Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - Carbiz Inc. - Exhibit 10.4

REGISTRATION RIGHTS AGREEMENT 

          THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of August
31, 2007, by and among CARBIZ INC., an Ontario, Canada corporation, with
its principal office located at 7405 N. Tamiami Trail, Sarasota, FL 34243 (the
“Company”), and the undersigned Investors (each, an “Investors”
and collectively, the “Investors”). 

          WHEREAS:

          A.      In
connection with the Securities Purchase Agreement by and among the parties
hereto of even date herewith (the “Securities Purchase Agreement”), the
Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to issue and sell to the Investors secured
convertible debentures (the “Convertible Debentures”) which shall be
convertible into that number of shares of the Company’s common shares, with no
par value (the “Common Shares”), pursuant to the terms of the Securities
Purchase Agreement for an aggregate purchase price of One Million U.S. Dollars
(US$1,000,000). Capitalized terms not defined herein shall have the meaning
ascribed to them in the Securities Purchase Agreement. 

          B.      To
induce the Investors to execute and deliver the Securities Purchase Agreement,
the Company has agreed to provide certain registration rights under the
Securities Act of 1933, as amended, and the rules and regulations there under,
or any similar successor statute (collectively, the “1933 Act”), and
applicable state securities laws. 

          NOW,
THEREFORE, in consideration of the promises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Investors
hereby agree as follows: 

          1.      DEFINITIONS.

          As
used in this Agreement, the following terms shall have the following meanings:

                    (a)     
“Person” means a corporation, a limited liability company, an
association, a partnership, an organization, a business, an individual, a
governmental or political subdivision thereof or a governmental agency. 

                    (b)     
“Register,” “registered,” and “registration” refer to a
registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant to
Rule 415 under the 1933 Act or any successor rule providing for offering
securities on a continuous or delayed basis (“Rule 415”), and the
declaration or ordering of effectiveness of such Registration Statement(s) by
the United States Securities and Exchange Commission (the “SEC”). 

                    (c)     
“Registrable Securities” means the Common Shares issuable to Investors
upon conversion of the Convertible Debentures pursuant to the Securities
Purchase Agreement, excluding in all cases, however, any Registrable Securities
sold by Investors to the public or sold pursuant to Rule 144 promulgated under
the 1933 Act. 

                    (d)      “Registration
Statement” means a registration statement under the 1933 Act which covers
the Registrable Securities. 

          2.      REGISTRATION.

                    (a)      Subject
to the terms and conditions of this Agreement, the Company shall prepare and
file, no later than one hundred fifty (150) days from the date hereof (the
“Scheduled Filing Deadline”), with the SEC a registration
statement on Form F-1 or SB-2 (or, if the Company is then eligible, on Form F-3)
under the 1933 Act (the “Initial Registration Statement”) for the
registration for the resale by all Investors who purchased Convertible
Debentures pursuant to the Securities Purchase Agreement fifty percent (50%) of
the Common Shares which are anticipated to be issued upon conversion of the
Convertible Debentures. Such registration obligation shall be further subject to
any registration rights that predate this Agreement, which are set forth on
Schedule 2(a) attached hereto. Should the Company be limited by the SEC (as
evidenced by a written comment from the SEC) under Rule 415 with respect to the
number of shares it may register in the Initial Registration Statement or any
subsequent Registration Statement filed pursuant to this Agreement, it may limit
the number of shares held by the Investors which are included in such
Registration Statement as may be necessary in order to have such Initial
Registration Statement or subsequent Registration Statement declared effective
by the SEC. In the event such limitation occurs, the Company shall file such
additional Registration Statements, by the later of thirty days of the
Investors’ demand and as soon as permitted by the SEC, as shall be necessary for
the Company to register all Common Shares which would have been included in the
Initial Registration Statement but for the limitation described above.
Additionally, subject to the Rule 415 qualifications set forth above, if the
Convertible Debentures have an outstanding balance on the one year anniversary
date of the original issuance date of the Convertible Debentures, the Company
shall file with the SEC a registration statement on Form F-1 or SB-2 (or, if the
Company is then eligible, on Form F-3) covering the shares underlying the
remaining balance of the Convertible Debentures. Furthermore, in any such event,
the Company shall use its best efforts to have such subsequent Registration
Statement declared effective within sixty (60) days of the filing thereof. The
Company shall cause the Registration Statements to remain effective for so long
as the Convertible Debentures remain outstanding. Prior to the filing of any
Registration Statement registering the Registrable Securities with the SEC, the
Company shall furnish a copy of such Registration Statement to the Investors and
James G. Dodrill II, P.A. for their review and comment. The Investors and James
G. Dodrill II, P.A. shall furnish comments on the Initial Registration Statement
to the Company by the later of: (a) twenty-four (24) hours of the receipt
thereof from the Company and (b) the close of the first business day following
receipt thereof from the Company. 

                    (b)      Effectiveness
of the Initial Registration Statement. The Company shall use its best
efforts (i) to have the Initial Registration Statement declared effective by the
SEC no later than sixty (60) days after the filing thereof (the “Scheduled
Effective Deadline”) and (ii) to insure that the Initial Registration
Statement and any subsequent Registration Statement remains in effect until all
of the Registrable Securities have been sold, subject to the terms and
conditions of this Agreement. It shall be an event of default hereunder if the
Initial Registration Statement or any subsequent Registration Statement is not
declared effective by the SEC within sixty (60) days after filing thereof. An
event of default shall not be triggered, however, if the Initial Registration
Statement or any subsequent Registration Statement is not declared effective by
the 

2 

SEC within sixty (60) days after the filing thereof exclusively
due to issues raised by the SEC in writing related to Rule 415 promulgated under
the 1933 Act. 

                    (c)     
Failure to File or Obtain Effectiveness of the Registration Statement. In
the event the Initial Registration Statement is not filed by the Scheduled
Filing Deadline or is not declared effective by the SEC on or before the
Scheduled Effective Date, or if after the Initial Registration Statement has
been declared effective by the SEC, sales cannot be made pursuant to the Initial
Registration Statement (whether because of a failure to keep the Initial
Registration Statement effective, failure to disclose such information as is
necessary for sales to be made pursuant to the Initial Registration Statement,
failure to register sufficient Common Shares or otherwise then as partial relief
for the damages to any holder of Registrable Securities by reason of any such
delay in or reduction of its ability to sell the underlying Common Shares (which
remedy shall not be exclusive of any other remedies at law or in equity),
subject to the terms of the Subordination Agreement, the Company will pay as
liquidated damages (the “Liquidated Damages”) to the Investors, at
the Investors’ option, either a cash amount or the Company’s Common Shares
within three (3) business days, after demand therefor, equal to two percent (2%)
of the principal value of the Convertible Debentures outstanding as Liquidated
Damages for each thirty (30) day period after the Scheduled Filing Deadline or
the Scheduled Effective Date as the case may be. Total Liquidated Damages paid,
however, shall not exceed an amount equal to fifteen percent (15%) of the
outstanding principal amount of the Convertible Debentures. The Company shall
not be liable, however, to pay any Liquidated Damages if the Initial
Registration Statement has not been declared effective prior to the Scheduled
Effective Date exclusively due to issues raised by the SEC related to Rule 415
promulgated under the 1933 Act.

                    (d)     
Liquidated Damages. The Company and the Investors hereto acknowledge and
agree that the sums payable under subsection 2(c) above shall constitute
liquidated damages and not penalties and are in addition to all other rights of
the Investors, including the right to call a default. The parties further
acknowledge that (i) the amount of loss or damages likely to be incurred is
incapable or is difficult to precisely estimate, (ii) the amounts specified in
such subsections bear a reasonable relationship to, and are not plainly or
grossly disproportionate to, the probable loss likely to be incurred in
connection with any failure by the Company to obtain or maintain the
effectiveness of the Initial Registration Statement by the Scheduled Effective
Date and thereafter, (iii) one of the reasons for the Company and the Investors
reaching an agreement as to such amounts was the uncertainty and cost of
litigation regarding the question of actual damages, and (iv) the Company and
the Investors are sophisticated business parties and have been represented by
sophisticated and able legal counsel and negotiated this Agreement at arm’s
length.

          3.      RELATED
OBLIGATIONS. 

                    (a)      The
Company shall keep the Initial Registration Statement, and any additional
Registration Statement filed as a result of the limitation set forth in Section
2(a) hereof, effective pursuant to Rule 415 at all times until the Convertible
Debentures are no longer outstanding (the “Registration Period”), which
Registration Statements (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein, or

3 

necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading. 

