Voting Shares and Principal Holders

        All of the outstanding common and preferred shares are entitled to be voted at the meeting. As at the close of business on            , 2007, 60,908,002 common shares, 63,472,895 Series A Preferred Shares and 9,988,513 Series B Preferred Shares were outstanding. Each shareholder is entitled to one vote for each common and/or preferred share shown as registered in the shareholder's name on the list of shareholders prepared as of the close of business on                        , 2007.

        To our knowledge as at the close of business on            , 2007, no person beneficially owned or exercised control or direction over shares carrying more than 10% of the voting rights attached to any class of shares entitled to be voted at the meeting except for the following:

•

Philip S. Sassower who beneficially owns or exercises control or direction over 2,265,225 common shares (or 3.7% of the outstanding common shares) and 13,676,370 Series A Preferred Shares (or 21.5% of the outstanding Series A Preferred Shares), representing approximately 11.9% of the voting rights attached to all of the shares entitled to be voted at the meeting;

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•

Phoenix Venture Fund LLC which beneficially owns or controls 31,032,014 Series A Preferred Shares (or 48.9% of the outstanding Series A Preferred Shares), representing approximately 23.1% of the voting rights attached to all of the shares entitled to be voted at the meeting;



•

William Freas who beneficially owns or controls 2,941,177 Series B Preferred Shares (or 29.4% of the outstanding Series B Preferred Shares), representing approximately 2.2% of the voting rights attached to all of the shares entitled to be voted at the meeting; and



•

Ross Irvine who beneficially owns or controls 1,000,000 Series B Preferred Shares (or 10.0% of the outstanding Series B Preferred Shares), representing approximately 0.7% of the voting rights attached to all of the shares entitled to be voted at the meeting.

Cost of Proxy Solicitation

        We will bear the cost of solicitation of proxies from our shareholders. In addition to solicitation by mail, the directors and officers of our company may solicit proxies personally or by telephone or other electronic means. These persons will receive no additional compensation for such services but will be reimbursed for reasonable out-of-pocket expenses. Arrangements will also be made with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation materials to the beneficial owners of stock held of record by these persons, and we will reimburse them for their reasonable out-of-pocket expenses.

Annual Meeting of Shareholders

        The purpose of this meeting is for our shareholders to consider and, if deemed advisable, approve a special resolution authorizing a change of our Company's jurisdiction from the federal jurisdiction of Canada to the State of Delaware. On December 6, 2006, we held our annual meeting of shareholders. At that meeting, our shareholders:

•

approved our audited financial statements as at and for the year ended March 31, 2006, together with the auditors report (which financial statements are prepared in accordance with Canadian GAAP);



•

elected our directors;



•

appointed our auditors and authorized the directors to fix their remuneration;



•

passed a resolution to amend our share option plan to:



•

amend the provisions of the plan revising the limits on the grant of options to insiders;



•

increase the number of common shares reserved for issuance under the plan from 11,400,000 to 26,800,000;



•

permit certain miscellaneous amendments to be made to the plan from time to time without obtaining further approval of our shareholders; and



•

permit the extension from time to time of the expiration date of options granted under the plan to a date immediately following any black out period which prevents the exercise of such options;



•

passed a resolution approving the issuance of that number of common shares having a fair market value of $120,000 (up to a maximum of 500,000 common shares) to Martin E. Janis & Company Inc. for services to be rendered to our company; and



•

passed a resolution approving the amendment to the rights, privileges and restrictions attached to our Series A Preferred Shares to permit the quarterly payment of dividends in common shares to the holders of our Series A Preferred Shares.

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THE DOMESTICATION

General

        Our board of directors is proposing to change our jurisdiction of incorporation from the federal jurisdiction of Canada to the State of Delaware through a transaction called a "continuance" under Section 188 of the Canada Business Corporations Act, also referred to as a "domestication" under Section 388 of the Delaware General Corporation Law (which we sometimes refer to as the DGCL). The continued, or domesticated, corporation will become subject to the DGCL on the date of its domestication, but will be deemed to have commenced its existence in Delaware on the date it originally commenced existence in Canada. Under the DGCL, a corporation becomes domesticated in Delaware by filing a certificate of domestication and a certificate of incorporation for the corporation being domesticated. Our board of directors has unanimously approved our domestication, believes it to be in our best interests and in the best interests of our shareholders, and unanimously recommends approval of our domestication to our shareholders.

        The domestication will be effective upon the filing of the applicable certificates of domestication and incorporation with the office of the Secretary of State of the State of Delaware. Thereafter, Xplore Technologies will be subject to the certificate of incorporation filed in Delaware. We will be discontinued in Canada as of the date shown on the certificate of discontinuance issued by the Director of the Canada Business Corporations Act. However, our common stock will continue to be listed on the Toronto Stock Exchange and we will continue to be subject to the rules and regulations of the Toronto Stock Exchange and the obligations imposed by each provincial securities regulatory authority in Canada. Upon domestication, our board of directors intends to adopt by-laws, a copy of which is attached to this prospectus as Exhibit D. A copy of Section 190 the Canada Business Corporations Act addressing dissenters' rights in connection with the continuance is attached to this prospectus as Exhibit E.

