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Alberta Special Warrant Indenture by Megadox

VIEWS: 26 PAGES: 49

Prepare a Special Warrant Indenture between an Alberta corporation and a trustee with this comprehensive long-form template. - The corporation will issue special warrants entitling the warrant holder to one common share and a fraction of a share warrant. - The special warrants are to be offered in Canada and in the USA only if the purchaser is exempt from registration under the US Securities Act of 1933. - The Trustee is appointed to hold, administer and disburse dividend funds, and to hold the proceeds of the offering in escrow until closing. - Immediately prior to the expiry date, the rights of all holders of special warrants will be deemed to be exercised without any further action on the part of such holders. - Warrant holders who exercise their warrants will become entitled to distributions from any dividend funds or other distributions to be made to shareholders of the corporation. - The document includes a Special Warrant Certificate form, a Transfer of Special Warrants form, a Warrant Exercise form, and an Exercise of Repurchase form. This Alberta Special Warrant Indenture template is available as a fully editable MS Word download.

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									                                 SPECIAL WARRANT INDENTURE

        THIS SPECIAL WARRANT INDENTURE made the ___ day of ____________, ________.

BETWEEN:

                [TRUSTEE], a trust company duly incorporated under the laws of the
                Province of Alberta and authorized to carry on business in the Province
                of Alberta (hereinafter referred to as the “Trustee”)

                                                                                  OF THE FIRST PART
                                                  and

                [CORPORATION], a corporation duly incorporated under the laws of
                the Province of Alberta and having a head office in the City of [city],
                Alberta (hereinafter referred to as the “Corporation”)

                                                                               OF THE SECOND PART

WHEREAS:

A.      The Corporation proposes to create and issue Special Warrants in the manner herein set forth;

B.      One Special Warrant shall, subject to adjustment as provided for in this Indenture, entitle the
        holder thereof to acquire one Common Share and [warrant fraction] of a Warrant at no additional
        cost upon the terms and conditions herein set forth; and

C.      All things necessary have been done and performed to make the Special Warrants, when created
        and issued as provided in this Indenture, legal, valid and binding upon the Corporation with the
        benefits and subject to the terms of this Indenture.

NOW THEREFORE THIS INDENTURE WITNESSES THAT in consideration of the premises and
mutual covenants hereinafter contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Corporation hereby appoints the Trustee as trustee to
hold the rights, interests and benefits contained herein for and on behalf of those persons who from time
to time become the holders of Special Warrants issued pursuant to this Indenture and the parties hereto
agree as follows:

                                   ARTICLE I - INTERPRETATION

1.1     Definitions

In this Indenture, including the recitals and schedules hereto, unless there is something in the subject
matter or context inconsistent therewith, the terms defined in this Article or elsewhere shall, for the
purposes of this Indenture and all deeds or instruments supplemental or ancillary thereto, have the
respective meanings specified in this Section or elsewhere herein:

(a)     “Accredited Investor” means accredited investor as defined in Rule 501(a) of Regulation D;

(b)     “Adjustment Period” means the period from and including the date of issuance of the Special
        Warrants up to and including the Expiry Time;
                                                 -2-


(c)   “Agency Agreement” means the agreement dated as of [agency agreement date] among the
      Corporation and the Agents;

(d)   “Agents” means [Agents];

(e)   “Applicable Legislation” means the provisions of the Business Corporations Act, S.A. 1981, c. B-15,
      as from time to time amended, and any statute of Canada or a province thereof, and the
      regulations under any such named or other statute, relating to trust indentures or to the rights,
      duties and obligations of trustees and of corporations under trust indentures, to the extent that
      such provisions are at the time in force and applicable to this Indenture;

(f)   “Business Day” means a day which is not a Saturday or Sunday or legal holiday in the City of
      [city], in the Province of Alberta or in the Province of Ontario;

(g)   “Clearing Date” means that date which is 90 days following the Effective Date, provided that if
      such date is not a Business Day, then such date shall be the next succeeding day that is a Business
      Day;

(h)   “Closing Date” means the date the Trustee receives the Escrowed Proceeds as contemplated
      hereunder;

(i)   “Common Shares” means, subject to Section 5. 1, fully paid and non-assessable common shares of
      the Corporation as presently constituted;

(j)   “Corporation’s Auditors” means an independent firm of chartered accountants duly appointed as
      auditors of the Corporation;

(k)   “Counsel” means a barrister or solicitor or a firm of barristers and solicitors retained by the
      Trustee or retained by the Corporation and acceptable to the Trustee;

(l)   “Current Market Price” of the Common Shares at any date means the simple average of the
      closing trading price per share for such shares for the 20 consecutive Trading Days immediately
      preceding such date on The Canadian Venture Exchange or, if on such date the Common Shares
      are not listed on The Canadian Venture Exchange, on such stock exchange upon which such
      shares are listed and as selected by the directors (provided that if on any day in such 20 Trading
      Day period no closing price per share is reported by such exchange, the average of the reported
      closing bid and ask prices on such exchange shall be deemed to be the closing price per share for
      such day), or, if such shares are not listed on any stock exchange, then on such over-the-counter
      market as may be selected for such purpose by the directors;

(m)   “Development Condition” means the receipt by the Trustee of a joint notice (the “Joint Notice”) in
      writing in the form set forth in Schedule “B” signed by the Corporation and the Agents, which
      shall serve as confirmation that the Corporation’s technology is hosted and functioning on the
      Corporation’s website;

(n)   “Director” or “director” means a director of the Corporation for the time being, and, unless
      otherwise specified herein, reference to action by the directors means action by the directors of
      the Corporation as a board or, whenever duly empowered, action by a committee of such board;

(o)   “Dividend Funds” means all cash dividends and other distributions deposited with the Trustee
      pursuant to subsection 4.1;
                                                   -3-


(p)    “Effective Date” means the date of this Indenture;

(q)    “Escrowed Proceeds” means 50% of the Proceeds, which funds shall be held by the Trustee in
       accordance with the terms of this Indenture;

(r)    “Exercise Date” with respect to any Special Warrant means the date on which the Warrant
       Certificate representing such Special Warrant is surrendered for exercise in accordance with
       Section 3.1 and includes the date Special Warrants are deemed to be exercised pursuant to Section
       3.6;

(s)    “Expiry Date” means the earlier of:
       (i)     that date which is the later of:
               A.      five (5) Business Days following the date that the Qualification Condition has
                       been satisfied, or
               B.      the earlier of:
                       1.   seven (7) days after the Development Condition has been satisfied; or
                       2.   the Repurchase Deadline; and
       (ii)    the first anniversary of the Effective Date;

(t)    “Expiry Time” means [time] ([city] time) on the Expiry Date;

(u)    “Extraordinary Resolution” has the meaning ascribed thereto in Section 8.11 hereof;

(v)    “Filing Jurisdiction” means each of the provinces in the Selling Jurisdictions where Special
       Warrants are sold;

(w)    “Institutional Accredited Investor” means an institutional Accredited Investor that meets the
       criteria set forth in Rule 501(a)(1), (2), (3) or (7) of Regulation D;

(x)    “Joint Notice” has the meaning ascribed thereto in the definition of “Development Condition”;

(y)    “Permitted Investments” means Government of Canada treasury bills or other short term interest
       bearing securities of or guaranteed by the Government of Canada or interest bearing deposits or
       securities of a Canadian chartered bank listed in Schedule 1 of the Bank Act (Canada) or the
       Trustee;

(z)    “Person” means an individual, corporation, body corporate, partnership, trust, trustee, executor,
       administrator, legal representative or any unincorporated organization, and words importing
       persons have a similar meaning;

