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<SEC-DOCUMENT>0001130319-08-000867.txt : 20081204
<SEC-HEADER>0001130319-08-000867.hdr.sgml : 20081204
<ACCEPTANCE-DATETIME>20081204152902
ACCESSION NUMBER:		0001130319-08-000867
CONFORMED SUBMISSION TYPE:	SUPPL
PUBLIC DOCUMENT COUNT:		5
FILED AS OF DATE:		20081204
DATE AS OF CHANGE:		20081204
EFFECTIVENESS DATE:		20081204

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ONCOLYTICS BIOTECH INC
		CENTRAL INDEX KEY:			0001129928
		STANDARD INDUSTRIAL CLASSIFICATION:	PHARMACEUTICAL PREPARATIONS [2834]
		IRS NUMBER:				000000000
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		SUPPL
		SEC ACT:		
		SEC FILE NUMBER:	333-151513
		FILM NUMBER:		081229876

	BUSINESS ADDRESS:	
		STREET 1:		1167 KENSINGTON CRES NW SUITE 210
		STREET 2:		CALGARY ALBERTA CANADA T2N 1X7
		CITY:			ALBERTA CANADA
		STATE:			A0
		ZIP:			00000
		BUSINESS PHONE:		4036707380

	MAIL ADDRESS:	
		STREET 1:		210 - 1167 KENSINGTON CRES NW
		CITY:			CALGARY
		STATE:			A0
		ZIP:			T2N 1X7
</SEC-HEADER>
<DOCUMENT>
<TYPE>SUPPL
<SEQUENCE>1
<FILENAME>o42618suppl.htm
<DESCRIPTION>PROSPECTUS SUPPLEMENT DATED DECEMBER 4, 2008
<TEXT>
<HTML>
<HEAD>
<TITLE>Prospectus Supplement dated December 4, 2008</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV align="right" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 9pt">Filed pursuant to General
    Instruction II.L of Form
    <FONT style="white-space: nowrap">F-10;</FONT></FONT></B>
</DIV>

<DIV align="right" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 9pt">File&#160;No.
    <FONT style="white-space: nowrap">333-151513</FONT></FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Prospectus Supplement<BR>
(To a Short Form&nbsp;Base Shelf Prospectus Dated June&nbsp;16, 2008)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>No securities regulatory authority has expressed an opinion about these securities and it is an
offence to claim otherwise.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>This prospectus supplement, together with the short form base shelf prospectus dated June&nbsp;16, 2008
to which it relates, as amended or supplemented, and each document deemed to be incorporated by
reference into the short form base shelf prospectus, constitutes a public offering of these
securities only in those jurisdictions where they may be lawfully offered for sale and therein only
by persons permitted to sell such securities.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Information has been incorporated by reference in this prospectus supplement and the accompanying
short form base shelf prospectus from documents filed with securities commissions or similar
authorities in Canada. </I></B><I>Copies of the documents incorporated by reference in this prospectus
supplement and the short form base shelf prospectus may be obtained on request without charge from
the Corporate Secretary of Oncolytics Biotech&nbsp;Inc. at 210, 1167 Kensington Crescent&nbsp;N.W., Calgary,
Alberta T2N&nbsp;1X7, telephone (403)&nbsp;670-7377. In addition, copies of documents incorporated by
reference may be obtained from the securities commissions or similar authorities in Canada through
the SEDAR website at www.sedar.com. See &#147;Documents Incorporated by Reference&#148;.</I>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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<TR valign="bottom">
    <TD width="47%"></TD>
    <TD width="5%"></TD>
    <TD width="47%"></TD>
</TR>
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<TR valign="bottom"><!-- Blank Space -->
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><U><I>New Issue</I></U>
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">December&nbsp;4, 2008</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><IMG src="o42618o4261800.gif" alt="(ONCOLYTICS LOGO)">
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>5,175,000 Common Shares</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus supplement relates to the issuance of: (i)&nbsp;up to 2,500,000 of our common
shares (the &#147;<B>Common Shares</B>&#148;), issuable from time to time, on exercise of up to 2,500,000 common
share purchase warrants (expected to be issued by us on or about December&nbsp;5, 2008 pursuant to the
2008 Unit Offering (as described below), (ii)&nbsp;up to 375,000 Common Shares issuable from time to
time, on exercise of 375,000 common share purchase warrants that may be issued on the exercise of
the over-allotment option granted to the underwriter pursuant to the 2008 Unit Offering; (iii)&nbsp;the
issuance of 2,300,000 Common Shares, issuable from time to time, on exercise of 2,300,000 common
share purchase warrants issued by us on February&nbsp;22, 2007 in connection with our unit offering
under a short form prospectus dated February&nbsp;14, 2007 (the &#147;<B>2007 Unit Offering</B>&#148;); and (iv)&nbsp;such
indeterminate number of additional Common Shares that may be issuable by reason of the
anti-dilution provisions contained in the 2007 Warrant Indenture (as defined herein) and the 2008
Warrant Indenture (as defined herein). See &#147;Terms of 2008 Warrants&#148; and &#147;Terms of 2007 Warrants&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;1, 2008, we filed a prospectus supplement to a short form base shelf prospectus
dated June&nbsp;16, 2008 with the securities commissions in the provinces of British Columbia, Alberta,
Manitoba and Ontario and a registration statement on Form&nbsp;F-10 (File No.&nbsp;333-151513), principally filed on June&nbsp;6, 2008, as amended June&nbsp;17, 2008, with the
United States Securities and Exchange Commission (the&nbsp;&#147;<B>SEC</B>&#148;) relating to the offering (the &#147;<B>2008
Unit Offering</B>&#148;) by us in the provinces of British Columbia, Alberta, Manitoba and Ontario of up to
2,875,000 units of the Corporation, each unit consisting of one Common Share and one common share
purchase warrant (the &#147;<B>2008 Warrants</B>&#148;). Each 2008 Warrant will entitle the holder to purchase one
Common Share upon payment of Cdn.&nbsp;$1.80, subject to adjustment, at any time until 4:30&nbsp;p.m.
(Calgary time) on the date that is 36&nbsp;months from the date of the closing of the 2008 Unit
Offering. If on any date (the &#147;<B>Accelerated Exercise Date</B>&#148;) the 10-day volume weighted average
trading price of the Common Shares on the Toronto Stock Exchange (&#147;<B>TSX</B>&#148;) exceeds $2.50 per share,
then, at our sole discretion, and upon us sending the holders of 2008 Warrants written notice of
such Accelerated Exercise Date and issuing a news release announcing such Accelerated Exercise
Date, the 2008 Warrants shall only be exercisable for a period of 30&nbsp;days following the later of
the date on which such written notice is sent to holders of 2008 Warrants and the date on which
such announcement is made by news release. The exercise price of the 2008 Warrants was determined
by negotiation between us and the underwriter for the 2008 Unit Offering. See &#147;Plan of
Distribution&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;14, 2007, we filed a short form prospectus with the securities commissions in the
provinces of British Columbia, Alberta, Manitoba and Ontario and a registration statement on
Form&nbsp;F-10 (File No.&nbsp;333-140460)
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">with the SEC relating to the offering (the &#147;<B>2007 Unit Offering</B>&#148;) by
us of 4,600,000 units of the Corporation, each unit consisting of one Common Share and one-half of
a common share purchase warrant (the &#147;<B>2007 Warrants</B>&#148;, together with the 2008 Warrants, the
&#147;<B>Warrants</B>&#148;). The 2007 Unit Offering was completed on February&nbsp;22, 2007. Each whole 2007 Warrant
entitles the holder to purchase one Common Share upon payment of Cdn.&nbsp;$3.50, subject to adjustment,
at any time until 5:00&nbsp;p.m. (Calgary time) on February&nbsp;22, 2010. The exercise price of the 2007
Warrants was determined by negotiation between us and the underwriter for the 2007 Unit
Offering. See &#147;Plan of Distribution&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our outstanding Common Shares are listed for trading on the TSX under the trading symbol &#147;ONC&#148;
and on the NASDAQ Capital Market (the &#147;<B>NASDAQ</B>&#148;) under the trading symbol &#147;ONCY&#148;. The TSX has
approved the listing of the Common Shares issuable on the exercise of the 2007 Warrants. The TSX
has conditionally approved the listing of the Common Shares issuable on the exercise of the 2008
Warrants. Listing for the 2008 Warrants is subject to us fulfilling all of the requirements of the
TSX on or before February&nbsp;25, 2009. Pursuant to its procedure, the NASDAQ has verbally confirmed that it will not be objecting to the additional listing of the Common Shares issuable upon exercise of the 2007 Warrants.
We have also filed an application with the NASDAQ for the additional listing of the Common Shares issuable upon exercise of
the 2008 Warrants.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Investing in the Common Shares involves risks that are described in the &#147;Risk Factors&#148; section
beginning on page S-14 of this prospectus supplement and page 4 of the accompanying short form base
shelf prospectus.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus supplement registers the offering of the securities to which it relates under
the United States Securities Act of 1933, as amended (the &#147;<B>U.S. Securities Act</B>&#148;), in accordance
with the multi-jurisdictional disclosure system adopted by the SEC. This prospectus supplement
does not qualify the distribution of Common Shares in any province or territory of Canada.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING SHORT FORM BASE SHELF
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>We are permitted, under a multi-jurisdictional disclosure system adopted by the United States,
to prepare this prospectus supplement and the accompanying short form base shelf prospectus in
accordance with Canadian disclosure requirements. You should be aware that such requirements are
different from those of the United States. We have prepared our financial statements included or
incorporated herein by reference in accordance with Canadian generally accepted accounting
principles, and they are subject to Canadian auditing and auditor independence standards. Thus,
they may not be comparable to the financial statements of United States companies. Information
regarding the impact upon our financial statements of significant differences between Canadian and
United States generally accepted accounting principles is contained in the notes to our audited
financial statements and in our Current Report on </B><B>Form 6-K</B><B> dated November&nbsp;28, 2008, both of which
are incorporated by reference in this prospectus supplement and the accompanying short form base
shelf prospectus.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>You should be aware that the purchase of Common Shares may have tax consequences both in the
United States and Canada. This prospectus supplement and the accompanying short form base shelf
prospectus may not describe these tax consequences fully. You should read the tax discussion in
this prospectus supplement and the accompanying short form base shelf prospectus. See &#147;Canadian
Federal Income Tax Considerations&#148; and &#147;United States Federal Income Tax Considerations&#148; in this
prospectus supplement and the accompanying short form base shelf prospectus.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Your ability to enforce civil liabilities under United States federal securities laws may be
affected adversely by the fact that we are incorporated under the laws of Canada, the majority of
our officers and directors and some of the experts named in this prospectus supplement and the
accompanying short form base shelf prospectus are residents of Canada, and a substantial portion of
our assets and the assets of such persons are located outside the United States.</B>
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->ii<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our head office and principal place of business is located at 210, 1167 Kensington
Crescent&nbsp;N.W., Calgary, Alberta, T2N&nbsp;1X7. Our registered office is located at 4500 Bankers Hall
East, 855 &#150; 2nd Street&nbsp;S.W., Calgary, Alberta, T2P&nbsp;4K7.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->iii<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<!--TOC-->
</DIV>
<DIV align="left">
<A name="tocpage"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>TABLE OF CONTENTS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Page</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#101">IMPORTANT NOTICE ABOUT THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">S-1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#102">DEFINITIONS AND OTHER MATTERS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">S-1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#103">SPECIAL NOTICE REGARDING FORWARD-LOOKING STATEMENTS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">S-2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#104">DOCUMENTS INCORPORATED BY REFERENCE</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">S-2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#105">DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">S-4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#106">ONCOLYTICS BIOTECH INC.</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">S-4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#107">OUR BUSINESS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">S-4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#108">RECENT DEVELOPMENTS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">S-6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#109">CAPITALIZATION</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">S-7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#110">MARKET FOR SECURITIES</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">S-7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#111">USE OF PROCEEDS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">S-8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#112">PRIOR SALES</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">S-8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#113">TERMS OF 2008 WARRANTS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">S-8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#114">TERMS OF 2007 WARRANTS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">S-9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#115">PLAN OF DISTRIBUTION</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">S-10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#116">CANADIAN FEDERAL INCOME TAX CONSIDERATIONS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">S-11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#117">UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">S-14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#118">RISK FACTORS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">S-20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#119">LEGAL MATTERS AND INTEREST OF EXPERTS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">S-21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#119">AUDITORS'
CONSENT</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">S-22</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left">
<!--/TOC-->
</DIV>
<DIV align="left">
<A name="101"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>IMPORTANT NOTICE ABOUT THE INFORMATION<BR>
IN THIS PROSPECTUS SUPPLEMENT</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This document is in two parts. The first part is this prospectus supplement, which describes
the specific terms of the Common Shares being offered and also adds to and updates information
contained in the accompanying short form base shelf prospectus. The second part, the accompanying
short form base shelf prospectus, gives more general information, some of which may not apply to
the Common Shares being offered under this prospectus supplement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You should rely only on the information contained in or incorporated by reference in this
prospectus supplement and the accompanying short form base shelf prospectus. If the description of
the Common Shares varies between this prospectus supplement and the accompanying short form base
shelf prospectus, you should rely on the information in this prospectus supplement. We have not
authorized anyone to provide you with different or additional information. We are not making an
offer of the Common Shares in any jurisdiction where the offer is not permitted by law. If anyone
provides you with any different or inconsistent information, you should not rely on it. You should
not assume that the information contained in or incorporated by reference in this prospectus
supplement or the accompanying short form base shelf prospectus is accurate as of any date other
than the date on the front of this prospectus supplement.
</DIV>
<DIV align="left">
<A name="102"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>DEFINITIONS AND OTHER MATTERS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In this prospectus supplement and in the accompanying short form base shelf prospectus, unless
otherwise indicated, references to &#147;we&#148;, &#147;us&#148;, &#147;our&#148;, &#147;Oncolytics&#148; or the &#147;Corporation&#148; are to
Oncolytics Biotech&nbsp;Inc. and/or its subsidiary corporations, as applicable. All references to
&#147;dollars&#148;, &#147;Cdn.$&#148; or &#147;$&#148; are to Canadian dollars and all references to &#147;U.S.$&#148; are to United
States dollars.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We prepare our financial statements in accordance with Canadian generally accepted accounting
principles (&#147;<B>Canadian GAAP</B>&#148;), which differ from United States generally accepted accounting
principles (&#147;<B>U.S. GAAP</B>&#148;). Therefore, our financial statements incorporated by reference in this
prospectus supplement and in the accompanying short form base shelf prospectus and in the documents
incorporated by reference in this prospectus
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->S-1<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">supplement and in the accompanying short form base shelf prospectus may not be comparable to
financial statements prepared in accordance with U.S. GAAP. You should refer to Note&nbsp;21 of our
financial statements for the year ended December&nbsp;31, 2007 for a discussion of the principal
differences between our financial results determined under Canadian GAAP and under U.S. GAAP. For
our financial statements as at and for the three and nine months ended September&nbsp;30, 2008, you
should refer to our reconciliation of our financial statements as at and for the three and nine
months ended September&nbsp;30, 2008 to U.S. GAAP furnished to the SEC on the Corporation&#146;s Current
Report on Form 6-K dated November&nbsp;28, 2008 and incorporated into this prospectus supplement by
reference. See &#147;Documents Incorporated by Reference&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus supplement is deemed to be incorporated by reference into the accompanying
short form base shelf prospectus solely for the purposes of the offering of the Common Shares.
Other documents are also incorporated or deemed to be incorporated by reference into this
prospectus supplement and into the accompanying short form base shelf prospectus. See &#147;Documents
Incorporated by Reference&#148; in this prospectus supplement.
</DIV>
<DIV align="left">
<A name="103"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SPECIAL NOTICE REGARDING FORWARD-LOOKING STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Some of the statements that we make contain forward-looking statements reflecting our current
beliefs, plans, estimates and expectations. Readers are cautioned that these forward-looking
statements involve risks and uncertainties, including, without limitation, clinical trial study
delays, product development delays, our ability to attract and retain business partners, future
levels of government funding, competition from other biotechnology companies and our ability to
obtain the capital required for research, product development, operations and marketing. These
factors should be carefully considered and readers should not place undue reliance on our
forward-looking statements. Actual events may differ materially from our current expectations due
to risks and uncertainties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our statements of &#147;belief&#148;, &#147;estimates&#148;, &#147;expectations&#148; and other similar statements are based
primarily upon our results derived to date from our research and development program with animals
and early stage human results and upon which we believe we have a reasonable scientific basis to
expect the particular results to occur. It is not possible to predict, based upon studies in
animals or early stage human results, whether a new therapeutic will be proved to be safe and
effective in humans. There can be no assurance that the particular result expected by us will
occur. Except as required by applicable securities laws, we undertake no obligation to update
publicly any forward-looking statements for any reason after the date of this prospectus supplement
or to conform these statements to actual results or to changes in our expectations.
</DIV>
<DIV align="left">
<A name="104"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>DOCUMENTS INCORPORATED BY REFERENCE</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus supplement is deemed to be incorporated by reference into the accompanying
short form base shelf prospectus solely for the purposes of the offering of the Common Shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Other information has also been incorporated by reference in the accompanying base shelf
prospectus from documents filed with securities commissions or similar authorities in certain of
the provinces of Canada. </B>Copies of the documents incorporated herein by reference may be obtained
on request without charge from our Corporate Secretary at 210, 1167 Kensington Crescent&nbsp;N.W.,
Calgary, Alberta, T2N&nbsp;1X7 telephone (403)&nbsp;670-7377, and are available electronically at
www.sedar.com.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have filed the following documents with the securities commissions or similar regulatory
authorities in certain of the provinces of Canada and such documents are specifically incorporated
by reference in and form an integral part of the accompanying base shelf prospectus and this
prospectus supplement:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our Renewal Annual Information Form dated March&nbsp;5, 2008, for the year ended
December&nbsp;31, 2007 (the &#147;<B>AIF</B>&#148;);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our Management Proxy Circular dated March&nbsp;23, 2007 relating to the annual and
special meeting of shareholders held on May&nbsp;2, 2007;</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->S-2<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our Management Proxy Circular dated March&nbsp;20, 2008 relating to the annual and
special meeting of shareholders held on May&nbsp;7, 2008;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our audited financial statements, together with the notes thereto, as at and for the
years ended December&nbsp;31, 2007 and 2006 and the auditors&#146; report thereon addressed to
our shareholders;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our management&#146;s discussion and analysis of financial condition and results of
operations dated March&nbsp;5, 2008, for the year ended December&nbsp;31, 2007;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our unaudited interim consolidated financial statements, together with the notes
thereto, as at and for the three and nine months ended September&nbsp;30, 2008;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our management&#146;s discussion and analysis of financial condition and results of
operations dated November&nbsp;4, 2008, for the three and nine months ended September&nbsp;30,
2008; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the reconciliation of our unaudited interim consolidated financial statements as at
and for the three and nine months ended September&nbsp;30, 2008 to U.S. GAAP, filed on
November&nbsp;28, 2008 under the heading &#147;Other&#148;.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any documents of the type required by Section&nbsp;11.1 of Form&nbsp;44-101F1 &#150; <I>Short Form&nbsp;Prospectus</I>
promulgated under National Instrument 44-101 &#150; <I>Short Form&nbsp;Prospectus Distributions </I>of the Canadian
Securities Administrators to be incorporated by reference in a short form prospectus, including,
without limitation, any annual information form, comparative annual financial statements and the
auditors&#146; report thereon, comparative interim financial statements, management&#146;s discussion and
analysis of financial condition and results of operations, material change report (except a
confidential material change report), business acquisition report and information circular, if
filed by us with the securities commissions or similar authorities in the provinces of British
Columbia, Alberta, Manitoba and Ontario after the date of this prospectus supplement and prior to
the termination of the distribution of the Common Shares under this prospectus supplement shall be
deemed to be incorporated by reference in the accompanying base shelf prospectus for the purposes
of this Offering.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any report filed by us with the SEC pursuant to section&nbsp;13(a), 13(c), 14 or 15(d) of the
United States Securities Exchange Act of 1934, as amended, after the date of this prospectus
supplement shall be deemed to be incorporated by reference into the registration statement of which
this prospectus supplement forms a part, if and to the extent expressly provided in such report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Any statement contained in the accompanying base shelf prospectus, in this prospectus
supplement or in a document incorporated or deemed to be incorporated by reference in the
accompanying base shelf prospectus will be deemed to be modified or superseded for purposes of this
prospectus supplement to the extent that a statement contained in this prospectus supplement or in
any other subsequently filed document which also is, or is deemed to be, incorporated by reference
into the accompanying base shelf prospectus modifies or supersedes that statement. The modifying
or superseding statement need not state that it has modified or superseded a prior statement or
include any other information set forth in the document that it modifies or supersedes. The making
of a modifying or superseding statement shall not be deemed an admission for any purposes that the
modified or superseded statement when made, constituted a misrepresentation, an untrue statement of
a material fact or an omission to state a material fact that is required to be stated or that is
necessary to make a statement not misleading in light of the circumstances in which it was made.
Any statement so modified or superseded shall not be deemed, except as so modified or superseded,
to constitute part of this prospectus supplement or the accompanying base shelf prospectus.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon a new annual information form and related audited annual financial statements and
management&#146;s discussion and analysis being filed by us with, and where required, accepted by, the
securities commission or similar regulatory authority in the provinces of British Columbia,
Alberta, Manitoba and Ontario during the term of this prospectus supplement, the previous annual
information form, the previous audited annual financial statements and related management&#146;s
discussion and analysis, all unaudited interim financial statements and related management&#146;s
discussion and analysis, material change reports and business acquisition reports filed prior to
the commencement of
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">our financial year in which the new annual information form and related audited
annual financial statements and
management&#146;s discussion and analysis are filed shall be deemed no longer to be incorporated
into the accompanying base shelf prospectus for purposes of future offers and sales of Common
Shares under this prospectus supplement. Upon new interim financial statements and related
management&#146;s discussion and analysis being filed by us with the securities commission or similar
regulatory authority in the provinces of British Columbia, Alberta, Manitoba and Ontario during the
term of this prospectus supplement, all interim financial statements and related management&#146;s
discussion and analysis filed prior to the new interim consolidated financial statements and
related management&#146;s discussion and analysis shall be deemed no longer to be incorporated into the
accompanying base shelf prospectus for purposes of future offers and sales of Common Shares under
this prospectus supplement. Upon a new information circular relating to an annual meeting of
holders of Common Shares being filed by us with the securities commission or similar regulatory
authority in the provinces of British Columbia, Alberta, Manitoba and Ontario during the term of
this prospectus supplement, the information circular for the preceding annual meeting of holders of
Common Shares shall be deemed no longer to be incorporated into the accompanying base shelf
prospectus for purposes of future offers and sales of Common Shares under this prospectus
supplement.
</DIV>

