__________

   |_|

to purchase ______ shares of Common Stock, $.001 par value per share, of TapImmune Inc. at $[----] per share for a total of $______ and pursuant to the terms of the attached Warrant, and tenders herewith payment of the aggregate Warrant Exercise Price of such Warrant Shares in full; or

   |_|

to purchase _______ shares of Common Stock, $.001 par value per share, of TapImmune Inc. pursuant to the cashless exercise provision under Section 4.01(b) of the Terms and Conditions of the attached Warrant, and tenders herewith the number of Warrant Shares to purchase such Warrant Shares based upon the formula set forth in Section 4.01(b).

 

  Social Number of

 

       Name        Address in FullInsur. No.         Warrant Shares

 

 

 

 

 

DATED on this _____ day of _______________, _____.

 

 

         Signature of Guarantor*  Signature of Holder

 

 

 Print Name of Holder

 

 

 Residence Address of Holder in full

 

 

*If this Warrant subscription form indicates that Warrant Shares are to be issued to a person or persons other than the registered Holder of the Warrant certificate, the signature of such Holder of the subscription form must be medallion guaranteed by an authorized officer of a chartered bank, trust company or an investment dealer who is a member of a recognized stock exchange.  If the subscription form is signed by a trustee, executor, administrator, curator, guardian, attorney, officer of a corporation or any person acting in a judiciary or representative capacity, the subscription form must be accompanied by evidence of authority to sign satisfactory to the Company.

 

Not a U.S. Person (as defined in Rule 902 of Regulation S (“Regulation S”) under the United States Securities Act of 1933, as amended (the “U.S. Act”), which definition includes, but is not limited to, any natural person resident in the United States, any corporation or partnership incorporated or organized under the laws of the United States or any estate or trust of which any executor, administrator or trustee is a U.S. Person in which case representation (d) below is not applicable; or

 

(a)Not a U.S. Person:   The Holder: (i) is not a U.S. Person; (ii) is not purchasing any of the Warrant Shares for the account or benefit of any U.S. Person or for offering, resale or delivery for the account or benefit of any U.S. Person or for the account of any person in any jurisdiction other than the jurisdiction set out in the name and address of the Holder set forth hereinabove; and (iii) was not offered any Warrant Shares in the United States and was outside the United States at the time of execution and delivery of this Warrant subscription;

 

(b)

No registration and sales under Regulation S:   the Holder acknowledges that the Warrant Shares have not been registered under the U.S. Act and the Company has no obligation or present intention of filing a registration statement under the U.S. Act in respect of the Warrant Shares.  In addition,  the Holder agrees to resell the Warrant Shares only in accordance with the provisions of Regulation S, pursuant to a registration under the U.S. Act or pursuant to an available exemption from such registration, and that hedging transactions involving the Warrant Shares may not be conducted unless in compliance with the U.S. Act.  The Holder understands that any certificate representing the Warrant Shares will bear a legend setting forth the foregoing restrictions.  Furthermore, the Holder understands that the Warrant Shares are restricted within the meaning of “Rule 144” promulgated under the U.S. Act; that the exemption from registration under Rule 144 will not be available in any event for at least six months from the date of purchase and payment of the Warrants by the Holder, and even then will not be available unless (i) a public trading market then exists for the shares of the Company, (ii) adequate information concerning the Company is then available to the public and (iii) other terms and conditions of Rule 144 are complied with; and that any sale of the Warrant Shares may be made by the Holder only in limited amounts in accordance with such terms and conditions;

 

(c)

No U.S. beneficial interest:   no U.S. Person, either directly or indirectly, has any beneficial interest in any of the Warrant Shares acquired by Holder hereunder, nor does the Holder have any agreement or understanding (written or oral) with any U.S. Person respecting:

 

(i)

the transfer or any assignment of any rights or interest in any of the Warrant Shares;

 

(ii)

the division of profits, losses, fees, commissions or any financial stake in connection with this subscription; or

 

(iii)

the voting of the Warrant Shares;

 

(d)

Holder’s declarations as an “Accredited Investor” :   the Holder warrants and certifies that the Holder is an “Accredited Investor”, as that term is defined in Section 4(2) of the U.S. Act, and in “Rule 501” of “Regulation D” promulgated thereunder, by virtue of the Subscriber’s qualification under one or more of the following categories {please check the appropriate category or categories where applicable}:

 

The Holder is a natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds U.S. $1,000,000.

 

The Holder is a natural person who had an individual income in excess of U.S. $200,000 in each of the two most recent years or joint income with the Subscriber’s spouse in excess of U.S. $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.