        The domestication will not interrupt the corporate existence or operations of Xplore Technologies or the trading market of our common stock. Each outstanding common and preferred share at the time of the domestication will remain issued and outstanding as a share of common or preferred stock of Xplore Technologies after its corporate existence is continued from Canada under the Canada Business Corporations Act and domesticated in Delaware under Delaware law. Following the completion of our domestication, our common stock will continue to be listed on the Toronto Stock Exchange under the trading symbol "XPL." In addition, we may seek approval to list our common stock on a national stock exchange or stock market in the United States.

Principal Reasons for the Domestication

        In 2003, our board of directors determined that maintaining our existing corporate headquarters in Canada was no longer consistent with the strategic direction and growth of our business, which is increasingly U.S. driven. Consistent with that determination, our headquarters was transferred from Canada to our facility in Austin, Texas in August 2004. The redomiciling of Xplore Technologies as a Delaware corporation is part of our overall plan to relocate substantially all of our business enterprise to the United States, to have our jurisdiction of incorporation be in the United States and to have our stock trade on an exchange in the United States.

        Our board of directors believes that, by domiciling Xplore Technologies in the United States, we may be able to enhance shareholder value over the long term with greater acceptance in the capital markets and improved marketability of our common stock. Our board of directors considered the fact that, in management's experience, potential investors, lenders and strategic partners in the United States are more familiar with U.S. accounting, tax and disclosure standards than those in Canada and

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may be more comfortable dealing with U.S. corporations than Canadian corporations. Our board also considered that, by becoming subject solely to U.S. tax laws and accounting standards, we will eliminate many of the income tax and financial accounting complexities associated with incorporation outside the United States. In addition, our board believes that being domiciled in the United States should provide the flexibility to enter into some types of mergers, acquisitions and business combination transactions with other U.S. corporations that could have adverse tax consequences if we remained a Canadian corporation. In addition, our board of directors believes that our domestication will provide greater opportunity in proposing and winning business in the United States.

        Our board of directors chose the State of Delaware to be our domicile because it believes the more favorable corporate environment afforded by Delaware will help us compete more effectively with other public companies, many of which are incorporated in Delaware, in raising capital and in attracting and retaining skilled, experienced personnel. For many years, Delaware has followed a policy of encouraging public companies to incorporate in the state by adopting comprehensive corporate laws that are revised regularly in response to developments in modern corporate law and changes in business circumstances. The Delaware courts are known for their considerable expertise in dealing with complex corporate issues and providing predictability through a substantial body of case law construing Delaware's corporate law. Coupled with an active bar known for continually assessing and recommending improvements to the DGCL, these factors add greater certainty in complying with fiduciary responsibilities and assessing risks associated with conducting business.

        Our board of directors also considered the following disadvantages of the domestication to our shareholders: the increased costs to comply with the United States federal securities laws, including the Sarbanes-Oxley Act of 2002, and the potential tax liability to our shareholders. However, our board believes that the potential benefits of the change in domicile and related adoption of our proposed Delaware certificate of incorporation and by-laws outweigh the disadvantages. In particular, our board believes the prospects for greater acceptance in the capital markets and enhanced marketability for our common stock plus the benefits associated with attracting and retaining skilled and experienced personnel, as well as the greater sophistication, breadth and certainty of Delaware law, make the proposed domestication beneficial to Xplore Technologies, its management and its shareholders.

        There are material differences between Canadian corporate law and Delaware corporate law with respect to shareholders' rights and Delaware law may offer shareholders more or less protection depending on the particular matter. A detailed overview of the material differences is set forth below.

Effects of the Continuance

        Applicable Law.     As of the effective date of the continuance, our legal jurisdiction of incorporation will be Delaware, and the continuing corporation, will no longer be subject to the provisions of the Canada Business Corporations Act. All matters of corporate law will be determined under the Delaware General Corporation Law. We will retain our original incorporation date in Canada as our date of incorporation for purposes of the Delaware General Corporation Law. Upon the effectiveness of the Registration Statement of which this prospectus forms a part, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended. In addition, we will continue to be subject to the rules and regulations of the Toronto Stock Exchange and the obligations imposed by each provincial securities regulatory authority in Canada.

        Assets, Liabilities, Obligations, Etc.     Under Delaware law, as of the effective date of the continuance, all of our assets, property, rights, liabilities and obligations immediately prior to the continuance will continue to be our assets, property, rights, liabilities and obligations. Canadian corporate law ceases to apply to us on the date shown on the certificate of discontinuance to be issued by the Director of the Canada Business Corporations Act.

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        Capital Stock.     Once the domestication is completed, holders of our common and/or preferred shares will continue to own one share of our common stock for each common share held and one share of our preferred stock for each preferred share held before the continuance. The existing certificates representing Xplore Canada's shares of capital stock will not be canceled. Holders of options or warrants to purchase Xplore Canada's common shares on the effective date of the continuance will continue to hold options or warrants to purchase the same number of shares of Xplore Delaware's common stock at the same exercise price.

        Business and Operations.     The continuance, if approved, will effect a change in the legal jurisdiction of incorporation as of the effective date thereof, but our business and operations will remain the same.