<DIV align="left">
<A name="105"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following documents have been filed with the SEC as part of the registration statement on
Form F-10 (File No.&nbsp;333-151513) of which this prospectus supplement forms a part: the documents
referred to under &#147;Documents Incorporated by Reference&#148;, consent of Ernst &#038; Young&nbsp;LLP, consent of
Bennett Jones LLP, and powers of attorney from our directors and officers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Warrant Indenture for the
2007 Warrants has been filed with the SEC as Exhibit&nbsp;7.1 to the
registration statement on Form&nbsp;F-10 (File No.&nbsp;333-140460) as filed with the SEC on February&nbsp;15, 2007 as is hereby incorporated by reference into the
registration statement on Form&nbsp;F-10 (File No. 333-151513) to which this prospectus supplement relates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Warrant Indenture for the 2008 Warrants has been or will be filed with the SEC as part of
the registration statement on Form F-10 (File No.&nbsp;333-151513).
</DIV>
<DIV align="left">
<A name="106"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ONCOLYTICS BIOTECH INC.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Oncolytics Biotech&nbsp;Inc. was incorporated pursuant to the provisions of the <I>Business
Corporations Act </I>(Alberta) on April&nbsp;2, 1998 as 779738 Alberta&nbsp;Ltd. On April&nbsp;8, 1998, we amended
our articles and changed our name to Oncolytics Biotech&nbsp;Inc. On July&nbsp;29, 1999, we further amended
our articles by removing the private company restrictions and subdividing our 2,222,222 Common
Shares issued and outstanding into 6,750,000 Common Shares. On February&nbsp;9, 2007, we further
amended our articles to permit for our shareholder meetings to be held at any place in Alberta or
at any other location as determined by our directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our head office and principal place of business is located at 210, 1167 Kensington
Crescent&nbsp;N.W., Calgary, Alberta T2N&nbsp;1X7. Our registered office is located at 4500 Bankers Hall
East, 855 &#151; 2nd Street&nbsp;S.W., Calgary, Alberta T2P&nbsp;4K7.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have one direct wholly-owned subsidiary, Oncolytics Biotech (Barbados)&nbsp;Inc. (&#147;<B>Oncolytics
Barbados</B>&#148;), which is incorporated pursuant to the laws of Barbados and one indirect wholly-owned
subsidiary, Oncolytics Biotech (U.S.),&nbsp;Inc., which is incorporated pursuant to the laws of
Delaware.
</DIV>
<DIV align="left">
<A name="107"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>OUR BUSINESS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We focus on the discovery and development of oncolytic viruses for the treatment of cancers
that have not been successfully treated with conventional therapeutics. Recent scientific advances
in oncology, virology, and molecular biology have created opportunities for new approaches to the
treatment of cancer. The product we are presently developing may represent a novel treatment for
Ras-mediated cancers which can be used as an alternative to existing cytotoxic or cytostatic
therapies or as an adjuvant therapy to conventional chemotherapy, radiation
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">therapy, or surgical
resections. It could also potentially be used to treat certain cellular proliferative disorders
for which no current therapy exists.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our technologies are based primarily on discoveries in the Department of Microbiology and
Infectious Diseases at the University of Calgary in the 1990&#146;s. Oncolytics was formed in 1998 to
explore the natural oncolytic capability of the reovirus, a virus that preferentially replicates in
cells with an activated Ras pathway.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The lead product being developed by us may represent a novel treatment for certain tumour
types and some cellular proliferative disorders. Our lead product is a virus that is able to
replicate specifically in, and hence kill, certain tumour cells both in tissue culture as well as
in a number of animal models without damaging normal cells.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our potential product for human use, REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>, is developed from the reovirus.
This virus has been demonstrated to replicate specifically in tumour cells bearing an activated Ras
pathway. Activating mutations of Ras occur in approximately thirty per cent of all human tumours
directly, but considering its central role in signal transduction, activation of the Ras pathway
has been shown to play a role in approximately two-thirds of all tumours.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The functionality of REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> is based upon the finding that tumours bearing an
activated Ras pathway are deficient in their ability to activate the anti-viral response mediated
by the host cellular protein, Protein Kinase R (&#147;<B>PKR</B>&#148;). Since PKR is responsible for preventing
reovirus replication, tumour cells lacking the activity of PKR are susceptible to reovirus
infections. As normal cells do not possess Ras activations, these cells are able to thwart
reovirus infections by the activity of PKR. In a tumour cell with an activated Ras pathway,
reovirus is able to freely replicate and hence kill the host tumour cell. The result of this
replication is progeny viruses that are then free to infect surrounding cancer cells. This cycle
of infection, replication and cell death is believed to be repeated until there are no longer any
tumour cells carrying an activated Ras pathway available.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following schematic illustrates the molecular basis of how the reovirus kills cancer
cells.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><IMG src="o42618o4261801.gif" alt="(REOVIRUS FLOW CHART)">
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For both non-cancer cells and cancer cells with an activated Ras pathway, virus binding,
entry, and production of viral genes all proceed normally. In the case of normal cells however,
the viral genes cause the activation of the anti-viral response that is mediated by the host cell&#146;s
PKR, thus blocking the replication of the reovirus. In cells with an activated Ras pathway, the
activation of PKR is prevented or reversed by an element of the Ras signal transduction pathway,
thereby allowing the replication of the reovirus in these cancer cells. The end result of this
replication is the death of the cancer cell. The action of the Ras pathway in allowing reovirus
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->S-5<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">replication to ensue can be mimicked in non-cancerous cells by treating these cells with the
chemical 2-aminopurine (2-AP) which prevents the activation of PKR.
</DIV>
<DIV align="left">
<A name="108"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>RECENT DEVELOPMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;1, 2008, we completed an internal reorganization to provide additional international
flexibility and promote broadened opportunities for the Corporation. Pursuant to the internal
reorganization we transferred certain assets to our wholly-owned subsidiary, Oncolytics Barbados,
in consideration for additional shares in the capital of Oncolytics Barbados. The transferred
assets consisted of: (a)&nbsp;the rights to certain regulatory submissions; (b)&nbsp;certain non-Canadian
patents and patent applications; and (c)&nbsp;certain agreements to which we were a party, including,
clinical research management agreements, clinical trial agreements, research agreements
and&nbsp;manufacturing agreements. We also granted Oncolytics Barbados permission to use certain other
intellectual property rights not transferred by us to Oncolytics Barbados. Concurrently with the
asset transfer, the Corporation and Oncolytics Barbados entered into a trust agreement pursuant to
which we agreed to hold legal title to the transferred assets with beneficial title remaining with
Oncolytics Barbados.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of the internal reorganization, the Corporation and Oncolytics Barbados also entered
into a research and development agreement on July&nbsp;1, 2008 pursuant to which we agreed to provide
certain services to Oncolytics Barbados, including: conducting research and development related to
the transferred assets; coordinating clinical trials and the handling of data generated by such
trials; pursuing regulatory approvals as required; coordinating the filing, prosecution and
maintenance of patent applications and patents; and coordinating the development and implementation
of manufacturing processes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October&nbsp;7, 2008, we announced the issuance of our 29th U.S. patent, No.&nbsp;7,431,931, entitled
&#147;Reovirus Clearance of Ras-Mediated Neoplastic Cells from Mixed Cellular Compositions.&#148; The
allowed claims cover methods of selectively removing cancer cells ex vivo from blood stem cells and
other organs using reovirus.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On November&nbsp;6, 2008, we announced interim results of our U.S. REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> Phase&nbsp;II
clinical trial in patients with bone and soft tissue sarcomas metastatic to the lung. The results
were delivered by Dr.&nbsp;Monica Mita of the Institute of Drug Development, the Cancer Therapy and
Research Center at the University of Texas Health Science Center, San Antonio, Texas, at the
Chemotherapy Foundation Symposium XXVI, held in New York from November&nbsp;4-8, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At the time of the presentation, 35 patients had been enrolled in the study, and 29 were
evaluable. 21% (6/29) of the evaluable patients experienced stable disease (SD)&nbsp;for more than 16
weeks. The investigators concluded that the study has met its established objectives, and that
enrolment will continue to the full 52 patients.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Tumour Type</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Cycles</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Best Response</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Synovial sarcoma
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">17*</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">SD</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Ewing&#146;s sarcoma
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">9*</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">SD</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Malignant Fibrous Histiocytoma
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">7*</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">SD, tumor resection after cycle 4</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Tumour Type</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Cycles</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Best Response</B></TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Leiomyosarcoma
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">6&nbsp;&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">SD</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Chordoma
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">5*</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">SD</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Unspecified Spindle Cell
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">5*</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">SD</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>patients still on study</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An oral presentation covering results of the trial (REO 014) was also delivered at the
Connective Tissue Oncology Society (CTOS)&nbsp;annual meeting, held in London, U.K. from November&nbsp;13-15,
2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On November&nbsp;14, 2008, Dr.&nbsp;Anders Kolb of the Nemours Center for Childhood Cancer Research
delivered a poster entitled &#147;<I>Systemic Administration of REOLYSIN Inhibits Growth of Human Sarcoma
Xenografts Alone and in Combination with Cisplatin and Radiation</I>&#148; at the CTOS meeting.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->S-6<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the study, mice were engrafted with a variety of sarcoma cell lines including
rhabdomyosarcoma, Ewing&#146;s sarcoma, synovial sarcoma and osteosarcoma, then treated with
REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> or REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> in combination with either cisplatin or radiation.
The researchers concluded that in all tumour lines evaluated,
REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> exhibits significant antitumour activity, including a complete response
in a rhabdomyosarcoma line. The combination of REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> and radiation is effective in
inhibiting the growth of rhabdomyosarcoma and Ewing&#146;s sarcoma xenografts, and the combination of
REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> and cisplatin is effective in Ewing&#146;s sarcoma, osteosarcoma and synovial
sarcoma xenografts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On November&nbsp;18, 2008, we announced the issuance of our 30th U.S. patent, No.&nbsp;7,452,723,
entitled &#147;Methods for Preventing Reovirus Recognition for the Treatment of Cellular Proliferative
Disorders.&#148; The allowed claims relate to kits comprised of reovirus and an immune suppressive
agent that are designed to prevent reovirus recognition by the immune system.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;1, 2008, we filed a prospectus supplement to the short form base shelf prospectus
dated June&nbsp;16, 2008 in respect of the 2008 Unit Offering.
</DIV>
<DIV align="left">
<A name="109"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CAPITALIZATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On September&nbsp;30, 2008 and December&nbsp;4, 2008, we had 41,180,748 Common Shares issued and
outstanding. If all of our stock options and warrants outstanding as of
December&nbsp;4<FONT style="font-family: Symbol">&#044;</FONT><FONT style="font-family: Symbol">&#032;</FONT><FONT style="font-family: Symbol">&#050;</FONT><FONT style="font-family: Symbol">&#048;</FONT><FONT style="font-family: Symbol">&#048;</FONT><FONT style="font-family: Symbol">&#056;</FONT><FONT style="font-family: Symbol">&#032;</FONT>were exercised, we would have
49,271,241<FONT style="font-family: Symbol">&#032;</FONT><FONT style="font-family: Symbol">&#032;</FONT>Common Shares issued and outstanding. Following the 2008 Unit Offering, we
will have up to 43,680,748 Common Shares issued and outstanding (up to 54,521,241 Common Shares on
a fully-diluted basis). Following the 2008 Unit Offering, and assuming the over-allotment option
granted to the underwriter pursuant to the 2008 Unit Offering is exercised in full, we will have
44,055,748 Common Shares issued and outstanding (55,308,741 Common Shares on a fully-diluted
basis).
</DIV>
<DIV align="left">
<A name="110"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>MARKET FOR SECURITIES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our outstanding Common Shares are listed and posted for trading on the TSX under the trading
symbol &#147;ONC&#148; and on NASDAQ under the trading symbol &#147;ONCY&#148;. The following table sets forth the
market price ranges and the aggregate volume of trading of the Common Shares on the TSX and NASDAQ
for the periods indicated:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15" style="border-bottom: 1px solid #000000"><B>TSX</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15" style="border-bottom: 1px solid #000000"><B>NASDAQ</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Close</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Volume </B></TD>