(aa)   “Proceeds” means the aggregate gross proceeds from the private placement of Special Warrants;

(bb)   “Property” means all property and securities deposited with the Trustee pursuant to subsection
       4.1;

(cc)   “Prospectus” means a (final) prospectus and any amendments thereto, to be filed with the
       Securities Commissions in respect of the distribution of the Common Shares and Warrants
       issuable upon the exercise or deemed exercise of the Special Warrants;
                                                  -4-


(dd)   “Qualification Condition” means the issuance of a receipt for the Prospectus from each of the
       Securities Commissions;

(ee)   “Qualified Institutional Buyer” means qualified institutional buyer as defined in Rule 144A under
       the U.S. Securities Act;

(ff)   “Regulation D” means Regulation D of the U.S. Securities Act;

(gg)   “Regulation S” means Regulation S of the U.S. Securities Act;

(hh)   “Repurchase Deadline” means [time] ([city] time) on that date which is 97 days following the
       Effective Date, provided that if such date is not a Business Day, then such date shall be the next
       succeeding day that is a Business Day;

(ii)   “Repurchase Price” means $[repurchase price] per Special Warrant;

(jj)   “Repurchase Right” has the meaning ascribed thereto in Section 4.7(a)(ii);

(kk)   “Securities Commissions” means the securities commissions or similar regulatory authorities in
       the Filing Jurisdictions;

(ll)   “Selling Jurisdictions” means the provinces of Alberta, [additional provinces];

(mm)   “Shareholder” means a holder of record of one (1) or more Common Shares;

(nn)   “Special Warrants” means the warrants issued, created and certified hereunder and for the time
       being outstanding entitling the holder to acquire Common Shares;

(oo)   “Subsidiary of the Corporation” or “Subsidiary” means any corporation of which more than fifty
       (50%) percent of the outstanding Voting Shares are owned, directly or indirectly, by or for the
       Corporation, provided that the ownership of such shares confers the right to elect at least a
       majority of the board of directors of such corporation and includes any corporation in like
       relation to a Subsidiary;

(pp)   “successor corporation” has the meaning set forth in Section 9.2;

(qq)   “this Special Warrant Indenture”, “this Trust Indenture”, “this Indenture”, “herein”, “hereby”, or
       any similar expression means or refers to this Indenture and any indenture, deed or instrument
       supplemental or ancillary hereto, and the expressions “Article”, “Section” and “Subsection”
       followed by a number means and refers to the specified Article, Section or Subsection of this
       Indenture;

(rr)   “Trading Day” means, with respect to a stock exchange, a day on which such exchange is open
       for the transaction of business and with respect to the over-the-counter market means a day on
       which The Canadian Venture Exchange is open for the transaction of business;

(ss)   “Transfer Agent” means [Transfer Agent] or such other company as may from time to time be
       appointed as the transfer agent of the Common Shares;

(tt)   “Trustee” means [Trustee] or its successors from time to time in the trust hereby created;
                                                   -5-


(uu)    “United States” means the United States of America, its territories and possessions, any State of
        the United States, and the District of Columbia;

(vv)    “U.S. Securities Act” means the United States Securities Act of 1933, as amended;

(ww)    “Voting Shares” means shares of the capital stock of any class of any corporation carrying voting
        rights under all circumstances, provided that, for the purposes of such definition, shares which
        only carry the right to vote conditionally on the happening of an event shall not be considered
        Voting Shares, whether or not such event shall have occurred, nor shall any shares be deemed to
        cease to be Voting Shares solely by reason of a right to vote accruing to shares of another class or
        classes by reason of the happening of any such event;

(xx)    “Warrants” means the warrants created by and authorized and issuable under the Warrant
        Indenture dated as of [warrant indenture date] between the Corporation and [Trustee], each
        whole Warrant entitling the holder thereof, subject to the terms and conditions therein provided,
        to acquire one Common Share at a price of $[purchase price] per share until [time] ([city] time) on
        [expiry date];

(yy)    “Warrant Agency” means the principal office of the Trustee in the City of [city], in the Province of
        Alberta or such other place(s) as may be designated in accordance with subsection 3.1(c);

(zz)    “Warrant Certificate” means a certificate, substantially in the form set forth in Schedule “A”
        hereto, issued on or after the Effective Date to evidence Special Warrants;

(aaa)   “Warrant Indenture” means the Warrant Indenture dated [warrant indenture date] between the
        Corporation and the Trustee governing the terms and conditions of the Warrants;

(bbb)   “Warrantholders” or “Holders” (without reference to Common Shares or Warrants) means the
        persons who are registered owners of Special Warrants;

(ccc)   Warrantholders’ Request” means an instrument signed in one or more counterparts by
        Warrantholders entitled to acquire in the aggregate not less than 25% of the aggregate number of
        Common Shares and Warrants which could be acquired pursuant to all Special Warrants then
        unexercised and outstanding, requesting the Trustee to take some action or proceeding specified
        therein; and

(ddd)   “written order of the Corporation”, “written request of the Corporation”, “written consent of the
        Corporation” and “certificate of the Corporation” mean, respectively, a written order, request,
        consent and certificate signed in the name of the Corporation by its Chairman, President, Chief
        Executive Officer, Chief Financial Officer, Vice-President or Corporate Secretary, and may consist
        of one or more instruments so executed.

1.2     Headings

The division of this Indenture into Articles, Sections, Subsections and paragraphs, and the insertion of
headings are for convenience of reference only, and shall not affect the construction or interpretation of
this Indenture.

1.3     Number and Gender

In this Indenture, unless otherwise expressly provided or unless the context otherwise requires, words
importing number include the singular and the plural, and words importing gender include the
masculine, the feminine and the neuter.
                                                     -6-



1.4     Currency

Except as otherwise expressly provided, all dollar amounts herein are expressed in lawful money of
Canada.

1.5     Applicable Law

This Indenture and the Warrant Certificates and all documents relating thereto, which by common accord
have been and will be drafted in English, shall be construed in accordance with the laws of the Province
of Alberta and the federal laws applicable therein and shall be treated in all respects as Alberta contracts.
Each of the parties hereto, which shall include the Warrantholders, irrevocably attorns to the exclusive
jurisdiction of the courts of the Province of Alberta with respect to all matters arising out of this Indenture
and the transactions contemplated herein.

1.6     Day Not a Business Day

In the event that any day on or before which any action is required to be taken hereunder is not a Business
Day, then such action shall be required to be taken on or before the next succeeding day that is a Business
Day.

1.7     Time of the Essence

Time shall be of the essence of this Indenture.

1.8     Date of Issue

A receipt for a Prospectus shall conclusively be deemed to be issued and obtained by the Corporation on
the date appearing on such receipt as the receipt’s date.

                             ARTICLE II - ISSUE OF SPECIAL WARRANTS

2.1     Creation and Issue of Special Warrants

[number of special warrants] Special Warrants are hereby created and authorized to be issued at a price
of $[issue price] per Special Warrant. The Warrant Certificates shall be certified and delivered by the
Trustee to such persons as the Corporation may direct by written order of the Corporation without the
Trustee receiving consideration therefor.

2.2     Terms of Special Warrants

(a)     Each Special Warrant shall entitle the holder thereof, upon exercise or deemed exercise as
        provided in Section 3.6 hereof, to acquire one Common Share and [warrant fraction] of a Warrant,
        subject to adjustment in accordance with subsection 4.7(a)(ii), subsection 4.7(b)(i) and Article V, at
        any time after the Effective Date until the Expiry Time at no additional cost to the holder.

