatives of the Company, the Underwriters and any of the Personnel.
                The parties agree that the Underwriters hold all rights of the Personnel
                in trust for the Personnel. The foregoing provisions shall survive
                the
                completion of professional services rendered under the Engagement
                or any
                termination of the authorization given by this
                Agreement.

            

    

     

    
      	
              12.

            	
              Expenses

            

    

     

    Whether
      or not the transactions herein contemplated shall be completed, the Company
      shall pay all expenses of or incidental to the authorization, issue, delivery
      and sale of the Underwritten Units and of or incidental to all other matters
      in
      connection with the Offering including, without limitation, (i) the fees
      and expenses payable in connection with the qualification of the Distribution
      of
      the Underwritten Units, (ii) the fees, taxes and disbursements of Fraser Milner
      Casgrain LLP, counsel to the Underwriters and any travel and administrative
      expenses incurred by the Underwriters in connection with the Offering,
      (iii) the fees, taxes and disbursements of the Company’s counsel and local
      counsel, auditors, road show consultants, printers and other consultants and
      service providers retained by the Company in connection with the Offering,
      (iv) all costs incurred in connection with the preparation, printing and
      delivery of documents relating to the Offering or of the definitive certificates
      representing the Underwritten Units and (v) any stock exchange listing
      fees.

     

    
       

       

      
        	
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              13.

            	
              Authority

            

    

     

    The
      Company shall be entitled to and shall act on any notice, waiver, extension
      or
      other communication given by Orion, on behalf of the Purchasers, which has
      authority to bind the Purchasers with respect to all matters covered by this
      Agreement.

     

    
      	
              14.

            	
              Conflict
                of Interest

            

    

     

    The
      Company: (i) acknowledges and agrees that the Underwriters has certain
      statutory obligations as registrant under the Canadian Securities Laws and
      has
      fiduciary relationships with its respective clients; and (ii) consents to
      the Underwriters acting hereunder while continuing to act for its respective
      clients. To the extent that an Underwriters’ statutory obligations as registrant
      under the Canadian Securities Laws or fiduciary relationships with its
      respective clients conflicts with its obligations hereunder, the Underwriters
      shall be entitled to fulfill its statutory obligations as registrant under
      the
      Canadian Securities Laws and its fiduciary duties to its respective clients.
      Nothing in this Agreement shall be interpreted to prevent the Underwriters
      from
      fulfilling its statutory obligations as registrant under the Canadian Securities
      Laws or to satisfy its fiduciary duties to its clients.

     

    
      	
              15.

            	
              Survival

            

    

     

    All
      representations, warranties, covenants and agreements of the Company and of
      the
      Underwriters herein contained or contained in documents delivered pursuant
      to
      this Agreement shall survive the purchase and sale of the Underwritten Units
      and
      shall continue in full force and effect for the benefit of the Underwriters,
      the
      Purchasers and the Company, as the case may be, regardless of any subsequent
      disposition of such securities or any investigation or due diligence conducted
      by or on behalf of the Underwriters in connection with the Offering or with
      respect to the Distribution of the Securities.

     

    
      	
              16.

            	
              Notices

            

    

     

    Any
      notice or other communication to be given hereunder shall be addressed as
      follows:

     

    if
      to the Company:

     

    IMI
      International
      Medical Innovations Inc.

    4211
      Yonge Street, Suite 615

    Toronto,
      Ontario M2P 2A9

     

    Attention:        Brent
      Norton,

                            President
      and Chief
      Executive Officer

    Facsimile:        
(416)
      222-4533

     

    
       

       

      
        	
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    copy
      to:

     

    Aird
      & Berlis LLP

    BCE
      Place, 181 Bay Street, Suite 1800

    Toronto,
      Ontario, M5J 2T9

     

    Attention:        Richard
      Kimel

    Facsimile:         (416)
      863-1515

     

    if
      to the Underwriters:

     

    Orion
      Securities Inc.