                    (b)      The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to such Registration Statements and
the prospectuses used in connection with such Registration Statements, which
prospectuses are to be filed pursuant to Rule 424 promulgated under the 1933
Act, as may be necessary to keep such Registration Statements effective at all
times during the Registration Period, and, during such period, comply with the
provisions of the 1933 Act with respect to the disposition of all Registrable
Securities of the Company covered by such Registration Statements until such
time as all of such Registrable Securities shall have been disposed of or until
the Registration Period terminates in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in such Registration
Statement. In the case of amendments and supplements to a Registration Statement
which are required to be filed pursuant to this Agreement (including pursuant to
this Section 3(b)) by reason of the Company’s filing a report on Form 10-KSB,
Form 10-QSB or Form 8-K or any analogous report under the Securities Exchange
Act of 1934, as amended (the “1934 Act”), the Company shall incorporate
such report by reference into the Registration Statement, if applicable, or
shall file such amendments or supplements with the SEC on the same day on which
the 1934 Act report is filed which created the requirement for the Company to
amend or supplement the Registration Statement.

                    (c)      The
Company shall furnish to each Investors whose Registrable Securities are
included in any Registration Statement, without charge, (i) at least one (1)
copy of such Registration Statement as declared effective by the SEC and any
amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference, all exhibits and each preliminary
prospectus, (ii) ten (10) copies of the final prospectus included in such
Registration Statement and all amendments and supplements thereto (or such other
number of copies as such Investors may reasonably request) and (iii) such other
documents as such Investors may reasonably request from time to time in order to
facilitate the disposition of the Registrable Securities owned by such
Investors. 

                    (d)      The
Company shall use its best efforts to (i) register and qualify the Registrable
Securities covered by a Registration Statement under such other securities or
“blue sky” laws of such jurisdictions in the United States as any Investors
reasonably requests, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (w) make any
change to its certificate of incorporation or by-laws, (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction. The Company shall promptly notify each Investors who holds
Registrable Securities of the receipt by the Company of any notification with
respect to the suspension of the registration or qualification of any of the
Registrable Securities for sale under the securities or 

4 

“blue sky” laws of any jurisdiction in the United States or its
receipt of actual notice of the initiation or threat of any proceeding for such
purpose. 

                    (e)      As
promptly as practicable after becoming aware of such event or development, the
Company shall notify each Investors in writing of the happening of any event as
a result of which the prospectus included in a Registration Statement, as then
in effect, includes an untrue statement of a material fact or omission to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading (provided that in no event shall such notice contain any
material, nonpublic information), and promptly prepare a supplement or amendment
to such Registration Statement to correct such untrue statement or omission, and
deliver ten (10) copies of such supplement or amendment to each Investors. The
Company shall also promptly notify each Investors in writing (i) when a
prospectus or any prospectus supplement or post-effective amendment has been
filed, and when a Registration Statement or any post-effective amendment has
become effective (notification of such effectiveness shall be delivered to each
Investors by facsimile on the same day of such effectiveness), (ii) of any
request by the SEC for amendments or supplements to a Registration Statement or
related prospectus or related information, and (iii) of the Company’s reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate. 

                    (f)      The
Company shall use its best efforts to prevent the issuance of any stop order or
other suspension of effectiveness of a Registration Statement, or the suspension
of the qualification of any of the Registrable Securities for sale in any
jurisdiction within the United States of America and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify each Investors who holds Registrable
Securities being sold of the issuance of such order and the resolution thereof
or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose. 

                    (g)      At
the reasonable request of any Investors, the Company shall furnish to such
Investors, on the date of the effectiveness of the Registration Statement and
thereafter from time to time on such dates as an Investors may reasonably
request (i) a letter, dated such date, from the Company’s independent certified
public accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
and (ii) an opinion, dated as of such date, of counsel representing the Company
for purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the
Investors. 

                    (h)      The
Company shall make available for inspection by (i) any Investors and (ii) one
(1) firm of accountants or other agents retained by the Investors (collectively,
the “Inspectors”) all pertinent financial and other records, and
pertinent corporate documents and properties of the Company (collectively, the
“Records”), as shall be reasonably deemed necessary by each Inspector,
and cause the Company’s officers, directors and employees to supply all
information which any Inspector may reasonably request; provided, however, that
each Inspector shall agree, and each Investors hereby agrees, to hold in strict
confidence and shall not make any disclosure (except to an Investors) or use any
Record or other information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so notified, unless
(a) the disclosure of such Records is necessary to avoid or 

5 

correct a misstatement or omission in any Registration
Statement or is otherwise required under the 1933 Act, (b) the release of such
Records is ordered pursuant to a final, non-appealable subpoena or order from a
court or government body of competent jurisdiction, or (c) the information in
such Records has been made generally available to the public other than by
disclosure in violation of this or any other agreement of which the Inspector
and the Investors has knowledge. Each Investors agrees that it shall, upon
learning that disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential. 

                    (i)     
The Company shall hold in confidence and not make any disclosure of information
concerning an Investors provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws, (ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning an Investors is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to such Investors and allow such Investors, at the Investors’
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information. 

                    (j)      [reserved]

                    (k)      The
Company shall cooperate with the Investors who hold Registrable Securities being
offered and, to the extent applicable, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legend) representing the
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, as the Investors may reasonably request and registered in such names as the
Investors may request. 

                    (l)      The
Company shall use its best efforts to cause the Registrable Securities covered
by the applicable Registration Statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to
consummate the disposition of such Registrable Securities. 

                    (m)      The
Company shall otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC in connection with any registration hereunder. 

                    (n)      Within
two (2) business days after a Registration Statement which covers Registrable
Securities is declared effective by the SEC, the Company shall deliver, and
shall cause legal counsel for the Company to deliver, to the transfer agent for
such Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such Registration Statement) confirmation that such
Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit A. 

6 

                    (o)      The
Company shall take all other reasonable actions necessary to expedite and
facilitate disposition by the Investors of Registrable Securities pursuant to a
Registration Statement. 

          4.      OBLIGATIONS
OF THE INVESTORS. 

          Each
Investors agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(f) or the first
sentence of 3(e), such Investors will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statement(s) covering such
Registrable Securities until such Investors’ receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(e) or receipt of
notice that no supplement or amendment is required. Notwithstanding anything to
the contrary, the Company shall cause its transfer agent to deliver unlegended
certificates for Common Shares to a transferee of an Investors in accordance
with the terms of the Securities Purchase Agreement in connection with any sale
under any effective Registration Statement of Registrable Securities with
respect to which an Investors has entered into a contract for sale prior to the
Investors’ receipt of a notice from the Company of the happening of any event of
the kind described in Section 3(f) or the first sentence of 3(e) and for which
the Investors has not yet settled. No Investors shall have any right to obtain
or seek an injunction restraining or otherwise delaying any registration under
this Agreement as a result of any controversy that might arise with respect to
the interpretation or implementation of this Agreement. It shall be a condition
precedent to the obligations of the Company to take any actions pursuant to this
Agreement that the selling Investors furnish such information regarding
themselves, the Registrable Securities held by them and the intended method of
disposition of such securities as shall be required to timely effect the
registration of the Registrable Securities, including any Liquidated Damages
relating thereto. 

          5.     
EXPENSES OF REGISTRATION. 

          All
expenses incurred in connection with registrations, filings or qualifications
pursuant to Sections 2 and 3, including, without limitation, all registration,
listing and qualifications fees, printers, legal and accounting fees shall be
paid by the Company.

          6.     
INDEMNIFICATION. 

          With
respect to Registrable Securities which are included in a Registration Statement
under this Agreement: 

                    (a)     
To the fullest extent permitted by law, the Company will, and hereby does,
indemnify, hold harmless and defend each Investors, the directors, officers,
partners, employees, agents, representatives of, and each Person, if any, who
controls any Investors within the meaning of the 1933 Act or the 1934 Act (each,
an “Indemnified Person”), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’
fees, amounts paid in settlement or expenses, joint or several (collectively,
“Claims”) incurred in investigating, preparing or defending any action,
claim, suit, inquiry, proceeding, investigation or appeal taken from the
foregoing by or before any court or governmental, administrative or other
regulatory agency, body or the SEC, whether pending or threatened, whether or
not an indemnified party is or may be a party thereto (“Indemnified
Damages”), to which any of them 

7 

may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon: (i) any untrue statement or alleged untrue statement of a
material fact in a Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other “blue sky” laws of any jurisdiction in
which Registrable Securities are offered (“Blue Sky Filing”), or the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
final prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading; or (iii) any violation or alleged violation by the Company
of the 1933 Act, the 1934 Act, any other law, including, without limitation, any
state securities law, or any rule or regulation there under relating to the
offer or sale of the Registrable Securities pursuant to a Registration Statement
(the matters in the foregoing clauses (i) through (iii) being, collectively,
“Violations”). The Company shall reimburse the Investors and each such
controlling person promptly as such expenses are incurred and are due and
payable, for any legal fees or disbursements or other reasonable expenses
incurred by them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a): (x) shall not apply to a Claim by an
Indemnified Person arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto; (y) shall not be available to the extent such Claim is based
on a failure of the Investors to deliver or to cause to be delivered the
prospectus made available by the Company, if such prospectus was timely made
available by the Company pursuant to Section 3(c); and (z) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of the Company, which consent shall not be
unreasonably withheld. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Person
and shall survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9 hereof. 