    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Close</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Volume</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(Shares)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(U.S.$)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(U.S.$)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(U.S.$)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(Shares)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Period</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>2007</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">December</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">355,628</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">795,031</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>2008</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.95</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">538,887</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.93</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">622,530</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">February</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.82</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">564,976</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">588,210</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.83</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">376,635</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.02</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">618,300</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">April</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.96</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,159,535</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,138,020</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">May</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,682,910</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">897,410</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">June</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">786,060</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.95</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">934,260</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">July</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.91</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">508,040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.79</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">467,500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">August</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.82</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.87</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">333,770</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">297,960</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">September</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.57</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">484,830</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">634,990</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">October</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.92</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.64</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,147,860</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1..39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,045,040</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">November</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">694,411</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.64</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,106,707</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">December 1-3</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108,151</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68,337</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->S-7<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="111"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>USE OF PROCEEDS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From time to time, when the Warrants are exercised, we will receive proceeds equal to the
aggregate exercise price of such Warrants. Assuming that all of the Warrants are exercised prior
to their respective expiry times and that no adjustment based on the anti-dilution provisions
contained in the 2008 Warrant Indenture and the 2007 Warrant Indenture has taken place, the net
proceeds to us will be approximately $13,742,500.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The net proceeds for the exercise of the Warrants will be used by us for our research and
development program, our manufacturing activities in support of the program and general corporate
purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The principle purposes in the research and development area will be the advancement of our
clinical trial program and the continued development of our manufacturing process. Our clinical
trial program has been designed and directed to test the safety and activity of
REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> either as a mono-therapy or in combination with other approved chemotherapies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The net proceeds of exercise of the Warrants will further these objectives and will assist us
in completing our ongoing Phase II clinical trial program. Specifically, the net proceeds will
further our mono and co-therapy trials in the U.S. and our co-therapy trials in the U.K.
Manufacturing is a key element in the progress towards regulatory approval and the net proceeds
will assist in funding the lyophilization and process development activities in this area. These
two areas in the development process are expected to cost approximately $6&nbsp;million in 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We contract out the majority of our activities, conducting our clinical trial program at
selected clinical trial sites coordinated and managed through Contract Research Organizations. The
manufacturing program is contracted out to a major manufacturer and directed by us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to reach commercial production we will need to receive regulatory approval allowing
us to sell REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>. To receive regulatory approval, we will be required to run a
successful pivotal clinical trial program and validate our GMP manufacturing process. We expect to
commence these activities in the later part of 2009. As we have yet to determine the size of our
pivotal trial program, the jurisdictions where we plan to file our program, and who the principal
investigators will be, the timing and the ultimate costs of such activities are currently
indeterminable.
</DIV>
<DIV align="left">
<A name="112"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PRIOR SALES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;12, 2007, we granted options to acquire an aggregate of 431,493 Common Shares at
an exercise price of $2.22 per Common Share. No other Common Shares or securities exchangeable or
convertible into Common Shares have been issued during the twelve month period preceding the date
of this prospectus supplement.
</DIV>
<DIV align="left">
<A name="113"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>TERMS OF 2008 WARRANTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The 2008 Warrants will be governed by an indenture (the &#147;<B>2008 Warrant Indenture</B>&#148;) to be
entered into between us and Computershare Trust Company of Canada, as agent for the holders of the
2008 Warrants. The following is a summary of the material attributes and characteristics of the
2008 Warrants. The following description of the terms of the Warrant Indenture is subject to the
detailed provisions of the Warrant Indenture.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the 2008 Unit Offering, up to 2,875,000 2008 Warrants may be issued. Each 2008 Warrant
will entitle the holder to purchase one Common Share upon payment of $1.80, subject to adjustment,
at any time until 4:30&nbsp;p.m. (Calgary time) on the date that is 36&nbsp;months following the closing of
the 2008 Unit Offering. If on any Accelerated Exercise Date the 10&nbsp;day volume weighted average
trading price of our Common Shares on the TSX exceeds $2.50 per share, then, at our sole discretion
and upon us sending the holders of the 2008 Warrants written notice of such Accelerated Exercise
Date (the &#147;<B>Notice</B>&#148;) and issuing a news release announcing such Accelerated Exercise Date, the 2008
Warrants shall only be exercisable for a period of 30&nbsp;days following the later of the date on which
such Notice is sent to holders of 2008 Warrants and the date on which such announcement is made by
news
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->S-8<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">release. The Notice will be deemed to be sent by us on the date the Notice is deposited in
first class mail to the
registered address of the holder of the 2008 Warrants as reflected on the 2008 Warrant
register maintained under the Warrant Indenture.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No U.S. Person (as that term is defined by Regulation&nbsp;S under the U.S. Securities Act) or
person holding 2008 Warrants for the benefit of or for the account of a U.S. Person is permitted to
exercise 2008 Warrants during any period of time prior to the expiration date of the 2008 Warrants
during which a registration statement under the U.S. Securities Act, relating to the Common Shares
underlying the 2008 Warrants, is not effective. As a condition to closing the 2008 Unit Offering,
we have agreed to use reasonable efforts to maintain the registration statement on Form&nbsp;F-10 (File
No.&nbsp;333-151513) relating to the short form base shelf prospectus accompanying the prospectus
supplement, or another registration statement relating to the Common Shares underlying the
Warrants, effective until the earlier of the expiration date of the 2008 Warrants and the date on
which no 2008 Warrants remain outstanding. If a registration statement under the U.S. Securities
Act is not effective during such period of time, we will notify the holders of the 2008 Warrants in
the United States, in accordance with the 2008 Warrant Indenture.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of 2008 Warrants will not have any voting rights or any other rights which a holder of
Common Shares would have (including, without limitation, the right to receive notice of or to
attend meetings of shareholders or any right to receive dividends or other distributions). Holders
of 2008 Warrants will have no pre-emptive rights to acquire our securities. If all of the 2008
Warrants were exercised, we would be required to issue 2,875,000 Common Shares (subject to
adjustment in certain circumstances)<B>, </B>assuming exercise in full of the over-allotment option
granted to the underwriter in connection with the 2008 Unit Offering.
</DIV>
<DIV align="left">
<A name="114"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>TERMS OF 2007 WARRANTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
2007 Warrants are governed by an indenture (the &#147;<B>2007 Warrant Indenture</B>&#148;) entered into by
us and Computershare Trust Company of Canada on February&nbsp;12, 2007, as trustee for the holders of
the 2007 Warrants. The following is a summary of the material attributes and characteristics of
the 2007 Warrants. The following description of the terms of the 2007 Warrant Indenture is subject
to the detailed provisions of the 2007 Warrant Indenture.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the 2007 Unit Offering, 2,300,000 2007 Warrants were issued. Each whole 2007 Warrant
entitled the holder to purchase one Common Share upon payment of Cdn.&nbsp;$3.50, subject to adjustment,
at any time until 5:00&nbsp;p.m. (Calgary time) on February&nbsp;22, 2010.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No U.S. Person (as that term is defined by Regulation&nbsp;S under the U.S. Securities Act) or
person holding 2007 Warrants for the benefit of or for the account of a U.S. Person is permitted to
exercise 2007 Warrants during any period of time prior to the expiration date of the 2007 Warrants
during which a registration statement under the U.S. Securities Act, relating to the Common Shares
underlying the 2007 Warrants, is not effective. As a condition to closing the 2007 Unit Offering,
we agreed to use reasonable efforts to maintain the registration statement on Form&nbsp;F-10 (File
No.&nbsp;333-140529) relating to the short form base shelf prospectus accompanying the prospectus
supplement, or another registration statement relating to the Common Shares underlying the
Warrants, effective until the earlier of the expiration date of the 2007 Warrants and the date on
which no 2007 Warrants remain outstanding. If a registration statement under the U.S. Securities
Act is not effective during such period of time, we will notify the holders of the 2007 Warrants in
the United States, in accordance with the 2007 Warrant Indenture.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of 2007 Warrants do not have any voting rights or any other rights which a holder of
Common Shares has (including, without limitation, the right to receive notice of or to attend
meetings of shareholders or any right to receive dividends or other distributions). Holders of
2007 Warrants do not have any pre-emptive rights to acquire our securities. If all of the 2007
Warrants were exercised, we would be required to issue 2,300,000 Common Shares (subject to
adjustment in certain circumstances).
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->S-9<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="115"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PLAN OF DISTRIBUTION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus supplement relates to the issuance of: (i)&nbsp;up to 2,500,000 Common Shares,
issuable from time to time, on exercise of 2,500,000 common share purchase warrants (expected to be
issued by us on or about December <B>&#091;5&#093;</B>, 2008 pursuant to the 2008 Unit Offering (as described
below), (ii)&nbsp;up to 375,000 Common Shares issuable from time to time, on exercise of 375,000 common
share purchase warrants that may be issued on the
exercise of the over-allotment option granted to the underwriter pursuant to the 2008 Unit
Offering; (iii)&nbsp;the issuance of 2,300,000 Common Share, issuable from time to time, on exercise of
2,300,000 common share purchase warrants issued by us pursuant to the 2007 Unit Offering and
(iv)&nbsp;such indeterminate number of additional Common Shares that may be issuable by reason of the
anti-dilution provisions contained in the 2007 Warrant Indenture and 2008 Warrant Indenture
governing the 2007 Warrants and 2008 Warrants, respectively. See &#147;Terms of 2008 Warrants &#147;and
&#147;Terms of 2007 Warrants&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus supplement registers the offering of the securities to which it relates under
the U.S.&nbsp;Securities Act, in accordance with the multi-jurisdictional disclosure system adopted by
the SEC and the securities commission or similar regulatory authority in each of the provinces of
Canada. This prospectus supplement does not qualify the distribution of the Common Shares in any
province or territory of Canada.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of Warrants resident in the United States who acquire Common Shares pursuant to the
exercise of Warrants in accordance with their respective terms and under the accompanying short
form base shelf prospectus and this prospectus supplement may have a right of action against us for
any misrepresentation in the accompanying base shelf prospectus and this prospectus supplement.
However, the existence and enforceability of such a right of action is not without doubt. By
contrast, holders of Warrants resident in Canada who may acquire Common Shares pursuant to the
exercise of Warrants in accordance with their respective terms and who will be deemed to acquire
such Common Shares under applicable Canadian prospectus exemptions, will not have any such right of
action with respect to such acquisition of Common Shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Common Shares to which this prospectus supplement relates will be sold directly by us to
holders of Warrants on the exercise of such Warrants. No underwriters, dealers or agents will be
involved in these sales.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2008 Warrants</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;16, 2008, we filed a
short form base shelf prospectus with the Alberta Securities
Commission and on June&nbsp;6, 2008, as amended June&nbsp;17, 2008, a registration statement on Form F-10 (File No.&nbsp;333-151513) with the SEC relating to
the offering by the Corporation from time to time during the 25&nbsp;months that the short form base
shelf prospectus, including amendments thereto, remained valid of up to Cdn.&nbsp;$150,000,000 of Common
Shares, subscription receipts, warrants, debt securities and units. The shelf registration
statement was declared effective by the SEC on February&nbsp;15, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;1, 2008, we filed a prospectus supplement to the short form base shelf prospectus
dated June&nbsp;16, 2008 with the securities commissions in the provinces of British Columbia, Alberta,
Manitoba and Ontario and a registration statement on Form&nbsp;F-10 (File No.&nbsp;333-151513) with the SEC
relating to the offering by us in British Columbia, Alberta, Manitoba and Ontario of (i)&nbsp;up to
2,875,000 units of the Corporation, each unit consisting of one Common Share and one common share
purchase warrant and (ii)&nbsp;up to 287,500 broker warrants. Each 2008 Warrant will entitle the holder
to purchase one Common Share upon payment of Cdn.&nbsp;$1.80, subject to adjustment, at any time until
4:30&nbsp;p.m. (Calgary time) on the date that is 36&nbsp;months from the date of the closing of the 2008
Unit Offering. If on the Accelerated Exercise Date the 10&nbsp;-day volume weighted average trading
price of the Common Shares on the TSX exceeds $2.50 per share, then, at our sole discretion, and
upon us sending the holders of 2008 Warrants written notice of such Accelerated Exercise Date and
issuing a news release announcing such Accelerated Exercise Date, the 2008 Warrants shall only be
exercisable for a period of 30&nbsp;days following the later of the date on which such written notice is
sent to holders of 2008 Warrants and the date on which such announcement is made by news release.
The exercise price of the 2008 Warrants was determined by negotiation between us and the
underwriter for the 2008 Unit Offering. Each broker warrant is exercisable, in whole or in part,
within 3&nbsp;years of the initial closing date of the 2008 Unit Offering (subject to acceleration),
into one Common Share at an exercise price of $1.80. The 2008 Unit Offering is expected to be
completed on or about December&nbsp;5, 2008.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->S-10<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is a condition of closing of the 2008 Unit Offering that the shelf registration statement
be declared effective by the SEC and that we file with the SEC this prospectus supplement
registering the offering of the Common Shares issuable from time to time on the exercise of the
2008 Warrants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2007 Warrants</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;14, 2007, we filed a short form prospectus with the securities commissions in the
provinces of British Columbia, Alberta, Manitoba and Ontario and a registration statement on
Form&nbsp;F-10 (File No.&nbsp;333-140460)
with the SEC relating to the offering by us of 4,600,000 units, each unit consisting of one
Common Share and one-half of a common share purchase warrant. Each whole common share purchase
warrant will entitle the holder to purchase one Common Share upon payment of Cdn.&nbsp;$3.50, subject to
adjustment, at any time until 5:00&nbsp;p.m. (Calgary time) on February&nbsp;22, 2010. The 2007 Unit
Offering was completed on February&nbsp;22, 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;15, 2007, we filed a short form base shelf prospectus with the Alberta Securities
Commission and a registration statement on Form F-10 (File No.&nbsp;333-140529) with the SEC relating to
the offering by the Corporation from time to time during the 25&nbsp;months that the short form base
shelf prospectus, including amendments thereto, remained valid of up to Cdn.&nbsp;$12,000,000 of common
shares. The shelf registration statement was declared effective by the SEC on February&nbsp;15, 2007.
It is a condition of closing of the 2007 Unit Offering that the shelf registration statement be
declared effective by the SEC and that we file with the SEC a prospectus supplement registering the
offering of the Common Shares issuable from time to time on the exercise of the 2007 Warrants. We
filed a prospectus supplement with the Alberta Securities Commission and a registration statement
on Form F-10 (File No.&nbsp;333-140529) with the SEC relating to the issuance of up to 2,300,000 Common
Shares issuable from time to time on the exercise of the 2007 Warrants (the &#147;<B>Previous Prospectus
Supplement</B>&#148;). This prospectus supplement replaces and supersedes the Previous Prospectus
Supplement and qualifies the issuance of up to 2,300,000 Common Shares issuable on the exercise of
the 2007 Warrants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>United States Securities Law Compliance</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No U.S. Person or person holding Warrants on behalf or for the account of a U.S. Person may
exercise the Warrants during any period of time when a registration statement covering such Common
Shares is not effective. See &#147;Terms of 2008 Warrants&#148; and &#147;Terms of 2007 Warrants&#148;.
</DIV>
<DIV align="left">
<A name="116"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CANADIAN FEDERAL INCOME TAX CONSIDERATIONS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the opinion of Bennett Jones&nbsp;LLP (&#147;<B>Counsel</B>&#148;), the following is a general summary of the
principal Canadian federal income tax considerations generally applicable to a purchase of Common
Shares acquired on the exercise of Warrants. This summary is based upon the current provisions of
the <I>Income Tax Act </I>(Canada) (the &#147;<B>Tax Act</B>&#148;), the regulations thereunder (the &#147;<B>Regulations</B>&#148;), all
specific proposals to amend the Tax Act and the Regulations publicly announced by the Government of
Canada prior to the date hereof (the &#147;<B>Proposed Amendments</B>&#148;) and Counsel&#146;s understanding of the
prevailing administrative views of the Canada Revenue Agency (the &#147;<B>CRA</B>&#148;). This summary is not
exhaustive of all possible Canadian federal income tax considerations and except for the Proposed
Amendments does not otherwise take into account any changes in law, whether by legislative,
governmental or judicial action, nor does it take into account or consider any provincial,
territorial or foreign income tax considerations. There can be no assurance that the Proposed
Amendments will be enacted in their current form or at all.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This summary is applicable only to investors who acquire such Common Shares on the exercise of
the Warrants and who for the purposes of the Tax Act and at all relevant times, will hold the
Common Shares and Warrants acquired as capital property, deal at arm&#146;s length, and are not
affiliated with us and do not use or hold, and are not deemed to use or hold, their Common Shares
and Warrants in, or in the course of, carrying on a business in Canada. Common Shares and Warrants
will generally constitute capital property to an investor provided that the investor does not hold
such securities in the course of carrying on a business and has not acquired such securities in a
transaction or transactions considered to be an adventure or concern in the nature of trade. This
summary does not apply to investors who are &#147;financial institutions&#148; or &#147;specified financial
institutions&#148; for the purposes of the Tax Act. Such investors should consult their own tax
advisors for advice.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This summary is of a general nature only and is not intended to be, nor should it be construed
to be, legal or tax advice to any particular investor. Accordingly, all prospective investors are
urged to consult their own tax advisors with respect to their particular circumstances.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Residents of Canada</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This portion of the summary is applicable to an investor who, for the purposes of the Tax Act
and at all relevant times, is resident or is deemed to be resident in Canada. Certain investors
who are resident in Canada for
the purposes of the Tax Act whose Common Shares might not otherwise qualify as capital
property may be entitled to make an irrevocable election in accordance with subsection&nbsp;39(4) of the
Tax Act to have such Common Shares and every &#147;Canadian Security&#148; (as defined in the Tax Act) owned
by such investor in the taxation year of the election and in all subsequent taxation years treated
as capital property. This election is not applicable to Warrants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Exercise of Warrants</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An investor will not realize a gain or a loss upon the exercise of a Warrant. For the
purposes of the Tax Act, when a Warrant is exercised, the investor&#146;s adjusted cost base of the
Common Share acquired thereby will (subject to averaging) be the aggregate of the investor&#146;s
adjusted cost base of the Warrant and the exercise price paid on the exercise of the Warrant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Disposition of Common Shares</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, a disposition, or a deemed disposition, of a Common Share, other than to us, will
give rise to a capital gain (or a capital loss) in the taxation year of the disposition equal to
the amount by which the proceeds of disposition of the Common Share, net of any reasonable costs of
disposition, exceed (or are less than) the adjusted cost base of the Common Share, to the holder
thereof. The tax treatment of capital gains and capital losses are described in greater detail
below under &#147;Treatment of Capital Gains and Capital Losses&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Treatment of Capital Gains and Capital Losses</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the year of disposition an investor will be required to include one-half of the amount of
any capital gain (a &#147;<B>taxable capital gain</B>&#148;) in income, and will be required to deduct one-half of
the amount of any capital loss (an &#147;allowable capital loss&#148;) against taxable capital gains realized
by the investor. Allowable capital losses not deducted in the taxation year in which they are
realized may be carried back and deducted in any of the three preceding taxation years or carried
forward and deducted in any subsequent taxation year against taxable capital gains realized in such
years, to the extent and under the circumstances specified in the Tax Act. A capital gain realized
by an investor who is an individual (including certain trusts) may give rise to alternative minimum
tax. A &#147;Canadian-controlled private corporation&#148; (as defined in the Tax Act) may be liable to an
additional 6 2/3% refundable tax under the Tax Act on certain investment income, including taxable
capital gains.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The amount of any capital loss realized on the disposition or deemed disposition of a Common
Share by an investor that is a corporation may be reduced by the amount of dividends received or
deemed to have been received by it on the Common Share to the extent and in the circumstances
prescribed by the Tax Act. Similar rules may apply where an investor that is a corporation is a
member of a partnership or is beneficiary of a trust that owns Common Shares and where Common
Shares are owned by a partnership or trust of which a partnership or trust is a partner or
beneficiary. Investors to whom these rules may be relevant should consult their own tax advisors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Dividends</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends (including deemed dividends) received on Common Shares will be included in computing
the investor&#146;s income. In the case of an individual investor (other than certain trusts), such
dividends will generally be subject to the gross-up and dividend tax credit rules normally
applicable to dividends received from taxable Canadian corporations. Provided that appropriate
designations are made by us at the time the dividend is paid, such dividend will be treated as an
eligible dividend for purposes of the Tax Act and an investor will be entitled to an enhanced gross
up and dividend tax credit in respect of such dividend. There may be limitations on our ability to
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">designate dividends as eligible dividends. In the case of a corporation, such dividends will
generally be deductible in computing the corporation&#146;s taxable income. An investor that is a
&#147;private corporation&#148;, as defined in the Tax Act, or any other corporation resident in Canada and
controlled by or for the benefit of an individual (other than a trust) or a related group of
individuals (other than trusts) will generally be liable to pay a refundable tax at the rate of
33<sup>1</sup>/<sub>3</sub>% under Part&nbsp;IV of the Tax Act on dividends received (or deemed to be received) on Common Shares
to the extent such dividends are deductible in computing its taxable income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Alternative Minimum Tax</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general terms, a holder who is an individual (other than certain trusts) that receives or
is deemed to receive taxable dividends on the Common Shares or realizes a capital gain on the
disposition of the Common Shares or Warrants may realize an increase in the holder&#146;s liability for
alternative minimum tax.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Non-Residents of Canada</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This portion of the summary is applicable to an investor who, for the purposes of the Tax Act
and at all relevant times, is not, and has never been, resident in Canada and is not, and has never
been, deemed to be resident in Canada, does not use or hold, and is not deemed to use or hold,
Common Shares in, or in the course of, carrying on business in Canada, and is not an insurer who
carries on an insurance business in Canada and elsewhere (a &#147;<B>Non-Resident Holder</B>&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Exercise of Warrants and Disposition of Common Shares</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A Non-Resident Holder will not be subject to tax under the Tax Act on the exercise of
Warrants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A Non-Resident Holder will be subject to tax under the Tax Act in respect of a disposition of
Common Shares only to the extent such Common Shares constitute &#147;taxable Canadian property&#148; for
purposes of the Tax Act and the Non-Resident Holder is not afforded relief from such tax under an
applicable income tax treaty.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Common Shares will normally not be taxable Canadian property at a particular time provided
that: (i)&nbsp;the Common Shares are listed on a designated stock exchange at the particular time (which
includes the TSX and NASDAQ); (ii)&nbsp;the Non-Resident Holder, persons with whom the Non-Resident
Holder does not deal at arm&#146;s length (within the meaning of the Tax Act), or the Non-Resident
Holder together with such persons, did not own 25% or more of the issued shares of any class or
series of Oncolytics at any time during the 60-month period preceding the particular time; and
(iii)&nbsp;such Common Shares are not otherwise deemed under the Tax Act to be taxable Canadian property
at the particular time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A Non-Resident Holder who is subject to tax under the Tax Act on a disposition of Common
Shares will generally be required to compute such gains in the same manner described above under
&#147;Residents of Canada &#150; Disposition of Common Shares&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Dividends</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends paid or credited, or which are deemed to be paid or credited, on the Common Shares
will be subject to a Canadian non-resident withholding tax of 25%, subject to reduction of such
rate under an applicable income tax treaty. For example, Non-Resident Holders who are residents of
the United States for the purposes of the <I>Canada-United States Tax Convention </I>will generally have
such rate of withholding reduced to 15% (or 5% if such Non-Resident Holder is a company which owns
at least 10% of the voting stock of Oncolytics).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Non-Resident Holders should consult their tax advisors with respect to the tax implications of
acquiring Common Shares on the exercise of Warrants in their jurisdiction of residence and the
application of any bilateral income tax treaty between Canada and their jurisdiction of residence.</B>
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="117"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a summary of certain material anticipated U.S. federal income tax
consequences to a U.S. Holder (as defined below) arising from and relating to the acquisition of
Common Shares received on the exercise of Warrants under this prospectus supplement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 as a result of the acquisition of Common Shares received on the exercise of Warrants. 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 to such U.S. Holder. 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 its own financial advisor, legal counsel, or accountant
regarding the U.S. federal income, U.S. state and local, and foreign tax consequences of the
acquisition of Common Shares received on the exercise of Warrants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No legal opinion from U.S. legal counsel or ruling from the Internal Revenue Service (the
&#147;<B>IRS</B>&#148;) has been requested, or will be obtained, regarding the U.S. federal income tax consequences
of the acquisition of Common Shares received on the exercise of Warrants. This summary is not
binding on the IRS, and the IRS is not precluded from taking a position that is different from, and
contrary to, the positions taken in this summary. In addition, because the authorities on which
this summary is based are subject to various interpretations, the IRS and the U.S. courts could
disagree with one or more of the positions taken in this summary.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Scope of this Summary</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Authorities</I>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This summary is based on the Internal Revenue Code of 1986, as amended (the &#147;<B>Code</B>&#148;), Treasury
Regulations (whether final, temporary, or proposed), published rulings of the IRS, published
administrative positions of the IRS, the Convention Between Canada and the United States of America
with Respect to Taxes on Income and on Capital, signed September&nbsp;26, 1980, as amended (the
&#147;<B>Canada-U.S. Tax Convention</B>&#148;), and U.S. court decisions that are applicable and, in each case, as
in effect and available, as of the date of this prospectus supplement. Any of the authorities on
which this summary is based could be changed in a material and adverse manner at any time, and any
such change could be applied on a retroactive basis. This summary does not discuss the potential
effects, whether adverse or beneficial, of any proposed legislation that, if enacted, could be
applied on a retroactive basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>U.S. Holders</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of this summary, a &#147;U.S. Holder&#148; is a beneficial owner of Warrants that, for U.S.
federal income tax purposes, is (a)&nbsp;an individual who is a citizen or resident of the U.S., (b)&nbsp;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., any state in the U.S., or the
District of Columbia, (c)&nbsp;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)&nbsp;a trust if (i)&nbsp;such trust has validly elected
to be treated as a U.S. person for U.S. federal income tax purposes or (ii)&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Non-U.S. Holders</I></B>
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of this summary, a &#147;non-U.S. Holder&#148; is a beneficial owner of Warrants other than
a U.S. Holder. This summary does not address the U.S. federal income tax consequences to non-U.S.
Holders of the acquisition of Common Shares received on the exercise of Warrants. Accordingly, a
non-U.S. Holder should consult its own financial advisor, legal counsel, or accountant regarding
the U.S. federal income, U.S. state and local, and foreign tax consequences (including the
potential application of and operation of any income tax treaties) of the acquisition of Common
Shares received on the exercise of Warrants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>U.S. Holders Subject to Special U.S. Federal Income Tax Rules&nbsp;Not Addressed</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This summary does not address the U.S. federal income tax consequences applicable to U.S.
Holders that are subject to special provisions under the Code, including the following U.S.
Holders: (a)&nbsp;U.S. Holders that are tax-exempt organizations, qualified retirement plans, individual
retirement accounts, or other tax-deferred accounts;
(b)&nbsp;U.S. Holders that are financial institutions, insurance companies, real estate investment
trusts, or regulated investment companies; (c)&nbsp;U.S. Holders that are dealers in securities or
currencies or U.S. Holders that are traders in securities that elect to apply a mark-to-market
accounting method; (d)&nbsp;U.S. Holders that have a &#147;functional currency&#148; other than the U.S. dollar;
(e)&nbsp;U.S. Holders that are liable for the alternative minimum tax under the Code; (f)&nbsp;U.S. Holders
that own units, warrants, or common shares as part of a straddle, hedging transaction, conversion
transaction, constructive sale, or other arrangement involving more than one position; (g)&nbsp;U.S.
Holders that received units, warrants, or common shares in connection with the exercise of employee
stock options or otherwise as compensation for services; (h)&nbsp;U.S. Holders that hold units,
warrants, or common shares other than as a capital asset within the meaning of Section&nbsp;1221 of the
Code; (i)&nbsp;U.S. expatriates or former longer-term residents of the U.S. or (j)&nbsp;U.S. Holders that
own (directly, indirectly, or constructively) 10% or more of the total combined voting power of the
outstanding shares of the Corporation. U.S. Holders that are subject to special provisions under
the Code, including U.S. Holders described immediately above, should consult their own financial
advisor, legal counsel or accountant regarding the U.S. federal income tax consequences of the
acquisition of Common Shares received on the exercise of Warrants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If an entity that is classified as a partnership for U.S. federal income tax purposes holds
Warrants, the U.S. federal income tax consequences to such partnership and the partners of such
partnership generally will depend on the activities of the partnership and the status of such
partners. Partners of entities that are classified as partnerships for U.S. federal income tax
purposes should consult their own financial advisor, legal counsel or accountant regarding the U.S.
federal income tax consequences of the acquisition of Common Shares received on the exercise of
Warrants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Tax Consequences Other than U.S. Federal Income Tax Consequences Not Addressed</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This summary does not address the U.S. state and local, U.S. federal estate and gift, or
foreign tax consequences to U.S. Holders of the acquisition of Common Shares received on the
exercise of Warrants. Each U.S. Holder should consult its own financial advisor, legal counsel, or
accountant regarding the U.S. state and local, U.S. federal estate and gift, and foreign tax
consequences of the acquisition of Common Shares received on the exercise of Warrants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>U.S. Federal Income Tax Consequences of the Exercise of Warrants</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A U.S. Holder should not recognize gain or loss on the exercise of a warrant and related
receipt of a common share (except if cash is received in lieu of the issuance of a fractional
common share). A U.S. Holder&#146;s initial tax basis in the common share received on the exercise of a
warrant should be equal to the sum of (a)&nbsp;such U.S. Holder&#146;s tax basis in such warrant plus (b)&nbsp;the
exercise price paid by such U.S. Holder on the exercise of such warrant. A U.S. Holder&#146;s holding
period for the common share received on the exercise of a warrant should begin on the date that
such warrant is exercised by such U.S. Holder.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Distributions on Common Shares</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>General Taxation of Distributions</I>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the &#147;passive foreign investment company&#148; rules discussed below, a U.S. Holder that
receives a distribution, including a constructive distribution, with respect to the Common Shares
will be required to include the amount of such distribution in gross income as a dividend (without
reduction for any Canadian income tax withheld from such distribution) to the extent of the current
or accumulated &#147;earnings and profits&#148; of the Corporation. To the extent that a distribution exceeds
the current and accumulated &#147;earnings and profits&#148; of the Corporation, such distribution will be
treated (a)&nbsp;first, as a tax-free return of capital to the extent of a U.S. Holder&#146;s tax basis in
the Common Shares and, (b)&nbsp;thereafter, as gain from the sale or exchange of such Common Shares.
(See more detailed discussion at &#147;Disposition of Common Shares&#148; below). Dividends paid on the
Common Shares generally will not be eligible for the &#147;dividends received deduction.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Reduced Tax Rates for Certain Dividends</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For taxable years beginning before January&nbsp;1, 2011, a dividend paid by the Corporation
generally will be taxed at the preferential tax rates applicable to long-term capital gains if (a)
the Corporation is a &#147;qualified foreign
corporation&#148; (as defined below), (b)&nbsp;the U.S. Holder receiving such dividend is an individual,
estate, or trust, and (c)&nbsp;such dividend is paid on Common Shares that have been held by such U.S.
Holder for at least 61&nbsp;days during the 121-day period beginning 60&nbsp;days before the &#147;ex-dividend
date.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Corporation generally will be a &#147;qualified foreign corporation&#148; under Section&nbsp;1(h)(11) of
the Code (a &#147;<B>QFC&#148;</B>) if (a)&nbsp;the Corporation is eligible for the benefits of the Canada-U.S. Tax
Convention, or (b)&nbsp;the Common Shares are readily tradable on an established securities market in
the U.S. However, even if the Corporation satisfies one or more of such requirements, the
Corporation will not be treated as a QFC if the Corporation is a &#147;passive foreign investment
company&#148; (as defined below) for the taxable year during which the Corporation pays a dividend or
for the preceding taxable year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As discussed below, based on current business plans and available financial information, the
Corporation anticipates that it may qualify as a &#147;passive foreign investment company&#148; for the
taxable year ending December&nbsp;31, 2008 and subsequent taxable years, depending on the assets and
income of the Corporation over the course of the taxable year ending December&nbsp;31, 2008. (See more
detailed discussion at &#147;Additional Rules that May Apply to U.S. Holders &#151; Passive Foreign
Investment Corporation&#148; below). Accordingly, there can be no assurances that the Corporation will
be a QFC for the current or any future taxable year or that the Corporation will be able to certify
that it is a QFC in accordance with the certification procedures issued by the Treasury and the
IRS.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the Corporation is not a QFC, a dividend paid by the Corporation to a U.S. Holder,
including a U.S. Holder that is an individual, estate, or trust, generally will be taxed at
ordinary income tax rates (and not at the preferential tax rates applicable to long-term capital
gains). The dividend rules are complex, and each U.S. Holder should consult its own financial
advisor, legal counsel, or accountant regarding the dividend rules.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Distributions Paid in Foreign Currency</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The amount of a distribution paid to a U.S. Holder in foreign currency generally will be equal
to the U.S. dollar value of such distribution based on the exchange rate applicable on the date of
receipt. A U.S. Holder that does not convert foreign currency received as a distribution into U.S.
dollars on the date of receipt generally will have a tax basis in such foreign currency equal to
the U.S. dollar value of such foreign currency on the date of receipt. Such a U.S. Holder generally
will recognize ordinary income or loss on the subsequent sale or other taxable disposition of such
foreign currency (including an exchange for U.S. dollars).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Disposition of Common Shares</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A U.S. Holder will recognize gain or loss on the sale or other taxable disposition of Common
Shares in an amount equal to the difference, if any, between (a)&nbsp;the amount of cash plus the fair
market value of any property
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">received and (b)&nbsp;such U.S. Holder&#146;s tax basis in the Common Shares
sold or otherwise disposed of. Subject to the &#147;passive foreign investment company&#148; rules discussed
below, any such gain or loss generally will be capital gain or loss, which will be long-term
capital gain or loss if the Common Shares are held for more than one year. Gain or loss recognized
by a U.S. Holder on the sale or other taxable disposition of Common Shares generally will be
treated as &#147;U.S. source&#148; for purposes of applying the U.S. foreign tax credit rules unless the gain
is subject to tax in Canada and is resourced as &#147;foreign source&#148; under the Canada-U.S. Tax
Convention and such U.S. Holder elects to treat such gain or loss as &#147;foreign source.&#148; (See more
detailed discussion at &#147;Foreign Tax Credit&#148; below).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Preferential tax rates apply to long-term capital gains of a U.S. Holder that is an
individual, estate, or trust. There are currently no preferential tax rates for long-term capital
gains of a U.S. Holder that is a corporation. Deductions for capital losses are subject to
significant limitations under the Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Foreign Tax Credit</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A U.S. Holder that pays (whether directly or through withholding) Canadian income tax with
respect to dividends received on the Common Shares generally will be entitled, at the election of
such U.S. Holder, to receive either a deduction or a credit for such Canadian income tax paid.
Generally, a credit will reduce a U.S. Holder&#146;s U.S. federal income tax liability on a
dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holder&#146;s income subject to U.S.
federal income tax. This election is made on a year-by-year basis and applies to all foreign taxes
paid (whether directly or through withholding) by a U.S. Holder during a taxable year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Complex limitations apply to the foreign tax credit, including the general limitation that the
credit cannot exceed the proportionate share of a U.S. Holder&#146;s U.S. federal income tax liability
that such U.S. Holder&#146;s &#147;foreign source&#148; taxable income bears to such U.S. Holder&#146;s worldwide
taxable income. In applying this limitation, a U.S. Holder&#146;s various items of income and deduction
must be classified, under complex rules, as either &#147;foreign source&#148; or &#147;U.S. source.&#148; In addition,
this limitation is calculated separately with respect to specific categories of income. Dividends
received on the Common Shares generally will constitute &#147;foreign source&#148; income and generally will
be categorized as &#147;passive income.&#148; The foreign tax credit rules are complex, and each U.S. Holder
should consult its own financial advisor, legal counsel, or accountant regarding the foreign tax
credit rules.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Information Reporting; Backup Withholding Tax</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payments made within the U.S., or by a U.S. payor or U.S. middleman, of dividends on, or
proceeds arising from the sale or other taxable disposition of, Common Shares generally will be
subject to information reporting and backup withholding tax, at the rate of 28%, if a U.S. Holder
(a)&nbsp;fails to furnish such U.S. Holder&#146;s correct U.S. taxpayer identification number (generally on
Form W-9), (b)&nbsp;furnishes an incorrect U.S. taxpayer identification number, (c)&nbsp;is notified by the
IRS that such U.S. Holder has previously failed to properly report items subject to backup
withholding tax, or (d)&nbsp;fails to certify, under penalty of perjury, that such U.S. Holder has
furnished its correct U.S. taxpayer identification number and that the IRS has not notified such
U.S. Holder that it is subject to backup withholding tax. However, U.S. Holders that are
corporations generally are excluded from these information reporting and backup withholding tax
rules. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a credit
against a U.S. Holder&#146;s U.S. federal income tax liability, if any, or will be refunded, if such
U.S. Holder furnishes required information to the IRS. Each U.S. Holder should consult its own
financial advisor, legal counsel, or accountant regarding the information reporting and backup
withholding tax rules.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Information Filing Required by Certain U.S. Holders</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A U.S. Holder may be required to file Form&nbsp;926 with the IRS if (a)&nbsp;immediately after the
exercise of the Warrants, such U.S. Holder owns, directly or indirectly, at least 10% of the total
voting power or the total value of the outstanding shares of the Corporation or (b)&nbsp;the exercise
price of the Warrants, when aggregated with all other transfers of cash by such U.S. Holder (or any
person related to such U.S. Holder) to the Corporation within the preceding 12&nbsp;month period,
exceeds U.S.$100,000. A U.S. Holder that fails to properly and timely file Form&nbsp;926 with the IRS
generally will be subject to a penalty equal to 10% of the amount of cash transferred to the
corporation (subject to a maximum penalty of U.S.$100,000, unless the failure to file is due to
intentional disregard). The Form&nbsp;926 filing requirement is subject to numerous limitations and
exceptions, and each U.S. Holder should consult
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">its own financial advisor, legal counsel, or
accountant regarding the information reporting requirements that may apply with respect to the
exercise of the Warrants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Additional Rules that May Apply to U.S. Holders</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the Corporation is a &#147;passive foreign investment company&#148; (as defined below), the preceding
sections of this summary may not describe the U.S. federal income tax consequences to U.S. Holders
of the acquisition, ownership, and disposition of Common Shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Passive Foreign Investment Corporation</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Corporation generally will be a &#147;passive foreign investment company&#148; under Section&nbsp;1297 of
the Code (a &#147;<B>PFIC</B>&#148;) if, for a taxable year, (a)&nbsp;75% or more of the gross income of the Corporation
for such taxable year is passive income or (b)&nbsp;on average, 50% or more of the assets held by the
Corporation either produce passive income or are held for the production of passive income, based
on the fair market value of such assets (or on the adjusted tax basis of such assets, if the
Corporation is not publicly traded and either is a &#147;controlled foreign corporation&#148; or makes an
election). &#147;Passive income&#148; includes, for example, dividends, interest, certain rents and
royalties, certain gains from the sale of stock and securities, and certain gains from commodities
transactions. Active business gains arising from the sale of commodities generally are excluded
from passive income if substantially all of a foreign corporation&#146;s commodities are (a)&nbsp;stock in
trade of such foreign corporation or other property of a kind which would properly be included in
inventory of such foreign corporation, or property held by such foreign corporation primarily for
sale to customers in the ordinary course of business, (b)&nbsp;property used in the trade or business of
such foreign
corporation that would be subject to the allowance for depreciation under Section&nbsp;167 of the
Code, or (c)&nbsp;supplies of a type regularly used or consumed by such foreign corporation in the
ordinary course of its trade or business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of the PFIC income test and asset test described above, if the Corporation owns,
directly or indirectly, 25% or more of the total value of the outstanding shares of another
corporation, the Corporation will be treated as if it (a)&nbsp;held a proportionate share of the assets
of such other corporation and (b)&nbsp;received directly a proportionate share of the income of such
other corporation. In addition, for purposes of the PFIC income test and asset test described
above, &#147;passive income&#148; does not include any interest, dividends, rents, or royalties that are
received or accrued by the Corporation from a &#147;related person&#148; (as defined in Section&nbsp;954(d)(3) of
the Code), to the extent such items are properly allocable to the income of such related person
that is not passive income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, if the Corporation is a PFIC and owns shares of another foreign corporation that
also is a PFIC, under certain indirect ownership rules, a disposition of the shares of such other
foreign corporation or a distribution received from such other foreign corporation generally will
be treated as an indirect disposition by a U.S. Holder or an indirect distribution received by a
U.S. Holder, subject to the rules of Section&nbsp;1291 of the Code discussed below. To the extent that
gain recognized on the actual disposition by a U.S. Holder of the Common Shares or income
recognized by a U.S. Holder on an actual distribution received on the Common Shares was previously
subject to U.S. federal income tax under these indirect ownership rules, such amount generally
should not be subject to U.S. federal income tax.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on current business plans and available financial information, the Corporation
anticipates that it may qualify as a PFIC for the taxable year ending December&nbsp;31, 2008 and for
subsequent taxable years. Whether the Corporation will, in fact, qualify as a PFIC for the taxable
year ending December&nbsp;31, 2008 will depend on the assets and income of the Corporation over the
course of the taxable year ending December&nbsp;31, 2008 and, as a result, cannot be predicted with
certainty as of the date of this prospectus supplement. Each U.S. Holder should consult its own
financial advisor, legal counsel, or accountant regarding whether the Corporation will qualify as a
PFIC for the taxable year ending December&nbsp;31, 2008 and in subsequent taxable years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Default PFIC Rules&nbsp;Under Section&nbsp;1291 of the Code</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the Corporation is a PFIC, the U.S. federal income tax consequences to a U.S. Holder of the
acquisition, ownership, and disposition of Common Shares will depend on whether such U.S. Holder
makes certain elections described below.. A U.S. Holder that does not make any of the elections
described below will be subject to the
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">default PFIC rules discussed immediately below and will be
referred to in this summary as a &#147;Non-Electing U.S. Holder.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A Non-Electing U.S. Holder will be subject to the rules of Section&nbsp;1291 of the Code with
respect to (a)&nbsp;any gain recognized on the sale or other taxable disposition of Common Shares and
(b)&nbsp;any excess distribution paid on the Common Shares. A distribution generally will be an &#147;excess
distribution&#148; to the extent that such distribution (together with all other distributions received
in the current taxable year) exceeds 125% of the average distributions received during the three
preceding taxable years (or during a U.S. Holder&#146;s holding period for the Common Shares, if
shorter).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Section&nbsp;1291 of the Code, any gain recognized on the sale or other taxable disposition
of Common Shares, and any excess distribution paid on the Common Shares, must be ratably allocated
to each day in a Non-Electing U.S. Holder&#146;s holding period for the Common Shares. The amount of any
such gain or excess distribution allocated to prior years of such Non-Electing U.S. Holder&#146;s
holding period for the Common Shares (other than years prior to the first taxable year of the
Corporation beginning after December&nbsp;31, 1986 for which the Corporation was not a PFIC) will be
subject to U.S. federal income tax at the highest tax applicable to ordinary income in each such
prior year. A Non-Electing U.S. Holder will be required to pay interest on the resulting tax
liability for each such prior year, calculated as if such tax liability had been due in each such
prior year. Such a Non-Electing U.S. Holder that is not a corporation must treat any such interest
paid as &#147;personal interest,&#148; which is not deductible. The amount of any such gain or excess
distribution allocated to the current year of such Non-Electing U.S. Holder&#146;s holding period for
the Common Shares will be treated as ordinary income in the current year, and no interest charge
will be incurred with respect to the resulting tax liability for the current year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the Corporation is a PFIC for any taxable year during which a Non-Electing U.S. Holder
holds Common Shares, the Corporation will continue to be treated as a PFIC with respect to such
Non-Electing U.S. Holder, regardless of whether the Corporation ceases to be a PFIC in one or more
subsequent years. A Non-Electing U.S. Holder may terminate this deemed PFIC status by electing to
recognize gain (which will be taxed under the rules of Section&nbsp;1291 of the Code discussed above) as
if such Common Shares were sold on the last day of the last taxable year for which the Corporation
was a PFIC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Elections</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Rather than being subject to the default PFIC rules described above, a U.S. Holder of Common
Shares generally may either (i)&nbsp;make a ''qualified electing fund&#146;&#146; election under section&nbsp;1295 of
the Code (a &#147;<B>QEF Election</B>&#148;), to be taxed currently on such U.S. Holder&#146;s pro rata portion of the
Corporation&#146;s income and gain, whether or not such income or gain is distributed in the form of
distributions on the Common Shares or otherwise, or (ii)&nbsp;make a ''mark-to-market&#146;&#146; election under
section&nbsp;1296 of the Code (a &#147;<B>Mark-to-Market Election</B>&#148;) and thereby agree, for the year of the
election and each subsequent taxable year, to recognize ordinary gain or ordinary loss (limited to
the amount of prior ordinary gain), based on the increase or decrease in market value of the Common
Shares for such taxable year. The U.S. Holder&#146;s basis in the Common Shares generally would be
adjusted to reflect any such income or loss amounts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, under Treasury Regulations, if a U.S. Holder holds an option, warrant or other right
to acquire stock of a PFIC, the holding period with respect to shares of stock of the PFIC acquired
upon exercise of such option, warrant or other right shall include the period that the option,
warrant or other right was held. Thus, U.S. Holders will be treated as having held Common Shares
received on exercise of Warrants for the entire period during which the Warrants were held. In
order to be effective with respect to the Common Shares, a QEF Election would have to be made for
the first year in which the U.S. Holder&#146;s holding period for the shares begins, but under
applicable rules, a U.S. Holder will not be able to make a QEF Election that would apply to a
Warrant or the Common Share that may be received on exercise of a Warrant. The general effect of
these rules is that (a)&nbsp;under the special taxation rules for PFICs discussed above, excess
distributions and gains realized on the disposition of Common Shares received upon exercise of
Warrants will be spread over the entire holding period for the Warrants and the Common Shares
received on their exercise and (b)&nbsp;even if a U.S. Holder makes a QEF Election upon exercise of
Warrants and receipt of the Common Shares, that election generally will not be a timely and
effective QEF Election with respect to the Common Shares received on exercise. Thus, the special
taxation rules and applicable interest charge with respect to PFICs discussed above will continue
to apply. However, a U.S. Holder
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">receiving Common Shares upon exercise of a warrant generally will
be eligible to make an effective QEF Election as of the first day of the taxable year of such U.S.
Holder beginning after the receipt of such Common Shares if such U.S. Holder also makes an election
to recognize gain (which will be taxed under the PFIC rules described above) as if such Common
Shares were sold on such date at fair market value. In addition, under the Treasury Regulations, a
disposition, other than by exercise, of a warrant generally will be subject to the special taxation
rules for PFICs discussed above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A U.S. Holder of Common Shares may make a Mark-to-Market Election only if the Common Shares
are marketable stock. The Common Shares generally will be &#147;marketable stock&#148; if the Common Shares
are regularly traded on (i)&nbsp;a national securities exchange that is registered with the Securities
and Exchange Commission, (ii)&nbsp;the national market system established pursuant to section 11A of the
Securities and Exchange Act of 1934 or (iii)&nbsp;a foreign securities exchange that is regulated or
supervised by a governmental authority of the country in which the market is located, provided that
(x)&nbsp;such foreign exchange has trading volume, listing, financial disclosure, and other requirements
and the laws of the country in which such foreign exchange is located, together with the rules of
such foreign exchange, ensure that such requirements are actually enforced and (y)&nbsp;the rules of
such foreign exchange ensure active trading of listed stocks. Because of the rules which treat
holders of Warrants as holding Common Shares received on exercise for the period during which they
held the Warrants, a U.S. Holder will be treated as making a Mark-to-Market Election after the
beginning of such U.S. Holder&#146;s holding period for the Common Shares. Since the U.S. Holder also is
not treated as having made a timely QEF Election under these same rules, the tax regime and
interest charge of Section&nbsp;1291 described above will apply to dispositions of and distributions on
the Common Shares received on exercise of Warrants during the year in which the Mark-to-Market
Election is made. U.S. Holders should consult their own tax advisors with respect to the
Mark-to-Market Election.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order for a U.S. Holder of Common Shares to be able to make a QEF Election, the Corporation
also would have to provide certain information regarding such U.S. Holder&#146;s pro rata share of the
Corporation&#146;s ordinary earnings and net capital gain. In the event the Corporation is or becomes a
PFIC, the Corporation &nbsp;will make available to U.S. Holders, upon their request, timely and accurate
information as to its status as a PFIC and will use commercially reasonable efforts to provide to a
purchaser acquiring Common Shares pursuant to this prospectus supplement that is a U.S. Holder all
information that a U.S. Holder making a QEF Election is required to obtain for U.S. federal income
tax purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Other PFIC Rules</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Section 1291(f) of the Code, the IRS has issued proposed Treasury Regulations that,
subject to certain exceptions, would cause a U.S. Holder that had not made a timely QEF Election to
recognize gain (but not loss) upon certain transfers of Common Shares that would otherwise be
tax-deferred (e.g., gifts and exchanges pursuant to corporate reorganizations). However, the
specific U.S. federal income tax consequences to a U.S. Holder may vary based on the manner in
which Common Shares are transferred.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain additional adverse rules will apply with respect to a U.S. Holder if the Corporation
is a PFIC, regardless of whether such U.S. Holder makes a QEF Election. For example under Section
1298(b)(6) of the Code, a U.S. Holder that uses Common Shares as security for a loan will, except
as may be provided in Treasury Regulations, be treated as having made a taxable disposition of such
Common Shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The PFIC rules are complex, and each U.S. Holder should consult its own financial advisor,
legal counsel, or accountant regarding the PFIC rules and how the PFIC rules may affect the U.S.
federal income tax consequences of the acquisition, ownership, and disposition of Common Shares.
</DIV>
<DIV align="left">
<A name="118"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>RISK FACTORS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prospective purchasers of Common Shares should consider carefully the risk factors set out
herein and contained in and incorporated by reference in the accompanying base shelf prospectus.
Discussions of certain risks affecting Oncolytics in connection with its business are provided in
our annual disclosure documents filed with the various securities regulatory authorities which are
incorporated by reference in the accompanying base shelf prospectus.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Bermuda law differs from the laws in effect in Canada and may afford less protection to
holders of our securities.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain of our assets and intellectual property are held by our wholly-owned subsidiary,
Oncolytics Barbados, which is organized under the laws of Bermuda. It may not be possible to
enforce court judgments obtained in Canada against Oncolytics Barbados in Bermuda based on the
civil liabilities provisions of applicable securities laws. In addition, there is some doubt as to
whether the courts of Bermuda would recognize or enforce judgments of Canada courts obtained
against us or our directors or officers based on the civil liabilities provisions of Canadian
securities laws or hear actions against us or those persons based on such laws.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Changes in law could adversely affect our business and corporate structure.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There can be no assurances that there will not occur changes in corporate, tax, property and
other laws in Canada and/or Barbados (or the interpretation thereof by regulatory or tax
authorities) which may materially and adversely affect our businesses and corporate structure.
</DIV>
<DIV align="left">
<A name="119"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>LEGAL MATTERS AND INTEREST OF EXPERTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The auditors of the Corporation are Ernst &#038; Young&nbsp;LLP, Chartered Accountants, 1000, 440 &#150; 2nd
Avenue S.W., Calgary, Alberta, T2P&nbsp;5E9. Ernst &#038; Young&nbsp;LLP is independent of Oncolytics in
accordance with the Rules of Professional Conduct as outlined by the Institute of Chartered
Accountants of Alberta. Ernst &#038; Young&nbsp;LLP is registered with the U.S. Public Company Accounting
Oversight Board.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain legal matters relating to the Offering will be passed upon by Bennett Jones LLP with
respect to certain Canadian legal matters and by Dorsey &#038; Whitney&nbsp;LLP with respect to certain U.S.
legal matters on behalf of the Corporation As at the date hereof, the partners and associates of
Bennett Jones&nbsp;LLP, as a group, and the partners and associates of Dorsey &#038; Whitney&nbsp;LLP, as a group,
each beneficially own directly or indirectly, less than 1% of the Common Shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, none of the aforementioned persons or firms, nor any director, officer or
employee of any of the aforementioned persons or firms is or is expected to be elected, appointed
or employed as a director, officer or employee of the Corporation or any associate or affiliate of
the Corporation.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->S-21<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="120"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>AUDITORS&#146; CONSENT</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have read the prospectus supplement of Oncolytics Biotech&nbsp;Inc. (the &#147;<B>Corporation</B>&#148;) dated
December&nbsp;4<FONT style="font-family: Symbol">&#044;</FONT><FONT style="font-family: Symbol">&#032;</FONT>2008 relating to the issuance of up to 5,175,000 Common Shares of the
Corporation (the &#147;<B>Prospectus</B>&#148;). We have complied with Canadian generally accepted standards for an
auditor&#146;s involvement with offering documents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We consent to the incorporation by reference in the above-mentioned Prospectus of our report
to the shareholders of the Corporation on the balance sheets of the Corporation as at December&nbsp;31,
2007 and 2006 and the statements of loss and comprehensive loss and cash flows for each of the
years in the three year period ended December&nbsp;31, 2007 and for the cumulative period from inception
on April&nbsp;2, 1998. Our report is dated February&nbsp;15,&nbsp;2008.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Calgary, Canada <BR>
December&nbsp;4, 2008
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">(Signed) Ernst &#038; Young LLP<BR>
Chartered Accountants</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->S-22<!-- /Folio -->
</DIV>