Officers and Directors

        Our board of directors currently consists of four members, Philip S. Sassower (Chairman), Brian E. Usher-Jones, Andrea Goren and Thomas F. Leonardis. Upon the domestication, our board of directors will consist of the same four individuals. Immediately following the domestication, our executive officers will also be unchanged. They are Philip S. Sassower, Chief Executive Officer, Mark Holleran, President and Chief Operating Officer, and Michael J. Rapisand, Chief Financial Officer and Corporate Secretary.

Treatment of the Outstanding Capital Stock, Options and Warrants

        The existing share certificates representing of our common and preferred shares will continue to represent the same number of shares of our common or preferred stock, as applicable, after the domestication without any action on your part. You will not have to exchange any share certificates. We will issue new certificates to you representing shares of capital stock of Xplore Technologies as a Delaware corporation upon your transfer or at your request. Holders of our outstanding options and warrants will continue to hold the same securities, which will remain exercisable for an equivalent number of shares of common stock of Xplore Technologies as a Delaware corporation for the equivalent exercise price per share, without any action by the holder.

Shareholder Approval

        The continuance is subject to various conditions, including approval by our shareholders of the special resolution authorizing the transaction. A copy of the special resolution is attached to this prospectus as Exhibit A. Under Canadian law, this requires affirmative votes from at least two-thirds of the votes cast by the holders of our common shares, Series A Preferred Shares and Series B Preferred Shares, voting together at the meeting as a single class, whether in person or by proxy. Assuming we receive the requisite shareholder approval for the continuance, our board of directors will retain the right to terminate or abandon the continuance if it determines that consummating the continuance would be inadvisable or not in the best interests of Xplore Technologies or its shareholders, or if all of the respective conditions to consummation of the continuance have not occurred.

Regulatory and Other Approvals

        The continuance is subject to the authorization of the Director of the Canada Business Corporations Act. The Director is empowered to authorize the continuance if, among other things, he is satisfied that the continuance will not adversely affect our creditors or shareholders.

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        Canadian law also requires that an application for authorization of a Canadian corporation to continue in another jurisdiction must be accompanied by:

•

a copy of relevant excerpts from the DGCL;



•

an opinion from counsel qualified to provide opinions on DGCL that the law in Delaware permits import of a Canadian corporation, and provides that:



•

the property of Xplore Canada continues to be the property of Xplore Delaware,



•

Xplore Delaware continues to be liable for the obligations of Xplore Canada,



•

an existing cause of action, claim or liability to prosecution is unaffected,



•

a civil, criminal or administrative action or proceeding pending by or against the corporation may be continued to be prosecuted by or against the body corporate, and



•

a conviction against, or ruling, order or judgment in favor of or against, Xplore Canada may be enforced by or against Xplore Delaware;



•

an affidavit of an authorized director or officer stating that:



•

shareholders and creditors will not be adversely affected,



•

the export has been authorized by special resolution of shareholders, and



•

shareholders have been given full disclosure of the effect of the export on their rights and interests;



•

if there are any dissenters, a statement of a director or officer that Xplore Technologies will undertake to honor the dissent right granted by Section 190 of the Canada Business Corporations Act and if necessary to turn to the Canadian courts for that purpose and that it has sufficient funds to pay dissenting shareholders and that arrangements have been made to ensure that those funds will be available to satisfy that claim; and



•

the applicable filing fee.

        Subject to the Director's authorization of the continuance, and the approval of our board of directors and shareholders, we anticipate that we will file with the Secretary of State of Delaware a certificate of domestication and a certificate of incorporation under Section 388 of the DGCL, and that we will be domesticated in Delaware on the date that all of the conditions to the domestication have been satisfied. Promptly thereafter, we intend to give notice to the Director that we have been continued under the laws of the State of Delaware and request that the Director issue us a certificate of discontinuance bearing the same date as the date of acceptance of our certificate of domestication and certificate of incorporation by the Secretary of State of Delaware.

Comparison of Shareholder Rights

        The principal attributes of our capital stock before and after continuance and domestication are comparable, but there are material differences in shareholder rights as described below.

        General.     On the effective date of the domestication, we will be deemed to have been incorporated under the laws of the State of Delaware from our inception and will be governed by the certificate of incorporation filed with the certificate of domestication adopted in the special resolution of our shareholders authorizing the domestication. Differences between Canadian corporate law and

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Delaware corporate law and between our current articles of incorporation and by-laws and the proposed certificate of incorporation and by-laws will result in various changes in the rights of our shareholders. The following summary comparison highlights provisions of applicable Canadian and Delaware corporate law and our proposed certificate of incorporation and by-laws, as well as our current Canadian articles of incorporation and by-laws. Our proposed certificate of incorporation and by-laws are included in this prospectus as Exhibit C and Exhibit D, respectively.

        Capital Structure.     Under our proposed Delaware certificate of incorporation, the total number of shares of capital stock that we will have the authority to issue is 300 million shares of common stock, par value $0.001 per share, and 90 million shares of preferred stock, par value $0.001 per share, of which 64 million have been designated Series A Preferred Stock and 10 million have been designated Series B Preferred Stock. Under our current Canadian articles of incorporation, we presently have the authority to issue an unlimited number of common shares, without par value and an unlimited number of preferred shares, issuable in a series, without par value.