                    (b)     
In connection with a Registration Statement, each Investors agrees to severally
and not jointly indemnify, hold harmless and defend, to the same extent and in
the same manner as is set forth in Section 6(a), the Company, each of its
directors, each of its officers, employees, representatives, or agents and each
Person, if any, who controls the Company within the meaning of the 1933 Act or
the 1934 Act (each an “Indemnified Party”), against any Claim or
Indemnified Damages to which any of them may become subject, under the 1933 Act,
the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise
out of or is based upon any Violation, in each case to the extent, and only to
the extent, that such Violation occurs in reliance upon and in conformity with
written information furnished to the Company by such Investors expressly for use
in connection with such Registration Statement; and, subject to Section 6(d),
such Investors will reimburse any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section 6(b) and the
agreement with respect to contribution contained in Section 7 shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of such Investors, 

8 

which consent shall not be unreasonably withheld; provided,
further, however, that the Investors shall be liable under this Section 6(b) for
only that amount of a Claim or Indemnified Damages as does not exceed the net
proceeds to such Investors as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable Securities
by the Investors pursuant to Section 9. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6(b)
with respect to any prospectus shall not inure to the benefit of any Indemnified
Party if the untrue statement or omission of material fact contained in the
prospectus was corrected and such new prospectus was delivered to each Investors
prior to such Investors’ use of the prospectus to which the Claim relates. 

                    (c)      Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section 6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses of not
more than one (1) counsel for such Indemnified Person or Indemnified Party to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding. The Indemnified Party or Indemnified Person shall
cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action or claim.
The indemnifying party shall keep the Indemnified Party or Indemnified Person
fully apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. No indemnifying party shall be liable for any
settlement of any action, claim or proceeding effected without its prior written
consent; provided, however, that the indemnifying party shall not unreasonably
withhold, delay or condition its consent. No indemnifying party shall, without
the prior written consent of the Indemnified Party or Indemnified Person,
consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party or Indemnified Person of a
release from all liability in respect to such claim or litigation. Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnified Party or Indemnified Person with
respect to all third parties, firms or corporations relating to the matter for
which indemnification has been made. The failure to deliver written notice to
the indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this 

9 

Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action. 

                    (d)      The
indemnification required by this Section 6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or Indemnified Damages are incurred. 

                    (e)      The
indemnity agreements contained herein shall be in addition to (i) any cause of
action or similar right of the Indemnified Party or Indemnified Person against
the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law. 

          7.      CONTRIBUTION.

          To
the extent any indemnification by an indemnifying party is prohibited or limited
by law, the indemnifying party agrees to make the maximum contribution with
respect to any amounts for which it would otherwise be liable under Section 6 to
the fullest extent permitted by law; provided, however, that: (i) no seller of
Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any seller of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (ii) contribution by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities. 

          8.      [Reserved]

          9.      REPORTS
UNDER THE 1934 ACT. 

          With a
view to making available to the Investors the benefits of Rule 144 promulgated
under the 1933 Act or any similar rule or regulation of the SEC that may at any
time permit the Investors to sell securities of the Company to the public
without registration (“Rule 144”) the Company agrees to: 

                    (a)     
make and keep public information available, as those terms are understood and
defined in Rule 144 at all times while the Company is subject to the reporting
requirements of the 1934 Act; 

                    (b)      use
its best efforts to file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements (it being understood that
nothing herein shall limit the Company’s obligations under Section 4(c) of the
Securities Purchase Agreement) and the filing of such reports and other
documents as are required by the applicable provisions of Rule 144; and 

                    (c)      furnish
to each Investors so long as such Investors owns Registrable Securities,
promptly upon request, (i) a written statement by the Company that it has
complied with the reporting requirements of Rule 144, the 1933 Act and the 1934
Act, (ii) a copy of the most recent annual or quarterly report of the Company
and such other reports and documents so 

10 

filed by the Company, and (iii) such other information as may
be reasonably requested to permit the Investors to sell such securities pursuant
to Rule 144 without registration. 

          10.      AMENDMENT
OF REGISTRATION RIGHTS. 

          Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investors who
then hold at least two-thirds (2/3) of the Registrable Securities. Any amendment
or waiver effected in accordance with this Section 10 shall be binding upon each
Investors and the Company. No such amendment shall be effective to the extent
that it applies to fewer than all of the holders of the Registrable Securities.
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 this Agreement unless the same
consideration also is offered to all of the parties to this Agreement. 

          11.      MISCELLANEOUS.

                    (d)      A
Person is deemed to be a holder of Registrable Securities whenever such Person
owns or is deemed to own of record such Registrable Securities. If the Company
receives conflicting instructions, notices or elections from two (2) or more
Persons with respect to the same Registrable Securities, the Company shall act
upon the basis of instructions, notice or election received from the registered
owner of such Registrable Securities. 

                    (e)     
Any notices, consents, waivers or other communications required or permitted to
be given under the terms of this Agreement must be in writing and will be deemed
to have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one (1) business day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be: 

	If to the Company, to: 	Carbiz Inc. 
	  	7405 North Tamiami Trail 
	  	Sarasota,
      FL           34243

	  	Attn: Mr. Carl Ritter, CEO 
	  	Telephone:         
      (800) 547-2277 
	  	Facsimile:            
      (941) 308-2718 
	  	 
	With a copy to: 	Troutman Sanders LLP 
	  	222 Central Park Avenue, Suite 2000 
	  	Virginia Beach, VA 23462 
	  	Attn: Mr. Thomas M. Rose, Esq. 
	  	Telephone:         
       (757) 687-7715 
	  	Facsimile:            
       (757) 687-1529 

11 

If to an Investors, to its address and facsimile number on the
Schedule of Investors attached hereto, with copies to such Investors’
representatives as set forth on the Schedule of Investors or to such other
address and/or facsimile number and/or to the attention of such other person as
the recipient party has specified by written notice given to each other party
five (5) days prior to the effectiveness of such change. Written confirmation of
receipt (A) given by the recipient of such notice, consent, waiver or other
communication, (B) mechanically or electronically generated by the sender’s
facsimile machine containing the time, date, recipient facsimile number and an
image of the first page of such transmission or (C) provided by a courier or
overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from a nationally recognized overnight delivery
service in accordance with clause (i), (ii) or (iii) above, respectively. 

                    (f)      Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof. 

                    (g)      The
laws of the State of Florida shall govern all issues concerning the relative
rights of the Company and the Investors as its stockholders. All other questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of Florida without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Florida or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Florida Each
party hereby irrevocably submits to the non-exclusive jurisdiction of the State
Courts sitting in Broward County, Florida and the United States District Court
for the Southern District of Florida for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. 

                    (h)     
This Agreement, the Irrevocable Transfer Agent Instructions, the Securities
Purchase Agreement and related documents including the Convertible Debentures
and the Security Agreement dated the date hereof (the “Security
Agreement”) constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to

12 

herein and therein. This Agreement, the Irrevocable Transfer
Agent Instructions, the Securities Purchase Agreement and related documents
including the Convertible Debentures and the Security Agreement supersede all
prior agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof. 

                    (i)      This
Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto. 

                    (j)     
The headings in this Agreement are for convenience of reference only and shall
not limit or otherwise affect the meaning hereof. 

                    (k)     
This Agreement may be executed in identical counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same agreement.
This Agreement, once executed by a party, may be delivered to the other party
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement. 

                    (l)     
Each party shall do and perform, or cause to be done and performed, all such
further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.

                    (m)      The
language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent and no rules of strict construction will
be applied against any party. 

                    (n)      This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

13 

          IN
WITNESS WHEREOF, the parties have caused this Investors Registration Rights
Agreement to be duly executed as of day and year first above written. 

COMPANY: 
CARBIZ INC.

By:
___________________________________
Name: 
Title: 

TRAFALGAR CAPITAL SPECIALIZED

INVESTMENT FUND, LUXEMBOURG 

By: Trafalgar Capital Sarl 
Its:
General Partner 

By:
___________________________________
Name: Andrew Garai 
Title: Chairman of
the Board 

14 

SCHEDULE I 

SCHEDULE OF INVESTORS

	  	 	 	 	Address/Facsimile 
	Name 	 	Signature 	 	Number of Buyer 
	  	 	 	 	8-10 Rue Mathias Hardt 
	Trafalgar Capital Specialized 	 	By: Trafalgar Capital Sarl 	 	BP 3023 
	Investment Fund, 	 	Its: General Partner 	 	L-1030 Luxembourg 
	Luxembourg 	 	 	 	Facsimile: 
	  	 	 	 	011-44-207-405-0161 
	  	 	By: _____________________________	 	and 
	  	 	Name: Andrew Garai 	 	001-786-323-1651 
	  	 	Its: Chairman of the Board 	 	  

EXHIBIT A 

FORM OF NOTICE OF EFFECTIVENESS 
OF REGISTRATION
STATEMENT 

Attention: 

Re:      CARBIZ
  INC.