(b)     No fractional Special Warrants shall be issued or otherwise provided for hereunder.

(c)     Each Special Warrant shall entitle the holder thereof to such other rights and privileges as are set
        forth in this Indenture.

2.3     Special Warrantholder Not a Shareholder

Except as provided for in subsection 6.2(i), nothing in this Indenture or in the holding of a Special
Warrant or Warrant Certificate or otherwise, shall, in itself, confer or be construed as conferring upon a
Warrantholder any right or interest whatsoever as a Shareholder or as any other shareholder of the
                                                     -7-


Corporation, including, but not limited to, the right to vote at, to receive notice of, or to attend, meetings
of shareholders or any other proceedings of the Corporation, or the right to receive dividends and other
distributions.

2.4     Special Warrants to Rank Pari Passu

All Special Warrants shall rank equally and without preference over each other, whatever may be the
actual date of issue of the same.

2.5     Form of Special Warrants

The Warrant Certificates (including all replacements issued in accordance with this Indenture) shall be
substantially in the form set out in Schedule “A” hereto, shall be dated as of the Effective Date, shall bear
such legends and distinguishing letters and numbers as the Corporation may, with the approval of the
Trustee, prescribe, and shall be issuable in any denomination excluding fractions.

2.6     Signing of Special Warrants

The Warrant Certificates shall be signed by any one of the directors and officers of the Corporation and
may, but need not be, under seal of the Corporation or a reproduction thereof. The signatures of any such
director or officer may be mechanically reproduced in facsimile and Warrant Certificates bearing such
facsimile signatures shall be binding upon the Corporation as if they had been manually signed by such
director or officer. Notwithstanding that any person whose manual or facsimile signature appears on any
Warrant Certificate as a director or an officer may no longer hold office at the date of such Warrant
Certificate or at the date of certification or delivery thereof any Warrant Certificate signed as aforesaid
shall, subject to Section 2.7, be valid and binding upon the Corporation and the holder thereof shall be
entitled to the benefits of this Indenture.

2.7     Certification by the Trustee

(a)     No Warrant Certificate shall be issued or, if issued, shall be valid for any purpose or entitle the
        holder to the benefit hereof until it has been certified by manual signature by or on behalf of the
        Trustee substantially in the form of the certificate set out in Schedule “A” hereto, and such
        certification by the Trustee upon any Warrant Certificate shall be conclusive evidence as against
        the Corporation that the Warrant Certificate so certified has been duly issued hereunder and that
        the holder is entitled to the benefits hereof.

(b)     The certification of the Trustee on Warrant Certificates issued hereunder shall not be construed as
        a representation or warranty by the Trustee as to the validity of this Indenture or the Warrant
        Certificates (except the due certification thereof) and the Trustee shall in no respect be liable or
        answerable for the use made of the Warrant Certificates or any of them or of the consideration
        therefor except as otherwise specified herein.

2.8     Issue in Substitution for Warrant Certificates Lost, etc.

(a)     If any Warrant Certificate becomes mutilated or is lost, destroyed or stolen, the Corporation,
        subject to applicable law, shall issue and thereupon the Trustee shall certify and deliver, a new
        Warrant Certificate of like tenor as the one mutilated, lost, destroyed or stolen in exchange for
        and in place of and upon cancellation of such mutilated Warrant Certificate, or in lieu of and in
        substitution for such lost, destroyed or stolen Warrant Certificate, and the substituted Warrant
        Certificate shall be in a form approved by the Trustee and the Special Warrants evidenced
        thereby shall be entitled to the benefits hereof and shall rank equally in accordance with its terms
        with all other Special Warrants issued or to be issued hereunder.
                                                   -8-


(b)    The applicant for the issue of a new Warrant Certificate pursuant to this Section 2.8 shall bear the
       cost of the issue thereof and in case of loss, destruction or theft shall, as a condition precedent to
       the issuance thereof, furnish to the Corporation and to the Trustee such evidence of ownership
       and of the loss, destruction or theft of the Warrant Certificate so lost, destroyed or stolen as shall
       be satisfactory to the Corporation and to the Trustee, in their sole discretion, and such applicant
       may also be required to furnish an indemnity or security in amount and form satisfactory to the
       Corporation and the Trustee, in their sole discretion, and shall pay the reasonable charges of the
       Corporation and the Trustee in connection therewith.

2.9    Exchange of Special Warrant Certificates

(a)    Any one or more Warrant Certificates representing any number of Special Warrants may, upon
       compliance with the reasonable requirements of the Trustee (including compliance with
       applicable securities legislation), be exchanged for one or more other Warrant Certificates
       representing the same aggregate number of Special Warrants as represented by the Warrant
       Certificate or Warrant Certificates so exchanged.

(b)    Warrant Certificates may be exchanged only at the Warrant Agency or at any other place that is
       designated by the Corporation with the approval of the Trustee. Any Warrant Certificate
       tendered for exchange shall be cancelled and surrendered by the Warrant Agency to the Trustee.

2.10   Transfer and Ownership of Special Warrants

(a)    The Special Warrants may only be transferred on the register kept by the Trustee at the Warrant
       Agency by the holder or its legal representatives or its attorney duly appointed by an instrument
       in writing in form and execution satisfactory to the Trustee only upon surrendering to the Trustee
       at the Warrant Agency the Warrant Certificates representing the Special Warrants to be
       transferred and upon compliance with:

       (i)     the conditions herein;
       (ii)    such reasonable requirements as the Trustee may prescribe; and
       (iii)   all applicable securities legislation and requirements of regulatory authorities;

       and such transfer shall be duly noted in such register by the Trustee. Upon compliance with such
       requirements, the Trustee shall issue to the transferee a Warrant Certificate representing the
       Special Warrants transferred.

(b)    The Special Warrants may not be offered, sold or transferred in the United States or to or from the
       account or benefit of a person in the United States unless an exemption from registration under
       the U.S. Securities Act and applicable state securities laws is available and the Warrantholder has
       presented to the Corporation evidence of the availability of the exemption satisfactory to the
       Corporation.

(c)    Subject to the provisions of this Indenture and applicable law, the Warrantholder shall be entitled
       to the rights and privileges attaching to the Special Warrants and the issue of Common Shares by
       the Corporation upon the exercise of Special Warrants by any Warrantholder in accordance with
       the terms and conditions herein contained (together with the payment by the Trustee of the
       amount, if any, and the delivery by the Trustee of the property and securities, if any, required to
       be paid and delivered, respectively, pursuant to Section 4.2) shall discharge all responsibilities of
       the Corporation and the Trustee with respect to such Special Warrants and neither the
       Corporation nor the Trustee shall be bound to inquire into the title of any such holder.
                                                      -9-


2.11    Charges for Exchange or Transfer

Except as otherwise herein provided, a reasonable charge may be levied on and paid by the transferor in
respect of the transfer or the exchange of any Warrant Certificate or the issue of a new Warrant
Certificate(s) pursuant hereto provided that the reimbursement of the Trustee or the Corporation for any
and all transfer, stamp or similar taxes or other governmental charges required to be paid shall be made
by the holder requesting such transfer or exchange as a condition precedent to such transfer or exchange.

2.12    Cancellation of Surrendered Special Warrants

All Warrant Certificates surrendered pursuant to Sections 2.8, 2.9, 2.10, 3.1, 3.3, 3.6, 4.7(a)(ii) or 6.1 shall
be returned to the Trustee for cancellation and, after the expiry of any period of retention prescribed by
law, destroyed by the Trustee. Upon request by the Corporation, the Trustee shall furnish to the
Corporation a destruction certificate identifying the Warrant Certificates so destroyed, the number of
Special Warrants evidenced thereby, the number of Common Shares, if any, issued pursuant to such
Special Warrants and the details of any Warrant Certificates issued in substitution or exchange for such
Warrant Certificates destroyed.