        Shareholder Approval; Vote on Extraordinary Corporate Transactions.     Canadian law generally requires a vote of shareholders on a greater number and diversity of corporate matters than Delaware law. Furthermore, many matters requiring shareholder approval under Canadian law must be approved by a special resolution of not less than a two-thirds majority of the votes cast by shareholders who voted on those matters. In certain cases, a special resolution to approve an extraordinary corporate action is also required to be approved separately by the holders of a class or series of shares, whether or not shares of such class or series otherwise carry the right to vote.

        Under Delaware law, and our proposed certificate of incorporation, a sale, lease or exchange of all or substantially all the property or assets of a Delaware corporation or an amendment to its certificate of incorporation requires the approval of the holders of a majority of the outstanding voting power. Mergers or consolidations also generally require the approval of the holders of a majority of the outstanding voting power of the corporation. However, shareholder approval is generally not required by a Delaware corporation if such corporation's certificate of incorporation is not amended by the merger; each share of stock of such corporation outstanding immediately prior to the merger will be an identical outstanding share of the surviving corporation after the effective date of the merger; and the number of shares of common stock, including securities convertible into common stock, issued in the merger does not exceed 20% of such corporation's outstanding common stock immediately prior to the effective date of the merger. In addition, shareholder approval is not required by a Delaware corporation if it is the surviving corporation in a merger with a subsidiary in which its ownership was 90% or greater.

        Amendments to the Governing Documents.     Under Canadian law, amendments to the articles of incorporation generally require the approval of not less than two-thirds of the votes cast by shareholders who voted on the resolution. The directors may make, amend or repeal any by-law unless the articles of incorporation or by-laws provide otherwise. When directors make, amend or repeal a by-law, they are required under the Canada Business Corporations Act to submit the change to shareholders at the next meeting of shareholders. Shareholders may confirm, reject or amend the by-law, amendment or repeal by a majority of the votes cast by shareholders who voted on the resolution.

        Under Delaware law, an amendment to a corporation's certificate of incorporation requires the approval by the holders of a majority of the outstanding voting power. In addition, under Delaware law, if the amendment to the certificate of incorporation would increase or decrease the aggregate number of authorized shares of a class, increase or decrease the par value of the shares of such class, or alter or change the powers, preferences or special rights of the shares of such class so as to affect them adversely, that class is entitled to vote separately on the amendment whether or not it is

25

designated as voting stock. Furthermore, if the proposed amendment would alter or change the powers, preferences or special rights of one or more series of any class so as to affect them adversely, but shall not so affect the entire class, then only the shares of the series so affected by the amendment shall be considered a separate class for purposes of the class vote. Delaware law reserves the power to the shareholders to adopt, amend or repeal the by-laws unless the certificate of incorporation confers such power on the board of directors in addition to the shareholders. Our proposed certificate of incorporation authorizes our board of directors to adopt, amended or repeal our by-laws.

        Place of Meetings.     Canadian law provides that meetings of shareholders must be held at the place within Canada provided in the by-laws or, in the absence of such provision, at the place within Canada that the directors determine. A meeting of shareholders may be held at a place outside of Canada if the place is specified in the articles of incorporation or all the shareholders entitled to vote at the meeting agree that the meeting is to be held at that place. Xplore Canada's articles provide that meetings of our shareholders may be held at such places in Canada or the United States as our directors may from time to time determine. Delaware law provides that meetings of the shareholders be held at any place in or out of Delaware designated by or in the manner provided in the certificate of incorporation or by-laws. Our proposed by-laws provide that meetings of the shareholders will be held at any place designated by our board of directors.

        Quorum of Shareholders.     Canadian law provides that, unless the by-laws provide otherwise, a quorum of shareholders is present at a meeting of shareholders (irrespective of the number of persons actually present at the meeting) if holders of a majority of the shares entitled to vote at the meeting are present in person or represented by proxy. Our current by-laws provide that the presence of one shareholder, in person or by proxy, constitutes a quorum. Under Delaware law, the certificate of incorporation or by-laws may specify the required quorum, but generally a quorum may consist of no less than one-third of the total voting power. Our proposed by-laws provide that the holders of a majority of the voting power, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders.

        Call of Meetings.     Canadian law provides that holders of not less than five percent of our issued voting shares may requisition the directors requiring them to call and hold a special meeting for the purposes stated in the requisition. Delaware law provides that a special meeting of the shareholders may be called by the board of directors or by any person or persons as may be authorized by the certificate of incorporation or by-laws. Our proposed by-laws provide that a special meeting of shareholders may only be called by our board of directors.

        Shareholder Consent in Lieu of Meeting.     Under Canadian law, shareholders can take action by written resolution and without a meeting only if all shareholders entitled to vote on that resolution sign the written resolution. Under Delaware law, unless otherwise limited by the certificate of incorporation, shareholders may act by written consent without a meeting if holders of outstanding stock representing not less than the minimum number of votes that would be necessary to take the action at an annual or special meeting execute a written consent providing for the action.

        Director Qualification and Number.     The Canada Business Corporations Act states that a distributing corporation must have no fewer than three directors, at least two of whom are not officers or employees of the corporation or its affiliates. Additionally, at least 25% of the directors must be Canadian residents unless the corporation has less than four directors, in which case at least one director must be a Canadian resident. Delaware law has no similar requirements; however, the governance standards of all major U.S. stock exchanges require the majority of a listed company's board of directors to be independent.