Ladies and Gentlemen: 

          We
are counsel to Carbiz inc., an Ontario, Canada corporation (the
“Company”), and have represented the Company in connection with that
certain Securities Purchase Agreement (the “Securities Purchase
Agreement”) entered into by and among the Company and the Investors named
therein (collectively, the “Investors”) pursuant to which the Company
issued to the Investors its Common Shares of the Company without par value (the
“Common Shares”). Pursuant to the Securities Purchase Agreement, the
Company also has entered into a Registration Rights Agreement with the Investors
(the “Registration Rights Agreement”) pursuant to which the Company
agreed, among other things, to register the Registrable Securities (as defined
in the Registration Rights Agreement) under the Securities Act of 1933, as
amended (the “1933 Act”). In connection with the Company’s obligations
under the Registration Rights Agreement, on ____________ ____, the Company filed
a Registration Statement on Form ________ (File No. 333-_____________) (the
“Registration Statement”) with the Securities and Exchange SEC (the
“SEC”) relating to the Registrable Securities which names each of the
Investors as a selling shareholder thereunder. 

          In
connection with the foregoing, we advise you that a member of the SEC’s staff
has advised us by telephone that the SEC has entered an order declaring the
Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no
knowledge, after telephonic inquiry of a member of the SEC’s staff, that any
stop order suspending its effectiveness has been issued or that any proceedings
for that purpose are pending before, or threatened by, the SEC and the
Registrable Securities are available for resale under the 1933 Act pursuant to
the Registration Statement. 

Very truly yours, 

[INSERT NAME OF COMPANY
COUNSEL] 

By: 
___________________________________________________

cc:      [LIST NAMES OF INVESTORS]Filed by Automated Filing Services Inc. (604) 609-0244 - Carbiz Inc. - Exhibit 10.5

WARRANT

  
    
      
        THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES
          ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED
          STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”),
          OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THESE SECURITIES
          MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS SUCH
          SECURITIES ARE REGISTERED UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES
          LAWS OR SUCH SECURITIES ARE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
          IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE 1933 ACT
          OR ANY APPLICABLE STATE SECURITIES LAW AND THE COMPANY WILL BE PROVIDED
          WITH AN OPINION OF COUNSEL IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY
          OR OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT
          SUCH EXEMPTIONS ARE AVAILABLE.

        WITHOUT COMPLIANCE WITH ALL APPLICABLE CANADIAN SECURITIES
          LEGISLATION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT
          BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED IN CANADA OR
          TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL THE DATE THAT IS
          FOUR MONTHS AND ONE DAY FROM THE DATE OF ISSUANCE OF THIS SECURITY.
        

      

    

  

CARBIZ INC. 

Warrant To Purchase Common Shares 

	Warrant No.: 	Number of Shares: 1,000,000

Date of Issuance: August 31, 2007 

Carbiz Inc., an Ontario, Canada corporation (the
“Company”), hereby certifies that, for Ten United States Dollars ($10.00)
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Trafalgar Capital Specialized Investment Fund,
Luxembourg, (“Trafalgar”), the registered holder hereof or its permitted
assigns, is entitled, subject to the terms set forth below, to purchase from the
Company upon surrender of this Warrant, at any time or times on or after the
date hereof, but not after 11:59 P.M. Eastern Time on the Expiration Date (as
defined herein) one million (1,000,000) fully paid and nonassessable Common
Shares (as defined herein) of the Company (the “Warrant Shares”) at the
exercise price per share provided in Section 1(b) below or as subsequently
adjusted; provided, however, that in 

no event shall the holder be entitled to exercise this Warrant
for a number of Warrant Shares in excess of that number of Warrant Shares which,
upon giving effect to such exercise, would cause the aggregate number of Common
Shares beneficially owned by the holder and its affiliates to exceed 4.99% of
the outstanding Common Shares following such exercise, except within sixty (60)
days of the Expiration Date. For purposes of the foregoing proviso, the
aggregate number of Common Shares beneficially owned by the holder and its
affiliates shall include the number of Common Shares issuable upon exercise of
this Warrant with respect to which the determination of such proviso is being
made, but shall exclude Common Shares which would be issuable upon (i) exercise
of the remaining, unexercised Warrants beneficially owned by the holder and its
affiliates and (ii) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company beneficially owned by the holder
and its affiliates (including, without limitation, any convertible notes or
preferred stock) subject to a limitation on conversion or exercise analogous to
the limitation contained herein. Except as set forth in the preceding sentence,
for purposes of this paragraph, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended. For purposes of this Warrant, in determining the number of outstanding
Common Shares a holder may rely on the number of outstanding Common Shares as
reflected in (1) the Company’s most recent Form 10-QSB or Form 10-KSB, or such
comparable form as the case may be, (2) a more recent public announcement by the
Company or (3) any other notice by the Company or its transfer agent setting
forth the number of Common Shares outstanding. Upon the written request of any
holder, the Company shall promptly, but in no event later than one (1) Business
Day (as defined below) following the receipt of such notice, confirm in writing
to any such holder the number of Common Shares then outstanding. In any case,
the number of outstanding Common Shares shall be determined after giving effect
to the exercise of Warrants (as defined below) by such holder and its affiliates
since the date as of which such number of outstanding Common Shares was
reported. 

          Section
1. 

                    (a)      This
Warrant is the Common Shares purchase warrant (the “Warrant”) issued
pursuant to a secured convertible debenture dated August 31, 2007 by and between
the Company and Trafalgar (the “Convertible Debenture”). 

                    (b)     
Definitions. The following words and terms as used in this Warrant shall
have the following meanings: 

                              (i)     
“Approved Stock Plan” means any employee benefit plan which has been
approved by the Board of Directors of the Company, pursuant to which the
Company’s securities may be issued to any employee, officer or director for
services provided to the Company. 

                              (ii)      “Business
Day” means any day other than Saturday, Sunday or other day on which
commercial banks in the City of New York are authorized or required by law to
remain closed. 

                              (iii)     
“Closing Bid Price” means the closing bid price of Common Shares as
quoted on the Principal Market (as defined below) (as reported by Bloomberg
Financial Markets (“Bloomberg”) through its “Volume at Price” function).

2 

                              (iv)      “Common
Shares” means (i) the Company’s Common Shares, no par value per share, and
(ii) any capital stock into which such Common Shares shall have been changed or
any capital stock resulting from a reclassification of such Common Shares. 

                              (v)      “Excluded
Securities” means, provided such security is issued at a price which is
greater than or equal to the arithmetic average of the Closing Bid Prices of the
Common Shares for the ten (10) consecutive trading days immediately preceding
the date of issuance, any of the following: (a) any issuance by the Company of
securities in connection with a strategic partnership or a joint venture (the
primary purpose of which is not to raise equity capital), (b) any issuance by
the Company of securities as consideration for a merger or consolidation or the
acquisition of a business, product, license, or other assets of another person
or entity and (c) options to purchase Common Shares, provided (I) such options
are issued after the date of this Warrant to employees of the Company within
thirty (30) days of such employee’s starting his employment with the Company,
and (II) the exercise price of such options is not less than the Closing Bid
Price of the Common Shares on the date of issuance of such option. 

                              (vi)     
“Expiration Date” means the date three (3) years from the Issuance Date
of this Warrant or, if such date falls on a Saturday, Sunday or other day on
which banks are required or authorized to be closed in the City of New York or
the State of New York or on which trading does not take place on the Principal
Exchange or automated quotation system on which the Common Shares is traded (a
“Holiday”), the next date that is not a Holiday. 

                              (vii)     
“Issuance Date” means the date hereof. 

                              (viii)      “Options”
means any rights, warrants or options to subscribe for or purchase Common Shares
or Convertible Securities.

                              (ix)     
“Other Securities” means (i) those options and warrants of the Company
issued prior to, and outstanding on, the Issuance Date of this Warrant, (ii) the
Common Shares issuable on exercise of such options and warrants, provided such
options and warrants are not amended after the Issuance Date of this Warrant and
(iii) the Common Shares issuable upon exercise of this Warrant.

                              (x)      “Person”
means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof. 

                              (xi)     
“Principal Market” means the New York Stock Exchange, the American Stock
Exchange, the Nasdaq Global Market, the Nasdaq Capital Market, whichever is at
the time the principal trading exchange or market for such security, or the
over-the-counter market on the electronic bulletin board for such security as
reported by Bloomberg or, if no bid or sale information is reported for such
security by Bloomberg, then the average of the bid prices of each of the market
makers for such security as reported in the “pink sheets” by the National
Quotation Bureau, Inc. 