2.13    Registration of Special Warrants

The Trustee shall keep at the Warrant Agency: (i) a register of Warrantholders in which shall be entered
in alphabetical order the names and addresses of the holders of Special Warrants and particulars of the
Special Warrants held by them; and (ii) a register of transfers in which all transfers of Special Warrants
and the date and other particulars of each transfer shall be entered. Branch registers shall also be kept at
such other place or places, if any, as the Corporation, with the approval of the Trustee, may designate.
Such registers will at all reasonable times be open for inspection by the Corporation and/or any
Warrantholder. The Trustee will from time to time when requested to do so by the Corporation or any
Warrantholder, upon payment of the Trustee’s reasonable charges, furnish a list of the names and
addresses of Warrantholders showing the number of Special Warrants held by each such Warrantholder.

2.14    Assumption by Transferee and Release of Transferor

Upon becoming a Warrantholder in accordance with the provisions of this Indenture, the transferee
thereof shall be deemed to have acknowledged and agreed to be bound by this Indenture. Upon the
registration of such transferee as the Warrantholder of a Special Warrant, the transferor shall cease to
have any further rights under this Indenture with respect to such Special Warrant or the Common Share
issuable in respect thereof.

2.15    U.S. Legends

The Trustee acknowledges that the Special Warrants, Common Shares and Warrants have not been
registered under the U.S. Securities Act. Each Special Warrant originally issued to a person in the United
States or transferred to a person in the United States and all certificates representing Common Shares and
Warrants issued upon the exercise of such Special Warrants in accordance with Article III hereof (and
each Special Warrant certificate, Common Share certificate or Warrant certificate issued in exchange
therefor or in substitution on transfer thereof) shall be overprinted with the following legend:

        THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
        THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
        ACT”) OR THE SECURITIES LAWS OF ANY STATE. THE HOLDER HEREOF, BY
        PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE
        CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR
        OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE
        UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER
                                                    - 10 -


        THE SECURITIES ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM
        REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144A
        THEREUNDER, OR (D) IN COMPLIANCE WITH ANOTHER EXEMPTION FROM
        REGISTRATION AFTER PROVIDING AN OPINION OF COUNSEL SATISFACTORY
        TO THE CORPORATION TO EFFECT THAT REGISTRATION IS NOT REQUIRED,
        DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN
        SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA. AT ANY
        TIME THE CORPORATION IS A “FOREIGN ISSUE” AS DEFINED IN REGULATION S
        UNDER THE SECURITIES ACT, A NEW CERTIFICATE, BEARING NO LEGEND,
        DELIVERY OF WHICH WILL CONSTITUTE “GOOD DELIVERY”, MAY BE OBTAINED
        FROM [Transfer Agent] UPON DELIVERY OF THIS CERTIFICATE AND A DULY
        EXECUTED DECLARATION, IN A FORM SATISFACTORY TO [Transfer Agent] AND
        THE CORPORATION, TO THE EFFECT THAT THE SALE OF THE SECURITIES
        REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE 904 OF
        REGULATION S UNDER THE SECURITIES ACT;

provided, that if the Common Shares or Warrants are being sold outside of the United States in
compliance with Rule 904 of Regulation S under the U.S. Securities Act at the time that the Corporation is
a “foreign issuer” as defined in Rule 902 of Regulation S under the U.S. Securities Act, the legend may be
removed by providing a declaration to [Transfer Agent], the registrar and transfer agent for the Common
Shares of the Corporation and the warrant agency for the Warrants, in such form as the Corporation may
prescribe from time to time, it being understood that the Corporation has instructed [Transfer Agent] to
accept the form of declaration set forth below, but reserves the right to change the form of declaration to
reflect applicable law or practice or to suspend removal of legends if it should determine that such
removal is not consistent with applicable law:

        The undersigned (a) acknowledges that the sale of the securities of [Corporation] to
        which this declaration relates is being made in reliance on Rule 904 of Regulation S under
        the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) and (b)
        certifies that (1) the undersigned is not an affiliate of the Corporation as that term is
        defined under the U.S. Securities Act, (2) the offer of such securities was not made to a
        person in the United States and either (A) at the time the buy order was originated, the
        buyer was outside the United States, or the seller and any person acting on its behalf
        reasonably believed that the buyer was outside the United States or (B) the transaction
        was executed on or through the facilities of The Canadian Venture Exchange or The
        Toronto Stock Exchange and neither the seller nor any person acting on its behalf knows
        that the transaction has been prearranged with a buyer in the United States, (3) neither
        the seller nor any affiliate of the seller nor any person acting on any of their behalf has
        engaged or will engage in any directed selling efforts in the United States in connection
        with the offer and sale of such securities, 4) the sale is bona fide and not for the purpose
        of “washing off” the resale restrictions imposed because the securities are “restricted
        securities” (as that term is defined in Rule 144(a)(3) under the U.S. Securities Act, (5) the
        seller does not intend to replace such securities with fungible unrestricted securities and
        (6) the contemplated sale is not a transaction, or part of a series of transactions, which,
        although in technical compliance with Regulation S, is part of a plan or scheme to evade
        the registration provisions of the U.S. Securities Act. Terms used herein have the
        meanings given to them by Regulation S.

2.16    Certain Transfers

(a)     If the Warrant Certificate tendered for transfer bears the legend set forth in Section 2.15 hereof the
        Trustee shall not issue or register a Warrant Certificate for the Special Warrants represented
                                                  - 11 -


      thereby in the name of or for the benefit of a person outside the United States until the Trustee
      receives the declaration referred to in Section 2.15.

(b)   If the transferee of a Special Warrant is in the United States, the Warrant Certificate issued to such
      transferee shall be overprinted with the legend set forth in Section 2.15, and the requirement of
      Section 2.15 relating to legending the Common Shares and Warrants upon exercise of the Special
      Warrants shall also apply, unless the Corporation receives an opinion of counsel in form and
      substance satisfactory to it that no legend is required.

                        ARTICLE III - EXERCISE OF SPECIAL WARRANTS

3.1   Method of Exercise of Special Warrants

(a)   The holder of any Special Warrant may exercise the right conferred on such holder to acquire
      Common Shares and Warrants by surrendering, after the Effective Date and prior to the Expiry
      Time, to the Warrant Agency the Warrant Certificate with a duly completed and executed
      exercise form.

      A Warrant Certificate with the duly completed and executed exercise form referred to in this
      subsection 3. 1 (a) shall be deemed to be surrendered only upon personal delivery thereof or, if
      sent by mail or other means of transmission, upon actual receipt thereof at, in each case, the
      Warrant Agency.

(b)   Any exercise form referred to in subsection 3.1 (a) shall be signed by the Warrantholder and shall
      specify:

      (i)     the number of Common Shares and Warrants which the holder wishes to acquire (being
              not more than those which the holder is entitled to acquire pursuant to the Warrant
              Certificate(s) surrendered);

      (ii)    the person or persons in whose name or names such Common Shares and Warrants are to
              be issued;

      (iii)   the address or addresses of such persons; and

      (iv)    the number of Common Shares and Warrants to be issued to each such person if more
              than one is so specified.