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        Fiduciary Duty of Directors.     Directors of a corporation incorporated or organized under the Canada Business Corporations Act or Delaware General Corporation Law have fiduciary obligations to the corporation and its shareholders. Under these fiduciary obligations, the directors must act in accordance with the so-called duty of care. The Canada Business Corporations Act requires directors of a Canadian corporation, in exercising their powers and discharging their duties, to act honestly and in good faith with a view to the best interests of the corporation and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. Under Delaware common law, directors have a duty of care and a duty of loyalty. The duty of care requires that the directors act in an informed and deliberative manner and inform themselves, prior to making a business decision, of all material information reasonably available to them. The duty of loyalty is the duty to act in good faith, not out of self-interest, and in a manner which the directors reasonably believe to be in the best interest of the shareholders.

        Personal Liability of Directors.     The Canada Business Corporations Act prescribes circumstances where directors can be liable for malfeasance or nonfeasance. Certain actions to enforce a liability imposed by the Canada Business Corporations Act must be brought within two years from the date of the resolution authorizing the act complained of. A director will be deemed to have complied with his fiduciary obligations to the corporation under certain sections of the Canada Business Corporations Act if he relied in good faith on:

•

financial statements represented to him by an officer or in a written report of the auditor fairly reflecting the financial condition of the corporation; or



•

a report of a person whose profession lends credibility to a statement made by the professional person.

The Canada Business Corporations Act also contains other provisions limiting personal liability of a corporation's directors.

        Our proposed certificate of incorporation limits the liability of directors to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director. However, such limitation of liability cannot be relied upon in respect of certain prescribed conduct, including:

•

acts or omissions not in good faith, which involve intentional misconduct or which involve a knowing violation of law;



•

a breach of the duty of loyalty;



•

payment of unlawful dividends;



•

expenditure of funds for unlawful stock repurchases or redemptions; or



•

any transactions from which such director derived an improper personal benefit.

        Indemnification of Officers and Directors.     Under the Canada Business Corporations Act and pursuant to our current by-laws, we will indemnify present or former directors or officers against all costs, charges and expenses, including an amount paid to settle an action or settle a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with Xplore Canada. In order to qualify for indemnification such director or officers must:

•

have acted honestly and in good faith with a view to the best interests of the corporation; and



•

in the case of a criminal or administrative action or proceeding enforced by a monetary penalty, have had reasonable grounds for believing that his conduct was lawful.

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        The Canada Business Corporations Act also provides that such persons are entitled to indemnity from the corporation in respect of all costs, charges and expenses reasonably incurred in connection with the defense of any such proceeding if the person was not judged by the court or other competent authority to have committed any fault or omitted to do anything that the person ought to have done and otherwise meets the qualifications for indemnity described above.

        Delaware law permits indemnification to its present or former directors or officers, employees and agents made a party, or threatened to be made a party, to any third party proceeding by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, against expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, if such person:

•

acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation; and



•

with respect to any criminal action or proceeding, had no reason to believe that such conduct was unlawful.

        In a derivative action, or an action by or in the right of the corporation, the corporation is permitted to indemnify directors, officers, employees and agents against expenses actually and reasonably incurred by them in connection with the defense or settlement of an action or suit if they acted in good faith and in a manner that they reasonably believed to be in or not opposed to the best interests of the corporation. However, in such a case, no indemnification shall be made if the person is adjudged liable to the corporation, unless and only to the extent that, the court in which the action or suit was brought or the Court of Chancery of the State of Delaware shall determine upon application that such person is fairly and reasonably entitled to indemnity for such expenses despite such adjudication of liability to the corporation.

        Our proposed by-laws provide for mandatory indemnification of our directors and officers to the extent permitted under Delaware law. The Delaware General Corporation Law allows the corporation to advance expenses before the resolution of an action, if in the case of current directors and officers, such persons agree to repay any such amount advanced if they are later determined not to be entitled to indemnification. Our proposed by-laws provide for the mandatory advancement of expenses to directors and officers.

        Derivative Action.     Under the Canada Business Corporations Act, a complainant, who is defined as either a present or former registered holder or beneficial owner of a security of a corporation or any of its affiliates; a present or former director or officer of a corporation or any of its affiliates; the Director; or any other person who, in the discretion of a court, is a proper person to make an application under the part of the Canada Business Corporations Act dealing with shareholder remedies, may apply to the court for the right to bring an action in the name of and on behalf of a corporation or any of its subsidiaries, or to intervene in an existing action to which they are a party for the purpose of prosecuting, defending or discontinuing the action on behalf of the entity. Under the Canada Business Corporations Act, the court must be satisfied that:

•

the complainant has given proper notice to the directors of the corporation or its subsidiary of the complainant's intention to apply to the court if the directors of the corporation or its subsidiary will not bring, diligently prosecute or defend or discontinue the action;



•

the complainant is acting in good faith; and



•

it appears to be in the interest of the corporation or its subsidiary that the action be brought, prosecuted, defended or discontinued.

        Under the Canada Business Corporations Act, the court in a derivative action may make any order it thinks fit including, orders pertaining to the control or conduct of the lawsuit by the complainant or

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the making of payments to former and present shareholders and payment of reasonable legal fees incurred by the complainant.