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

                              (xiii)     
“Warrant” means this Warrant and all Warrants issued in exchange,
transfer or replacement hereof.

3 

                              (xiv)     
“Warrant Exercise Price” shall be fifteen cents (US$0.15), or as
subsequently adjusted as provided in Section 8 hereof.

                              (xv)     
“Warrant Shares” means the Common Shares issuable at any time upon
exercise of this Warrant.

                              (xvi)     
“Convertible Securities” means any security convertible into Common Shares. 

                    (c)      Other
Definitional Provisions.

                              (i)      Except
as otherwise specified herein, all references herein (A) to the Company shall be
deemed to include the Company’s successors and (B) to any applicable law defined
or referred to herein shall be deemed references to such applicable law as the
same may have been or may be amended or supplemented from time to time.

                              (ii)      When
used in this Warrant, the words “herein”, “hereof”, and
“hereunder” and words of similar import, shall refer to this
Warrant as a whole and not to any provision of this Warrant, and the words
“Section”, “Schedule”, and “Exhibit” shall refer to
Sections of, and Schedules and Exhibits to, this Warrant unless otherwise
specified.

                              (iii)     
Whenever the context so requires, the neuter gender includes the masculine or
feminine, and the singular number includes the plural, and vice versa.

          Section
2.      Exercise of Warrant. Subject to the
terms and conditions hereof, this Warrant may be exercised by the holder hereof
then registered on the books of the Company, pro rata as hereinafter provided,
at any time on any Business Day on or after the opening of business on such
Business Day, commencing with the first day after the date hereof, and prior to
11:59 P.M. Eastern Time on the Expiration Date, by (i) delivery of a written
notice, in the form of the subscription notice attached as Exhibit A
hereto (the “Exercise Notice”), of such holder’s election to exercise
this Warrant, which notice shall specify the number of Warrant Shares to be
purchased, (ii) payment to the Company of an amount equal to the Warrant
Exercise Price(s) applicable to the Warrant Shares being purchased, multiplied
by the number of Warrant Shares (at the applicable Warrant Exercise Price) as to
which this Warrant is being exercised (plus any applicable issue or transfer
taxes) (the “Aggregate Exercise Price”): (a) in cash or wire transfer of
immediately available funds, (b) using Common Shares of the Company having a
fair market value equal to the Aggregate Exercise Price, or (c) by delivery of a
written notice of Net Exercise, as described below and (iii) the surrender of
this Warrant (or an indemnification undertaking with respect to this Warrant in
the case of its loss, theft or destruction) to a common carrier for overnight
delivery to the Company as soon as practicable following such date. In the event
of any exercise of the rights represented by this Warrant in compliance with
this Section 2(a), the Company shall on the fifth (5th) Business Day following
the date of receipt of the Exercise Notice, the Aggregate Exercise Price and
this Warrant (or an indemnification undertaking with respect to this Warrant in
the case of its loss, theft or destruction) and the receipt of the
representations of the holder specified in Section 6 hereof, if requested by the
Company (the “Exercise Delivery Documents”), and if the Common Shares are
DTC eligible, credit such aggregate number of Common Shares to which the holder
shall be entitled to the holder’s or its designee’s balance account with The
Depository Trust Company; 

4 

provided, however, if the holder who submitted the Exercise
Notice requested physical delivery of any or all of the Warrant Shares, or, if
the Common Shares are not DTC eligible then the Company shall, on or before the
fifth (5th) Business Day following receipt of the Exercise Delivery
Documents, issue and surrender to a common carrier for overnight delivery to the
address specified in the Exercise Notice, a certificate, registered in the name
of the holder, for the number of Common Shares to which the holder shall be
entitled pursuant to such request. Upon delivery of the Exercise Notice and
Aggregate Exercise Price referred to in clause (ii) above, the holder of this
Warrant shall be deemed for all corporate purposes to have become the holder of
record of the Warrant Shares with respect to which this Warrant has been
exercised. In the case of a dispute as to the determination of the Warrant
Exercise Price, the Closing Bid Price or the arithmetic calculation of the
Warrant Shares, the Company shall promptly issue to the holder the number of
Warrant Shares that is not disputed and shall submit the disputed determinations
or arithmetic calculations to the holder via facsimile within one (1) Business
Day of receipt of the holder’s Exercise Notice. If the holder and the Company
are unable to agree upon the determination of the Warrant Exercise Price or
arithmetic calculation of the Warrant Shares within one (1) day of such disputed
determination or arithmetic calculation being submitted to the holder, then the
Company shall immediately submit via facsimile (i) the disputed determination of
the Warrant Exercise Price or the Closing Bid Price to an independent, reputable
investment banking firm or (ii) the disputed arithmetic calculation of the
Warrant Shares to its independent, outside accountant. The Company shall cause
the investment banking firm or the accountant, as the case may be, to perform
the determinations or calculations and notify the Company and the holder of the
results no later than forty-eight (48) hours from the time it receives the
disputed determinations or calculations. Such investment banking firm’s or
accountant’s determination or calculation, as the case may be, shall be deemed
conclusive absent manifest error. 

          In
lieu of exercising this Warrant via cash payment or delivery of shares, holder
may elect to receive shares equal to the value of this Warrant (or portion
thereof being exercised) by surrender of this Warrant at the principal office of
the Company together with notice of election to exercise by means of a Net
Exercise in which event the Company shall issue to holder a number of the
Company computed using the following formula:

	 	X= 	
      Y(A-B)_ 

	 	  	
           A 

	 	  	
       

	 	Where X = 	
      the number of Common Shares to be issued to the holder
      

	 	  	
       

		Y = 	
      the number of Common Shares purchasable under this
      Warrant or, if only a portion of this Warrant is being exercised, the
      portion of this Warrant being exercised (at the date of such calculation)
      

	 	  	
       

		A = 	
      the Fair Market Value of one Common Share (at the date of
      such calculation) 

	 	  	
       

		B = 	
      the Exercise Price per Common Share (as adjusted to the
      date of such calculation). 

5 

                    (a)      Unless
the rights represented by this Warrant shall have expired or shall have been
fully exercised, the Company shall, as soon as practicable and in no event later
than five (5) Business Days after any exercise and at its own expense, issue a
new Warrant identical in all respects to this Warrant exercised except it shall
represent rights to purchase the number of Warrant Shares purchasable
immediately prior to such exercise under this Warrant exercised, less the number
of Warrant Shares with respect to which such Warrant is exercised. 

                    (b)      No
fractional Warrant Shares are to be issued upon any pro rata exercise of this
Warrant, but rather the number of Warrant Shares issued upon such exercise of
this Warrant shall be rounded up or down to the nearest whole number. 

                    (c)     
If the Company or its Transfer Agent shall fail for any reason or for no reason
to issue to the holder within ten (10) days of receipt of the Exercise Delivery
Documents, a certificate for the number of Warrant Shares to which the holder is
entitled or to credit the holder’s balance account with The Depository Trust
Company for such number of Warrant Shares to which the holder is entitled upon
the holder’s exercise of this Warrant, the Company shall, in addition to any
other remedies under this Warrant or otherwise available to such holder, pay as
additional damages in cash to such holder on each day the issuance of such
certificate for Warrant Shares is not timely effected an amount equal to 0.025%
of the product of (A) the sum of the number of Warrant Shares not issued to the
holder on a timely basis and to which the holder is entitled, and (B) the
Closing Bid Price of the Common Shares for the trading day immediately preceding
the last possible date which the Company could have issued such Common Shares to
the holder without violating this Section 2. 

                    (d)     
If within ten (10) days after the Company’s receipt of the Exercise Delivery
Documents, the Company fails to deliver a new Warrant to the holder for the
number of Warrant Shares to which such holder is entitled pursuant to Section 2
hereof, then, in addition to any other available remedies under this Warrant, or
otherwise available to such holder, the Company shall pay as additional damages
in cash to such holder on each day after such tenth (10th) day that
such delivery of such new Warrant is not timely effected in an amount equal to
0.25% of the product of (A) the number of Warrant Shares represented by the
portion of this Warrant which is not being exercised and (B) the Closing Bid
Price of the Common Shares for the trading day immediately preceding the last
possible date which the Company could have issued such Warrant to the holder
without violating this Section 2. 