 

The Holder is a corporation, organization described in section 501(c)(3) of the United States Internal Revenue Code, Massachusetts, or similar business trust or partnership, not formed for the specific purpose of acquiring the Warrant Shares, with total assets in excess of U.S. $5,000,000.

 

The Holder is a trust, with total assets in excess of U.S. $5,000,000, not formed for the specific purpose of acquiring the Warrant Shares, whose purchase is directed by a sophisticated person.

 

The Holder is a Director or Executive Officer of the Company.

 

The Holder is a “private business development company” as that term is defined in section 202(a)(22) of the United States Investment Advisers Act of 1940.

 

The Holder is either: (a) a “bank” as defined in section 3(a)(2) of the U.S. Act, or a “savings and loan association or other institution” as defined in section 3(a)(5)(A) of the U.S. Act, whether acting in its individual or fiduciary capacity; or (b) a broker or dealer registered pursuant to section 15 of the United States Securities Exchange Act of 1934; or (c) an “insurance company” as defined in section 2(13) of the U.S. Act; or (d) an investment company registered under the United States Investment Company Act of 1940 or a “business development company” as defined in section 2(a)(48) of the United States Investment Company Act of 1940; or (e) a small business investment company licensed by the United States “Small Business Administration” under either of subsections 301(c) or (d) of the United States Small Business Investment Act of 1958; or (f) a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of U.S. $5,000,000; or (g) an employee benefit plan within the meaning of the United States Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary as defined in section 3(21) of the United States Employee Retirement Income Security Act of 1974 which is either a bank, savings and loan association, insurance company or registered investment adviser, or if the employee benefit plan has total assets in excess of U.S. $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors.

 

The Holder is an entity in which all of the equity owners are accredited investors under one or more of the categories set forth hereinabove.

 

(e)

Experience:   the Holder has the requisite knowledge and experience in financial and business matters for properly evaluating the risks of an investment in the Company;

 

(f)

Information:   the Holder has received all information regarding the Company reasonably requested by the Holder;

 

(g)

Risk:   the Holder understands that an investment in the Company involves certain risks of which the Holder has taken full cognizance, and which risks the Holder fully understands;

 

(h)

Adequacy of information:   the Holder has been given the opportunity to ask questions of, and to receive answers from, the Company concerning the terms and conditions of the within Warrants and to obtain additional information necessary to verify the accuracy of the information contained in the information described in subsection (f) hereinabove, or such other information as the Holder desired in order to evaluate an investment in the Company;

 

(i)

Residency:   the residence of the Holder as set forth hereinabove is the true and correct residence of the Holder and the Holder has no present intention of becoming a resident or domiciliary of any other State or jurisdiction;

 

(j)

Independent investigation:   in making a decision to invest in the Company, the Holder has relied solely upon independent investigations made by the Holder, and the particular tax consequences arising from an investment in the Company will depend upon the Holder’s individual circumstances;

 

(k)

Principal:   the Holder is purchasing the Warrant Shares as principal for the Holder’s own account and not for the benefit of any other person, except as otherwise stated herein, and not with a view to the resale or distribution of all or any of the Warrant Shares;

 

(l)

Decision to purchase:   the decision of the Holder to purchase Warrant Shares pursuant hereto has been based only on the representations of this Warrant and any collateral business plan or offering memorandum provided herewith or based upon the Holder’s relationship with a Director and/or Executive Officer of the Company.  It is not made on other information relating to the Company and not upon any oral representation as to fact or otherwise made by or on behalf of the Company or any other person.  The Holder agrees that the Company assumes no responsibility or liability of any nature whatsoever for the accuracy, adequacy or completeness of any business plan information which has been created based upon the Company’s management experience.  In particular, and without limiting the generality of the foregoing, the decision to subscribe for Warrant Shares has not been influenced by:

 

(i)

newspaper, magazine or other media articles or reports related to the Company or its business;

 

(ii)

promotional literature or other materials used by the Company for sales or marketing purposes; or

 

(iii)

any representations, oral or otherwise, that the Company will become a listed company, that the Warrant Shares will be repurchased or have any guaranteed future realizable value or that there is any certainty as to the success of the Company or the liquidity or value of the Warrant Shares;

 

(m)

Advertisements:   the Holder acknowledges that the Holder has not purchased Warrant Shares as a result of any general solicitation or general advertising, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising;

 

(n)

Information not received:   the Holder has not received, nor has the Holder requested, nor does the Holder have any need to receive, any offering memorandum or any other document (other than financial statements or any other document the content of which is prescribed by statute or regulation) describing the business and affairs of the Company which has been prepared for delivery to, and review by, prospective purchasers in order to assist them in making an investment decision in respect of the Warrant Shares, and the Holder has not become aware of any advertisement in printed media of general and regular paid circulation, radio or television with respect to the distribution of the Warrant Shares;