        Similarly, in Delaware, a shareholder may bring a derivative action on behalf of the corporation to enforce a corporate right, including the breach of a director's duty to the corporation. Delaware law requires that the plaintiff in a derivative suit be a shareholder of the corporation at the time of the wrong complained of and remain so through the duration of the suit; that the plaintiff make a demand on the directors of the corporation to assert the corporate claim unless the demand would be futile; and that the plaintiff is an adequate representative of the other shareholders.

        Dissenter's Rights.     The Canada Business Corporations Act provides that shareholders of a corporation entitled to vote on certain matters are entitled to exercise dissent rights and demand payment for the fair value of their shares. Dissent rights exist when there is a vote upon matters such as:

•

any amalgamation with another corporation (other than with certain affiliated corporations);



•

an amendment to the corporation's articles of incorporation to add, change or remove any provisions restricting the issue, transfer or ownership of shares;



•

an amendment to the corporation's articles of incorporation to add, change or remove any restriction upon the business or businesses that the corporation may carry on;



•

a continuance under the laws of another jurisdiction;



•

a sale, lease or exchange of all or substantially all the property of the corporation other than in the ordinary course of business; and



•

a court order permitting a shareholder to dissent in connection with an application to the court for an order approving an arrangement proposed by the corporation.

        However, a shareholder is not entitled to dissent if an amendment to the articles of incorporation is effected by a court order approving a reorganization or by a court order made in connection with an action for an oppression remedy.

        Under Delaware law, shareholders who have neither voted in favor of or consented to the merger or consolidation have the right to seek appraisal in connection with certain mergers or consolidations by demanding payment in cash for their shares equal to the fair value of such shares. Fair value is determined by a court in an action timely brought by the dissenters. In determining fair value, the court may consider all relevant factors, including the rate of interest which the resulting or surviving corporation would have had to pay to borrow money during the pendency of the court proceeding.

        The Delaware General Corporation Law grants appraisal rights only in the case of certain mergers or consolidations and not in the case of other fundamental changes such as the sale of all or substantially all of the assets of the corporation or amendments to the certificate of incorporation, unless so provided in the corporation's certificate of incorporation. Further, no appraisal rights are available for shares of any class or series listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or held of record by more than 2,000 shareholders. However, appraisal rights are available if the agreement of merger or consolidation does not convert such shares into:

•

stock of the surviving corporation,



•

stock of another corporation which is either listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or held of record by more than 2,000 shareholders, or

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•

cash in lieu of fractional shares or some combination of the above.

        In addition, dissenters' rights are not available for any shares of the surviving corporation if the merger did not require the vote of the shareholders of the surviving corporation.

        Oppression Remedy.     Under the Canada Business Corporations Act, a complainant has the right to apply to a court for an order where an act or omission of the corporation or an affiliate effects a result, or the business or affairs of which are or have been conducted in a manner, or the exercise of the directors' powers are or have been exercised in a manner, that would be oppressive or unfairly prejudicial to or would unfairly disregard the interest of any security holder, creditor, director or officer of the corporation. On such application, the court may make any interim or final order it thinks fit, including an order restraining the conduct complained of. There are no equivalent statutory remedies under the Delaware General Corporation Law; however, shareholders may be entitled to remedies for a violation of a director's fiduciary duties under Delaware common law.

        Business Combinations.     Section 203 of the Delaware Business Corporation Law provides, with some exceptions, that a Delaware corporation may not engage in any business combination with a person, or an affiliate or associate of such person, who is an interested shareholder for three years from the date that person became an interested shareholder unless:

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the transaction or the business combination resulting in a person becoming an interested shareholder is approved by the board of directors of the corporation before the person becomes an interested shareholder;



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the interested shareholder acquired at least 85% of the outstanding voting stock of the corporation in the same transaction that makes the person an interested shareholder, excluding shares owned by persons who are both officers and directors of the corporation, and shares held by certain employee stock ownership plans; or



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on or after the date the person becomes an interested shareholder, the business combination is approved by the corporation's board of directors and by the holders of at least two-thirds of the corporation's outstanding voting stock at an annual or special meeting, excluding shares owned by the interested shareholder.

        An "interested shareholder" is defined as any person who is:

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the owner of 15% or more of the outstanding voting stock of the corporation; or



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an affiliate or associate of the corporation and who was the owner of 15% or more of the outstanding voting stock of the corporation at any time within the three years immediately prior to the date on which the person's status as an interested shareholder is to be determined.

        A "business combination" includes a merger or consolidation, a sale or other disposition of assets having an aggregate market value of 10% or more of the consolidated assets of the corporation or the aggregate market value of the outstanding stock of the corporation and certain transactions that would increase the interested shareholder's proportionate share ownership in the corporation.

        A corporation may, at its option, exclude itself from the coverage of Section 203 by an appropriate provision in its certificate of incorporation. Our proposed certificate of incorporation does not contain such an exclusion from Section 203 of the Delaware General Corporation Law. There is no comparable provision relating to business combinations under the Canada Business Corporations Act but restrictions on business combinations do exist under applicable Canadian securities laws.