                    (e)     
This Warrant may not be exercised unless an exemption is available from the
registration requirements under the Securities Act, and the securities laws of
all applicable states, and the Company has received an opinion of counsel or
other evidence to such effect satisfactory to it; provided, however, that a
holder who acquired this Warrant in the Company’s private placement of such
securities who was and remains outside the United States and not a “U.S.
person,” as such term is defined in Regulation S under the Securities Act, will
not be required to deliver an opinion of counsel in connection with the exercise
of such Warrant. Upon exercise of this Warrant, the certificate representing the
Warrant Shares will bear a legend restricting transfer without registration
under the Securities Act and applicable state securities laws unless an
exemption from registration is available and will contain any other restrictions
required by applicable United States federal or state securities laws.
Further, without compliance with all applicable Canadian securities
legislation, the securities represented by this certificate may not be sold,
transferred, hypothecated or otherwise traded in Canada or to or for the benefit

6 

of a Canadian resident until the date that is four months and
one day after the date of issuance of this Warrant.

          Section
3.      Covenants as to Common Shares. The
Company hereby covenants and agrees as follows: 

                    (a)     
This Warrant is, and any Warrants issued in substitution for or replacement of
this Warrant will upon issuance be, duly authorized and validly issued. 

                    (b)     
All Warrant Shares which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully paid
and nonassessable and free from all taxes, liens and charges with respect to the
issue thereof. 

                    (c)      During
the period within which the rights represented by this Warrant may be exercised,
the Company will at all times have authorized and reserved at least one hundred
percent (100%) of the number of Common Shares needed to provide for the exercise
of the rights then represented by this Warrant and the par value of said shares
will at all times be less than or equal to the applicable Warrant Exercise
Price. If at any time the Company does not have a sufficient number of Common
Shares authorized and available, then the Company shall call and hold a special
meeting of its shareholders within sixty (60) days of that time for the sole
purpose of increasing the number of authorized Common Shares. 

                    (d)      If
at any time after the date hereof the Company shall file a registration
statement, the Company shall include the Warrant Shares issuable to the holder,
pursuant to the terms of this Warrant. 

                    (e)      The
Company will not, by amendment of its Articles of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed by it
hereunder, but will at all times in good faith assist in the carrying out of all
the provisions of this Warrant and in the taking of all such action as may
reasonably be requested by the holder of this Warrant in order to protect the
exercise privilege of the holder of this Warrant against dilution or other
impairment, consistent with the tenor and purpose of this Warrant. The Company
will not increase the par value of any Common Shares receivable upon the
exercise of this Warrant above the Warrant Exercise Price then in effect, and
(ii) will take all such actions as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable Common
Shares upon the exercise of this Warrant. 

                    (f)     
This Warrant will be binding upon any entity succeeding to the Company by
merger, consolidation or acquisition of all or substantially all of the
Company’s assets. 

          Section
4.      Taxes. The Company shall pay any and all
taxes, except any applicable withholding, which may be payable with respect to
the issuance and delivery of Warrant Shares upon exercise of this Warrant. 

          Section
5.      Warrant Holder Not Deemed a Shareholder.
Except as otherwise specifically provided herein, no holder, as such, of this
Warrant shall be entitled to vote or 

7 

receive dividends or be deemed the holder of capital stock of
the Company for any purpose, nor shall anything contained in this Warrant be
construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock, reclassification
of stock, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to the
issuance to the holder of this Warrant of the Warrant Shares which he or she is
then entitled to receive upon the due exercise of this Warrant. In addition,
nothing contained in this Warrant shall be construed as imposing any liabilities
on such holder to purchase any securities (upon exercise of this Warrant or
otherwise) or as a shareholder of the Company, whether such liabilities are
asserted by the Company or by creditors of the Company. Notwithstanding this
Section 5, the Company will provide the holder of this Warrant with copies of
the same notices and other information given to the shareholders of the Company
generally, contemporaneously with the giving thereof to the shareholders. 

          Section
6.      Representations of Holder. If such
holder cannot make the appropriate representations set forth in the Exercise
Notice in order to confirm compliance with any applicable United States federal
or state securities laws, the Company is under no obligation to issue the
Warrant Shares. 

          Section
7.      Ownership and Transfer. 

                    (a)      The
Company shall maintain at its principal executive offices (or such other office
or agency of the Company as it may designate by notice to the holder hereof), a
register for this Warrant, in which the Company shall record the name and
address of the person in whose name this Warrant has been issued, as well as the
name and address of each transferee. The Company may treat the person in whose
name any Warrant is registered on the register as the owner and holder thereof
for all purposes, notwithstanding any notice to the contrary, but in all events
recognizing any transfers made in accordance with the terms of this Warrant.

          Section
8.      Adjustment of Warrant Exercise Price
and Number of Shares. The Warrant Exercise Price and the number of Common
Shares issuable upon exercise of this Warrant shall be adjusted from time to
time as follows: 

                    (a)      Adjustment
of Warrant Exercise Price and Number of Shares upon Issuance of Common
Shares. If and whenever on or after the Issuance Date of this Warrant, the
Company issues or sells, or is deemed to have issued or sold, any Common Shares
(other than (i) Excluded Securities and (ii) Common Shares which are issued or
deemed to have been issued by the Company in connection with an Approved Stock
Plan or upon exercise or conversion of the Other Securities) for a consideration
per share less than a price (the “Applicable Price”) equal to the Warrant
Exercise Price in effect immediately prior to such issuance or sale, then
immediately after such issue or sale the Warrant Exercise Price then in effect
shall be reduced to an amount equal to such consideration per share. Upon each
such adjustment of the Warrant Exercise Price hereunder, the number of Warrant
Shares issuable upon exercise of this Warrant shall be adjusted to the number of
shares determined by multiplying the Warrant Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares issuable
upon exercise of this Warrant immediately prior to such adjustment and dividing
the product thereof by the Warrant Exercise Price resulting from such
adjustment. 

8 

                    (b)      Effect
on Warrant Exercise Price of Certain Events. For purposes of determining the
adjusted Warrant Exercise Price under Section 8(a) above, the following shall be
applicable: 

                              (i)     
Issuance of Options. If after the date hereof, the Company in any manner
grants any Options and the lowest price per share for which one Common Share is
issuable upon the exercise of any such Option or upon conversion or exchange of
any Convertible Securities issuable upon exercise of any such Option is less
than the Applicable Price, then such Common Share shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the
granting or sale of such Option for such price per share. For purposes of this
Section 8(b)(i), the lowest price per share for which one Common Share is
issuable upon exercise of such Options or upon conversion or exchange of any
convertible securities shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to any
one Common Share upon the granting or sale of the Option, upon exercise of the
Option or upon conversion or exchange of any convertible security issuable upon
exercise of such Option. No further adjustment of the Warrant Exercise Price
shall be made upon the actual issuance of such Common Shares or of such
Convertible Securities upon the exercise of such Options or upon the actual
issuance of such Common Shares upon conversion or exchange of such Convertible
Securities. 

                              (ii)      Issuance
of Convertible Securities. If the Company in any manner issues or sells any
Convertible Securities and the lowest price per share for which one share of
Common Shares is issuable upon the conversion or exchange thereof is less than
the Applicable Price, then such Common Share shall be deemed to be outstanding
and to have been issued and sold by the Company at the time of the issuance or
sale of such Convertible Securities for such price per share. For the purposes
of this Section 8(b)(ii), the lowest price per share for which one Common Share
is issuable upon such conversion or exchange shall be equal to the sum of the
lowest amounts of consideration (if any) received or receivable by the Company
with respect to one share of Common Shares upon the issuance or sale of the
convertible security and upon conversion or exchange of such convertible
security. No further adjustment of the Warrant Exercise Price shall be made upon
the actual issuance of such Common Shares upon conversion or exchange of such
Convertible Securities, and if any such issue or sale of such Convertible
Securities is made upon exercise of any Options for which adjustment of the
Warrant Exercise Price had been or are to be made pursuant to other provisions
of this Section 8(b), no further adjustment of the Warrant Exercise Price shall
be made by reason of such issue or sale.

                              (iii)     
Change in Option Price or Rate of Conversion. If the purchase price
provided for in any Options, the additional consideration, if any, payable upon
the issue, conversion or exchange of any Convertible Securities, or the rate at
which any Convertible Securities are convertible into or exchangeable for Common
Shares changes at any time, the Warrant Exercise Price in effect at the time of
such change shall be adjusted to the Warrant Exercise Price which would have
been in effect at such time had such Options or Convertible Securities provided
for such changed purchase price, additional consideration or changed conversion
rate, as the case may be, at the time initially granted, issued or sold and the
number of Warrant Shares issuable upon exercise of this Warrant shall be
correspondingly readjusted. For purposes of this Section 8(b)(iii), if the terms
of any Option or convertible security that was outstanding as of the Issuance
Date of this Warrant are changed in the manner described in the immediately
preceding sentence, then such Option or convertible security and the Common
Shares deemed issuable upon exercise, conversion or exchange thereof shall be
deemed to have 

9 

been issued as of the date of such change. No adjustment
pursuant to this Section 8(b) shall be made if such adjustment would result in
an increase of the Warrant Exercise Price then in effect. 