 

(o)

Information received:   the Holder has had access to such additional information, if any, concerning the Company as the Holder has considered necessary in connection with the Holder’s investment decision to acquire the Warrant Shares;

 

(p)

Reliance on public information:   the Holder has relied solely upon the publicly available information relating to the Company and not upon any verbal or written representation as to fact or otherwise made by or on behalf of the Company; such publicly available information having been delivered to the Holder without independent investigation or verification by the Company, and agrees that the Company assumes no responsibility or liability of any nature whatsoever for the accuracy, adequacy or completeness of the publicly available information;

 

(r)Reliance of representative:   the Holder, by reason of the Holder’s knowledge and experience in financial and business matters, is capable of evaluating the risks and merits of an investment in the Warrant Shares or, if the Holder is relying upon the investment advice of a representative who has advised the undersigned in connection with this investment (the “Representative”), the undersigned believes the Representative to be sophisticated and competent in the area of investment advice and analysis and therefore capable of evaluating the risks and merits of an investment in the Warrant Shares;

 

(s)

Economic risk:   the Holder has such knowledge and experience in financial and business affairs as to be capable of evaluating the merits and risks of the Holder’s investment in the Warrant Shares, and the Holder is able to bear the economic risk of a total loss of the Holder’s investment in the Warrant Shares;

 

(t)

Speculative investment:   the Holder understands that an investment in the Warrant Shares is a speculative investment and that there is no guarantee of success of the Company’s management’s plans.  Management’s plans are an effort to apply present knowledge and experience to project a future course of action which is hoped will result in financial success employing the Company’s assets and with the present level of management’s skills and of those whom the Company will need to attract (which cannot be assured).  Additionally, all plans are capable of being frustrated by new or unrecognized or unappreciated present or future circumstances which can typically not be accurately, or at all, predicted;

 

(u)

Risk and resale restriction:   the Holder is aware of the risks and other characteristics of the Warrant Shares and of the fact that the Holder will not be able to resell the Warrant Shares except in accordance with the applicable securities legislation and regulatory policy;

 

(v)Representations as to resale:   no person has made to the Holder any written or oral representations:

 

(i)that any person will resell or repurchase the Warrant Shares;

 

(ii)that any person will refund the purchase of the Warrant Shares;

 

(iii)as to the future price or value of any of the Warrant Shares; or

 

(iv)that the Warrant Shares will be listed and posted for trading on any stock exchange, over-the-counter or bulletin board market, or that application has been made to list and post any of the Warrant Shares for trading on any stock exchange, over-the-counter or bulletin board market; and

 

the Purchaser will not resell the Warrant Shares except in accordance with the provisions of applicable securities legislation and stock exchange rules;

 

(w)

Reports and undertakings:   if required by applicable securities legislation, policy or order or by any securities commission, stock exchange or other regulatory authority, the Holder will execute and otherwise assist the Company in filing such reports, undertakings and other documents as may be reasonably required with respect to the issue of the Warrant Shares;

 

(x)

Resale restrictions:   the Holder has been independently advised as to the applicable hold period imposed in respect of the Warrant Shares by securities legislation in the jurisdiction in which the Holder’s resides and confirms that no representation has been made respecting the applicable hold periods for the Warrant Shares and is aware of the risks and other characteristics of the Warrant Shares and of the fact that the Holder may not be able to resell the Warrant Shares except in accordance with the applicable securities legislation and regulatory policy.  In this regard the Holder agrees that if the Holder decides to offer, sell or otherwise transfer any of the Warrant Shares the Holder will not offer, sell or otherwise transfer any of such Warrant Shares, directly or indirectly, unless:

 

(i)

the sale is to the Company; or

 

(ii)

the sale is made outside the United States in compliance with the requirements of Rule 904 of Regulation S under the U.S. Act and in compliance with applicable state securities laws; or

 

(iii)

the sale is made pursuant to an exemption from registration under the U.S. Act provided by Rule 144 thereunder and in compliance with applicable state securities laws; or

 

(iv)

the sale is made pursuant to another applicable exemption from registration under the U.S. Act and in compliance with applicable state securities laws;

 

(y)

No prospectus filing:   the Holder acknowledges that this is an offering made on a private basis without a prospectus and that no federal, state, provincial or other agency has made any finding or determination as to the merits of the investment nor made any recommendation or endorsement of the Warrant Shares, and that:

 

(i)

the Holder may be or is restricted from using most of the civil remedies available under applicable securities legislation; and

 

(ii)

the Company is relieved from certain obligations that would otherwise apply under applicable securities legislation;

 

(z)