        Anti-Takeover Effects.     Some powers granted to companies under Delaware law may allow a Delaware corporation to make itself potentially less vulnerable to hostile takeover attempts. These powers include the ability to:

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implement a staggered board of directors, which prevents an immediate change in control of the board;



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require that notice of nominations for directors be given to the corporation prior to a meeting where directors will be elected, which may give management an opportunity to make a greater effort to solicit its own proxies;



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only allow the board of directors to call a special meeting of shareholders, which may thwart a raider's ability to call a meeting to make disruptive changes;



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eliminate shareholders' action by written consent, which would restrict a raider's actions to a meeting scenario;



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remove a director from a staggered board only for cause, which gives some protection to directors on a staggered board from arbitrary removal;



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provide that the power to determine the number of directors and to fill vacancies be vested solely in the board, so that the incumbent board, not a raider, would control vacant board positions;



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provide for supermajority voting in some circumstances, including mergers and certificate of incorporation amendments; and



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issue "blank check" preferred stock, which may be used to make a corporation less attractive to a raider.

        Our proposed certificate of incorporation and/or by-laws will provide us with the following powers:

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prior notice of director nominations;



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restrictions on the ability to call a special meeting of stockholders;



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to determine the number of directors and to fill vacancies on the board; and



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to issue "blank check" preferred stock.

Our Proposed Delaware Certificate of Incorporation and By-Laws

        We have included provisions in our proposed Delaware certificate of incorporation and by-laws that do not simply reflect the default provisions of Delaware law. They are as follows:

        Voting Rights Of Common Stock.     Under Delaware law, unless the certificate of incorporation otherwise provides, each stockholder is entitled to one vote for each share of common stock held by such stockholder. Under our proposed certificate of incorporation, holders of our common stock are entitled to one vote for each share of common stock held by them; however, holders of our common stock are not entitled to vote on any amendment to our certificate of incorporation relating solely to the terms of our preferred stock if the holders of our preferred stock are entitled to vote on the amendment pursuant to our proposed certificate of incorporation.

        "Blank-Check" Preferred Stock Issuance Authority For Board Of Directors.     Under Delaware law, the powers, preferences and rights, and the qualifications, limitations or restrictions in respect of any series of preferred stock must be set forth in the certificate of incorporation, or, if authority is vested in the board of directors by the certificate of incorporation, in the resolutions providing for the issuance of such series of preferred stock. Our proposed certificate of incorporation contains a provision granting our board of directors the authority to fix by resolution the powers, preferences, and rights, and the qualifications, limitations or restrictions in respect of any series of preferred stock.

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        Increase In Amount Of Authorized Preferred Stock.     Under Delaware law, the holders of outstanding shares of a class of stock are entitled to vote as a class on a proposed amendment to increase or decrease the number of authorized shares of such class unless the certificate of incorporation provides that such number of shares may be increased or decreased by the affirmative vote of holders of a majority of the voting power of the outstanding shares entitled to vote. Our proposed certificate of incorporation contains such a provision and requires the vote of the holders of a majority of the voting power of all of our outstanding shares entitled to vote to increase or decrease the aggregate number of authorized shares of preferred stock unless a separate vote is otherwise required.

        By-Laws.     Under Delaware law, stockholders entitled to vote have the power to adopt, amend or repeal the by-laws of the corporation. In addition, if the certificate of incorporation so provides, the board of directors also has the power to adopt, amend or repeal the bylaws. Our proposed certificate of incorporation provides that a majority of the total number of directors has the power to make, amend, alter, change, add to or repeal our by-laws.

        Presentation Of Nominations and Proposals At Meetings Of Stockholders.     Delaware law does not provide procedures for stockholders to nominate individuals to serve on the board of directors or to present other proposals at meetings of stockholders. Our proposed by-laws contain procedures governing stockholder nominations and stockholder proposals. To nominate an individual to our board of directors at an annual or special stockholders meeting, or to present other proposals at an annual meeting, a stockholder must provide advance notice to us, in the case of an annual meeting, not fewer than 45 days nor more than 75 days prior to the first anniversary of the date on which we first mailed our proxy materials for the preceding year's annual meeting and, in the case of a special meeting, not later than the close of business on the later of the 90th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by our board of directors to be elected at such meeting.

        Number Of Directors.     Under Delaware law, the number of directors is fixed by, or in the manner provided in, the by-laws of a corporation, unless the certificate of incorporation fixes the number of directors. Our proposed certificate of incorporation provides that the number of directors must be set by a resolution adopted by a majority of the total number of directors. Our proposed by-laws provide that the number of directors on our board of directors may not be less than three or more than nine.

        Vacancies And Newly Created Directorships.     Under Delaware law, vacancies and newly created directorships may be filled by a majority of directors then in office unless the certificate of incorporation or the by-laws otherwise provide. Our proposed certificate of incorporation provides that any vacancies and newly created directorships on our board of directors must be filled by a majority of the directors then in office and not by stockholders.

Dissent Rights of Shareholders

        Section 190 of the Canada Business Corporations Act is reprinted in its entirety as Exhibit E to this prospectus. Shareholders may exercise their dissent rights in connection with the proposal to change our jurisdiction of incorporation from the federal jurisdiction of Canada to Delaware.

        If you wish to dissent and do so in compliance with Section 190 of the Canada Business Corporations Act, you will be entitled to be paid the fair value of the shares you hold if the domestication occurs. Fair value is determined as of the close of business on the day before the continuance is approved by shareholders.