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<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN PAGE WIDTH -->
</DIV><!-- END PAGE WIDTH -->
<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I><U>Base Shelf Prospectus</U></I>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><I><FONT style="font-size: 9pt; color: #C41E3A">This short
    form prospectus has been filed under legislation in each of the
    provinces of British Columbia, Alberta, Manitoba and Ontario
    that permits certain information about these securities to be
    determined after this short form prospectus has become final and
    that permits the omission from this short form prospectus of
    that information. The legislation requires the delivery to
    purchasers of a prospectus supplement containing the omitted
    information within a specified period of time after agreeing to
    purchase any of these securities.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><I><FONT style="font-size: 9pt">This short form prospectus
    constitutes a public offering of these securities only in those
    jurisdictions where they may be lawfully offered for sale and
    therein only by persons permitted to sell such securities. No
    securities regulatory authority has expressed an opinion about
    these securities and it is an offence to claim
    otherwise.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><I><FONT style="font-size: 9pt">Information has been
    incorporated by reference in this short form prospectus from
    documents filed with securities commissions or similar
    authorities in Canada.
    </FONT></I></B><FONT style="font-size: 9pt"><I>Copies of the
    documents incorporated herein by reference may be obtained on
    request without charge from the Corporate Secretary of
    Oncolytics Biotech Inc. at 210, 1167 Kensington Crescent N.W.,
    Calgary, Alberta T2N&#160;1X7 telephone
    <FONT style="white-space: nowrap">(403)&#160;670-7377,</FONT>
    and are available electronically</I> at <I>www.sedar.com. See
    &#147;Documents Incorporated by Reference&#148;.</I>
    </FONT>
</DIV>