Confidentiality:   the Holder understands that the Company’s business plan and this Warrant are confidential.  Furthermore, the Holder has not distributed such, or divulged the contents thereof, to anyone other than such legal or financial advisors as the Holder has deemed desirable for purposes of evaluating an investment in the Warrant Shares, and the Holder has not made any copies thereof except for the Holder’s own records;

 

(aa)

Age of majority:   the Holder, if an individual, has attained the age of majority and is legally competent to execute this Warrant subscription and to take all actions required pursuant hereto;

 

(ab)

Authorization and formation of Holder:   the Holder, if a corporation, partnership, trust or other form of business entity, is authorized and otherwise duly qualified to purchase and hold the Warrant Shares, and such entity has not been formed for the specific purpose of acquiring Warrant Shares in this issue.  If the Holder is one of the aforementioned entities it hereby agrees that, upon request of the Company, it will supply the Company with any additional written information that may be reasonably requested by the Company.  In addition, the entering into of this Warrant subscription and the transactions contemplated hereby will not result in the violation of any of the terms of and provisions of any law applicable to, or the constating documents, if a corporation, of, the Holder or of any agreement, written or oral, to which the Holder may be a party or by which the Holder may be bound;

 

(ac)

Legal obligation:   this Warrant subscription has been duly and validly authorized, executed and delivered by and constitutes a legal, valid, binding and enforceable obligation of the Holder;

 

(ad)

Legal and tax consequences:   the Holder acknowledges that an investment in the Warrant Shares of the Company may have tax consequences to the Holder under applicable law, which the Holder is solely responsible for determining, and the Holder also acknowledges and agrees that the Holder is responsible for obtaining its own legal and tax advice;

 

(ae)

Compliance with applicable laws:   The Holder knows of no reason (and is sufficiently knowledgeable to determine the same or has sought legal advice) why the delivery of this Warrant subscription, the acceptance of it by the Company and the issuance of the Warrant Shares to the Holder will not comply with all applicable laws of the Holder’s jurisdiction of residence or domicile, and all other applicable laws, and the Holder has no reason to believe that the Holder’s subscription hereby will cause the Company to become subject to or required to comply with any disclosure, prospectus or reporting requirements or to be subject to any civil or regulatory review or proceeding.  In addition, the Holder will comply with all applicable securities laws and will assist the Company in all reasonable manner to comply with all applicable securities laws;

 

(af)

Encumbrance or transfer of Warrant Shares:   the Holder will only sell, assign, gift, pledge or encumber in any manner whatsoever the Warrant Shares herein subscribed for in accordance with applicable securities legislation; and

 

(ag)

Regulation S:   the Holder further represents and warrants that the Holder was not specifically formed to acquire any of the Warrants Share subscribed for in this Warrant subscription in violation of the provisions of Regulation S.

 

(a)

the Warrant Shares are restricted securities within the meaning of Rule 144 promulgated under the U.S. Act;

 

(b)

the exemption from registration under Rule 144 will not be available in any event for at least six months from the date of purchase and payment of the Warrants by the Holder, and even then will not be available unless (i) a public trading market then exists for the shares of the Company, (ii) adequate information concerning the Company is then available to the public and (iii) other terms and conditions of Rule 144 are complied with; and

 

(c)

any sale of the Warrant Shares may be made by the Holder only in limited amounts in accordance with such terms and conditions.

 

(a)

there is then in effect a “Registration Statement” under the U.S. Act covering such proposed disposition and such disposition is made in accordance with said Registration Statement; or

 

(b)

(i) the Holder shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, (ii) the Holder shall have furnished the Company with an opinion of the Holder’s own counsel to the effect that such disposition will not require registration of such Warrant Shares under the U.S. Act and (iii) such opinion of the Holder’s counsel shall have been concurred in by counsel for the Company and the Company shall have advised the Holder of such concurrence.

 

(a)

“Company” means TapImmune Inc. or any successor Company referred to in Article 6 hereinbelow;

 

(b)

“Company’s Auditors” means Dale Matheson Carr-Hilton Labonte LLP, an independent firm of accountants duly appointed as auditors of the Company or any duly appointed successor;

 

(c)

“Current Market Price” of a share at any date means the price per share equal to the weighted average price at which the shares have traded during any 30 consecutive trading days selected by the Company, commencing not more than 45 trading days before and ending not less than five trading days before such date, on any recognized stock exchange on which such shares are listed or quoted as may be selected for such purpose by the Directors or, if such shares are not listed on any stock exchange, then on the Over-The-Counter Bulletin Board (“OTCBB”) of FINRA and if not on the OTCBB then on such over-the-counter market or bulletin board trading market upon which such trade as may be selected for such purpose by the Directors.  The weighted average price per share shall be determined by dividing the aggregate sale price of all such shares sold on the aforementioned exchange or market, as the case may be, during the aforementioned 30 consecutive trading days by the total number of such shares so sold;

