Summary of the Rights Plan

The following is a summary of the principal terms of the proposed Rights Plan which is qualified in its entirety by reference to the text of the Rights Plan. A copy of the Rights Plan will, upon adoption by the Board, be available for review on SEDAR prior to the Meeting at www.sedar.com. Capitalized terms that are not defined herein have the meaning ascribed to them in the Rights Plan.

Effective Date
The Board intends to implement the Rights Plan with effect (the “Effective Date”) prior to the Meeting subject to the ratification by the shareholders at the Meeting. The Effective Date will be publicly announced once the Rights Plan has been implemented by the Board.

Term
If the Rights Plan is ratified and approved at the Meeting, it will remain in force until the earlier of the Expiration Time and the termination of the annual meeting of the shareholders in the year 2012 unless at or prior to such meeting the shareholders ratify the continued existence of the Rights Plan.

Shareholder Approval
The Board anticipates that TSXV will approve the adoption of the Rights Plan subject to evidence of shareholder approval of the Rights Plan at the Meeting and confirmation that a news release regarding the Rights Plan has been disseminated. In order to meet the first of these conditions, the Rights Plan must be approved both (i) by more than 50% of the votes cast in favour of the Rights Plan at the meeting by shareholders present in person or by proxy, and (ii) by more than 50% of the votes cast at the meeting by shareholders present in person or by proxy, without giving effect to any votes cast by a shareholder that, directly or indirectly, on its own or in concert with others, holds or exercises control over more than 20% of the outstanding Common Shares of the Corporation and who does not qualify as an Acquiring Person (as defined in the Rights Plan) and by the associates, affiliates and insiders of such shareholder. If the Rights Plan is not ratified, it will terminate at the end of the Meeting.

To the knowledge of the directors and senior officers of the Corporation, as of the date hereof, no person is the beneficial owner of 20% or more of the outstanding shares.
The Rights Plan will require that it be ratified by the Independent Shareholders (as defined in the Rights Plan) which excludes various shareholders including Acquiring Persons, Grandfathered Person, Offeror and any associate or affiliates of such shareholder or any person acting jointly and in concert with such shareholder. The Corporation is not aware of any shareholder who is not an Independent Shareholder as defined in the Rights Plan.

Issue of Rights
On the Effective Date, one right (a “Right”) will be issued and attached to each of the Corporation’s outstanding shares and one Right will be issued and will continue to be issued in respect of each share of the Corporation issued thereafter, prior to the earlier of the Separation Time (as defined below) and the Expiration Time.

Rights Exercise Privilege
The Rights will separate from the shares and become exercisable at the Separation Time (as defined below). After the Separation Time, but prior to the occurrence of a Flip-in Event (as defined below), each Right may be exercised to purchase one share at an exercise price per Right of $1 (the “Exercise Price”).

Flip-in Event and Exchange Option
Subject to certain customary exceptions, upon the acquisition by a person of 20% or more of the shares of the Corporation and that person becoming an Acquiring Person (a “Flip-in Event”) and following the Separation Time, each Right, other than a Right beneficially owned by an Acquiring Person, its affiliates and associates, their respective joint actors and certain transferees, may be exercised to purchase that number of shares which have a market value equal to two times the Exercise Price. Rights Beneficially Owned by an Acquiring Person, its affiliates and associates, their respective joint actors and certain transferees will be void. The Rights Plan will provide that a person (a “Grandfathered Person”) who is the Beneficial Owner of 20% or more of the outstanding shares determined as at the Record Time shall not be an Acquiring Person unless, after the Record Time, that person becomes the Beneficial Owner of any additional shares. The Board of Directors is authorized, after a Flip-in Event has occurred, to issue or deliver, in return for the Rights and on payment of the relevant exercise price or without charge, debt, equity or other securities or assets of the Corporation or a combination thereof.

Certificates and Transferability
Prior to the earlier of the Separation Time (as defined below) and the Expiration Time, the Rights will be evidenced by a legend imprinted on certificates for shares of the Corporation issued from and after the Effective Date and will not be transferable separately from the shares. From and after the Separation Time (as defined below) and prior to the Expiration Time, the Rights will be evidenced by Rights Certificates which will be transferable and traded separately from the shares of the Corporation.

Separation Time
The “Separation Time” shall mean, subject to Section 5.2 of the Rights Plan, the close of business on the tenth trading day after the earliest of:
(a) the Stock Acquisition Date, being the first date of public announcement by the Corporation or a person of facts indicating that a person has become an Acquiring Person;
(b) the date of commencement of, or first public announcement of the intent of any Person (other than the Corporation or any Subsidiary of the Corporation) to commence a takeover bid (other than a Permitted Bid or a Competing Permitted Bid); and
(c) the date upon which a Permitted Bid or Competing Permitted Bid ceases to be such; or such later date as may be determined by the Board acting in good faith, provided that if the foregoing results in a Separation Time being prior to Record Time, the Separation Time shall be the Record Time, and provided further that if any takeover bid referred to in clause (b) of this definition expires, is cancelled, terminated or otherwise withdrawn prior to the Separation Time, such takeover bid shall be deemed, for the purposes of this definition, never to have been made.