<DIV style="margin-top: 15pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 9pt">Final Short
    Form&#160;Prospectus</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="50%"></TD>
    <TD width="50%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">    <B><FONT style="font-size: 9pt; font-family: 'Times New Roman', Times">New
    Issue</FONT></B></TD>
    <TD nowrap align="right">    <B><FONT style="font-size: 9pt; font-family: 'Times New Roman', Times">
    Dated June&#160;16, 2008</FONT></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="o42618o4257602.gif" alt="(ONCOLYTICS LOGO)"><FONT style="font-size: 9pt">
    </FONT>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 18pt">Cdn. $150,000,000</FONT></B>
</DIV>

<DIV style="margin-top: 15pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 12pt">Common Shares<BR>
    Subscription Receipts<BR>
    Warrants<BR>
    Debt Securities<BR>
    Units</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 27pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 17%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=480 length=84 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 27pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may from time to time during the
    <FONT style="white-space: nowrap">25-month</FONT>
    period that this prospectus (the &#147;<B>Prospectus</B>&#148;),
    including any amendments, remains valid, sell under this
    Prospectus up to Cdn. $150,000,000 (or the equivalent in other
    currencies or currency units) aggregate initial offering price
    of our common shares (&#147;<B>Common Shares</B>&#148;),
    subscription receipts (&#147;<B>Subscription
    Receipts</B>&#148;), warrants to purchase Common Shares
    (&#147;<B>Warrants</B>&#148;), senior or subordinated unsecured
    debt securities (&#147;<B>Debt Securities</B>&#148;), and/or
    units comprised of one or more of the other securities described
    in this Prospectus in any combination, (&#147;<B>Units</B>&#148;
    and, together with the Common Shares, Subscription Receipts,
    Debt Securities and Warrants, the
    &#147;<B>Securities</B>&#148;). We may offer Securities in such
    amount and, in the case of the Subscription Receipts, Debt
    Securities, Warrants and Units, with such terms, as we may
    determine in light of market conditions. We may sell the
    Subscription Receipts, Debt Securities and Warrants in one or
    more series.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>There are certain risk factors that should be carefully
    reviewed by prospective purchasers. See &#147;Risk
    Factors&#148;.</B>
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The specific variable terms of any offering of Securities will
    be set forth in a supplement to this Prospectus relating to such
    Securities (each, a <B>&#147;Prospectus Supplement&#148;</B>)
    including where applicable: (i)&#160;in the case of the Common
    Shares, the number of Common Shares offered, the currency (which
    may be Canadian dollars or any other currency), the issue price
    and any other specific terms; (ii)&#160;in the case of
    Subscription Receipts, the number of Subscription Receipts
    offered, the currency (which may be Canadian dollars or any
    other currency), the issue price, the terms and procedures for
    the
</DIV>

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
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<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    exchange of the Subscription Receipts and any other specific
    terms; (iii)&#160;in the case of Warrants, the designation, the
    number of Warrants offered, the currency (which may be Canadian
    dollars or any other currency), number of the Common Shares that
    may be acquired upon exercise of the Warrants, the exercise
    price, dates and periods of exercise, adjustment procedures and
    any other specific terms; (iv)&#160;in the case of Debt
    Securities, the designation, aggregate principal amount and
    authorized denominations of the Debt Securities, any limit on
    the aggregate principal amount of the Debt Securities, the
    currency (which may be Canadian dollars or any other currency),
    the issue price (at par, at a discount or at a premium), the
    issue and delivery date, the maturity date (including any
    provisions for the extension of a maturity date), the interest
    rate (either fixed or floating and, if floating, the method of
    determination thereof), the interest payment date(s), the
    provisions (if any) for subordination of the Debt Securities to
    other indebtedness, any redemption provisions, any repayment
    provisions, any terms entitling the holder to exchange or
    convert the Debt Securities into other securities and any other
    specific terms; and (v)&#160;in the case of Units, the
    designation, the number of Units offered, the offering price,
    the currency (which may be Canadian dollars or any other
    currency), terms of the Units and of the securities comprising
    the Units and any other specific terms.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>We are permitted, as a foreign issuer in the United States,
    under a multi-jurisdictional disclosure system adopted by the
    United States and Canada, to prepare this Prospectus in
    accordance with Canadian disclosure requirements. You should be
    aware that such requirements are different from those of the
    United States. We have prepared our financial statements
    included or incorporated herein by reference in accordance with
    Canadian generally accepted accounting principles, and they are
    subject to Canadian auditing and auditor independence standards.
    Thus, they may not be comparable to the financial statements of
    United States companies. Information regarding the impact upon
    our financial statements of significant differences between
    Canadian and United States generally accepted accounting
    principles is contained in the notes to the financial statements
    incorporated by reference in this Prospectus.</B>
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>You should be aware that the purchase of the Securities may
    have tax consequences both in the United States and Canada. Such
    consequences for investors who are resident in, or citizens of,
    the United States may not be described fully herein. You should
    read the tax discussion contained in the applicable Prospectus
    Supplement with respect to a particular offering of securities.
    See &#147;Certain Income Tax Considerations&#148;.</B>
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Your ability to enforce civil liabilities under United States
    federal securities laws may be affected adversely by the fact
    that we are incorporated under the laws of Canada, the majority
    of our officers and directors and some of the experts named in
    this Prospectus are residents of Canada, and a substantial
    portion of our assets and the assets of such persons are located
    outside the United States.</B>
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION
    (THE &#147;SEC&#148;) NOR ANY STATE SECURITIES COMMISSION HAS
    APPROVED OR DISAPPROVED THESE SECURITIES NOR PASSED UPON THE
    ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
    THE CONTRARY IS A CRIMINAL OFFENCE.</B>
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    All shelf information permitted under applicable laws to be
    omitted from this Prospectus will be contained in one or more
    Prospectus Supplements that will be delivered to purchasers
    together with this Prospectus. Each Prospectus Supplement will
    be incorporated by reference into this Prospectus for the
    purposes of securities legislation as of the date of the
    Prospectus Supplement and only for the purposes of the
    distribution of the Securities to which the Prospectus
    Supplement pertains.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our outstanding securities are listed for trading on the Toronto
    Stock Exchange under the trading symbol &#147;ONC&#148; and on
    the NASDAQ Capital Market under the trading symbol
    &#147;ONCY&#148;. Unless otherwise specified in any applicable
    Prospectus Supplement, the Subscription Receipts, Warrants, Debt
    Securities, and Units will not be listed on any securities
    exchange. <B>There is no market through which the Subscription
    Receipts, Warrants, Debt Securities or Units may be sold and
    purchasers may not be able to resell the Subscription Receipts,
    Warrants, Debt Securities or Units purchased under this
    Prospectus. This may affect the pricing of these securities in
    the secondary market, the transparency and availability of
    trading prices, the liquidity of the securities, and the extent
    of issuer regulation. See the &#147;Risk Factors&#148; section
    of the applicable Prospectus Supplement.</B>
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    ii
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<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may sell the Securities to or through underwriters, dealers,
    placement agents or other intermediaries or directly to
    purchasers or through agents. See &#147;Plan of
    Distribution&#148;. The Prospectus Supplement relating to a
    particular offering of Securities will identify each person who
    may be deemed to be an underwriter with respect to such offering
    and will set forth the terms of the offering of such Securities,
    including, to the extent applicable, the initial public offering
    price, the proceeds that we will receive, the underwriting
    discounts or commissions and any other discounts or concessions
    to be allowed or reallowed to dealers. The managing underwriter
    or underwriters with respect to Securities sold to or through
    underwriters, if any, will be named in the related Prospectus
    Supplement.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Subject to applicable securities legislation, in connection with
    any offering of Securities under this Prospectus, the
    underwriters, if any, may over-allot or effect transactions
    which stabilize or maintain the market price of the Securities
    offered at a level above that which might otherwise prevail in
    the open market. These transactions, if commenced, may be
    discontinued at any time. See &#147;Plan of Distribution&#148;.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>You should rely only on the information contained in this
    Prospectus. We have not authorized anyone to provide you with
    information different from that contained in this Prospectus.</B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our head office and principal place of business is located at
    210, 1167 Kensington Crescent N.W., Calgary, Alberta T2N 1X7.
    Our registered office is located at 4500 Bankers Hall East,
    855&#160;&#151; 2nd Street S.W., Calgary, Alberta T2P 4K7.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    iii
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<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN PAGE WIDTH -->
<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="tocpage"></A>
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">TABLE OF
    CONTENTS</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="97%">&nbsp;</TD> <!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>  <!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>  <!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>  <!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>  <!-- colindex=02 type=quadright -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="right" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Page</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#101'>DEFINITIONS AND OTHER MATTERS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#102'>SPECIAL NOTICE REGARDING FORWARD-LOOKING
    STATEMENTS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#103'>DOCUMENTS INCORPORATED BY REFERENCE</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#104'>WHERE YOU CAN FIND ADDITIONAL INFORMATION</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#105'>ENFORCEABILITY OF CIVIL LIABILITIES</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#106'>RISK FACTORS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#107'>ONCOLYTICS BIOTECH INC.</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#108'>OUR BUSINESS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#109'>RECENT DEVELOPMENTS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    11
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#110'>USE OF PROCEEDS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#111'>CAPITALIZATION</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#112'>PRIOR SALES</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#113'>DESCRIPTION OF SHARE CAPITAL</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#114'>DESCRIPTION OF SUBSCRIPTION RECEIPTS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    14
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#115'>DESCRIPTION OF WARRANTS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    14
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#116'>DESCRIPTION OF DEBT SECURITIES</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    15
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#117'>DESCRIPTION OF UNITS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    17
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#118'>MARKET FOR SECURITIES</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    18
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#119'>PLAN OF DISTRIBUTION</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    19
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#120'>CERTAIN INCOME TAX CONSIDERATIONS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#121'>LEGAL MATTERS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#122'>AUDITOR</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#123'>DOCUMENTS FILED AS PART&#160;OF THE REGISTRATION
    STATEMENT</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#124'>PURCHASERS&#146; STATUTORY RIGHTS</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20
</TD>
<TD>&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>
</DIV><!-- END PAGE WIDTH -->
<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left">
<!-- /TOC -->
</DIV>
<A name='101'>
<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DEFINITIONS
    AND OTHER MATTERS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In this Prospectus and any Prospectus Supplement, unless
    otherwise indicated, references to &#147;we&#148;,
    &#147;us&#148;, &#147;our&#148;, &#147;Oncolytics&#148; or the
    &#147;Corporation&#148; are to Oncolytics Biotech Inc. All
    references to &#147;dollars&#148;, &#147;Cdn.$&#148; or
    &#147;$&#148; are to Canadian dollars and all references to
    &#147;U.S.$&#148; are to United States dollars. Unless otherwise
    indicated, all financial information included and incorporated
    by reference in this Prospectus and any Prospectus Supplement is
    determined using Canadian generally accepted accounting
    principles.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We prepare our financial statements in accordance with Canadian
    generally accepted accounting principles (<B>&#147;Canadian
    GAAP&#148;</B>), which differ from United States generally
    accepted accounting principles (<B>&#147;U.S. GAAP&#148;</B>).
    Therefore, our financial statements incorporated by reference in
    this Prospectus and any Prospectus Supplement and in the
    documents incorporated by reference in this Prospectus and in
    any applicable Prospectus Supplement may not be comparable to
    financial statements prepared in accordance with U.S. GAAP. You
    should refer to Note&#160;21 of our financial statements for the
    year ended December&#160;31, 2007 for a discussion of the
    principal differences between our financial results determined
    under Canadian GAAP and under U.S. GAAP. For our financial
    statements as at and for the three months ended March&#160;31,
    2008, you should refer to our reconciliation of our financial
    statements as at and for the three months ended March&#160;31,
    2008 to U.S. GAAP furnished to the SEC on the Company&#146;s
    Current Report on
    <FONT style="white-space: nowrap">Form&#160;6-K</FONT>
    dated June&#160;4, 2008 and incorporated into this Prospectus by
    reference. See &#147;Documents Incorporated by Reference&#148;.
</DIV>
<A name='102'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SPECIAL
    NOTICE REGARDING FORWARD-LOOKING STATEMENTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Some of the statements that we make contain forward-looking
    statements reflecting our current beliefs, plans, estimates and
    expectations. Readers are cautioned that these forward-looking
    statements involve risks and uncertainties, including, without
    limitation, clinical trial study delays, product development
    delays, our ability to attract and retain
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    1
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    business partners, future levels of government funding,
    competition from other biotechnology companies and our ability
    to obtain the capital required for research, product
    development, operations and marketing. These factors should be
    carefully considered and readers should not place undue reliance
    on our forward-looking statements. Actual events may differ
    materially from our current expectations due to risks and
    uncertainties.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our statements of &#147;belief&#148;, &#147;estimates&#148;,
    &#147;expectations&#148; and other similar statements are based
    primarily upon our results derived to date from our research and
    development program with animals and early stage human results
    and upon which we believe we have a reasonable scientific basis
    to expect the particular results to occur. It is not possible to
    predict, based upon studies in animals or early stage human
    results, whether a new therapeutic will be proved to be safe and
    effective in humans. There can be no assurance that the
    particular result expected by us will occur. Except as required
    by applicable securities laws, we undertake no obligation to
    update publicly any forward-looking statements for any reason
    after the date of this Prospectus or to conform these statements
    to actual results or to changes in our expectations.
</DIV>

<DIV style="margin-top: 27pt; font-size: 1pt">&nbsp;</DIV>
<A name='103'>
<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DOCUMENTS
    INCORPORATED BY REFERENCE</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Information has been incorporated by reference in this
    Prospectus from documents filed with securities commissions or
    similar authorities in Canada.</B> Copies of the documents
    incorporated herein by reference may be obtained on request
    without charge from our Corporate Secretary at 210, 1167
    Kensington Crescent N.W., Calgary, Alberta T2N&#160;1X7
    telephone
    <FONT style="white-space: nowrap">(403)&#160;670-7377,</FONT>
    and are available electronically at www.sedar.com.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have filed the following documents with the securities
    commissions or similar regulatory authorities in certain of the
    provinces of Canada and such documents are specifically
    incorporated by reference in this Prospectus:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="3%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our Renewal Annual Information Form dated March&#160;5, 2008,
    for the year ended December&#160;31, 2007 (the
    &#147;<B>AIF</B>&#148;);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our Management Proxy Circular dated March&#160;23, 2007 relating
    to the annual and special meeting of shareholders held on
    May&#160;2, 2007;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our Management Proxy Circular dated March&#160;20, 2008 relating
    to the annual and special meeting of shareholders held on
    May&#160;7, 2008;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our audited financial statements, together with the notes
    thereto, for the years ended December&#160;31, 2007 and 2006 and
    the auditors&#146; report thereon addressed to our shareholders;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our management&#146;s discussion and analysis of financial
    condition and results of operations dated March&#160;5, 2008,
    for the year ended December&#160;31, 2007;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our unaudited interim consolidated financial statements as at
    and for the three months ended March&#160;31, 2008, together
    with the notes thereto;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our management&#146;s discussion and analysis of financial
    condition and results of operations dated April&#160;30, 2008,
    for the three months ended March&#160;31, 2008; and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the reconciliation of our consolidated financial statements as
    at and for the three months ended March&#160;31, 2008 to U.S.
    GAAP, filed on June&#160;3, 2008 under the heading
    &#147;Other&#148;.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Any documents of the type required by National Instrument
    44-101&#160;&#151; Short Form&#160;Prospectus Distributions of
    the Canadian Securities Administrators to be incorporated by
    reference in a short form prospectus, including any annual
    information form, comparative annual financial statements and
    the auditors&#146; report thereon, comparative interim financial
    statements, management&#146;s discussion and analysis of
    financial condition and results of operations, material change
    report (except a confidential material change report), business
    acquisition report and information circular, if filed by us with
    the securities commissions or similar authorities in the
    provinces of Canada after the date of this Prospectus shall be
    deemed to be incorporated by reference in this Prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Any report filed by us with the SEC pursuant to section 13(a),
    13(c), 14 or 15(d) of the United States Securities Exchange Act
    of 1934 after the date of this Prospectus shall be deemed to be
    incorporated by reference into the registration statement of
    which this Prospectus forms a part, if and to the extent
    expressly provided in such report.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Any statement contained in this Prospectus or in a document
    incorporated or deemed to be incorporated by reference herein
    will be deemed to be modified or superseded for purposes of this
    Prospectus to the extent that a statement contained in this
    Prospectus or in any other subsequently filed document which
    also is, or is deemed to be, incorporated by reference into this
    Prospectus modifies or supersedes that statement. The modifying
    or superseding statement need not state that it has modified or
    superseded a prior statement or include any other </B>
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    2
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>information set forth in the document that it modifies or
    supersedes. The making of a modifying or superseding statement
    shall not be deemed an admission for any purposes that the
    modified or superseded statement when made, constituted a
    misrepresentation, an untrue statement of a material fact or an
    omission to state a material fact that is required to be stated
    or that is necessary to make a statement not misleading in light
    of the circumstances in which it was made. Any statement so
    modified or superseded shall not be deemed, except as so
    modified or superseded, to constitute part of this
    Prospectus.</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon a new annual information form and related audited annual
    financial statements and management&#146;s discussion and
    analysis being filed by us with, and where required, accepted
    by, the securities commission or similar regulatory authority in
    each of the provinces of British Columbia, Alberta, Manitoba and
    Ontario during the term of this Prospectus, the previous annual
    information form, the previous audited annual financial
    statements and related management&#146;s discussion and
    analysis, all unaudited interim financial statements and related
    management&#146;s discussion and analysis, material change
    reports and business acquisition reports filed prior to the
    commencement of our financial year in which the new annual
    information form and related audited annual financial statements
    and management&#146;s discussion and analysis are filed shall be
    deemed no longer to be incorporated into this Prospectus for
    purposes of future offers and sales of Securities under this
    Prospectus. Upon new interim financial statements and related
    management&#146;s discussion and analysis being filed by us with
    the securities commission or similar regulatory authority in
    each of the provinces of British Columbia, Alberta, Manitoba and
    Ontario during the term of this Prospectus, all interim
    financial statements and related management&#146;s discussion
    and analysis filed prior to the new interim consolidated
    financial statements and related management&#146;s discussion
    and analysis shall be deemed no longer to be incorporated into
    this Prospectus for purposes of future offers and sales of
    Securities under this Prospectus. Upon a new information
    circular relating to an annual meeting of holders of Common
    Shares being filed by us with the securities commission or
    similar regulatory authority in each of the provinces of British
    Columbia, Alberta, Manitoba and Ontario during the term of this
    Prospectus, the information circular for the preceding annual
    meeting of holders of Common Shares shall be deemed no longer to
    be incorporated into this Prospectus for purposes of future
    offers and sales of Securities under this Prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    One or more Prospectus Supplements containing the specific
    variable terms for an issue of the Securities and other
    information in relation to such Securities will be delivered to
    purchasers of such Securities together with this Prospectus and
    will be deemed to be incorporated by reference into this
    Prospectus as of the date of the Prospectus Supplement solely
    for the purposes of the offering of the Securities covered by
    any such Prospectus Supplement.
</DIV>