        If you wish to dissent, you must send written objection to the continuance to us at or before the meeting. If you vote in favor of the continuance, you in effect lose your rights to dissent. If you abstain or vote against the continuance, you preserve your dissent rights if you comply with Section 190.

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However, it is not sufficient to vote against the continuance or abstain. You must also provide a separate dissent notice at or before the meeting. If you grant a proxy and intend to dissent, the proxy must instruct the proxy holder to vote against the continuance in order to prevent the proxy holder from voting such shares in favor of the continuance and thereby voiding your right to dissent. Under the Canada Business Corporations Act, you have no right of partial dissent. Accordingly, you may only dissent as to all your shares.

        Under Section 190, you may dissent only for shares that are registered in your name. In many cases, people beneficially own shares that are registered either:

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in the name of an intermediary, such as a bank, trust company, securities dealer, broker, trustee, administrator of self administered registered retirement savings plans, registered retirement income funds, registered educational savings plans and similar plans and their nominees; or



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in the name of a clearing agency in which the intermediary participates, such as The Canadian Depositary for Securities Limited or The Depository Trust Company.

        If you want to dissent and your shares are registered in someone else's name, you must contact your intermediary and either:

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instruct your intermediary to exercise the dissenters' rights on your behalf (which, if the shares are registered in the name of a clearing agency, will require that the shares first be re-registered in your intermediary's name); or



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instruct your intermediary to re-register the shares in your name, in which case you will have to exercise your dissenters' rights directly.

        In other words, if your shares are registered in someone else's name, you will not be able to exercise your dissenters' rights directly unless the shares are re-registered in your name. A dissenting shareholder may only make a claim under Section 190 with respect to all of the shares of a class held on behalf of any one beneficial owner and registered in the name of the dissenting shareholder. We are required to notify each shareholder who has filed a dissent notice when and if the continuance has been approved. This must be sent within 10 days after shareholders approve the continuance. We will not send a notice to any shareholder who voted to approve the continuance or who has withdrawn their dissent notice.

        Within 20 days after receiving the above notice from us, or if you do not receive such notice, within 20 days after learning that the continuance has been approved, you must send us a payment demand containing:

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your name and address;



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the number of shares you own; and



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a demand for payment of the fair value of your shares.

        Within 30 days after sending a payment demand, you must send to us through our transfer agent, Equity Transfer Services Inc., 200 University Avenue, Suite 400, Toronto, Ontario M5H 4H1, the certificates representing your shares. If you fail to send us a dissent notice, a payment demand or your share certificates within the appropriate time frame, you forfeit your right to dissent and your right to be paid the fair value of your shares. Our transfer agent will endorse on your share certificates a notice that you are a dissenting shareholder and will return the share certificates to you.

        Once you send a payment demand to us, you cease to have any rights as a shareholder. Your only remaining right is the right to be paid the fair value of your shares. Your rights as a shareholder will be reinstated if:

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you withdraw your payment demand prior to an offer being made by us;

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•

we fail to make you an offer of payment; or



•

if the continuance does not happen.

        Within seven days of the later of the effective date of the continuance or the date we receive your payment demand, we must send you a written offer to pay for your shares. This offer must include a written offer to pay you an amount considered by our board of directors to be the fair value of your shares accompanied by a statement showing how that value was determined. The offer must include a statement showing the manner used to calculate the fair value. Every offer to pay any shareholder must be on the same terms. We must pay you for your shares within 10 days after you accept our offer. Any such offer lapses if we do not receive your acceptance within 30 days after the offer to pay has been made to you.

        If we fail to make an offer to pay for your shares, or if you fail to accept the offer within the specified period, we may, within 50 days after the effective date of the continuance, apply to a court to fix a fair value for your shares. If we fail to apply to a court, you may apply to a court for the same purpose within a further period of 20 days. You are not required to give security for costs in such a case.

        All dissenting shareholders whose shares have not been purchased will be joined as parties and bound by the decision of the court. We are required to notify each affected dissenting shareholder of the date, place and consequences of the application and of their right to appear and be heard in person or by counsel. The court may determine whether any person who is a dissenting shareholder should be joined as a party. The court will then fix a fair value for the shares of all dissenting shareholders who have not accepted a payment offer from us. The final order of a court will be rendered against us for the amount of the fair value of the shares of all dissenting shareholders. The court may, in its discretion, allow a reasonable rate of interest on the amount payable to each dissenting shareholder and appoint an appraiser to assist in the determination of a fair value for the shares.

THIS IS ONLY A SUMMARY OF THE DISSENTING SHAREHOLDER PROVISIONS OF THE CANADA BUSINESS CORPORATIONS ACT. THEY ARE TECHNICAL AND COMPLEX. IT IS SUGGESTED THAT IF YOU WANT TO AVAIL YOURSELF OF YOUR RIGHTS THAT YOU SEEK YOUR OWN LEGAL ADVICE. FAILURE TO COMPLY STRICTLY WITH THE PROVISIONS OF THE CANADA BUSINESS CORPORATIONS ACT MAY PREJUDICE YOUR RIGHT OF DISSENT. SECTION 190 THE CANADA BUSINESS CORPORATIONS ACT IS ATTACHED HERETO AS EXHIBIT E AND IS INCORPORATED HEREIN BY REFERENCE.