Permitted Bid and Competing Permitted Bid Requirements
The requirements for a Permitted Bid include the following:
(a) the takeover bid must be made for all shares and by way of a takeover bid circular;
(b) the takeover bid must be made to all shareholders;
(c) the takeover bid must be outstanding for a minimum period 60 days and shares of the Corporation tendered pursuant to the takeover bid may not be taken up prior to the expiry of the 60 days period and only if at such time more than 50% of the shares of the Corporation held by Independent Shareholders have been tendered to the takeover bid and not withdrawn; and
(d) if more than 50% of the shares of the Corporation held by Independent Shareholders are tendered to the takeover bid within the 60 day period, the bidder must make a public announcement of that fact and the takeover bid must remain open for deposits of the Corporation’s shares for an additional 10 business days from the date of such public announcement.
The Rights Plan will allow for a Competing Permitted Bid to be made while a Permitted Bid is in existence. A Competing Permitted Bid must satisfy all the requirements of a Permitted Bid except that it may expire on the same date as the Permitted Bid, subject to the statutory requirement that it be outstanding for a minimum period of 35 days.

Waiver and Redemption
The Board may, prior to a Flip-in Event, waive the dilutive effects of the Rights Plan in respect of a particular Flip-in Event resulting from a takeover bid made by way of a take-over bid circular to all holders of the Corporation’s shares, in which event such waiver would be deemed also to be a waiver in respect of any other Flip-in Event occurring under a takeover bid made by way of takeover bid circular to all holders of the Corporation’s shares prior to the expiry of the takeover bid in respect of which the waiver is granted. The Board may also waive the Rights Plan in respect of a particular Flip-in Event that has occurred through inadvertence, provided that the Acquiring Person that inadvertently triggered such Flip-in Event reduces its beneficial holdings to less than 20% of the outstanding voting shares of the Corporation. At any time prior to the occurrence of a Flip-in Event, the Board may also at its option redeem all, but not less than all, of the outstanding Rights at a price of $0.00001 each.

Exemptions for Investment Advisors
Investment managers (for client accounts), trust companies (acting in their capacities as trustees and administrators) registered pension plan administrators, Crown agents and certain statutory bodies that manage investments funds for employee benefit plans, pension plans, insurance plans or various public
bodies may acquire greater than 20% of the Corporation’s shares without triggering a Flip-in Event, provided that they are not making, or are not part of a group making, a takeover bid.

Anti-dilution Adjustments
The Exercise Price of a Right, the number and kind of shares subject to purchase upon exercise of a Right, and the number of Rights outstanding, will be adjusted in certain events, including:
(a) if there is a dividend payable in shares or convertible securities (other than pursuant to any regular dividend reinvestment plan of the Corporation providing for the acquisition of common shares), or a subdivision or consolidation of the shares, or an issuance of shares or Convertible Securities in respect of, in lieu of or in exchange for shares; or
(b) if the Corporation fixes a record date for the distribution to all holders of shares of certain rights or warrants to acquire shares or Convertible Securities, or for the making of a distribution to all holders of shares of evidences of indebtedness or assets (other than regular periodic cash dividends or stock dividends payable in shares) or rights or warrants.

Supplements and Amendments
The Corporation will be authorized to make amendments to the Rights Plan to correct any clerical or typographical error, or to maintain the validity of the Rights Plan as a result of changes in law or regulation. Prior to the Meeting, the Corporation will be authorized to amend or supplement the Rights Plan as the Board may in good faith deem necessary or desirable. The Corporation will issue a press release relating to any significant amendment made to the Rights Plan prior to the Meeting and will advise the shareholders of any such amendment at the Meeting. Other amendments or supplements to the Rights Plan may be made with the prior approval of shareholders or Rights holders.