<DIV style="margin-top: 27pt; font-size: 1pt">&nbsp;</DIV>
<A name='104'>
<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">WHERE YOU
    CAN FIND ADDITIONAL INFORMATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have filed with the SEC a registration statement on
    <FONT style="white-space: nowrap">Form&#160;F-10</FONT>
    relating to the Securities. This Prospectus, which constitutes a
    part of the registration statement, does not contain all of the
    information contained in the registration statement, certain
    items of which are contained in the exhibits to the registration
    statement as permitted by the rules and regulations of the SEC.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We file annual and quarterly financial information and material
    change reports and other material with the SEC and with the
    securities commissions or similar regulatory authorities in
    Canada. Under a multi-jurisdictional disclosure system adopted
    by the United States, documents and other information that we
    file with the SEC may be prepared in accordance with the
    disclosure requirements of Canada, which are different from
    those of the United States. You may read and copy any document
    that we have filed with the SEC at the SEC&#146;s public
    reference rooms in Washington, D.C. and Chicago, Illinois. You
    may also obtain copies of those documents from the public
    reference room of the SEC at 100 F Street, N.E., Washington,
    D.C. 20549 by paying a fee. You should call the SEC at
    <FONT style="white-space: nowrap">1-800-SEC-0330</FONT>
    or access its website at www.sec.gov for further information
    about the public reference rooms. You may read and download some
    of the documents we have filed with the SEC&#146;s Electronic
    Data Gathering and Retrieval system at www.sec.gov. You may read
    and download any public document that we have filed with the
    securities commissions or similar regulatory authorities in
    Canada at www.sedar.com.
</DIV>
<A name='105'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">ENFORCEABILITY
    OF CIVIL LIABILITIES</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are a corporation existing under the <I>Business Corporations
    Act</I> (Alberta). The majority of our officers and directors
    and some of the experts named in this Prospectus, are residents
    of Canada or otherwise reside outside the United States, and
    all, or a substantial portion of their assets and a substantial
    portion of our assets, are located outside the United States. We
    have appointed an agent for service of process in the United
    States, but it may be difficult for holders of Securities who
    reside in the United States to effect service within the United
    States upon those directors, officers and
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    3
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<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    experts who are not residents of the United States. It may also
    be difficult for holders of Securities who reside in the United
    States to realize in the United States upon judgments of courts
    of the United States predicated upon our civil liability and the
    civil liability of our directors, officers and experts under the
    United States federal securities laws. We have been advised by
    our Canadian counsel, Bennett Jones LLP, that a judgment of a
    United States court predicated solely upon civil liability under
    United States federal securities laws would probably be
    enforceable in Canada if the United States court in which the
    judgment was obtained has a basis for jurisdiction in the matter
    that would be recognized by a Canadian court for the same
    purposes. We have also been advised by Bennett Jones LLP,
    however, that there is substantial doubt whether an action could
    be brought in Canada in the first instance on the basis of
    liability predicated solely upon United States federal
    securities laws.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We filed with the SEC, concurrently with our registration
    statement on
    <FONT style="white-space: nowrap">Form&#160;F-10,</FONT>
    an appointment of agent for service of process on
    <FONT style="white-space: nowrap">Form&#160;F-X.</FONT>
    Under the
    <FONT style="white-space: nowrap">Form&#160;F-X,</FONT>
    we appointed DL Services, Inc. at 1420, Fifth Avenue,
    Suite&#160;3400, Seattle, Washington 98101 as our agent for
    service of process in the United States in connection with any
    investigation or administrative proceeding conducted by the SEC,
    and any civil suit or action brought against or involving us in
    a United States court arising out of or related to or concerning
    the offering of the Securities under this Prospectus.
</DIV>
<A name='106'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">RISK
    FACTORS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>A prospective purchaser of Securities should carefully
    consider the list of risk factors set forth below as well as the
    other information contained in and incorporated by reference in
    this Prospectus before purchasing our Securities.</B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">All of
    our potential products, including
    REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,
    are in the research and development stage and will require
    further development and testing before they can be marketed
    commercially.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Prospects for companies in the biotechnology industry generally
    may be regarded as uncertain given the nature of the industry
    and, accordingly, investments in biotechnology companies should
    be regarded as speculative. We are currently in the research and
    development stage on one product,
    REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,
    for human application, the riskiest stage for a company in the
    biotechnology industry. It is not possible to predict, based
    upon studies in animals and early stage human clinical trials
    whether
    REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
    will prove to be safe and effective in humans.
    REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
    will require additional research and development, including
    extensive additional clinical testing, before we will be able to
    obtain the approvals of the relevant regulatory authorities in
    applicable countries to market
    REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
    commercially. There can be no assurance that the research and
    development programs we conducted will result in
    REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
    or any other products becoming commercially viable products, and
    in the event that any product or products result from the
    research and development program, it is unlikely they will be
    commercially available for a number of years.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To achieve profitable operations we, alone or with others, must
    successfully develop, introduce and market our products. To
    obtain regulatory approvals for products being developed for
    human use, and to achieve commercial success, human clinical
    trials must demonstrate that the product is safe for human use
    and that the product shows efficacy. Unsatisfactory results
    obtained from a particular study relating to a program may cause
    us to abandon our commitment to that program or the product
    being tested. No assurances can be provided that any current or
    future animal or human test, if undertaken, will yield
    favourable results. If we are unable to establish that
    REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
    is a safe, effective treatment for cancer, we may be required to
    abandon further development of the product and develop a new
    business strategy.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">There are
    inherent risks in pharmaceutical research and
    development.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Pharmaceutical research and development is highly speculative
    and involves a high and significant degree of risk. The
    marketability of any product we develop will be affected by
    numerous factors beyond our control, including but not limited
    to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="3%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the discovery of unexpected toxicities or lack of sufficient
    efficacy of products which make them unattractive or unsuitable
    for human use;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    preliminary results as seen in animal and/or limited human
    testing may not be substantiated in larger, controlled clinical
    trials;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    manufacturing costs or other production factors may make
    manufacturing of products ineffective, impractical and
    non-competitive;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    proprietary rights of third parties or competing products or
    technologies may preclude commercialization;
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    4
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<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="3%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    requisite regulatory approvals for the commercial distribution
    of products may not be obtained; and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    other factors may become apparent during the course of research,
    up-scaling or manufacturing which may result in the
    discontinuation of research and other critical projects.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our products under development have never been manufactured on a
    commercial scale, and there can be no assurance that such
    products can be manufactured at a cost or in a quantity to
    render such products commercially viable. Production and
    utilization of our products may require the development of new
    manufacturing technologies and expertise. The impact on our
    business in the event that new manufacturing technologies and
    expertise are required to be developed is uncertain. There can
    be no assurance that we will successfully meet any of these
    technological challenges, or others that may arise in the course
    of development.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Pharmaceutical
    products are subject to intense regulatory approval
    processes.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The regulatory process for pharmaceuticals, which includes
    preclinical studies and clinical trials of each compound to
    establish its safety and efficacy, takes many years and requires
    the expenditure of substantial resources. Moreover, if
    regulatory approval of a drug is granted, such approval may
    entail limitations on the indicated uses for which it may be
    marketed. Failure to comply with applicable regulatory
    requirements can, among other things, result in suspension of
    regulatory approvals, product recalls, seizure of products,
    operating restrictions and criminal prosecution. Further,
    government policy may change, and additional government
    regulations may be established that could prevent or delay
    regulatory approvals for our products. In addition, a marketed
    drug and its manufacturer are subject to continual review. Later
    discovery of previously unknown problems with the product or
    manufacturer may result in restrictions on such product or
    manufacturer, including withdrawal of the product from the
    market and risk of litigation.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The U.S. Food and Drug Administration (the
    <B>&#147;FDA&#148;</B>) in the United States and similar
    regulatory authorities in other countries may deny approval of a
    new drug application if required regulatory criteria are not
    satisfied, or may require additional testing. Product approvals
    may be withdrawn if compliance with regulatory standards is not
    maintained or if problems occur after the product reaches the
    market. The FDA and similar regulatory authorities in other
    countries may require further testing and surveillance programs
    to monitor the pharmaceutical product that has been
    commercialized. Non-compliance with applicable requirements can
    result in fines and other judicially imposed sanctions,
    including product withdrawals, product seizures, injunction
    actions and criminal prosecutions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition to our own pharmaceuticals, we may supply active
    pharmaceutical ingredients and advanced pharmaceutical
    intermediates for use in our customers&#146; drug products. The
    final drug products in which the pharmaceutical ingredients and
    advanced pharmaceutical intermediates are used, however, are
    subject to regulation for safety and efficacy by the FDA and
    other jurisdictions, as the case may be. Such products must be
    approved by such agencies before they can be commercially
    marketed. The process of obtaining regulatory clearance for
    marketing is uncertain, costly and time consuming. We cannot
    predict how long the necessary regulatory approvals will take or
    whether our customers will ever obtain such approval for their
    products. To the extent that our customers do not obtain the
    necessary regulatory approvals for marketing new products, our
    product sales could be adversely affected.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The FDA and other governmental regulators have increased
    requirements for drug purity and have increased environmental
    burdens upon the pharmaceutical industry. Because pharmaceutical
    drug manufacturing is a highly regulated industry, requiring
    significant documentation and validation of manufacturing
    processes and quality control assurance prior to approval of the
    facility to manufacture a specific drug, there can be
    considerable transition time between the initiation of a
    contract to manufacture a product and the actual initiation of
    manufacture of that product. Any lag time in the initiation of a
    contract to manufacture product and the actual initiation of
    manufacture could cause us to lose profits or incur liabilities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The pharmaceutical regulatory regime in Europe and other
    countries is, by and large, generally similar to that of the
    United States. We could face similar risks in these other
    jurisdictions, as the risks described above.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our operations and products may be subject to other government
    manufacturing and testing regulations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Securing regulatory approval for the marketing of therapeutics
    by the FDA in the United States and similar regulatory agencies
    in other countries is a long and expensive process, which can
    delay or prevent product development and marketing. Approval to
    market products may be for limited applications or may not be
    received at all.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The products we anticipate manufacturing will have to comply
    with the FDA&#146;s current Good Manufacturing Practices
    (<B>&#147;GMP&#148;</B>) and other FDA, and local government
    guidelines and regulations, including other international
    regulatory requirements and guidelines. Additionally, certain of
    our customers may require the manufacturing facilities
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    5
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<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    contracted by us to adhere to additional manufacturing
    standards, even if not required by the FDA. Compliance with GMP
    regulations requires manufacturers to expend time, money and
    effort in production, and to maintain precise records and
    quality control to ensure that the product meets applicable
    specifications and other requirements. The FDA and other
    regulatory bodies periodically inspect drug-manufacturing
    facilities to ensure compliance with applicable GMP
    requirements. If the manufacturing facilities contracted by us
    fail to comply with the GMP requirements, the facilities may
    become subject to possible FDA or other regulatory action and
    manufacturing at the facility could consequently be suspended.
    We may not be able to contract suitable alternative or back-up
    manufacturing facilities on terms acceptable to us or at all.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The FDA or other regulatory agencies may also require the
    submission of any lot of a particular product for inspection. If
    the lot product fails to meet the FDA requirements, then the FDA
    could take any of the following actions: (i)&#160;restrict the
    release of the product; (ii)&#160;suspend manufacturing of the
    specific lot of the product; (iii)&#160;order a recall of the
    lot of the product; or (iv)&#160;order a seizure of the lot of
    the product.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are subject to regulation by governments in many
    jurisdictions and, if we do not comply with healthcare, drug,
    manufacturing and environmental regulations, among others, our
    existing and future operations may be curtailed, and we could be
    subject to liability.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition to the regulatory approval process, we may be
    subject to regulations under local, provincial, state, federal
    and foreign law, including requirements regarding occupational
    health, safety, laboratory practices, environmental protection
    and hazardous substance control, and may be subject to other
    present and future local, provincial, state, federal and foreign
    regulations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">The
    biotechnology industry is extremely competitive and we must
    successfully compete with larger companies with substantially
    greater resources.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Technological competition in the pharmaceutical industry is
    intense and we expect competition to increase. Other companies
    are conducting research on therapeutics involving the Ras
    pathway as well as other novel treatments or therapeutics for
    the treatment of cancer which may compete with our product. Many
    of these competitors are more established, benefit from greater
    name recognition and have substantially greater financial,
    technical and marketing resources than us. In addition, many of
    these competitors have significantly greater experience in
    undertaking research, preclinical studies and human clinical
    trials of new pharmaceutical products, obtaining regulatory
    approvals and manufacturing and marketing such products. In
    addition, there are several other companies and products with
    which we may compete from time to time, and which may have
    significantly better and larger resources than us. Accordingly,
    our competitors may succeed in manufacturing and/or
    commercializing products more rapidly or effectively, which
    could have a material adverse effect on our business, financial
    condition or results of operations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We anticipate that we will face increased competition in the
    future as new products enter the market and advanced
    technologies become available. There can be no assurance that
    existing products or new products developed by our competitors
    will not be more effective, or be more effectively manufactured,
    marketed and sold, than any that may be developed or sold by us.
    Competitive products may render our products obsolete and
    uncompetitive prior to recovering research, development or
    commercialization expenses incurred with respect to any such
    products.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">We rely
    on patents and proprietary rights to protect our
    technology.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our success will depend, in part, on our ability to obtain
    patents, maintain trade secret protection and operate without
    infringing the rights of third parties. We have patents in the
    United States, Canada and Europe and have filed applications for
    patents in the United States and under the PCT, allowing us to
    file in other jurisdictions. See &#147;Narrative
    Description&#160;&#151; Patent and Patent Application
    Summary&#148; in our AIF. Our success will depend, in part, on
    our ability to obtain, enforce and maintain patent protection
    for our technology in Canada, the United States and other
    countries. We cannot be assured that patents will issue from any
    pending applications or that claims now or in the future, if
    any, allowed under issued patents will be sufficiently broad to
    protect our technology. In addition, no assurance can be given
    that any patents issued to or licensed by us will not be
    challenged, invalidated, infringed or circumvented, or that the
    rights granted thereunder will provide continuing competitive
    advantages to us.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The patent positions of pharmaceutical and biotechnology firms,
    including us, are generally uncertain and involve complex legal
    and factual questions. In addition, it is not known whether any
    of our current research endeavours will result in the issuance
    of patents in Canada, the United States, or elsewhere, or if any
    patents already issued will provide significant proprietary
    protection or will be circumvented or invalidated. Since patent
    applications in the United States
</DIV>

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    <BR>
    6
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    and Canada may be maintained in secrecy until at least
    18&#160;months after filing of the original priority
    application, and since publication of discoveries in the
    scientific or patent literature tends to lag behind actual
    discoveries by several months, we cannot be certain that we or
    any licensor were the first to create inventions claimed by
    pending patent applications or that we or the licensor were the
    first to file patent applications for such inventions. Loss of
    patent protection could lead to generic competition for these
    products, and others in the future, which would materially and
    adversely affect our financial prospects for these products and
    which could have a material adverse effect on our business,
    financial condition or results of operations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Similarly, since patent applications filed before
    November&#160;29, 2000 in the United States may be maintained in
    secrecy until the patents issue or foreign counterparts, if any,
    publish, we cannot be certain that we or any licensor were the
    first creator of inventions covered by pending patent
    applications or that we or such licensor were the first to file
    patent applications for such inventions. There is no assurance
    that our patents, if issued, would be held valid or enforceable
    by a court or that a competitor&#146;s technology or product
    would be found to infringe such patents.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Accordingly, we may not be able to obtain and enforce effective
    patents to protect our proprietary rights from use by
    competitors, and the patents of other parties could require us
    to stop using or pay to use certain intellectual property, and
    as such, our competitive position and profitability could suffer
    as a result.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, we may be required to obtain licenses under patents
    or other proprietary rights of third parties. No assurance can
    be given that any licenses required under such patents or
    proprietary rights will be available on terms acceptable to us.
    If we do not obtain such licenses, we could encounter delays in
    introducing one or more of our products to the market while we
    attempt to design around such patents, or could find that the
    development, manufacture or sale of products requiring such
    licenses could be foreclosed. In addition, we could incur
    substantial costs in defending ourselves in suits brought
    against us on such patents or in suits in which our attempts to
    enforce our own patents against other parties.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Our
    products may fail or cause harm, subjecting us to product
    liability claims.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Use of our product during current clinical trials may entail
    risk of product liability. We maintain clinical trial liability
    insurance; however, it is possible this coverage may not provide
    full protection against all risks. Given the scope and
    complexity of the clinical development process, the uncertainty
    of product liability litigation, and the shrinking capacity of
    insurance underwriters, it is not possible at this time to
    assess the adequacy of current clinical trial coverage, nor the
    ability to secure continuing coverage at the same level and at
    reasonable cost in the foreseeable future. While we carry, and
    intend to continue carrying amounts believed to be appropriate
    under the circumstances, it is not possible at this time to
    determine the adequacy of such coverage.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, the sale and commercial use of our product entails
    risk of product liability. We currently do not carry any product
    liability insurance for this purpose. There can be no assurance
    that we will be able to obtain appropriate levels of product
    liability insurance prior to any sale of our pharmaceutical
    products. An inability to obtain insurance on economically
    feasible terms or to otherwise protect against potential product
    liability claims could inhibit or prevent the commercialization
    of products developed by us. The obligation to pay any product
    liability claim or a recall of a product could have a material
    adverse effect on our business, financial condition and future
    prospects.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">We have
    limited manufacturing experience and intend to rely on third
    parties to commercially manufacture our products, if and when
    developed.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To date, we have relied upon a contract manufacturer to
    manufacture small quantities of
    REOLYSIN<B><SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP></B>.
    The manufacturer may encounter difficulties in scaling up
    production, including production yields, quality control and
    quality assurance. Only a limited number of manufacturers can
    supply therapeutic viruses and failure by the manufacturer to
    deliver the required quantities of
    REOLYSIN<B><SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP></B>
    on a timely basis at a commercially reasonable price may have a
    material adverse effect on us. We have completed a program for
    the development of a commercial process for manufacturing
    REOLYSIN<B><SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP></B>
    and have filed a number of patent applications related to the
    process. There can be no assurance that we will successfully
    obtain sufficient patent protection related to our manufacturing
    process.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">New
    products may not be accepted by the medical community or
    consumers.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our primary activity to date has been research and development
    and we have no experience in marketing or commercializing
    products. We will likely rely on third parties to market our
    products, assuming that they receive regulatory approvals. If we
    rely on third parties to market our products, the commercial
    success of such product may be outside of our control. Moreover,
    there can be no assurance that physicians, patients or the
    medical community will accept
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    7
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    our product even if it proves to be safe and effective and is
    approved for marketing by Health Canada, the FDA and other
    regulatory authorities. A failure to successfully market our
    product would have a material adverse effect on our revenue.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Our
    technologies may become obsolete.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The pharmaceutical industry is characterized by rapidly changing
    markets, technology, emerging industry standards and frequent
    introduction of new products. The introduction of new products
    embodying new technologies, including new manufacturing
    processes, and the emergence of new industry standards may
    render our products obsolete, less competitive or less
    marketable. The process of developing our products is extremely
    complex and requires significant continuing development efforts
    and third party commitments. Our failure to develop new
    technologies and products and the obsolescence of existing
    technologies could adversely affect our business.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may be unable to anticipate changes in our potential customer
    requirements that could make our existing technology obsolete.
    Our success will depend, in part, on our ability to continue to
    enhance our existing technologies, develop new technology that
    addresses the increasing sophistication and varied needs of the
    market, and respond to technological advances and emerging
    industry standards and practices on a timely and cost-effective
    basis. The development of our proprietary technology entails
    significant technical and business risks. We may not be
    successful in using our new technologies or exploiting our niche
    markets effectively or adapting our businesses to evolving
    customer or medical requirements or preferences or emerging
    industry standards.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">We are
    highly dependent on third party relationships for research and
    clinical trials.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We rely upon third party relationships for assistance in the
    conduct of research efforts, pre-clinical development and
    clinical trials, and manufacturing. In addition, we expect to
    rely on third parties to seek regulatory approvals for and to
    market our product. Although we believe that our collaborative
    partners will have an economic motivation to commercialize our
    product included in any collaborative agreement, the amount and
    timing of resources diverted to these activities generally is
    expected to be controlled by the third party. Furthermore, if we
    cannot maintain these relationships, our business may suffer.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">We have
    no operating revenues and a history of losses.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To date, we have not generated sufficient revenues to offset our
    research and development costs and accordingly have not
    generated positive cash flow or made an operating profit. As of
    December&#160;31, 2007, we had an accumulated deficit of
    $80.5&#160;million and we incurred net losses of
    $15.6&#160;million, $14.3&#160;million, and $12.8&#160;million,
    for the years ended December&#160;31, 2007, 2006 and 2005,
    respectively. As at March&#160;31, 2008, we had an accumulated
    deficit of $83.3&#160;million and in the three month period then
    ended we incurred a net loss of $3.3&#160;million. We anticipate
    that we will continue to incur significant losses during 2008
    and in the foreseeable future. We do not expect to reach
    profitability at least until after successful and profitable
    commercialization of one or more of our products. Even if one or
    more of our products are profitably commercialized, the initial
    losses incurred by us may never be recovered.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">We may
    not be able to obtain third-party reimbursement for the cost of
    our product.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Uncertainty exists regarding the reimbursement status of
    newly-approved pharmaceutical products and reimbursement may not
    be available for
    REOLYSIN<B><SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP></B>.
    Any reimbursements granted may not be maintained or limits on
    reimbursements available from third-party payors may reduce the
    demand for, or negatively affect the price of, these products.
    If
    REOLYSIN<B><SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP></B>
    does not qualify for reimbursement, if reimbursement levels
    diminish, or if reimbursement is denied, our sales and
    profitability would be adversely affected.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">We may
    need additional financing in the future to fund the research and
    development of our products and to meet our ongoing capital
    requirements.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As at December&#160;31, 2007, we had cash and cash equivalents
    (including short-term investments) of $25.2&#160;million and
    working capital of approximately $22.4&#160;million. As at
    March&#160;31, 2008, we had cash and cash equivalents (including
    short-term investments) of $22.0&#160;million and working
    capital of approximately $19.5&#160;million. We anticipate that
    we may need additional financing in the future to fund research
    and development and to meet our ongoing capital requirements.
    The amount of future capital requirements will depend on many
    factors, including continued scientific progress in our drug
    discovery and development programs, progress in our pre-clinical
    and clinical evaluation of drug candidates, time and expense
    associated with filing, prosecuting and enforcing our patent
    claims and costs associated with obtaining regulatory approvals.
    In order to meet such capital requirements, we will consider
    contract fees, collaborative research and development
    arrangements, and additional public or private financings
    (including the incurrence of debt and the issuance
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    8
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    of additional equity securities) to fund all or a part of
    particular programs as well as potential partnering or licensing
    opportunities. There can be no assurance that additional funding
    will be available or, if available, that it will be available on
    acceptable terms. If adequate funds are not available on terms
    favorable to us, we may have to reduce substantially or
    eliminate expenditures for research and development, testing,
    production and marketing of our proposed product, or obtain
    funds through arrangements with corporate partners that require
    us to relinquish rights to certain of our technologies or
    product. There can be no assurance that we will be able to raise
    additional capital if our current capital resources are
    exhausted.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">The cost
    of director and officer liability insurance may increase
    substantially and may affect our ability to retain quality
    directors and officers.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We carry liability insurance on behalf of our directors and
    officers. Given a number of large director and officer liability
    insurance claims in the U.S. equity markets, director and
    officer liability insurance has become increasingly more
    expensive with increased restrictions. Consequently, there is no
    assurance that we will continue to be offered this insurance or
    be able to obtain adequate coverage. The inability to acquire
    the appropriate insurance coverage may limit our ability to
    attract and maintain directors and officers as required to
    conduct our business.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">We are
    dependent on our key employees and collaborators.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our ability to develop the product will depend, to a great
    extent, on our ability to attract and retain highly qualified
    scientific personnel and to develop and maintain relationships
    with leading research institutions. Competition for such
    personnel and relationships is intense. We are highly dependent
    on the principal members of our management staff, as well as our
    advisors and collaborators, the loss of whose services might
    impede the achievement of development objectives. The persons
    working with us are affected by a number of influences outside
    of our control. The loss of key employees and/or key
    collaborators may affect the speed and success of product
    development.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We presently carry key man insurance in the amounts of
    $1,500,000, $1,000,000 and $500,000 for Dr.&#160;Thompson,
    Dr.&#160;Coffey and Mr.&#160;Ball, respectively.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Our share
    price may be highly volatile.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Market prices for securities of biotechnology companies
    generally are volatile. This increases the risk of securities
    litigation. Factors such as announcements (publicly made or at
    scientific conferences) of technological innovations, new
    commercial products, patents, the development of proprietary
    rights, results of clinical trials, regulatory actions,
    publications, quarterly financial results, our financial
    position, public concern over the safety of biotechnology,
    future sales of shares by us or our current shareholders and
    other factors could have a significant effect on the market
    price and volatility of the Common Shares.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">We incur
    some of our expenses in foreign currencies and therefore we are
    exposed to foreign currency exchange rate
    fluctuations.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We incur some of our manufacturing, clinical, collaborative and
    consulting expenses in foreign currencies (primarily the U.S.
    dollar and the British Pound (<B>&#147;BP&#148;</B>). Over the
    past few years the Canadian dollar has appreciated relative to
    the U.S. dollar and the BP thereby decreasing the Canadian
    dollar equivalent. However, if this trend reverses, our Canadian
    dollar equivalent costs will increase.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Also, as we expand to other foreign jurisdictions there may be
    an increase in our foreign exchange exposure.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">We earn
    interest income on our excess cash reserves and are exposed to
    changes in interest rates.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We invest our excess cash reserves in investment vehicles that
    provide a rate of return with little risk to principal. As
    interest rates change the amount of interest income we earn will
    be directly impacted.
</DIV>
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<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">ONCOLYTICS
    BIOTECH INC.</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Oncolytics Biotech Inc. was incorporated pursuant to the
    provisions of the <I>Business Corporations Act</I> (Alberta) on
    April&#160;2, 1998 as 779738 Alberta Ltd. On April&#160;8, 1998,
    we amended our articles and changed our name to Oncolytics
    Biotech Inc. On July&#160;29, 1999, we further amended our
    articles by removing the private company restrictions and
    subdividing our 2,222,222 Common Shares issued and outstanding
    into 6,750,000 Common Shares. On February&#160;9, 2007, we
    further amended our articles to permit for our shareholder
    meetings to be held at any place in Alberta or at any other
    location as determined by our directors.
</DIV>