 

(d)

“Director” means a director of the Company for the time being, and reference, without more, to action by the Directors of the Company shall mean action taken by the directors of the Company as a board, or whenever duly empowered, action by an executive committee of the board;

 

(e)

“Dividends Paid in the Ordinary Course” means dividends paid on the shares in any fiscal year of the Company, whether in: (i) cash; (ii) shares of the Company; (iii) warrants or similar rights to purchase any shares of the Company; or (iv) property or other assets of the Company; provided that the amount or value of such dividends (any such shares, warrants or similar rights, or property or other assets so distributed to be valued at the fair market value of such shares, warrants or similar rights, or property or other assets, as the case may be, as determined by action by the Directors (such determination to be conclusive)), does not in such fiscal year exceed the greatest of:

 

(i)

150% of the aggregate amount of dividends declared payable by the Company on the shares in the period of twelve consecutive months ended immediately prior to the first day of such fiscal year; and

 

(ii)

100% of the consolidated net income of the Company before extraordinary items for the period of twelve consecutive months ended immediately prior to the first day of such fiscal year less the amount of all dividends payable on all shares ranking prior to or on a parity with the shares in respect of the payment of dividends (such consolidated net income, extraordinary items and dividends to be shown in the audited consolidated financial statements of the Company for such period of twelve consecutive months or if there are no audited consolidated financial statements for such period, computed in accordance with generally accepted accounting principles, consistent with those applied in the preparation of the most recent audited consolidated financial statements of the Company);

 

(f)

“herein”, “hereby” and similar expressions refer to these Terms and Conditions as the same may be amended or modified from time to time; and the expressions “Article”, “Section” or “subsection” followed by a number refer to the specified Article or Section of these Terms and Conditions;

 

(g)

“Issuance Date” means that date on which the Company issued the attached Warrants;

 

(h)

“person” means an individual, company, partnership, trustee or any unincorporated organization, and any words importing persons have a similar meaning;

 

(i)

“shares” means the common shares in the capital of the Company as constituted at the Issuance Date and any shares resulting from any subdivision or consolidation of the shares;

 

(j)

“Time of Expiry” means 5:00 p.m. (Vancouver, British Columbia, Canada, time) on February 4, 2011;

 

(k)

“Warrant Exercise Period” means the period in time between the Issuance Date and the Time of Expiry;

 

(l)

“Warrant Exercise Price” means U.S. $0.02 per Warrant Share during the Warrant Exercise Period;

 

(m)

“Warrant Holders” or “Holders” means the bearers of the Warrants for the time being;

 

(n)

“Warrant Holders’ Request” means an instrument signed in one or more counterparts by Warrant Holders entitled to purchase in the aggregate not less than 25% of the aggregate number of Warrant Shares which could be purchased pursuant to all the Warrants outstanding for the time being, requesting the Company to take some action or proceeding;

 

(o)

“Warrants” means the Warrants of the Company issued and presently authorized, as set out in Section 2.01 and for the time being outstanding, and any other warrants made subject to these Terms and Conditions;

 

(p)

“Warrant Shares” means the shares in the capital of the Company issuable upon the exercise of the within Warrants by the Holder thereof; and

 

(q)

words importing the singular number include the plural and vice versa, and words importing the masculine gender include the feminine and neuter genders.

 

(a)

Subject to Section 2.03(b) hereinbelow, if a Warrant is mutilated, lost, destroyed or stolen, the Company shall issue and deliver a new Warrant of like date and tenor as the one mutilated, lost, destroyed or stolen, in exchange for and in place of and upon cancellation of such mutilated Warrant, or in lieu of, and in substitution for such lost, destroyed or stolen Warrant, and the substituted Warrant will be entitled to the benefit of these Terms and Conditions and rank equally in accordance with its terms with all other Warrants issued or to be issued by the Company.

 

(b)

The applicant for the issue of a new Warrant will bear the cost of its issue and in case of loss, destruction or theft, furnish to the Company such evidence of ownership and of loss, destruction or theft of the Warrant so lost, destroyed or stolen, as will be satisfactory to the Company in its discretion, and such applicant may also be required to furnish indemnity in amount and form satisfactory to the Company in its discretion, and will pay the reasonable charges of the Company in connection with such issuance of a new Warrant.

 

(a)

Warrants in any authorized denomination may, upon compliance with the reasonable requirements of the Company, be exchanged for Warrants in any other authorized denomination, of the same class and date of expiry, entitling the Holder to purchase an equal aggregate number of shares at the same subscription price and on the same terms as the Warrants so exchanged.