Canadian Federal Income Tax Consequences of the Rights Plan
The Corporation will not have any income for the purposes of the Income Tax Act (Canada) (the “ITA”) as a result of the issuance of the Rights. The ITA provides that the value of a right to acquire additional shares of a corporation is not a taxable benefit which must be included in income and is not subject to non resident withholding tax if the right is conferred on all holders of common shares. Although the Rights are to be so conferred, the Rights may become void in the hands of certain holders of the Corporation’s shares upon certain triggering events occurring (see “Flip-in Event”), and, consequently, whether or not the issue of the Rights is a taxable event is not entirely free from doubt. In any event, no amount must be included in income if the Rights do not have a monetary value at the date of issue. The Corporation considers that the Rights, when issued, will have negligible monetary value, there being only a remote possibility that the Rights will ever be exercised. The holder of Rights may have income or be subject to withholding tax under the ITA if the Rights become exercisable or are exercised, although there is only a remote possibility of the occurrence of a transaction or event that would have this result. The holder of Rights may be subject to tax in respect of the proceeds of disposition of such Rights.
This statement is of a general nature only and is not intended to constitute nor should it be construed to constitute legal or tax advice to any particular holder of the Corporation’s shares. Such shareholders are advised to consult their own tax advisors regarding the consequences of acquiring, holding, exercising or otherwise disposing of their Rights, taking into account their own particular circumstances and applicable foreign, provincial or territorial legislation.United States Federal Income Tax Consequences of the Rights Plan

NOTICE TO U.S. HOLDERS PURSUANT TO TREASURY DEPARTMENT CIRCULAR 230: Anything contained in this memorandum pertaining to any U.S. federal tax matter is not intended or written to be used, and it cannot be used by a participant in the Rights Plan, for the purpose of avoiding U.S. federal tax penalties under the Internal Revenue Code of 1986, as amended. The following discussion was written to support the promotion or marketing of the transactions or matters addressed by the Plan. Each shareholder that participates in the Rights Plan should seek U.S. federal tax advice, based on the shareholder’s particular circumstances, from an independent tax advisor.

This summary is based on the Internal Revenue Code of 1986, as amended, Treasury Regulations (whether final, temporary, or proposed), published IRS rulings, published administrative positions of the IRS, and U.S. court decisions that are applicable and, in each case, as in effect and available, as of the date of the document containing this summary. This summary does not constitute a formal opinion of U.S. federal income tax consequences. In addition, the following discussion is not binding on the IRS or the U.S. courts, and no assurance can be given that the IRS or the U.S. courts will agree with the analysis contained, or conclusions reached, in this summary.

For purposes of this discussion, a “U.S. Holder” is a beneficial owner of rights under the Rights Plan that, for U.S. federal income tax purposes, is (a) an individual who is a citizen or resident of the U.S., (b) a corporation, or any other entity classified as a corporation for U.S. federal income tax purposes, that is created or organized in or under the laws of the U.S. or any state in the U.S., including the District of Columbia, (c) an estate if the income of such estate is subject to U.S. federal income tax regardless of the source of such income, or (d) a trust if (i) such trust has validly elected to be treated as a U.S. person for U.S. federal income tax purposes or (ii) a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S. persons have the authority to control all substantial decisions of such trust.

The U.S. federal income tax consequences to shareholder participants in the Rights Plan are not certain. In Revenue Ruling 90-11, 1990-1 C.B. 10, the Internal Revenue Service (“IRS”) ruled that the issuance of rights under a typical shareholder rights plan does not result in a distribution by the issuing corporation of stock or property to its shareholders, an exchange of stock or property by the shareholders, or any other event giving rise to the realization of gross income by the shareholders. Prior to a tender offer for, or actual acquisition of, a specified percentage of the issuing corporation’s shares, the rights in Revenue Ruling 90-11 were not exercisable, were not evidenced by a separate certificate (from the common share certificate), and were not separately transferable (from the common shares). In addition, at the time the board of directors of the issuing corporation adopted the shareholder rights plan in Revenue Ruling 90-11, the likelihood that the rights would, at any time, be exercised was both remote and speculative. Based on this authority, a U.S. Holder (as defined below) should not recognize income (either as a distribution from the Corporation or otherwise) or gain for U.S. federal income tax purposes upon the issuance by the Corporation of rights under the Rights Plan.

We have found no authority that directly addresses the U.S. federal income tax consequences of rights under a typical shareholder rights plan becoming exercisable (including the issuance of a separate certificate evidencing the rights, the redemption by the issuing corporation of the rights, the occurrence of a Flip-in Event, or the purchase by a shareholder of additional shares of the issuing corporation pursuant to the rights). Notwithstanding this lack of direct authority, it is anticipated that if the rights under a typical shareholder rights plan of the Corporation became exercisable, a U.S. Holder may be treated as receiving a distribution from the Corporation or may recognize gain for U.S. federal income tax purposes, depending on the circumstances and the particular transaction that occurs. In addition, if the Corporation (or any of its predecessors) were determined to be a “passive foreign investment company’ under Section 1297 of the Internal Revenue Code (a “PFIC”) at any time during a U.S. Holder’s holding period with respect to the Corporation’s common shares, then such U.S. Holder that is treated as received a distribution or recognizing gain generally would be subject to adverse and complex U.S. federal income tax consequences under the PFIC rules with respect to a shareholder rights plan, which are not described in this summary. A U.S. Holder may be able to mitigate some of the adverse United States federal income tax consequences caused the PFIC rules by making a timely and effective “qualified electing fund” election under section 1295 of the Code or a “mark-to-market” election under section 1296 of the Code. However, the Corporation can offer no assurances that it will provide U.S. Holders with the information necessary to make a “qualified electing fund” election. The PFIC rules are extremely complex, and subject to numerous restrictions and limitations. U.S. Holders are encouraged to consult their individual tax advisors as to the specific U.S. federal income consequences of participation in the Rights Plan.

This summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential U.S. federal income tax consequences that may apply to a U.S. Holder with respect to participation in the Rights Plan. In addition, this summary does not take into account the individual facts and circumstances of any particular U.S. Holder that may affect the U.S. federal income tax consequences of participation in the Rights Plan. Accordingly, this summary is not intended to be, and should not be construed as, legal or U.S. federal income tax advice with respect to any U.S. Holder. Each U.S. Holder should consult his or her own financial advisor, legal counsel, or accountant regarding the U.S. federal U.S. state and local and foreign tax consequences of participation in the Rights Plan.

Eligibility for Investment in Canada
Provided that the Corporation remains a “public corporation” for purposes of the ITA at all material times, the Rights will each be qualified investments under the ITA for Registered Retirement Savings Plan, Registered Retirement Income Funds and Deferred Profit shares Plans. The issue of Rights will not affect the status under the ITA of the Corporation’s shares for such purposes nor will it affect the eligibility of such securities as investments for investors governed by certain Canadian federal and provincial legislation governing insurance companies, trust companies, loan companies and pension plans.

Recommendation of the Board
The Board has determined that the Rights Plan is in the best interests of the Corporation and the shareholders. The Board unanimously recommends that shareholders vote in favour of the Rights Plan Resolution.
Unless specified in a Proxy Form that the Corporation’s shares represented by the proxy shall be voted against the resolution respecting approval of the Rights Plan, it is the intention of the persons designated in the enclosed Proxy Form to vote in favour of approval of the Rights Plan.

The TSXV requires that the Rights Plan be approved both (i) by more than 50% of the votes cast at the meeting by shareholders present by person or by proxy, and (ii) by more than 50% of the votes cast at the meeting by shareholders present in person or by proxy, without giving effect to any votes cast by a shareholder that, directly or indirectly, on its own or in concert with others, holds or exercises control over more than 20% of the outstanding voting shares of the Corporation and by the associates, affiliates and insiders of such shareholder, and any other shareholder who does not qualify as an Independent Shareholder, as that term is defined in the Rights Plan.
Accordingly, such shareholders will be asked to pass the resolutions set out below in two separate votes to be conducted by ballot to conform to the foregoing requirements.

RESOLUTION (i)
All shareholders of the Corporation are entitled to vote on the resolution as set out below.
BE IT RESOLVED THAT:
1. The Shareholder Rights Plan Agreement to be entered into between the Corporation and Equity Transfer and Trust Company as the same may be amended prior to this Meeting, be and it is hereby ratified and confirmed; and
2. Any director or officer of the Corporation, be and is hereby authorized, for and on behalf of the Corporation, to execute and deliver such other documents and instruments and take such other actions as such Director or officer may
determine to be necessary or advisable to implement this resolution and the matters authorized hereby, such determination to be conclusively evidenced by the execution and delivery of such documents or instruments and the taking of any such actions.

RESOLUTION (ii)
In the event that any shareholder is identified that (i) directly or indirectly, on its own or in concert with others, holds or exercises control over more than 20% of the outstanding voting shares of the Corporation and who does not qualify as an Acquiring Person (as defined in the Rights Plan) and the associates, affiliates and insiders of such shareholder, or (ii) who is not an Independent Shareholder (as defined in the Rights Plan), all shareholders of the Corporation that vote on the first resolution as set out above EXCEPT such shareholder(s) so identified, will be asked to ALSO VOTE on the second resolution set out below.
To the knowledge of the directors and senior officers of the Corporation, as of the date hereof, no person is the beneficial owner of 20% or more of the outstanding shares nor is any shareholder not an Independent Shareholder (as defined in the Rights Plan).
BE IT RESOLVED THAT:
1. The Shareholder Rights Plan Agreement to be entered into between the Corporation and Equity Transfer and Trust Company, as the same may be amended prior to this Meeting, be and it is hereby ratified and confirmed; and
2. Any director or officer of the Corporation, be and is hereby authorized, for and on behalf of the Corporation, to execute and deliver such other documents and instruments and take such other actions as such Director or officer may determine to be necessary or advisable to implement this resolution and the matters authorized hereby, such determination to be conclusively evidenced by the execution and delivery of such documents or instruments and the taking of any such actions.

If the Rights Plan is not approved by the shareholders of the Corporation it will cease to have effect on the date of the Meeting.