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    <BR>
    9
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<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our head office and principal place of business is located at
    210, 1167 Kensington Crescent N.W., Calgary, Alberta T2N 1X7.
    Our registered office is located at 4500 Bankers Hall East,
    855&#160;&#151; 2nd Street S.W., Calgary, Alberta T2P 4K7.
</DIV>
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<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">OUR
    BUSINESS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We focus on the discovery and development of oncolytic viruses
    for the treatment of cancers that have not been successfully
    treated with conventional therapeutics. Recent scientific
    advances in oncology, virology, and molecular biology have
    created opportunities for new approaches to the treatment of
    cancer. The product we are presently developing may represent a
    novel treatment for Ras-mediated cancers which can be used as an
    alternative to existing cytotoxic or cytostatic therapies or as
    an adjuvant therapy to conventional chemotherapy, radiation
    therapy, or surgical resections. It could also potentially be
    used to treat certain cellular proliferative disorders for which
    no current therapy exists.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our technologies are based primarily on discoveries in the
    Department of Microbiology and Infectious Diseases at the
    University of Calgary in the 1990&#146;s. Oncolytics was formed
    in 1998 to explore the natural oncolytic capability of the
    reovirus, a virus that preferentially replicates in cells with
    an activated Ras pathway.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The lead product being developed by us may represent a novel
    treatment for certain tumour types and some cellular
    proliferative disorders. Our lead product is a virus that is
    able to replicate specifically in, and hence kill, certain
    tumour cells both in tissue culture as well as in a number of
    animal models without damaging normal cells.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our potential product for human use,
    REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>,
    is developed from the reovirus. This virus has been demonstrated
    to replicate specifically in tumour cells bearing an activated
    Ras pathway. Activating mutations of Ras occur in approximately
    thirty per cent of all human tumours directly, but considering
    its central role in signal transduction, activation of the Ras
    pathway has been shown to play a role in approximately
    two-thirds of all tumours.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The functionality of
    REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
    is based upon the finding that tumours bearing an activated Ras
    pathway are deficient in their ability to activate the
    anti-viral response mediated by the host cellular protein,
    Protein Kinase&#160;R <B>(&#147;PKR&#148;)</B>. Since PKR is
    responsible for preventing reovirus replication, tumour cells
    lacking the activity of PKR are susceptible to reovirus
    infections. As normal cells do not possess Ras activations,
    these cells are able to thwart reovirus infections by the
    activity of PKR. In a tumour cell with an activated Ras pathway,
    reovirus is able to freely replicate and hence kill the host
    tumour cell. The result of this replication is progeny viruses
    that are then free to infect surrounding cancer cells. This
    cycle of infection, replication and cell death is believed to be
    repeated until there are no longer any tumour cells carrying an
    activated Ras pathway available.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following schematic illustrates the molecular basis of how
    the reovirus kills cancer cells.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="o42618o4257601.gif" alt="(GRAPH)">
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For both non-cancer cells and cancer cells with an activated Ras
    pathway, virus binding, entry, and production of viral genes all
    proceed normally. In the case of normal cells however, the viral
    genes cause the activation of the anti-viral response that is
    mediated by the host cell&#146;s PKR, thus blocking the
    replication of the reovirus. In cells with an activated Ras
    pathway, the activation of PKR is prevented or reversed by an
    element of the Ras signal transduction pathway, thereby allowing
    the replication of the reovirus in these cancer cells. The end
    result of this replication is the death of the cancer
</DIV>

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    <BR>
    10
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    cell. The action of the Ras pathway in allowing reovirus
    replication to ensue can be mimicked in non-cancerous cells by
    treating these cells with the chemical
    <FONT style="white-space: nowrap">2-aminopurine</FONT>
    which prevents the activation of PKR.
</DIV>
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<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">RECENT
    DEVELOPMENTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
    Development since the First Quarter of 2008</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Clinical
    Trial Program</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Clinical
    Trials&#160;&#151;&#160;Results</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In June 2008, we announced that interim results of our Phase II
    study of intravenous
    REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
    in patients with sarcomas metastatic to the lung were presented
    at the American Society of Clinical Oncology annual meeting. The
    presentation, entitled &#147;A Phase II Study of Intravenous
    REOLYSIN (Wild-type Reovirus) in the Treatment of Patients with
    Bone and Soft Tissue Sarcomas Metastatic to the Lung&#148; was
    delivered by Dr.&#160;Monica Mita, the study principal
    investigator and her team at the Institute of Drug Development,
    the Cancer Therapy and Research Center at the University of
    Texas Health Science Center, San Antonio, Texas.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The interim results demonstrated that the treatment has been
    well tolerated to date, with 8 of 16 evaluable patients
    experiencing stable disease for periods ranging from two to more
    than ten,
    <FONT style="white-space: nowrap">28-day</FONT>
    cycles. As previously announced by Oncolytics, the third patient
    treated in the study was demonstrated to have stable disease by
    RECIST criteria for more than six months as measured by
    CT&#160;scan. A PET scan taken at the same time showed that any
    residual mass was metabolically inert.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In April 2008, we completed patient enrolment in the dose
    escalation portion and reported positive interim results from
    our U.K. clinical trial to evaluate the anti-tumour effects of
    systemic administration of
    REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
    in combination with paclitaxel and carboplatin in patients with
    advanced cancers including head and neck, melanoma, lung and
    ovarian.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Four of the first eight patients treated in the study to date
    have a diagnosis of carcinoma of the head and neck. All three
    head and neck patients evaluated to date have had excellent
    clinical and radiological responses without appreciable
    toxicity. Preliminary assessment after recruitment of the first
    two cohorts has suggested that patients with head and neck
    carcinomas may represent a group of patients in whom the
    combination of carboplatin/paclitaxel and
    REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
    is active.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In the first cohort, the patient with head and neck cancer
    received 8 cycles of treatment (the maximum allowed) and
    achieved a clinical complete response. In the second cohort, the
    two patients with head and neck cancers with widespread
    disseminated disease have each received six cycles of treatment
    to date and both have achieved significant partial responses.
    Two of the three patients, including the patient with the
    clinical complete response, had previously received
    cisplatin/5-FU treatment and all three had previously received
    radiotherapy.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The trial has two components. The first is an open-label,
    dose-escalating, non-randomized study of
    REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
    given intravenously with paclitaxel and carboplatin every three
    weeks. Standard dosages of paclitaxel and carboplatin were
    delivered to patients with escalating dosages of
    REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
    intravenously. The second component of the trial includes the
    enrolment of a further 12 patients at the maximum dosage of
    REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
    in combination with a standard dosage of paclitaxel and
    carboplatin.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Eligible patients include those who have been diagnosed with
    advanced or metastatic solid tumours such as head and neck,
    melanoma, lung and ovarian cancers that are refractory (have not
    responded) to standard therapy or for which no curative standard
    therapy exists. The primary objective of the trial is to
    determine the Maximum Tolerated Dose, Dose-Limiting Toxicity,
    recommended dose and dosing schedule and safety profile of
    REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
    when administered in combination with paclitaxel and
    carboplatin. Secondary objectives include the evaluation of
    immune response to the drug combination, the body&#146;s
    response to the drug combination compared to chemotherapy alone
    and any evidence of anti-tumour activity.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Clinical
    Trials&#160;&#151;&#160;Approved to Commence</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In May 2008, we announced that we received a letter of approval
    from the U.K. Medicines and Healthcare Products Regulatory
    Agency for our Clinical Trial Application to begin a Phase II
    clinical trial using intravenous administration of
    REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
    in combination with paclitaxel and carboplatin in patients with
    advanced head and neck cancers. The principal investigator is
    Dr.&#160;Kevin Harrington of The Institute of Cancer Research
    and The Royal Marsden NHS Foundation Trust.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    11
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<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This trial is a 14&#160;patient, single arm, open-label,
    dose-targeted, non-randomized, multi-centre trial of
    REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
    given intravenously in combination with a standard dosage of
    paclitaxel and carboplatin. Patients with a variety of advanced
    cancers, including head and neck cancers, will continue to be
    treated in the ongoing U.K.&#160;combination paclitaxel and
    carboplatin trial.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Eligible patients include those with advanced or metastatic head
    and neck cancer that are refractory to standard therapy or for
    which no curative standard therapy exists. The primary objective
    of the Phase II trial is to measure tumour responses and
    duration of response, and to describe any evidence of antitumour
    activity. The secondary objective is to determine the safety and
    tolerability of
    REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
    when administered in combination with paclitaxel and carboplatin
    to patients with advanced or metastatic head and neck cancer.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Clinical
    Trials&#160;&#151;&#160;Actively Enrolling</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In June 2008, we announced that we commenced patient enrolment
    in the Phase&#160;II clinical trial described above under
    &#147;Clinical Trials&#160;&#151;&#160;Approved to
    Commence&#148; using intravenous administration of
    REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
    in combination with paclitaxel and carboplatin in patients with
    advanced head and neck cancers.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In May 2008, we announced that we had begun patient enrolment in
    a clinical trial using intravenous administration of
    REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
    in combination with cyclophosphamide, a chemotherapeutic agent
    as well as immune modulator, in patients with advanced cancers.
    The Principal Investigators are Dr.&#160;James Spicer of
    King&#146;s College in London, Dr.&#160;Johann de Bono and
    Dr.&#160;Kevin Harrington of The Royal Marsden NHS Foundation
    Trust and The Institute of Cancer Research, London, and
    Professor Hardev Pandha of the Royal Surrey County Hospital NHS
    Trust, Surrey and Mount Alvernia Hospitals.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The trial is an open-label, dose-escalating, non-randomized
    trial of
    REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
    given intravenously with escalating doses of cyclophosphamide. A
    standard dose of
    REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
    is administered intravenously over five consecutive days, while
    an intravenous dose of cyclophosphamide is administered three
    days before
    REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
    treatment and continues through the course of the treatment
    cycle. The total number of patients studied will depend on the
    number of dose levels tested, but it is anticipated to be
    approximately 30&#160;patients.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Eligible patients include those who have been diagnosed with
    advanced or metastatic solid tumours including pancreatic, lung
    and ovarian cancers that are refractory (have not responded) to
    standard therapy or for which no curative standard therapy
    exists. The primary objectives of the trial include determining
    the Minimum Effective Immunomodulatory Dose of cyclophosphamide
    to obtain successful immune modulation. Secondary objectives
    include determining the safety profile of the combination and
    gathering any evidence of anti-tumour activity.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Manufacturing
    Program</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In May 2008, we announced that we had successfully transferred
    GMP production for
    REOLYSIN<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
    at the 40-litre batch size to SAFC
    Pharma<SUP style="font-size: 85%; vertical-align: text-top"><FONT style="font-variant: SMALL-CAPS">tm</FONT></SUP>,
    a Division of Sigma-Aldrich Corporation. This follows the
    successful scale-up from 20 litres to 40 litres announced by us
    last year.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Yields at the 40-litre scale should provide sufficient doses to
    support future development plans leading to registration and
    also anticipated early stage commercial requirements.
    Development work to support further scale-up to the 100-litre
    level is currently underway.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Collaborations</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In April 2008, we announced that Prof. Alan Melcher and his
    research group at St. James&#146;s University Hospital in Leeds,
    U.K. published the results of their work with reovirus in the
    May&#160;1, 2008 online issue of The Journal of Immunology. The
    paper is entitled &#147;Reovirus Activates Human Dendritic Cells
    to Promote Innate Antitumor Immunity.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The researchers studied the ability of reovirus to activate
    human dendritic cells <B>(&#147;DC&#148;)</B>, key regulators of
    both innate and adaptive immune responses. The data demonstrated
    that reovirus directly activates human DC, which in turn
    stimulate innate killing of cancer cells by natural killer and T
    cells, suggesting a novel potential role for T&#160;cells in
    oncolytic virus-induced local tumor cell death. Combined with
    the virus&#146;s ability to directly kill cancer cells, the
    researchers concluded that reovirus recognition by DC may
    enhance the efficacy of reovirus as a therapeutic agent.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In April 2008, we announced that Prof. Alan Melcher and his
    research group at St.&#160;James&#146;s University Hospital in
    Leeds, U.K. published the results of their work in the April 10
    online issue of Gene Therapy. The paper is entitled
    &#147;Inflammatory Tumour Cell Killing by Oncolytic Reovirus for
    the Treatment of Melanoma.&#148;
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    12
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The investigators showed that reovirus effectively kills and
    replicates in both human melanoma cell lines and freshly
    resected tumours. They demonstrated that reovirus melanoma
    killing is more potent than, and distinct from, chemotherapy or
    radiotherapy-induced cell death. They concluded that reovirus is
    suitable for clinical testing in melanoma.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In April 2008, we announced that an oral presentation by
    Dr.&#160;Chandini Thirukkumaran of the Tom Baker Cancer Centre,
    Calgary, entitled &#147;Targeting Multiple Myeloma with
    Oncolytic Viral Therapy&#148; was presented at the American
    Association for Cancer Research (&#147;<B>AACR</B>&#148;) Annual
    Meeting in April.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The presentation covered preclinical work using reovirus as a
    purging agent during autologous (harvested from the patient
    themselves) hematopoietic stem cell transplants for multiple
    myeloma. The results demonstrated that up to 70% of multiple
    myeloma cell lines tested showed reovirus sensitivity and
    reovirus induced cell death mediated through apoptosis.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The investigators concluded that this preclinical data supports
    initiating a Phase I purging trial using reovirus against
    multiple myeloma.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In April 2008, we announced that a poster presentation by
    Dr.&#160;Anders Kolb of the Nemours Center for Childhood Cancer
    Research entitled &#147;Radiation in Combination with Reolysin
    for Pediatric Sarcomas&#148; was presented at AACR.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The poster covers preclinical work using reovirus in combination
    with radiation in mice implanted with pediatric rhabdomyosarcoma
    and Ewing&#146;s sarcoma tumours. The results demonstrated that
    the combination of reovirus and radiation significantly enhanced
    efficacy compared to either treatment alone in terms of tumour
    regression and event-free survival.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>
<A name='110'>
<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">USE OF
    PROCEEDS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Unless otherwise indicated in an applicable Prospectus
    Supplement relating to an offering of Securities, we will use
    the net proceeds we receive from the sale of Securities for
    general corporate purposes, which may include our clinical trial
    program and our manufacturing activities in support of such
    program. The amount of net proceeds to be used for any purpose
    will be described in the applicable Prospectus Supplement.
</DIV>

<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>
<A name='111'>
<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">CAPITALIZATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On March&#160;31, 2008, we had 41,180,748 Common Shares issued
    and outstanding. Since March&#160;31, 2008, we have issued no
    Common Shares pursuant to the exercise of stock options and no
    warrants have expired. As at June&#160;16, 2008, we have
    41,180,748 Common Shares issued and outstanding. After giving
    effect to the exercise of all our Common Share purchase warrants
    and options, we would have 49,271,241 Common Shares issued and
    outstanding as at June&#160;16, 2008.
</DIV>

<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>
<A name='112'>
<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PRIOR
    SALES</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On October&#160;29, 2007, we issued 60,000 Common Shares on the
    exercise of 60,000 options at an exercise price of $0.85 per
    Common Share. We granted options to acquire an aggregate of
    1,050&#160;Common Shares at an exercise price of $2.35 per
    Common Share and options to acquire an aggregate of
    431,493&#160;Common Shares at an exercise price of $2.22 per
    Common Share on October&#160;30, 2007 and December&#160;12,
    2007, respectively. No other Common Shares or securities
    exchangeable or convertible into Common Shares have been issued
    during the twelve month period preceding the date of this
    Prospectus.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>
<A name='113'>
<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF SHARE CAPITAL</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Authorized
    Capital</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our authorized capital consists of an unlimited number of Common
    Shares.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Common
    Shares</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The holders of our Common Shares are entitled to one vote per
    share at meetings of shareholders, to receive such dividends as
    declared by us and to receive our remaining property and assets
    upon dissolution or wind up. Our Common Shares are not subject
    to any future call or assessment and there are no pre-emptive,
    conversion or redemption rights attached to such shares.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    13
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN PAGE WIDTH -->
<A name='114'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF SUBSCRIPTION RECEIPTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following description of the terms of Subscription Receipts
    sets forth certain general terms and provisions of Subscription
    Receipts in respect of which a Prospectus Supplement may be
    filed. The particular terms and provisions of Subscription
    Receipts offered by any Prospectus Supplement, and the extent to
    which the general terms and provisions described below may apply
    thereto, will be described in the Prospectus Supplement filed in
    respect of such Subscription Receipts.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Subscription Receipts may be offered separately or in
    combination with one or more other Securities. The Subscription
    Receipts will be issued under a subscription receipt agreement.
    A copy of the subscription receipt agreement will be filed by us
    with the applicable securities commission or similar regulatory
    authorities after it has been entered into by us and will be
    available electronically at www.sedar.com.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Pursuant to the subscription receipt agreement, original
    purchasers of Subscription Receipts will have a contractual
    right of rescission against Oncolytics, following the issuance
    of the underlying Common Share or other securities to such
    purchasers upon the surrender or deemed surrender of the
    Subscription Receipts, to receive the amount paid for the
    Subscription Receipts in the event that this Prospectus and any
    amendment thereto contains a misrepresentation or is not
    delivered to such purchaser, provided such remedy for rescission
    is exercised within 180&#160;days from the closing date of the
    offering of Subscription Receipts.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The description of general terms and provisions of Subscription
    Receipts described in any Prospectus Supplement will include,
    where applicable:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="3%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the number of Subscription Receipts offered;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the price at which the Subscription Receipts will be offered;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if other than Canadian dollars, the currency or currency unit in
    which the Subscription Receipts are denominated;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the procedures for the exchange of the Subscription Receipts
    into Common Shares or other securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the number of Common Shares or other securities that may be
    obtained upon exercise of each Subscription Receipt;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the designation and terms of any other Securities with which the
    Subscription Receipts will be offered, if any, and the number of
    Subscription Receipts that will be offered with each Security;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the terms applicable to the gross proceeds from the sale of the
    Subscription Receipts plus any interest earned thereon;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the material tax consequences of owning the Subscription
    Receipts; and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any other material terms, conditions and rights (or limitations
    on such rights) of the Subscription Receipts.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We reserve the right to set forth in a Prospectus Supplement
    specific terms of the Subscription Receipts that are not within
    the options and parameters set forth in this Prospectus. In
    addition, to the extent that any particular terms of the
    Subscription Receipts described in a Prospectus Supplement
    differ from any of the terms described in this Prospectus, the
    description of such terms set forth in this Prospectus shall be
    deemed to have been superseded by the description of such
    differing terms set forth in such Prospectus Supplement with
    respect to such Subscription Receipts.
</DIV>
<A name='115'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF WARRANTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following description of the terms of Warrants sets forth
    certain general terms and provisions of Warrants in respect of
    which a Prospectus Supplement may be filed. The particular terms
    and provisions of Warrants offered by any Prospectus Supplement,
    and the extent to which the general terms and provisions
    described below may apply thereto, will be described in the
    Prospectus Supplement filed in respect of such Warrants.
    Warrants may be offered separately or in combination with one or
    more other Securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The description of general terms and provisions of Warrants
    described in any Prospectus Supplement will include, where
    applicable:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="3%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the designation and aggregate number of Warrants offered;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the price at which the Warrants will be offered;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if other than Canadian dollars, the currency or currency unit in
    which the Warrants are denominated;
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    14
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="3%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the designation and terms of the Common Shares that may be
    acquired upon exercise of the Warrants;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the date on which the right to exercise the Warrants will
    commence and the date on which the right will expire;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the number of Common Shares that may be purchased upon exercise
    of each Warrant and the price at which and currency or
    currencies in which that amount of securities may be purchased
    upon exercise of each Warrant;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the designation and terms of any Securities with which the
    Warrants will be offered, if any, and the number of the Warrants
    that will be offered with each Security;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the date or dates, if any, on or after which the Warrants and
    the related Securities will be transferable separately;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the minimum or maximum amount, if any, of Warrants that may be
    exercised at any one time;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    whether the Warrants will be subject to redemption or call, and,
    if so, the terms of such redemption or call provisions; and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any other material terms, conditions and rights (or limitations
    on such rights) of the Warrants.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We reserve the right to set forth in a Prospectus Supplement
    specific terms of the Warrants that are not within the options
    and parameters set forth in this Prospectus. In addition, to the
    extent that any particular terms of the Warrants described in a
    Prospectus Supplement differ from any of the terms described in
    this Prospectus, the description of such terms set forth in this
    Prospectus shall be deemed to have been superseded by the
    description of such differing terms set forth in such Prospectus
    Supplement with respect to such Warrants.
</DIV>

<DIV style="margin-top: 27pt; font-size: 1pt">&nbsp;</DIV>
<A name='116'>
<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF DEBT SECURITIES</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following description sets forth certain general terms and
    provisions of the Debt Securities and is not intended to be
    complete. The particular terms and provisions of the Debt
    Securities and a description of how the general terms and
    provisions described below may apply to the Debt Securities will
    be included in the applicable Prospectus Supplement. The
    following description is subject to the detailed provisions of
    the applicable Trust&#160;Indenture. Accordingly, reference
    should also be made to the applicable Trust&#160;Indenture, a
    copy of which will be filed by us with the securities commission
    or similar regulatory authority in each of the provinces of
    British Columbia, Alberta, Manitoba and Ontario after it has
    been entered into by us and will be available electronically at
    www.sedar.com.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Debt Securities will be issued under one or more indentures
    (each, a <B>&#147;Trust&#160;Indenture&#148;</B>), in each case
    between ourselves and a financial institution authorized to
    carry on business as a trustee (each, a
    <B>&#147;Trustee&#148;</B>).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Debt Securities may be offered separately or in combination with
    one or more other Securities. We may, from time to time, issue
    debt securities and incur additional indebtedness other than
    through the issuance of Debt Securities pursuant to this
    Prospectus.
</DIV>