    BCE
      Place, 181 Bay Street

    Suite
      3100, P.O. Box 830

    Toronto,
      Ontario, M5J 2T3

     

    Attention:        Gordon
      H. Larock

    Facsimile:        
(416)
      848-3699

     

    and
      to:

     

    Loewen,
      Ondaatje, McCutcheon Limited

    Hazelton
      Lanes, East Tower 

    55
      Avenue Road

    Suite
      2250, East Tower

    Toronto,
      ON M5R 3L2

     

    Attention:        Garrett
      Herman

    Facsimile:        
(416)
      964-4493

     

    copy
      to:

     

    Fraser
      Milner Casgrain LLP

    1
      Place Ville Marie, 39th
      Floor

    Montreal,
      QC H3B 4M7

     

    Attention:        Vitale
      A. Santoro

    Facsimile:        
(514)
      866-2241

     

    Any
      such notice or other communication shall be in writing, and unless delivered
      personally to a responsible officer of the addressee, shall be sent by courier
      or telecopy, and shall be deemed to have been received, if given by telecopy,
      on
      the day of sending (or the next Business Day following the sending if the
      sending is after 4:00 p.m. (local time at the place of receipt of such
      notice or communication) or if the day of sending is not a Business Day) and,
      if
      sent by courier, on the next Business Day following the sending
      thereof.

     

    
       

       

      
        	
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              17.

            	
              Governing
                Law

            

    

     

    This
      Agreement shall be governed by and interpreted in accordance with the laws
      of
      the Province of Ontario and the laws of Canada applicable therein.

     

    
      	
              18.

            	
              Time
                of Essence

            

    

     

    Time
      shall be of the essence hereof.

     

    
      	
              19.

            	
              Severability

            

    

     

    If
      any provision of this Agreement is determined to be void or unenforceable in
      whole or in part, it shall be deemed not to affect or impair the validity of
      any
      other provision of this Agreement and such void or unenforceable provision
      shall
      be severable from this Agreement.

     

    
      	
              20.

            	
              Counterparts

            

    

     

    This
      Agreement may be executed by any one or more of the parties herein in any number
      of counterparts, each of which shall be deemed to be an original, but all such
      counterparts shall together constitute one and the same instrument.

     

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    If
      you accept the foregoing offer and agree with the above terms and conditions,
      please so indicate by signing and returning this letter to us.

    
      	 	 	 
	 	Yours
              very
              truly,
	 	 
	 	Orion Securities
              Inc.
	 
 	 
 	 
 
	 	By:  	
              (s)
                Gordon H. Larock

            
	 	 	Gordon H. Larock
	 	 	Managing Director, Healthcare & Biotechnology,
              Investment Banking

    

    
      
        	 	 	 
	 	 
	 	 
	 	Loewen, Ondaatje, McCutcheon
                Limited
	 
 	 
 	 
 
	 	By:  	
                
                  (s)
                    Garrett Herman

                

              
	 	 	Garrett Herman
	 	 	Chairman & Chief Executive
                Officer

      

       

    

    The
      foregoing offer is hereby accepted effective as of the date and on the terms
      and
      conditions set forth above.

     

    
      
        	 	 	 
	 	IMI
International
                Medical Innovations Inc.
	 	 
	 
 	 
 	 
 
	 	By:  	
                
                  (s)
                    Brent Norton

                

              
	 	 	Brent Norton
	 	 	President and Chief Executive
                Officer

      

       

    

     

    
       

       

      
        	
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    SCHEDULE
      A

     

    DEBENTURE

     

    

    
       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        	
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    SCHEDULE
      B

     

    WARRANT

     

     

     

     

     

     

     

     

     

     

    
 

    
       

       

      
        	
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    SCHEDULE
      C

     

    COMPANY
      COUNSEL OPINIONS

     

    

     

    
       

       

       

       

       

       

       

       

       

       

       

       

       

      
        	
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    SCHEDULE
      D

     

    FORM
      OF LOCK-UP

     

    

    
       

       

       

       

       

       

       

       

       

      
        	
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