 

(b)

Warrants may be exchanged only at the office of the Company and any Warrants tendered for exchange will be surrendered to the Company and cancelled.

 

(a)

The Company may deem and treat the registered holder of any Warrant as the absolute owner of such Warrant, for all purposes, and will not be affected by any notice or knowledge to the contrary.

 

(b)

The registered holder of any Warrant will be entitled to the rights evidenced by such Warrant free from all equities or rights of set-off or counterclaim between the Company and the original or any intermediate Holder and all persons may act accordingly, and the receipt of any such bearer for the shares will be a good discharge to the Company for the same and the Company will not be bound to inquire into the title of any such bearer.

 

(a)

Share Reorganization.  If prior to the Time of Expiry the Company shall:

 

(i)

issue shares without the receipt of any consideration therefor to all or substantially all of the holders of the shares by way of stock dividend or other distribution (other than as dividends paid in the common course (“Dividends Paid in the Common Course”)), or

 

(ii)

subdivide its outstanding shares into a greater number of shares; or

 

(iii)

consolidate its outstanding shares into a lesser number of shares,

 

(b)

Rights Offering.  If prior to the Time of Expiry the Company shall fix a record date for the issue of rights, options or warrants to all or substantially all of the holders of shares under which such holders are entitled, during a period expiring not more than 45 calendar days after the record date for such issue (“Rights Period”), to subscribe for or purchase shares at a price per share to the holder of less than ninety-five percent (95%) of the Current Market Price for the shares on such record date (any of such events being called a “Rights Offering”), then the Warrant Exercise Price shall be adjusted effective immediately after the end of the Rights Period to a price determined by multiplying the Warrant Exercise Price in effect immediately prior to the end of the Rights Period by a fraction:

 

(i)

the numerator of which shall be the aggregate of:

 

A.

the number of shares outstanding as of the record date for the Rights Offering; and

 

B.

a number determined by dividing (1) the product of the number of shares issued or subscribed during the Rights Period upon the exercise of the rights, warrants or options under the Rights Offering and the price at which such shares are offered by (2) the Current Market Price of the shares as of the record date for the Rights Offering; and

 

(ii)

the denominator of which shall be the number of shares outstanding after giving effect to the Rights Offering and including the number of shares actually issued or subscribed for during the Rights Period upon exercise of the rights, warrants or options under the Rights Offering.

 

Any Warrant Holder who shall have exercised his right to purchase shares in accordance with this Article 4 during the period beginning immediately after the record date for a Rights Offering and ending on the last day of the Rights Period therefor shall, in addition to the shares to which he is otherwise entitled upon such exercise in accordance with this Article 4, be entitled to that number of additional shares equal to the result obtained when the difference, if any, resulting from the subtraction of the Warrant Exercise Price as adjusted for such Rights Offering pursuant to this subsection (b) hereinabove from the Warrant Exercise Price in effect immediately prior to the end of such Rights Offering is multiplied by the number of Warrant Shares purchased upon exercise of the Warrants held by such Warrant Holder during such period, and the resulting product is divided by the Warrant Exercise Price as adjusted for such Rights Offering pursuant to this subsection 4.07(b); provided that the provisions of this Article 4 shall be applicable to any fractional interest in any share to which such Warrant Holder might otherwise be entitled under the foregoing provisions of this subsection 4.07(b).  Such additional shares shall be deemed to have been issued to the Warrant Holder immediately following the end of the Rights Period and a certificate for such additional shares shall be delivered to such Warrant Holder within ten business days following the end of the Rights Period.

 

(c)

Special Distribution.  If prior to the Time of Expiry the Company shall issue or distribute to all or to substantially all the holders of the shares:

 

(i)

securities of the Company including rights, options or warrants to acquire shares of any class or securities exchangeable for or convertible into or exchangeable into any such shares or property or assets and including evidences of its indebtedness; or

 

(ii)

any property or other assets;

 

A.

the product of the number of shares outstanding on such record date and the Current Market Price of the shares on such record date; less

 

B.

the excess, if any, of (1) the fair market value on such record date, as determined by action by the Directors (whose determination shall be conclusive), to the holders of the shares of such securities or property or other assets so issued or distributed in the Special Distribution over (2) the fair market value of the consideration received therefor by the Company from the holders of the shares, as determined by action by the Directors (whose determination shall be conclusive); and

 

(iv)

the denominator of which shall be the number of shares outstanding on such record date multiplied by the Current Market Price of the shares on such record date.