                    (c)     
Effect on Warrant Exercise Price of Certain Events. For purposes of
determining the adjusted Warrant Exercise Price under Sections 8(a) and 8(b),
the following shall be applicable: 

                              (i)     
Calculation of Consideration Received. If any Common Shares, Options or
Convertible Securities are issued or sold or deemed to have been issued or sold
for cash, the consideration received therefor will be deemed to be the net
amount received by the Company therefor. If any Common Shares, Options or
Convertible Securities are issued or sold for a consideration other than cash,
the amount of such consideration received by the Company will be the fair value
of such consideration, except where such consideration consists of marketable
securities, in which case the amount of consideration received by the Company
will be the market price of such securities on the date of receipt of such
securities. If any Common Shares, Options or Convertible Securities are issued
to the owners of the non-surviving entity in connection with any merger in which
the Company is the surviving entity, the amount of consideration therefor will
be deemed to be the fair value of such portion of the net assets and business of
the non-surviving entity as is attributable to such Common Shares, Options or
Convertible Securities, as the case may be. The fair value of any consideration
other than cash or securities will be determined jointly by the Company and the
holders of Warrants representing at least two-thirds (b) of the Warrant Shares
issuable upon exercise of the Warrants then outstanding. If such parties are
unable to reach agreement within ten (10) days after the occurrence of an event
requiring valuation (the “Valuation Event”), the fair value of such
consideration will be determined within five (5) Business Days after the tenth
(10th) day following the Valuation Event by an independent, reputable
appraiser jointly selected by the Company and the holders of Warrants
representing at least two-thirds (b) of the Warrant Shares issuable upon
exercise of the Warrants then outstanding. The determination of such appraiser
shall be final and binding upon all parties and the fees and expenses of such
appraiser shall be borne jointly by the Company and the holders of Warrants.

                              (ii)     
Integrated Transactions. In case any Option is issued in connection with
the issue or sale of other securities of the Company, together comprising one
integrated transaction in which no specific consideration is allocated to such
Options by the parties thereto, the Options will be deemed to have been issued
for a consideration of $.01. 

                              (iii)      Treasury
Shares. The number of Common Shares outstanding at any given time does not
include shares owned or held by or for the account of the Company, and the
disposition of any shares so owned or held will be considered an issue or sale
of Common Shares. 

                              (iv)      Record
Date. If the Company takes a record of the holders of Common Shares for the
purpose of entitling them (1) to receive a dividend or other distribution
payable in Common Shares, Options or in Convertible Securities or (2) to
subscribe for or purchase Common Shares, Options or Convertible Securities, then
such record date will be deemed to be the date of the issue or sale of the
Common Shares deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the granting of
such right of subscription or purchase, as the case may be. 

10 

                    (d)      Adjustment
of Warrant Exercise Price upon Subdivision or Combination of Common
Shares. If the Company at any time after the date of issuance of this
Warrant subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding Common Shares into a greater
number of shares, any Warrant Exercise Price in effect immediately prior to such
subdivision will be proportionately reduced and the number of Common Shares
obtainable upon exercise of this Warrant will be proportionately increased. If
the Company at any time after the date of issuance of this Warrant combines (by
combination, reverse stock split or otherwise) one or more classes of its
outstanding Common Shares into a smaller number of shares, any Warrant Exercise
Price in effect immediately prior to such combination will be proportionately
increased and the number of Warrant Shares issuable upon exercise of this
Warrant will be proportionately decreased. Any adjustment under this Section
8(d) shall become effective at the close of business on the date the subdivision
or combination becomes effective. 

                    (e)     
Distribution of Assets. If the Company shall declare or make any dividend
or other distribution of its assets (or rights to acquire its assets) to holders
of Common Shares, by way of return of capital or otherwise (including, without
limitation, any distribution of cash, stock or other securities, property or
options by way of a dividend, spin off, reclassification, corporate
rearrangement or other similar transaction) (a “Distribution”), at any
time after the issuance of this Warrant, then, in each such case: 

                              (i)      any
Warrant Exercise Price in effect immediately prior to the close of business on
the record date fixed for the determination of holders of Common Shares entitled
to receive the Distribution shall be reduced, effective as of the close of
business on such record date, to a price determined by multiplying such Warrant
Exercise Price by a fraction of which (A) the numerator shall be the Closing
Sale Price of the Common Shares on the trading day immediately preceding such
record date minus the value of the Distribution (as determined in good faith by
the Company’s Board of Directors) applicable to one share of Common Shares, and
(B) the denominator shall be the Closing Bid Price of the Common Shares on the
trading day immediately preceding such record date; and 

                              (ii)      either
(A) the number of Warrant Shares obtainable upon exercise of this Warrant shall
be increased to a number of shares equal to the number of Common Shares
obtainable immediately prior to the close of business on the record date fixed
for the determination of holders of Common Shares entitled to receive the
Distribution multiplied by the reciprocal of the fraction set forth in the
immediately preceding clause (i), or (B) in the event that the Distribution is
of common shares of a company whose common shares are traded on a national
securities exchange or a national automated quotation system, then the holder of
this Warrant shall receive an additional warrant to purchase Common Shares, the
terms of which shall be identical to those of this Warrant, except that such
warrant shall be exercisable into the amount of the assets that would have been
payable to the holder of this Warrant pursuant to the Distribution had the
holder exercised this Warrant immediately prior to such record date and with an
exercise price equal to the amount by which the exercise price of this Warrant
was decreased with respect to the Distribution pursuant to the terms of the
immediately preceding clause (i). 

                    (f)      Certain
Events. If any event occurs of the type contemplated by the provisions of
this Section 8 but not expressly provided for by such provisions (including,
without limitation, the granting of stock appreciation rights, phantom stock
rights or other rights with 

11 

equity features), then the Company’s Board of Directors will
make an appropriate adjustment in the Warrant Exercise Price and the number of
Common Shares obtainable upon exercise of this Warrant so as to protect the
rights of the holders of the Warrants; provided, except as set forth in section
8(d), that no such adjustment pursuant to this Section 8(f) will increase the
Warrant Exercise Price or decrease the number of Common Shares obtainable as
otherwise determined pursuant to this Section 8. 

                    (g)      Notices.

                              (i)     
Immediately upon any adjustment of the Warrant Exercise Price, the Company will
give written notice thereof to the holder of this Warrant, setting forth in
reasonable detail, and certifying, the calculation of such adjustment. 

                              (ii)     
The Company will give written notice to the holder of this Warrant at least ten
(10) days prior to the date on which the Company closes its books or takes a
record (A) with respect to any dividend or distribution upon the Common Shares,
(B) with respect to any pro rata subscription offer to holders of Common Shares
or (C) for determining rights to vote with respect to any Organic Change (as
defined below), dissolution or liquidation, provided that such information shall
be made known to the public prior to or in conjunction with such notice being
provided to such holder. 

                              (iii)     
The Company will also give written notice to the holder of this Warrant at least
ten (10) days prior to the date on which any Organic Change, dissolution or
liquidation will take place, provided that such information shall be made known
to the public prior to or in conjunction with such notice being provided to such
holder. 

          Section
9.      Purchase Rights; Reorganization,
Reclassification, Consolidation, Merger or Sale. 

                    (a)     
In addition to any adjustments pursuant to Section 8 above, if at any time the
Company grants, issues or sells any Options, Convertible Securities or rights to
purchase stock, warrants, securities or other property pro rata to the record
holders of any class of Common Shares (the “Purchase Rights”), then the
holder of this Warrant will be entitled to acquire, upon the terms applicable to
such Purchase Rights, the aggregate Purchase Rights which such holder could have
acquired if such holder had held the number of Common Shares acquirable upon
complete exercise of this Warrant immediately before the date on which a record
is taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of Common Shares are to
be determined for the grant, issue or sale of such Purchase Rights. 

                    (b)     
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company’s assets to another Person or
other transaction in each case which is effected in such a way that holders of
Common Shares are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Shares is referred to herein as an “Organic Change.” Prior to the
consummation of any (i) sale of all or substantially all of the Company’s assets
to an acquiring Person or (ii) other Organic Change following which the Company
is not a surviving entity, the Company will secure from the Person purchasing
such assets or the successor resulting from such Organic Change (in each case,
the “Acquiring Entity”) a written agreement 

12 

(in form and substance satisfactory to the holders of Warrants
representing at least two-thirds of the Warrant Shares issuable upon exercise of
the Warrants then outstanding) to deliver to each holder of Warrants in exchange
for such Warrants, a security of the Acquiring Entity evidenced by a written
instrument substantially similar in form and substance to this Warrant and
satisfactory to the holders of the Warrants (including an adjusted warrant
exercise price equal to the value for the Common Shares reflected by the terms
of such consolidation, merger or sale, and exercisable for a corresponding
number of Common Shares acquirable and receivable upon exercise of the Warrants
without regard to any limitations on exercise, if the value so reflected is less
than any Applicable Warrant Exercise Price immediately prior to such
consolidation, merger or sale). Prior to the consummation of any other Organic
Change, the Company shall make appropriate provision (in form and substance
satisfactory to the holders of Warrants representing a majority of the
Warrant Shares issuable upon exercise of the Warrants then outstanding) to
insure that each of the holders of the Warrants will thereafter have the right
to acquire and receive in lieu of or in addition to (as the case may be) the
Warrant Shares immediately theretofore issuable and receivable upon the exercise
of such holder’s Warrants (without regard to any limitations on exercise), such
shares of stock, securities or assets that would have been issued or payable in
such Organic Change with respect to or in exchange for the number of Warrant
Shares which would have been issuable and receivable upon the exercise of such
holder’s Warrant as of the date of such Organic Change (without taking into
account any limitations or restrictions on the exercisability of this Warrant).