      If any of the Common Shares and Warrants subscribed for are to be issued to a person or persons
      other than the Warrantholder, the Warrantholder shall pay to the Corporation or the Warrant
      Agency on behalf of the Corporation, all applicable transfer or similar taxes and the Corporation
      shall not be required to issue or deliver certificates evidencing Common Shares and Warrants
      unless or until such Warrantholder shall have paid to the Corporation, or the Warrant Agency on
      behalf of the Corporation, the amount of such tax or shall have established to the satisfaction of
      the Corporation that such tax has been paid or that no tax is due.

(c)   In connection with the exchange of Warrant Certificates and exercise of Special Warrants and
      compliance with such other terms and conditions hereof as may be required, the Corporation has
      appointed the principal offices of the Trustee in the City of [city], in the Province of Alberta, as
      the agency at which Warrant Certificates may be surrendered for exchange or transfer or at which
      Special Warrants may be exercised and the Trustee has accepted such appointment. The
      Corporation may from time to time designate alternate or additional places as the Warrant
      Agency and shall give notice to the Trustee of any change of the Warrant Agency.
                                                  - 12 -



3.2    Effect of Exercise of Special Warrants

(a)    Upon the exercise of Special Warrants pursuant to Section 3.1 or upon a deemed exercise
       pursuant to Section 3.6, and subject to Section 3.3, the Common Shares and Wan-ants to be
       acquired upon exercise or, in the case of a deemed exercise pursuant to Section 3.6, all of the
       Common Shares and Warrants issuable pursuant to the Special Warrants deemed to be exercised,
       shall be deemed to have been issued and the person or persons to whom such Common Shares
       and Warrants are to be issued shall be deemed to have become the holder or holders of record of
       such Common Shares and Warrants on the Exercise Date unless the transfer registers of the
       Corporation shall be closed on such date, in which case the Common Shares and Warrants to be
       acquired upon exercise shall be deemed to have been issued and such person or persons deemed
       to have become the holder or holders of record of such Common Shares and Warrants, on the
       date on which such transfer registers are reopened.

(b)    Subject to Section 3.6, within five (5) Business Days after the Exercise Date with respect to a
       Special Warrant, the Corporation shall cause to be mailed to the person or persons in whose name
       or names the Common Shares and Warrants acquired upon exercise have been issued, as
       specified in the exercise form, at the address specified in such exercise form or, if so specified in
       such exercise form, cause to be delivered to such person or persons at the Warrant Agency where
       the Warrant Certificate was surrendered, a share certificate or certificates for the appropriate
       number of Common Shares and Warrants acquired upon exercise.

3.3    Partial Exercise of Special Warrants; Fractions

(a)    The holder of any Special Warrants may exercise his right to acquire a number of Common
       Shares and Warrants less than the aggregate number which the holder is entitled to acquire
       pursuant to the surrendered Warrant Certificate(s). In the event of any exercise of a number of
       Special Warrants less than the number which the holder is entitled to exercise, the holder of the
       Special Warrants upon such exercise shall, in addition, be entitled to receive, without charge
       therefor, a new Warrant Certificate(s) in respect of the balance of the Special Warrants
       represented by the surrendered Warrant Certificate(s) and which were not then exercised.

(b)    Notwithstanding anything herein contained including any adjustment provided for in Article V,
       the Corporation shall not be required, upon the exercise of any Special Warrants, to issue
       fractions of Common Shares and Warrants or to distribute certificates which evidence fractional
       Common Shares and Warrants. In lieu of fractional Common Shares and Warrants, the
       Corporation shall pay to the holder who would otherwise be entitled to receive fractional
       Common Shares and Warrants upon an exercise of Special Warrants, within ten (10) Business
       Days after the date upon which the fractional Common Shares and Warrants would otherwise
       have been deemed to have been issued pursuant to Section 3.2, an amount in lawful money of
       Canada equal to the Current Market Price of the Common Shares on such date multiplied by an
       amount equal to the fractional interest of Common Shares such holder would otherwise be
       entitled to receive upon such exercise, provided that the Corporation shall not be required to
       make any payment, calculated as aforesaid, that is less than $20.00, in aggregate.

3.4    Expiration of Special Warrants

Subject to Section 3.6, immediately after the Expiry Time, all rights under any Special Warrants not
exercised or deemed to be exercised in accordance with the terms and conditions of this Indenture shall
cease and terminate and such Special Warrant shall be void and of no further force or effect.
                                                  - 13 -


3.5   Accounting and Recording

(a)   The Trustee shall promptly account to the Corporation with respect to Special Warrants
      exercised. Any securities or other instruments, from time to time received by the Trustee shall be
      received in trust for, and shall be segregated and kept apart by the Trustee in trust for, the
      Corporation.

(b)   The Trustee shall record the particulars of Special Warrants exercised, which particulars shall
      include the names and addresses of the persons who become holders of Common Shares on
      exercise and the Exercise Date, if any, in respect thereof. The Trustee shall provide such
      particulars in writing to the Corporation within five (5) Business Days of any request by the
      Corporation therefor.

3.6   Deemed Exercise

(a)   Immediately prior to the Expiry Time, the rights of all holders of Special Warrants (other than
      Special Warrants in respect of which the holder duly exercises its right to acquire Common Shares
      and Warrants pursuant to Section 3. 1) to acquire Common Shares and Warrants shall be deemed
      to be exercised without any further action on the part of such holders or the Corporation and the
      Common Shares and Warrants issuable thereby shall be deemed to be issued to the
      Warrantholders at such time.

(b)   The Corporation shall cause to be mailed to each holder in whose name Common Shares and
      Warrants have been issued pursuant to this Section 3.6 in respect of Special Warrants deemed to
      be exercised pursuant to this Section 3.6, at its address appearing on the register maintained by
      the Trustee pursuant to Section 2.13 hereof, a certificate representing such Common Shares and
      Warrants.

3.7   Securities Restrictions

(a)   Notwithstanding anything herein contained, Common Shares and Warrants will only be issued
      pursuant to any Special Warrant in compliance with the securities laws of any applicable
      jurisdiction, and without limiting the generality of the foregoing, in the event that the Special
      Warrants are exercised pursuant to Section 3.1 or deemed to have been exercised pursuant to
      Section 3.6 prior to the issuance of a receipt for the Prospectus by each of the Securities
      Commissions, the certificates representing the Common Shares and Warrants thereby issued will
      bear such legend as may, in the opinion of Counsel to the Corporation, acting reasonably, be
      necessary in order to avoid a violation of any securities laws of any province in Canada, the
      United States or any other jurisdiction or to comply with the requirements of any stock exchange
      on which the Common Shares and Warrants are listed, provided that if, at any time, in the
      opinion of Counsel to the Corporation, such legends are no longer necessary in order to avoid a
      violation of any such laws, or the holder of any such legended certificate, at the holder’s expense,
      provides the Corporation with evidence satisfactory in form and substance to the Corporation,
      acting reasonably, (which may include an opinion of counsel satisfactory to the Corporation), to
      the effect that such holder is entitled to sell or otherwise transfer such Common Shares and
      Warrants in a transaction in which such legends are not required, such legended certificate may
      thereafter be surrendered to the Corporation in exchange for a certificate which does not bear
      such legend.

(b)   Special Warrants may not be exercised in the United States or by or on behalf of a person in the
      United States, nor will certificates for Common Shares and Warrants issuable upon exercise of
      Special Warrants be registered or delivered to an address in the United States without
      registration under the U.S. Securities Act and the securities laws of all applicable states, unless an
      exemption from registration is available. The Corporation may, at its option require an opinion of
                                                   - 14 -


        counsel or other evidence in form and substance satisfactory to the Corporation, acting
        reasonably, as to the availability of the exemption, provided that no opinion of counsel will be
        required of a Qualified Institutional Buyer that acquired the Special Warrants from one of the
        Agents or their affiliates in a transaction exempt from registration under the U.S. Securities Act,
        and that is exercising the Special Warrants for its own account or the account of another Qualified
        Institutional Buyer, or from an Accredited Investor that acquired the Special Warrants from one
        of the Agents or their affiliates in a transaction exempt from registration under the U.S. Securities
        Act and that is exercising the Special Warrants for its own account.