<DIV style="margin-top: 15pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">General</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Debt Securities may be issued from time to time in one or
    more series. We may specify a maximum aggregate principal amount
    for the Debt Securities of any series and, unless otherwise
    provided in the applicable Prospectus Supplement, a series of
    Debt Securities may be reopened for issuance of additional Debt
    Securities of such series.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Any Prospectus Supplement for Debt Securities supplementing this
    Prospectus will contain the specific terms and other information
    with respect to the Debt Securities being offered thereby,
    including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="3%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the designation, aggregate principal amount and authorized
    denominations of such Debt Securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any limit upon the aggregate principal amount of such Debt
    Securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the currency or currency units for which such Debt Securities
    may be purchased and the currency or currency units in which the
    principal and any interest is payable (in either case, if other
    than Canadian dollars);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the issue price (at par, at a discount or at a premium) of such
    Debt Securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the date or dates on which such Debt Securities will be issued
    and delivered;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the date or dates on which such Debt Securities will mature,
    including any provision for the extension of a maturity date, or
    the method of determination of such date(s);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the rate or rates per annum (either fixed or floating) at which
    such Debt Securities will bear interest (if any) and, if
    floating, the method of determination of such rate;
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    15
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="3%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the date or dates from which any such interest will accrue and
    on which such interest will be payable and the record date or
    dates for the payment of such interest, or the method of
    determination of such date(s);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if applicable, the provisions for subordination of such Debt
    Securities to other indebtedness of the Corporation;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the Trustee under the Trust&#160;Indenture pursuant to which
    such Debt Securities are to be issued;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any redemption term or terms under which such Debt Securities
    may be defeased whether at or prior to maturity;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any repayment or sinking fund provisions;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any events of default applicable to such Debt Securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    whether such Debt Securities are to be issued in registered form
    or in the form of temporary or permanent global securities and
    the basis of exchange, transfer and ownership thereof;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any exchange or conversion terms and any provisions for the
    adjustment thereof;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if applicable, our ability to satisfy all or a portion of any
    redemption of such Debt Securities, any payment of any interest
    on such Debt Securities or any repayment of the principal owing
    upon the maturity of such Debt Securities through the issuance
    of securities by us or of any other entity, and any
    restriction(s) on the persons to whom such securities may be
    issued;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the provisions applicable to the modification of the terms of
    the Trust&#160;Indenture; and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any other specific material terms or covenants applicable to
    such Debt Securities.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We reserve the right to include in a Prospectus Supplement
    specific terms pertaining to the Debt Securities which are not
    within the options and parameters set forth in this Prospectus.
    In addition, to the extent that any particular terms of the Debt
    Securities described in a Prospectus Supplement differ from any
    of the terms described in this Prospectus, the description of
    such terms set forth in this Prospectus shall be deemed to have
    been superseded by the description of such differing terms set
    forth in such Prospectus Supplement with respect to such Debt
    Securities.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Ranking</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Debt Securities will be direct unsecured obligations of
    Oncolytics. The Debt Securities will be senior or subordinated
    indebtedness of Oncolytics as described in the applicable
    Prospectus Supplement. If the Debt Securities are senior
    indebtedness, they will rank equally and rateably with all other
    unsecured indebtedness of Oncolytics from time to time issued
    and outstanding which is not subordinated. If the Debt
    Securities are subordinated indebtedness, they will be
    subordinated to senior indebtedness of Oncolytics as described
    in the applicable Prospectus Supplement, and they will rank
    equally and rateably with other subordinated indebtedness of
    Oncolytics from time to time issued and outstanding as described
    in the applicable Prospectus Supplement. We reserve the right to
    specify in a Prospectus Supplement whether a particular series
    of subordinated Debt Securities is subordinated to any other
    series of subordinated Debt Securities.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Registration
    of Debt Securities</FONT></B>
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Debt
    Securities in Book Entry Form</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Debt Securities of any series may be issued in whole or in part
    in the form of one or more global securities (each a
    &#147;<B>Global Security</B>&#148; and together &#147;<B>Global
    Securities</B>&#148;) registered in the name of a designated
    clearing agency (a &#147;<B>Depositary</B>&#148;) or its nominee
    and held by or on behalf of the Depositary in accordance with
    the terms of the applicable Trust&#160;Indenture. The specific
    terms of the depositary arrangement with respect to any portion
    of a series of Debt Securities to be represented by a Global
    Security will, to the extent not described herein, be described
    in the Prospectus Supplement relating to such series.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A Global Security may not be transferred, except as a whole
    between the Depositary and a nominee of the Depositary or as
    between nominees of the Depositary, or to a successor Depositary
    or nominee thereof, until it is wholly exchanged for Debt
    Securities in certificated non-book-entry form in accordance
    with the terms of the applicable Trust&#160;Indenture. So long
    as the Depositary for a Global Security, or its nominee, is the
    registered owner of such Global Security, such Depositary or
    such nominee, as the case may be, will be considered the sole
    owner or holder of the Debt Securities represented by such
    Global Security for all purposes under the applicable
    Trust&#160;Indenture and payments of principal of and interest,
    if any, on the Debt Securities represented by a Global Security
    will be made by us to the Depositary or its nominee.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    16
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Subject to such exceptions, if any, as may be provided for in
    the Trust&#160;Indenture and described in the applicable
    Prospectus Supplement, owners of beneficial interests in a
    Global Security will not be entitled to have the Debt Securities
    represented by such Global Security registered in their names,
    will not receive or be entitled to receive physical delivery of
    such Debt Securities in certificated non-book-entry form, will
    not be considered the owners or holders thereof under the
    applicable Trust&#160;Indenture and will be unable to pledge
    Debt Securities as security. The laws of some states in the
    United States may require that certain purchasers of Debt
    Securities take physical delivery of such Debt Securities in
    definitive form.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Principal and interest payments, if any, on the Debt Securities
    represented by a Global Security registered in the name of a
    Depositary or its nominee will be made to such Depositary or its
    nominee, as the case may be, as the registered owner of such
    Global Security. Neither Oncolytics, the Trustee nor any paying
    agent for such Debt Securities will have any responsibility or
    liability for any aspect of the records relating to or payments
    made on account of beneficial ownership interests in such Global
    Security or for maintaining, supervising or reviewing any
    records relating to such beneficial ownership interests.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Oncolytics, any underwriters, dealers or agents and any Trustee
    identified in an accompanying Prospectus Supplement, as
    applicable, will not have any liability or responsibility for:
    (i)&#160;records maintained by the Depositary relating to
    beneficial ownership interests in the Debt Securities held by
    the Depositary or the book-entry accounts maintained by the
    Depositary; (ii)&#160;maintaining, supervising or reviewing any
    records relating to any such beneficial ownership interests; or
    (iii)&#160;any advice or representation made by or with respect
    to the Depositary and contained in this Prospectus or in any
    Prospectus Supplement or Trust&#160;Indenture with respect to
    the rules and regulations of the Depositary or at the direction
    of Depositary participants.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The applicable Prospectus Supplement will identify the
    applicable Depositary for any Debt Securities represented by a
    Global Security.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Debt
    Securities in Registered Form</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Debt Securities of any series may be issued in whole or in part
    in registered form as provided in the applicable
    Trust&#160;Indenture.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In the event that the Debt Securities are issued in certificated
    non-book-entry form, principal and interest, if any, will be
    payable, the transfer of such Debt Securities will be
    registerable and such Debt Securities will be exchangeable for
    Debt Securities in other denominations of a like aggregate
    principal amount at the office or agency maintained by us.
    Payment of principal and interest, if any, on Debt Securities in
    certificated non-book-entry form may be made by check mailed to
    the address of the holders entitled thereto.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Subject to the foregoing limitations, Debt Securities of any
    authorized form or denomination issued under the applicable
    Trust&#160;Indenture may be transferred or exchanged for Debt
    Securities of any other authorized form or denomination or
    denominations, any such transfer or exchange to be for an
    equivalent aggregate principal amount of Debt Securities of the
    same series, carrying the same rate of interest and same
    redemption and other provisions as the Debt Securities so
    transferred or exchanged. Exchanges of Debt Securities of any
    series may be made at the offices of the applicable Trustee and
    at such other places as we may from time to time designate with
    the approval of the applicable Trustee and may be specified in
    the applicable Prospectus Supplement. Unless otherwise specified
    in the applicable Prospectus Supplement, the applicable Trustee
    will be the registrar and transfer agent for any Debt Securities
    issued in certificated non-book-entry form under the applicable
    Trust&#160;Indenture.
</DIV>
<A name='117'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF UNITS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may issue Units comprised of one or more of the other
    Securities described in this Prospectus in any combination. Each
    Unit will be issued so that the holder of the Unit is also the
    holder of each Security included in the Unit. Thus, the holder
    of a Unit will have the rights and obligations of a holder of
    each included Security. The unit agreement, if any, under which
    a Unit is issued may provide that the Securities included in the
    Unit may not be held or transferred separately, at any time or
    at any time before a specified date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The particular terms and provisions of Units offered by any
    Prospectus Supplement, and the extent to which the general terms
    and provisions described below may apply thereto, will be
    described in the Prospectus Supplement filed in respect of such
    Units.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    17
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The particular terms of each issue of Units will be described in
    the related Prospectus Supplement. This description will
    include, where applicable:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="3%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the designation and aggregate number of Units offered;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the price at which the Units will be offered;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if other than Canadian dollars, the currency or currency unit in
    which the Units are denominated;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the terms of the Units and of the Securities comprising the
    Units, including whether and under what circumstances those
    securities may be held or transferred separately;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the number of Securities that may be purchased upon exercise of
    each Unit and the price at which and currency or currency unit
    in which that amount of Securities may be purchased upon
    exercise of each Unit;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any provisions for the issuance, payment, settlement, transfer
    or exchange of the Units or of the Securities comprising the
    Units; and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any other material terms, conditions and rights (or limitations
    on such rights) of the Units.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We reserve the right to set forth in a Prospectus Supplement
    specific terms of the Units that are not within the options and
    parameters set forth in this Prospectus. In addition, to the
    extent that any particular terms of the Units described in a
    Prospectus Supplement differ from any of the terms described in
    this Prospectus, the description of such terms set forth in this
    Prospectus shall be deemed to have been superseded by the
    description of such differing terms set forth in such Prospectus
    Supplement with respect to such Units.
</DIV>

<DIV style="margin-top: 27pt; font-size: 1pt">&nbsp;</DIV>
<A name='118'>
<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">MARKET
    FOR SECURITIES</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our outstanding Common Shares are listed and posted for trading
    on the Toronto Stock Exchange under the trading symbol
    &#147;ONC&#148; and on the NASDAQ Capital Market under the
    trading symbol &#147;ONCY&#148;. The following table sets forth
    the market price ranges and the aggregate volume of trading of
    the Common Shares on the Toronto Stock Exchange and NASDAQ
    Capital Market for the periods indicated:
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="40%">&nbsp;</TD> <!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>  <!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>    <!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>    <!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>     <!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>  <!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>    <!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>    <!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>     <!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>  <!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>    <!-- colindex=04 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>    <!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>     <!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>  <!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>    <!-- colindex=05 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>    <!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>     <!-- colindex=05 type=hang1 -->
    <TD width="3%">&nbsp;</TD>  <!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>    <!-- colindex=06 type=lead -->
    <TD width="2%" align="right">&nbsp;</TD>    <!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>     <!-- colindex=06 type=hang1 -->
    <TD width="3%">&nbsp;</TD>  <!-- colindex=07 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>    <!-- colindex=07 type=lead -->
    <TD width="2%" align="right">&nbsp;</TD>    <!-- colindex=07 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>     <!-- colindex=07 type=hang1 -->
    <TD width="3%">&nbsp;</TD>  <!-- colindex=08 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>    <!-- colindex=08 type=lead -->
    <TD width="2%" align="right">&nbsp;</TD>    <!-- colindex=08 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>     <!-- colindex=08 type=hang1 -->
    <TD width="3%">&nbsp;</TD>  <!-- colindex=09 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>    <!-- colindex=09 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>    <!-- colindex=09 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>     <!-- colindex=09 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Toronto Stock Exchange</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>NASDAQ Capital Market</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>High<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Low<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Close<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Volume<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>High<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Low<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Close<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Volume<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Period</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(Shares)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(U.S.$)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(U.S.$)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(U.S.$)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(Shares)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>2007</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    May
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.39
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.12
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.19
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    880,135
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.17
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.98
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.06
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,026,481
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    June
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.55
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.05
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.15
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    755,603
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.47
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.92
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.08
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,746,620
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    July
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.21
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.68
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.91
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,512,581
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.08
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.59
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.79
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,296,480
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    August
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.95
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.54
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.62
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    514,617
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.85
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.50
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.55
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    592,767
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    September
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.90
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.42
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.90
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,046,083
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.90
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.44
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.89
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,172,901
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    October
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.46
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.67
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.30
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,614,255
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.53
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.75
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.44
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,470,044
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    November
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.65
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.10
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.28
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    600,779
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.77
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.08
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.29
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,038,246
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    December
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.38
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.67
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.70
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    355,628
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.38
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.67
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.72
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    795,031
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="line-height: 9pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>2008</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    January
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.04
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.66
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.95
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    538,887
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.04
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.69
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.93
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    622,530
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    February
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.26
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.82
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.90
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    564,976
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.27
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.85
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.94
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    588,210
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    March
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.01
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.70
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.83
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    376,635
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.02
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.70
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.84
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    618,300
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    April
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.50
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.78
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.96
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,159,535
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.46
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.76
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.94
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,138,020
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    May
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.18
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.60
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.15
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6,683,183
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.21
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.62
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.15
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    897,410
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    June (1-13)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.40
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.14
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    452,450
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.39
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.01
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.08
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    692,140
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    18
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN PAGE WIDTH -->
<A name='119'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PLAN OF
    DISTRIBUTION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We may sell Securities to or through underwriters, dealers,
    placement agents or other intermediaries and also may sell
    Securities directly to purchasers or through agents, subject to
    obtaining any applicable exemption from registration
    requirements.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The distribution of Securities may be effected from time to time
    in one or more transactions at a fixed price or prices, which
    may be changed, at market prices prevailing at the time of sale,
    or at prices related to such prevailing market prices to be
    negotiated with purchasers and as set forth in an accompanying
    Prospectus Supplement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In connection with the sale of Securities, underwriters may
    receive compensation from us or from purchasers of Securities
    for whom they may act as agents in the form of discounts,
    concessions or commissions. Underwriters, dealers, placement
    agents or other intermediaries that participate in the
    distribution of Securities may be deemed to be underwriters and
    any discounts or commissions received by them from us and any
    profit on the resale of Securities by them may be deemed to be
    underwriting discounts and commissions under applicable
    securities legislation.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If so indicated in the applicable Prospectus Supplement, we may
    authorize dealers or other persons acting as our agents to
    solicit offers by certain institutions to purchase the
    Securities directly from us pursuant to contracts providing for
    payment and delivery on a future date. These contracts will be
    subject only to the conditions set forth in the applicable
    Prospectus Supplement or supplements, which will also set forth
    the commission payable for solicitation of these contracts.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Prospectus Supplement relating to any offering of Securities
    will also set forth the terms of the offering of the Securities,
    including, to the extent applicable, the initial offering price,
    the proceeds to us, the underwriting discounts or commissions,
    and any other discounts or concessions to be allowed or
    reallowed to dealers. Underwriters with respect to any offering
    of Securities sold to or through underwriters will be named in
    the Prospectus Supplement relating to such offering.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Holders of Warrants resident in the United States who acquire
    Common Shares pursuant to the exercise of Warrants in accordance
    with their terms and under this Prospectus and any applicable
    Prospectus Supplement may have a right of action against the
    Corporation for any misrepresentation in this Prospectus or any
    applicable Prospectus Supplement. However, the existence and
    enforceability of such a right of action is not without doubt.
    By contrast, holders of Warrants resident in Canada who may
    acquire Common Shares pursuant to the exercise of Warrants in
    accordance with their terms and who will be deemed to acquire
    such Common Shares under applicable Canadian prospectus
    exemptions, will not have any such right of action.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under agreements which may be entered into by us, underwriters,
    dealers, placement agents and other intermediaries who
    participate in the distribution of Securities may be entitled to
    indemnification by us against certain liabilities, including
    liabilities under applicable securities legislation. The
    underwriters, dealers, placement agents and other intermediaries
    with whom we enter into agreements may be customers of, engage
    in transactions with or perform services for us in the ordinary
    course of business.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Any offering of Subscription Receipts, Debt Securities, Warrants
    or Units will be a new issue of securities with no established
    trading market. Unless otherwise specified in the applicable
    Prospectus Supplement, the Subscription Receipts, Debt
    Securities, Warrants or Units will not be listed on any
    securities exchange. <B>Unless otherwise specified in the
    applicable Prospectus Supplement, there is no market through
    which the Subscription Receipts, Debt Securities, Warrants or
    Units may be sold and purchasers may not be able to resell
    Subscription Receipts, Debt Securities, Warrants or Units
    purchased under this Prospectus or any Prospectus Supplement.
    This may affect the pricing of the Subscription Receipts, Debt
    Securities, Warrants or Units in the secondary market, the
    transparency and availability of trading prices, the liquidity
    of the securities, and the extent of issuer regulation.</B>
    Certain dealers may make a market in the Subscription Receipts,
    Debt Securities, Warrants or Units, as applicable, but will not
    be obligated to do so and may discontinue any market making at
    any time without notice. No assurance can be given that any
    dealer will make a market in the Subscription Receipts, Debt
    Securities, Warrants or Units or as to the liquidity of the
    trading market, if any, for the Subscription Receipts, Debt
    Securities, Warrants or Units.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Subject to applicable securities legislation, in connection with
    any offering of Securities under this Prospectus, the
    underwriters, if any, may over-allot or effect transactions
    which stabilize or maintain the market price of the Securities
    offered at a level above that which might otherwise prevail in
    the open market. These transactions, if commenced, may be
    discontinued at any time.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    19
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Notwithstanding the filing of this Prospectus, our short form
    base shelf prospectus dated February&#160;15, 2007 and the
    related prospectus supplement dated February&#160;16, 2007
    (collectively, the <B>&#147;2007 Base Shelf
    Prospectus&#148;</B>) will remain in full force and effect and
    continue to qualify the Common Shares issuable to U.S. residents
    on exercise of the Common Share purchase warrants issued in
    connection with our Unit offering under a short form prospectus
    dated February&#160;14, 2007 (the <B>&#147;2007 Unit
    Offering&#148;</B>) until such time as the 2007 Base Shelf
    Prospectus expires in accordance with applicable securities
    laws. In the event that the 2007 Base Shelf Prospectus expires
    prior to the exercise of all the Common Shares purchase warrants
    issued to U.S. residents in connection with the 2007 Unit
    Offering, we may use this Prospectus to qualify the remaining
    Common Shares issuable to U.S. residents on the exercise of
    Common Share purchase warrants issued in connection with the
    2007 Unit Offering. If such a determination is made, the
    applicable prospectus supplement will set out the relevant facts
    to qualify such Common Shares. We may also use this Prospectus
    to qualify Common Shares issuable to U.S. residents on the
    exercise of future Common Share purchase warrants issued by us.
</DIV>
<A name='120'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">CERTAIN
    INCOME TAX CONSIDERATIONS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The applicable prospectus supplement may describe certain
    Canadian federal income tax consequences which may be applicable
    to a purchaser of Securities offered thereunder, and may also
    include a discussion of certain United States federal income tax
    consequences to the extent applicable.
</DIV>
<A name='121'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">LEGAL
    MATTERS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Unless otherwise specified in the Prospectus Supplement, certain
    legal matters relating to the offering of the securities will be
    passed upon for us by Bennett Jones LLP and Dorsey&#160;&#038;
    Whitney LLP. In addition, certain legal matters in connection
    with any offering of securities will be passed upon for any
    underwriters, dealers or agents by counsel to be designated at
    the time of the offering by such underwriters, dealers or agents
    with respect to matters of Canadian and United States law.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The partners and associates of Bennett Jones LLP, as a group,
    and the partners and associates of Dorsey&#160;&#038; Whitney
    LLP, as a group, each beneficially own, directly or indirectly,
    less than 1% of our securities.
</DIV>
<A name='122'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">AUDITOR</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our financial statements as at December&#160;31, 2007 and 2006
    incorporated by reference into this Prospectus have been audited
    by Ernst&#160;&#038; Young LLP, independent auditors, as
    indicated in their report dated February&#160;15, 2008 and are
    incorporated herein in reliance upon the authority of said firm
    as experts in accounting and auditing in giving said report.
    Ernst&#160;&#038; Young LLP has been our auditor since inception
    in 1998.
</DIV>
<A name='123'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DOCUMENTS
    FILED AS PART&#160;OF THE REGISTRATION STATEMENT</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following documents have been filed with the SEC as part of
    the registration statement of which this Prospectus is a part
    insofar as required by the SEC&#146;s
    <FONT style="white-space: nowrap">Form&#160;F-10:</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="3%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the documents listed under &#147;Documents Incorporated by
    Reference&#148; in this Prospectus;
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the consent of our auditors Ernst&#160;&#038; Young LLP;
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the consent of our Canadian counsel Bennett Jones LLP;
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    powers of attorney from our directors and officers; and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <FONT style="white-space: nowrap">Form&#160;F-X&#160;&#151;</FONT>
    Appointment of Agent for Service of Proceeds and Undertaking.
</TD>
</TR>

</TABLE>
<A name='124'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PURCHASERS&#146;
    STATUTORY RIGHTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Securities legislation in certain of the provinces of Canada
    provides purchasers with the right to withdraw from an agreement
    to purchase securities. This right may be exercised within two
    business days after receipt or deemed receipt of a prospectus,
    the accompanying prospectus supplement relating to securities
    purchased by a purchaser and any amendment thereto. The
    legislation further provides a purchaser with remedies for
    rescission or damages if the prospectus, the accompanying
    prospectus supplement relating to securities purchased by a
    purchaser or any amendment contains a misrepresentation or are
    not delivered to the purchaser, provided that the remedies for
    rescission or damages are exercised by the purchaser within the
    time limit prescribed by the securities legislation in the
    purchaser&#146;s province. The purchaser should refer to any
    applicable provisions of the securities legislation of the
    purchaser&#146;s province for the particulars of these rights or
    consult with a legal advisor.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    20
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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