 

(d)

Capital Reorganization.  If prior to the Time of Expiry there shall be a reclassification of shares at any time outstanding or a change of the shares into other shares or into other securities (other than a Share Reorganization), or a consolidation, amalgamation, arrangement or merger of the Company with or into any other Company or other entity (other than a consolidation, amalgamation, arrangement or merger which does not result in any reclassification of the outstanding shares or a change of the shares into other securities), or a transfer of the undertaking or assets of the Company as an entirety or substantially as an entirety to another Company or other entity (any of such events being herein called a “Capital Reorganization”), any Warrant Holder who exercises his right to purchase Warrant Shares pursuant to Warrant(s) then held after the effective date of such Capital Reorganization shall be entitled to receive, and shall accept for the same aggregate consideration in lieu of the number of Warrant Shares to which such holder was theretofore entitled upon such exercise the aggregate number of shares, other securities or other property which such holder would have been entitled to receive as a result of such Capital Reorganization if, on the effective date thereof, the Warrant Holder had been the registered holder of the number of Warrant Shares to which such holder was theretofore entitled upon exercise of the Warrant subject to adjustment thereafter in accordance with provisions the same, as nearly as may be possible, as those contained in this Section 4.07; provided, however, that no such Capital Reorganization shall be carried into effect unless all necessary steps shall have been taken to so entitle the Warrant Holders.  If determined appropriate by the Company, acting reasonably, appropriate adjustments shall be made as a result of any such Capital Reorganization in the application of the provisions set forth in this Article 4 with respect to the rights and interests thereafter of Warrant Holders to the end that the provisions set forth in this Article 4 shall thereafter correspondingly be made applicable as nearly as may reasonably be in relation to any shares, other securities or other property thereafter deliverable upon the exercise of any Warrant.  Any such adjustments shall be made by and set forth in terms and conditions supplemental hereto approved by action by the Directors and by the Company, acting reasonably and shall for all purposes be conclusively deemed to be appropriate adjustments.

 

(e)

If prior to the Time of Expiry a Share Reorganization shall occur which results in an adjustment in the Exercise Price pursuant to the provisions of this Section 4.07, the number of Warrant Shares purchasable pursuant to each whole Warrant shall be adjusted contemporaneously with the adjustment of the Warrant Exercise Price per Warrant Share by multiplying the number of Warrant Shares theretofore purchasable on the exercise thereof by a fraction the numerator of which shall be the Warrant Exercise Price in effect immediately prior to such adjustment and the denominator of which shall be the Warrant Exercise Price resulting from such adjustment.

 

Section 4.08 - Rules Regarding Calculation of Adjustment of Exercise Price and Number of Warrant Shares Purchasable upon Exercise

 

For the purposes of Section 4.07 hereinabove:

 

(a)

The adjustments provided for in Section 4.07 are cumulative, and shall, in the case of adjustments to the Warrant Exercise Price per Warrant Share, be computed to the nearest one-tenth of one cent (U.S. $0.001) and shall be made successively whenever an event referred to therein shall occur, subject to the following subsections of this Section 4.08.

 

(b)

No adjustment in the Warrant Exercise Price per Warrant Share shall be required unless such adjustment would result in a change of at least one and one-half percent (1.5%) in the prevailing Warrant Exercise Price and no adjustment shall be made in the number of Warrant Shares purchasable upon exercise of a Warrant unless it would result in a change of at least one one-tenth of a Warrant Share (1/10); provided, however, that any adjustments which, except for the provisions of this subsection 4.08(b) would otherwise have been required to be made, shall be carried forward and taken into account in any subsequent adjustment.

 

(c)

Subject to the prior consent, if required, of any recognized stock exchange or over-the-counter or bulletin board trading market which may have jurisdiction over the affairs of the Company, from time to time, no adjustment in the Warrant Exercise Price per Warrant Share or in the number of Warrant Shares purchasable upon exercise of Warrants shall be made in respect of any event described in Section 4.07, other than the events referred to in paragraphs (ii) and (iii) of subsection (a) thereof, if Warrant Holders are entitled to participate in such event on the same terms, mutatis mutandis, as if Warrant Holders had exercised their Warrants prior to or on the effective date or record date of such event.

 

(d)

No adjustment in the Warrant Exercise Price shall be made pursuant to Section 4.07 in respect of the issue from time to time:

 

(ii)

in respect of the issue from time to time as Dividends Paid in the Ordinary Course of shares to holders of shares who exercise an option or election to receive substantially equivalent dividends in shares in lieu of receiving a cash dividend;

 

(e)

If a dispute shall at any time arise with respect to adjustments provided for in Section 4.07, such dispute shall be conclusively determined by the Company’s Auditors, or if they are unable or unwilling to act, by such other firm of independent chartered accountants as may be selected by action by the Directors and any such determination shall be binding upon the Company and the Warrant Holders; such auditors or accountants shall be provided access to all necessary records of the Company.  In the event that any such determination is made, the Company shall deliver a certificate to the Warrant Holders describing such determination.