                                 ARTICLE IV - ADDITIONAL RIGHTS

4.1     Dividend Funds

The Corporation hereby appoints the Trustee, as trustee, to receive, hold and deal with any and all
dividends or other distribution of cash, as described in section 6.2(i) hereof, (the “Dividend Funds”) and
any and all Property, as described in section 6.2(i) hereof, distributed to holders of Common Shares in
accordance with the terms of this Indenture and the Trustee hereby accepts such appointment and agrees
to be bound by the terms of this Indenture in respect thereof.

4.2     Conditions to Release of Dividend Funds and Property

(a)     If any Warrantholder, at any time prior to the Expiry Time elects or is deemed to elect to exercise
        the entitlement to acquire Common Shares and Warrants pursuant to Special Warrant(s) held by
        it, the Trustee shall within five (5) Business Days:

        (i)     pay to such Warrantholder from the Dividend Funds an amount equal to the product
                obtained by multiplying the sum of the amount of the Dividend Funds held by the
                Trustee on the date of such exercise and interest earned by the Trustee thereon to the date
                immediately preceding the date of payment (less interest thereon paid out by the Trustee
                pursuant to this Indenture prior to the date of payment) by a fraction of which the
                numerator is the number of Special Warrants tendered to the Trustee by such
                Warrantholder and the denominator is the number of Special Warrants outstanding on
                the date of payment (such number to be the number of Special Warrants outstanding
                immediately prior to the deemed exercise pursuant to Section 3.6 if such date of payment
                is the Expiry Date); and

        (ii)    deliver to such Warrantholder its pro rata share of the Property determined on the same
                basis as the calculation set forth in 4.2(a)(i) above.

(b)     The Trustee shall within five (5) Business Days after the Expiry Time:

        (i)     pay to each Warrantholder, in respect of Special Warrants then held by it deemed to be
                exercised, from the Dividend Funds an amount equal to the product obtained by
                multiplying the sum of the amount of the Dividend Funds held by the Trustee on the date
                of such exercise and interest earned by the Trustee thereon to the date immediately
                preceding the date of payment (less any interest thereon paid out by the Trustee pursuant
                to this Indenture prior to the date of payment) by a fraction of which the numerator is the
                number of Special Warrants deemed to have been exercised held by the Warrantholder
                and the denominator is the aggregate number of Special Warrants deemed to be
                exercised; and

        (ii)    deliver to such Warrantholder its pro rata share of the Property determined on the same
                basis as the calculation set forth in 4.2(b)(i) above.
                                                     - 15 -


(c)     Provided that the Trustee shall have paid and delivered, or set aside for payment and delivery,
        all Dividend Funds, interest earned thereon and Property required to be paid or delivered to
        Warrantholders pursuant to subsections 4.2(a) and (b), the Trustee shall pay to the Corporation
        all remaining Dividend Funds together with all interest accrued thereon to the date of payment
        and shall deliver to the Corporation all remaining Property held by the Trustee.

4.3     Administration of Dividend Funds and Property

(a)     During the Adjustment Period, the Corporation shall not issue any rights, options or warrants to
        all or substantially all of the holders of the Common Shares pursuant to which those holders are
        entitled to subscribe for, purchase or otherwise acquire Common Shares or securities convertible
        into Common Shares, unless the holders of the Special Warrants are entitled to participate in the
        event on the same terms, mutatis mutandis, as if they had exercised their Special Warrants
        immediately prior to the effective date or record date of the event.

(b)     All Dividend Funds and Property shall be held at or administered through the principal office of
        the Trustee at the City of [city], in the Province of Alberta. The Trustee shall not be entitled to deal
        with the Dividend Funds and Property except in accordance with the terms of this Indenture. The
        Trustee is hereby specifically authorized, and granted such powers as are necessary, to deal with
        the Property as it shall determine in its sole discretion to be in the best interests of the
        Warrantholders. In the event that the Trustee determines the necessity for the approval by the
        Warrantholders of any matter, an extraordinary resolution of the Warrantholders shall provide
        sufficient authority upon which the Trustee may act and the Trustee shall not be responsible for
        any loss occasioned by so doing.

4.4     Escrowed Proceeds and Prospectus Failure

(a)     The Corporation, upon receipt of the Proceeds, agrees to deposit the Escrowed Proceeds with the
        Trustee and hereby irrevocably authorizes and instructs the Trustee to retain the Escrowed
        Proceeds in trust in accordance with the provisions of this Article, except to the extent that the
        Special Warrants have been exercised or are deemed to be exercised.

(b)     The Escrowed Proceeds deposited with the Trustee hereunder, pending any payment, release or
        application thereof as required in accordance with the provisions of this Article IV, shall be held
        by the Trustee in accordance with Section 10.4 hereof.

(c)     The Escrowed Proceeds shall be held at or administered through the principal office of the
        Trustee at [city], Alberta. The Trustee shall not be entitled to deal with the Escrowed Proceeds
        except in accordance with the terms of this Indenture.

(d)     In the event that the Qualification Condition or the Development Condition has not been satisfied
        on or prior to the Clearing Date, the Corporation shall, prior to [time] ([city] time) on the first
        Business Day following the Clearing Date, send to the Trustee and to the Warrantholders in the
        manner set forth in subsection 4.7(a)(i), a written notice advising each such Warrantholder of its
        rights under subsection 4.7(a)(ii).

4.5     Location and Residence of Warrantholders

For the purposes of Section 4.4, a Warrantholder shall be deemed to be and the Corporation and the
Trustee may treat, for such purposes, the subscriber for the Special Warrant(s) in question as the
Warrantholder, and the Warrantholder shall be deemed to be in the jurisdiction of, and resident in, the
jurisdiction provided as the address of such subscriber as set forth in the subscription agreement for such
Special Warrants, or, the address of the purchaser of the Special Warrants as set forth in the Form 20 or
other filing required under applicable securities laws in respect of a transfer of the Special Warrants. If the
                                                   - 16 -


Corporation and the Trustee shall not have been provided with a copy of such Form 20 or other filing
required under applicable securities laws in respect of a transfer of beneficial ownership, then the original
subscriber shall be treated for all purposes hereunder to be the beneficial holder of, and the
Warrantholder of, the Special Warrants.

4.6     Conditions to Release of Escrowed Proceeds

In the event that:

(a)     the Development Condition and the Qualification Condition are satisfied prior to [time] ([city]
        time) on the Clearing Date, the Trustee shall deliver up to the Agents and the Corporation the
        Escrowed Proceeds and any interest thereon, in the manner set forth in the Joint Notice; or

(b)     the Development Condition or the Qualification Condition are not satisfied prior to [time] ([city]
        time) on the Clearing Date, the Trustee shall deliver up the Escrowed Proceeds in the manner set
        forth in subsections 4.7(a)(ii) and (iii) hereof.