          Section
10.      Lost, Stolen, Mutilated or Destroyed
Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the
Company shall promptly, on receipt of an indemnification undertaking (or, in the
case of a mutilated Warrant, the Warrant), issue a new Warrant of like
denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.

          Section
11.      Notice. Any notices, consents, waivers
or other communications required or permitted to be given under the terms of
this Warrant must be in writing and will be deemed to have been delivered: (i)
upon receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of receipt is received by the sending party
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one Business Day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be: 

	If to Trafalgar: 	Trafalgar Capital Specialized Investment Fund,
      Luxembourg 
	 	8-10 Rue Mathias Hardt 
	  	BP 3023 
	  	Luxembourg L-1030 
	  	Facsimile: 
		011-44-207-405-0161 
	 	And 001-786-323-1651 
	  	 
	With Copy to: 	James G. Dodrill II, P.A. 
	  	5800 Hamilton Way 
	 	Boca Raton, FL 33496 
	  	Attention: James Dodrill, Esq. 
	  	Telephone:      (561)
      862-0529 
	  	Facsimile:       
       (561) 892-7787 

13 

	If to the Company, to: 	Carbiz Inc. 
	  	7405 North Tamiami Trail 
	  	Sarasota, FL 34243 
	  	Attn: Mr. Carl Ritter, CEO 
	  	Telephone:      (800) 547-2277
    
	  	Facsimile:        
      (941) 308-2718 
	  	 
	With a copy to: 	Troutman Sanders LLP 
	  	222 Central Park Avenue, Suite 2000 
	  	Virginia Beach, VA 23462 
	  	Attn: Mr. Thomas M. Rose, Esq. 
	  	Telephone:      (757) 687-7715
    
	  	Facsimile:        
      (757) 687-1529 

If to a holder of this Warrant other than Trafalgar, to it at
the address and facsimile number as shall be delivered to the Company upon the
issuance or transfer of this Warrant and with copies to such holder’s
representatives as shall be delivered to the Company upon the issuance or
transfer of this Warrant. Each party shall provide five days’ prior written
notice to the other party of any change in address or facsimile number. Written
confirmation of receipt (A) given by the recipient of such notice, consent,
facsimile, waiver or other communication, (or (B) provided by a nationally
recognized overnight delivery service shall be rebuttable evidence of personal
service, receipt by facsimile or receipt from a nationally recognized overnight
delivery service in accordance with clause (i), (ii) or (iii) above,
respectively. 

          Section
12.      Date. The date of this Warrant is
set forth on page 1 hereof. This Warrant, in all events, shall be wholly void
and of no effect after the close of business on the Expiration Date, except that
notwithstanding any other provisions hereof, the provisions of Section 8(b)
shall continue in full force and effect after such date as to any Warrant Shares
or other securities issued upon the exercise of this Warrant. 

          Section
13.      Amendment and Waiver. Except as
otherwise provided herein, the provisions of the Warrants may be amended and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company has obtained the written
consent of the holders of Warrants representing at least two-thirds of the
Warrant Shares issuable upon exercise of the Warrants then outstanding; provided
that, except for Section 8(d), no such action may increase the Warrant Exercise
Price or decrease the number of shares or class of stock obtainable upon
exercise of any Warrant without the written consent of the holder of such
Warrant. 

          Section
14.      Descriptive Headings; Governing Law.
The descriptive headings of the several sections and paragraphs of this Warrant
are inserted for convenience only and do not constitute a part of this Warrant.
The corporate laws of the State of Florida shall govern all issues concerning
the relative rights of the Company and its shareholders. All other questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of Florida without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Florida or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of Florida
Each party hereby irrevocably submits to the exclusive jurisdiction of the state
courts sitting in 

14 

Broward County, Florida and the United States District Court
for the Southern District of Florida for the adjudication of any dispute
hereunder or in connection herewith or therewith, or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Warrant and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law.

          Section
15.      Waiver of Jury Trial. AS A
MATERIAL INDUCEMENT FOR EACH PARTY HERETO TO ENTER INTO THIS WARRANT, THE
PARTIES HERETO HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
RELATED IN ANY WAY TO THIS WARRANT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS
ASSOCIATED WITH THIS TRANSACTION. 

          IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed as of the
date first set forth above. 

CARBIZ INC. 

By:
____________________________________________
Name: 
Title: 

15 

EXHIBIT A TO WARRANT 

EXERCISE NOTICE 

TO BE EXECUTED
BY THE REGISTERED HOLDER TO EXERCISE
THIS WARRANT 

CARBIZ INC. 

          The
undersigned holder hereby exercises the right to purchase ______________ of the
Common Shares (“Warrant Shares”) of Carbiz Inc., an Ontario, Canada
corporation (the “Company”), evidenced by the attached Warrant (the
“Warrant”). Capitalized terms used herein and not otherwise defined shall
have the respective meanings set forth in the Warrant. 

          1.     
Form of Warrant Exercise Price. The Holder intends that payment of the
Warrant Exercise Price shall be made as a “Cash Exercise” with respect to
______________Warrant Shares. 

          2.     
Payment of Warrant Exercise Price. The holder shall pay the sum of
$______________ to the Company in accordance with the terms of the Warrant.

          3.     
Delivery of Warrant Shares. The Company shall deliver to the holder
_________ Warrant Shares in accordance with the terms of the Warrant.

          4.      The
undersigned represents, warrants and certifies as follows (only one of the
following must be checked): 

		A. [   ] 	
      The undersigned holder (a) acquired this Warrant directly
      from the Company pursuant to a written purchase agreement for the
      acquisition of such securities, (b) at the time of exercise of this
      Warrant is not in the United States, (c) is not a “U.S. person” (a “U.S.
      Person”), as such term is defined in Regulation S under the U.S.
      Securities Act, and is not exercising such securities on behalf of a U.S.
      Person or a person in the United States, and (d) did not execute this
      Notice of Exercise in the United States; or 

	 	  	
       

		B. [   ] 	
      The undersigned holder has delivered to the Company a
      written opinion of counsel or such other evidence in a form reasonably
      acceptable to the Company to the effect that an exemption from the
      registration requirements of the United States Securities Act of 1933, as
      amended (the “U.S. Securities Act”), and applicable state securities laws
      is available for the issuance of the Warrant Shares.

The undersigned holder understands that the certificate
representing the Warrants Shares will bear a legend restricting transfer without
registration under the U.S. Securities Act and applicable state securities laws
unless an exemption from registration is available and will contain any other
restrictions required under applicable United States federal or state securities
laws or Canadian securities laws. With respect to Box A above, the undersigned
holder agrees to 

A-1 

provide any additional information that the Company may
reasonably request to establish that an exclusion from registration under the
U.S. Securities Act is available for the issuance of the Warrant Shares. Unless
Box B above is checked, certificates representing Common Shares will not be
registered or delivered to an address in the United States. 

If Box B is checked, any opinion tendered or other evidence
delivered must be in form and substance reasonably satisfactory to the Company.
Holders planning to deliver such documentation in connection with the exercise
of a Warrant should contact the Company in advance to determine whether such
documentation will be acceptable to the Company. 

Date: _______________ __, ______

Name of Registered Holder 

By: __________________________
Name:
________________________
Title: _________________________

A-2 

EXHIBIT B TO WARRANT 

FORM OF WARRANT POWER 

          FOR
VALUE RECEIVED, the undersigned does hereby assign and transfer to
________________, Federal Identification No. __________, a warrant to purchase
____________ shares of the capital stock of Carbiz Inc., an Ontario, Canada
corporation, represented by warrant certificate no. _____, standing in the name
of the undersigned on the books of said corporation. The undersigned does hereby
irrevocably constitute and appoint ______________, attorney to transfer the
warrants of said corporation, with full power of substitution in the premises.

	Dated: ______________________________________	 	__________________________________________________
	  	 	 
		 	By: _______________________________________________
		 	Name: _____________________________________________
		 	Title: ______________________________________________

B-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00129-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00129-of-00352.parquet"}]]