 

(f)

In case the Company after the date of issue of the Warrants shall take any action affecting the shares, other than action described in Section 4.07, which in the opinion of the Directors of the Company would materially affect the rights of Warrant Holders, the Warrant Exercise Price per Warrant Share or the number of Warrant Shares purchasable upon exercise shall be adjusted in such manner, if any, and at such time, by action by the Directors, in their sole discretion as they may determine to be equitable in the circumstances, but subject in all cases to the prior approval, if required, of any recognized stock exchange or over-the-counter or bulletin board trading market which may have jurisdiction over the affairs of the Company, from time to time, together with all other applicable regulatory authorities.  Failure of the taking of action by the Directors so as to provide for an adjustment on or prior to the effective date of any action by the Company affecting the shares shall be conclusive evidence that the Board of Directors of the Company has determined that it is equitable to make no adjustment in the circumstances.

 

(g)

If the Company shall set a record date to determine the holders of the shares for the purpose of entitling them to receive any dividend or distribution or any subscription or purchase rights and shall, thereafter and before the distribution to such shareholders of any such dividend, distribution or subscription or purchase rights, legally abandon its plan to pay or deliver such dividend, distribution or subscription or purchase rights, then no adjustment in the Warrant Exercise Price per Warrant Share or the number of Warrant Shares purchasable upon exercise of any Warrant shall be required by reason of the setting of such record date.

 

(h)

In the absence of a resolution of the Directors fixing a record date for a Special Distribution or Rights Offering, the Company shall be deemed to have fixed as the record date therefor the date on which the Special Distribution or Rights Offering is effected.

 

(i)

As a condition precedent to the taking of any action which would require any adjustment in any of the subscription rights pursuant to any of the Warrants, including the Warrant Exercise Price per Warrant Share and the number or class of Warrant Shares or other securities which are to be received upon the exercise thereof, the Company shall take any corporate action which may, in the opinion of counsel to the Company, be necessary in order that the Company have unissued and reserved in its authorized capital and may validly and legally issue as fully paid and non-assessable all the shares or other securities which all the holders of such Warrants are entitled to receive on the full exercise thereof in accordance with the provisions thereof.

 

Section 4.09 - Postponement of Subscription

 

(a)

issuing to the Holder of any Warrant exercised after such record date and before the occurrence of such event, the additional Warrant Shares issuable upon such exercise by reason of the adjustment required by such event; and

 

(b)

delivering to such Holder any distributions declared with respect to such additional Warrant Shares after such exercise date and before such event;

 

Section 4.10 - Notice of Adjustment of Warrant Exercise Price and Number of Warrant Shares Purchasable Upon Exercise

 

(a)

At least 14 calendar days prior to the effective date or record date, as the case may be, of any event which requires or might require adjustment in any of the subscription rights pursuant to any of the Warrants, including the Warrant Exercise Price per Warrant Share and the number of Warrant Shares which are purchasable upon the exercise thereof, or such longer period of notice as the Company shall be required to provide holders of shares in respect of any such event, the Company shall give notice to the Warrant Holders by way of a certificate of the Company specifying the particulars of such event and, if determinable, the required adjustment and the computation of such adjustment.

 

(b)

In case any adjustment for which a notice in subsection 4.10(a) of this Section 4.10 has been given is not then determinable the Company shall promptly after such adjustment is determinable, give notice to the Warrant Holders of the adjustment and the computation of such adjustment.

 

(a)

The Holder of any Warrants hereby agrees and consents by acceptance hereof that the certificate or certificates representing any Warrants or Warrant Shares shall be impressed with a legend (the “Legend”) reciting that the transfer thereof is restricted for a prescribed period (the “Restricted Period”), substantially in the following form:

 

(b)

The Holder and any transferee thereof acknowledges by acceptance hereof that if any Warrants are exercised during the Restricted Period the certificate or certificates representing the Warrant Shares issuable upon such exercise shall also be impressed with the Legend set forth above unless counsel reasonably acceptable to the Company delivers an unqualified opinion that such Legend need not be imposed.

 

Section 6.01 - Modification of Terms for Certain Purposes

 

(a)

giving effect to any extraordinary resolution passed as provided in Article 6;

 

(b)

adding to or altering these provisions in respect of the registration and transfer of Warrants making provision for the exchange of Warrants of different denominations; and making any modification in the form of the Warrants which does not affect their substance;

 

(c)

for any other purpose, including the correction or rectification of any ambiguous, defective provisions, errors or omissions herein; and

 

(d)

to evidence any succession of any Company and the assumption by any successor of the covenants of the Company and in the Warrants contained as provided in this Article.