4.7     Repurchase Right

In the event that the Qualification Condition or the Development Condition have not been satisfied on or
prior to [time] ([city] time) on the Clearing Date:

(a)     the Corporation shall, prior to [time] ([city] time) on the first Business Day following the Clearing
        Date, send to the Trustee and to the Warrantholders by courier (or by first class mail in the event
        the address is a post office box) to the addresses of such holders appearing in the register of
        Warrantholders maintained by the Trustee, a written notice advising each such Warrantholder of
        its rights under subsection 4.7(a)(ii);

(b)     each holder of Special Warrants shall be entitled at the option of the holder, by delivering to the
        Trustee the duty completed Repurchase Form attached to the Warrant Certificate at any time
        between the Clearing Date and the Repurchase Deadline, to require the Corporation to utilize the
        Escrowed Proceeds to repurchase up to 50% of the original number of Special Warrants
        purchased by such holder at the Repurchase Price plus such holder’s pro-rata portion of the
        interest earned by the Trustee on the Escrowed Proceeds (calculated from the Closing Date to and
        including the date immediately prior to the date of payment to the holder of Special Warrants
        and net of any withholding tax) (the “Repurchase Right”);

(c)     after payment of the aggregate Repurchase Price to holders who have exercised their Repurchase
        Right pursuant to subsection 4.7(a)(ii) prior to the Repurchase Deadline, the Trustee shall
        immediately provide written notice to the Corporation advising as to the number of Special
        Warrants repurchased pursuant to the Repurchase Right, the amount of the Escrowed Proceeds
        (plus interest) paid to such holders, and the amount of the Escrowed Proceeds (plus interest)
        remaining in escrow. Upon receipt of such notice, the Corporation and [broker], on behalf of the
        Agents, shall advise the Trustee to distribute (the “Distribution Notice”) the balance of the
        Escrowed Proceeds (plus interest) and the Trustee shall release the balance of the Escrowed
        Proceeds plus accrued interest as follows:

        (i)      to [broker] on behalf of the Agents, an amount equal to $_______ multiplied by the
                 number of Special Warrants in respect of which holders have not exercised their
                 Repurchase Right prior to the Repurchase Deadline, plus all interest accrued thereon and
                 the balance of the Agent’s out-of-pocket expenses, and
                                                   - 17 -


      (ii)    to the Corporation, the balance of the Escrowed Proceeds plus all accrued interest
              thereon, after giving effect to the payment referred to in paragraph (A) above.

      The Trustee shall release the Escrowed Proceeds (plus accrued interest) as soon as reasonably
      practicable after the Repurchase Deadline, but in any event not later than one (1) Business Day
      after the receipt of the Distribution Notice. Any Special Warrants purchased by the Corporation
      shall be cancelled.

(d)   If:

      (i)     the Qualification Condition has not been met prior to the Clearing Date, any Special
              Warrants that have not been repurchased by the Corporation pursuant to subsection
              4.7(a)(ii) prior to the Repurchase Deadline shall thereafter be exercisable, upon the
              exercise or deemed exercise of such Special Warrants, into ____ Common Shares and
              [warrant fraction] of a Warrant for every Special Warrant then held by such holder (in
              lieu of one Common Share and [warrant fraction] of a Warrant otherwise receivable) at
              no additional cost;

      (ii)    the Qualification Condition has been met but the Development Condition has not been
              met prior to the Clearing Date, any Special Warrants that have not been repurchased by
              the Corporation pursuant to subsection 4.7(a)(ii) prior to the Repurchase Deadline shall
              thereafter be exercisable, upon the exercise or deemed exercise of such Special Warrants,
              into one (1) Common Share and [warrant fraction] of a Warrant for every Special Warrant
              then held by such holder at no additional cost.

(e)   Any holder wishing to exercise the Repurchase Right provided for in Section 4.7(a) hereof shall
      surrender its duly completed Repurchase Form (in the form attached to the Warrant Certificate)
      and Warrant Certificate(s) to the Trustee at its principal office in the City of [city], in the Province
      of Alberta, prior to the Repurchase Deadline.

(f)   The Trustee will apply the Escrowed Proceeds and the interest earned thereon by the Trustee
      pursuant to this Article to any payment required to be made pursuant to this Section 4.7. To the
      extent that the monies are not sufficient to enable the Trustee to make such payment in full, the
      Corporation will, within three (3) Business Days after receipt of written notice from the Trustee
      specifying such deficiency, provide the Trustee with sufficient funds to enable the Trustee to
      make such payment in full.

(g)   If any Warrantholder, at any time prior to the Expiry Time, elects to exercise the entitlement to
      acquire Common Shares and Warrants pursuant to Special Warrants held by it, the Trustee shall
      (subject to availability having regard, inter alia, to the funding requirements referred to in this
      Section 4.7). (i) pay to the Corporation from Escrowed Proceeds 50% of the Repurchase Price for
      each Special Warrant exercised together with interest equal to the product of the amount of all of
      the interest earned by the Trustee on the Escrowed Proceeds from the Closing Date to the date
      immediately preceding the date of payment (less any interest paid out by the Trustee pursuant to
      this Indenture prior to the date of payment) multiplied by a fraction, the numerator of which is
      the number of Special Warrants exercised by the Warrantholder and the denominator of which is
      the number of Special Warrants outstanding on the date of payment (such number to be the
      Special Warrants outstanding immediately prior to the Expiry Time if such date of payment is on
      or after the Expiry Time); and (ii) pay to [broker] an amount equal to the [commission rate]%
      commission payable to [broker] in connection with the Special Warrants so exercised (plus a pro
      rata portion of the interest accrued on such amount in respect of commission); provided that no
      payment shall be made by the Trustee pursuant to this subsection unless, after such payment, the
                                                    - 18 -


        Escrowed Proceeds held by the Trustee exceed an amount equal to 50% of the Repurchase Price
        multiplied by the number of Special Warrants outstanding on the date of payment (such number
        to be the Special Warrants outstanding immediately prior to the Expiry Time if such date of
        payment is on or after the Expiry Time).

       ARTICLE V - ADJUSTMENT OF NUMBER OF COMMON SHARES AND WARRANTS

5.1     Adjustment of Number of Common Shares and Warrants

The acquisition rights in effect at any date attaching to the Special Warrants shall be subject to adjustment
from time to time as follows:

(a)     if and whenever at any time during tile Adjustment Period, the Corporation shall:

        (i)     subdivide, redivide, or change its outstanding Common Shares into a greater number of
                shares; or

        (ii)    reduce, combine or consolidate its outstanding Common Shares into a smaller number of
                shares;

        the number of Common Shares and Warrants obtainable under each Special Warrant shall be
        adjusted immediately after the effective date of such subdivision, redivision, change, reduction,
        combination or consolidation, by multiplying the number of Common Shares theretofore
        obtainable on the exercise thereof by a fraction of which the numerator shall be the total number
        of Common Shares outstanding immediately after such date and the denominator shall be the
        total number of Common Shares outstanding immediately prior to such date. Such adjustment
        shall be made successively whenever any event referred to in this subsection shall occur;

(b)     if and whenever at any time during the Adjustment Period, there is a reclassification of the
        Common Shares or a capital reorganization of the Corporation other than as described in
        subsection 5.l(a) or a consolidation, amalgamation or merger of the Corporation with or into any
        other body corporate, trust, partnership or other entity, or a sale or conveyance of the property
        and assets of the Corporation as an entirety or substantially as an entirety to any other body
        corporate, trust, partnership or other entity, any Warrantholder who has not exercised its right of
        acquisition prior to the effective date of such reclassification, capital reorganization,
        consolidation, amalgamation, merger, sale or conveyance, upon the exercise of such right
        thereafter, shall be entitled to receive and shall accept, in lieu of the number of Common Shares
        and Warrants then sought to be acquired by it, the number of shares or other. securities or
        property of the Corporation or of the body corporate, trust, partnership or other entity resulting
        from such reclassification, capital reorganization, consolidation, amalgamation, merger, sale or
        conveyance as the case may be, that such Warrantholder would have been entitled to receive on
        such reclassification, capital reorganization, consolidation, amalgamation, merger, sale or
        conveyance, if, on the record date or the effective date thereof, as the case may be, the
        Warrantholder had been the registered holder of the number of Common Shares and Warrants
        sought to be acquired by it. If determined appropriate by the Trustee to give effect to or to
        evidence the provisions of this subsection 5.1(b), the Corporation, its successor, or such
        purchasing body corporate, partnership, trust or other entity, as the case may be, shall, prior to or
        contemporaneously with any such reclassification, capital reorganization, consolidation,
        amalgamation, merger, sale or conveyance, enter into an indenture which shall provide, to the
        extent possible, for the application of the provisions set forth in this Indenture with respect to the
        rights and interests thereafter of the Warrantholders to the end that the provisions set forth in this
        Indenture shall thereafter correspondingly be made applicable, as nearly as may reasonably be,
        with respect to any shares, other securities or property to which a Warrantholder is entitled on
                                                   - 19 -


        the exercise of its acquisition rights thereafter. Any indenture entered into between the
        Corporation and the Trustee pursuant to the provisions of this subsection 5.1(b) shall be a
        supplemental indenture entered into pursuant to the provisions of Article 9 hereof. Any
        indenture entered into between the Corporation, any successor to the Corporation or such
        purchasing body corporate, partnership, trust or other entity and the Trustee shall provide for
        adjustments which shall be as nearly equivalent as may be practicable to the adjustments
        provided in this Section 5.1 and which shall apply to successive reclassifications, capital
        reorganizations, amalgamations, consolidations, mergers, sales or conveyances; and

(c)     the adjustments provided for in this Article V in the number of Common Shares, Warrants and
        classes of securities which are to be received on the exercise of Special Warrants are cumulative.
        After any adjustment pursuant to this Section, the terms “Common Shares” and “Warrants”
        where used in this Indenture shall be interpreted to mean securities of any class or classes which,
        as a result of such adjustment and all prior adjustments pursuant to this Section, the
        Warrantholder is entitled to receive upon the exercise of its Special Warrant, and the number of
        Common Shares and Warrants indicated by any exercise made pursuant to a Special Warrant
        shall be interpreted to mean the number of Common Shares and Warrants or other property or
        securities a Warrantholder is entitled to receive, as a result of such adjustment and all prior
        adjustments pursuant to this Section, upon the full exercise of a Special Warrant.

5.2     Entitlement to Shares on Exercise of Special Warrant

All shares of any class or other securities which a Warrantholder is at the time in question entitled to
receive on the exercise of its Special Warrant, whether or not as a result of adjustments made pursuant to
this Article V, shall, for the purposes of the interpretation of this Indenture, be deemed to be shares which
such Warrantholder is entitled to acquire pursuant to such Special Warrant.

5.3     No Adjustment for Stock Options

Notwithstanding anything in this Article V, no adjustment shall be made in the acquisition rights attached
to the Special Warrants if the issue of Common Shares is being made pursuant to this Indenture or
pursuant to any stock option or stock purchase plan in force from time to time for directors, officers or
employees of the Corporation.

5.4     Determination by Corporation’s Auditors

In the event of any question arising with respect to the adjustments provided for in this Article V such
question shall be conclusively determined by the Corporation’s Auditors (or an alternate firm of chartered
accountants designated by the Corporation if, for any reason, the Corporation’s Auditors are unable to
act) who shall have access to all necessary records of the Corporation, and such determination shall be
binding upon the Corporation, the Trustee, all Warrantholders and all other persons interested therein.

5.5     Proceedings Prior to any Action Requiring Adjustment

As a condition precedent to the taking of any action which would require an adjustment in any of the
acquisition rights pursuant to any of the Special Warrants, including the number of Common Shares and
Warrants which are to be received upon the exercise thereof, the Corporation shall take any corporate
action which may, in the opinion of Counsel, be necessary in order that the Corporation has unissued and
reserved in its authorized capital and may validly and legally issue as fully paid and non-assessable all
the Common Shares and Warrants which the holders of such Special Warrants are entitled to receive on
the full exercise thereof in accordance with the provisions hereof.
                                                     - 20 -


5.6     Certificate of Adjustment

The Corporation shall from time to time immediately after the occurrence of any event which requires an
adjustment or readjustment as provided in Article V, deliver a certificate of the Corporation to the Trustee
specifying the nature of the event requiring the same and the amount of the adjustment necessitated
thereby and setting forth in reasonable detail the method of calculation and the facts upon which such
calculation is based.

5.7     Notice of Special Matters

The Corporation covenants with the Trustee that, so long as any Special Warrant remains outstanding, it
will give notice to the Trustee and to the Warrantholders of its intention to fix a record date that is prior to
the Expiry Date for the issuance of tights, options or warrants (other than the Special Warrants) to all or
substantially all the holders of its outstanding Common Shares. Such notice shall specify the particulars of
such event and the record date for such event, provided that the Corporation shall only be required to
specify in the notice such particulars of the event as shall have been fixed and determined on the date on
which the notice is given. The notice shall be given in each case not less than 14 days prior to such
applicable record date.

5.8     No Action After Notice

The Corporation covenants with the Trustee that it will not close its transfer books or take any other
corporate action which might deprive the holder of a Special Warrant of the opportunity to exercise its
right of acquisition pursuant thereto during the period of 14 days after the giving of the certificate or
notices set forth in Sections 5.6 and 5.7.

5.9     Participation by Special Warrantholders

No adjustment shall be made pursuant to this Article V if the Special Warrantholders are entitled to
participate in any event described in this Article V on the same terms, mutatis mutandis, as if the Special
Warrantholders had exercised their Special Warrants prior to or on the effective date or record date of
such event.

5.10    Other Action

In case the Corporation, after the date hereof, shall take any action affecting the Common Shares or
Warrants other than action described in subsection 5.1, which in the opinion of the directors of the
Corporation, acting reasonably, would materially affect the rights of Warrantholders, the number of
Common Shares and Warrants which may be acquired upon exercise of the Special Warrants shall be
adjusted in such manner and at such time, by action of the directors, in their discretion, acting reasonably,
as they may determine to be equitable in the circumstances, provided that no such adjustment will be
made unless prior written approval of the Agents and any stock exchange on which the Common Shares
are listed for trading has been obtained.

5.11    Protection of Trustee

Except as provided in Section 10.2, the Trustee shall be entitled to rely on certificates of the Corporation
delivered to it under section 5.6 and decisions of the Corporation’s auditors or appointed chartered
accountants pursuant to section 5.4 and the Trustee:

(a)     shall not at any time be under any duty or responsibility to any Warrantholder to determine
        whether any facts exist which may require any adjustment contemplated by Section 5.1, or with
        respect to the nature or extent of any such adjustment when made, or with respect to the method
        employed in making the same;
                                                  - 21 -


(b)     shall not be accountable with respect to the validity or value (or the kind or amount) of any
        Common Shares and Warrants or of any shares or other securities or property which may at any
        time be issued or delivered upon the exercise of the rights attaching to any Special Warrant; and

(c)     shall not be responsible for any failure of the Corporation to issue, transfer or deliver Common
        Shares and Warrants or certificates for the same upon the surrender of any Special Warrants for
        the purpose of the exercise of such rights or to comply with any of the covenants contained in this
        Article.

5.12    Adjustments for Common Shares Issuable on Exercise of Warrants

Adjustments to the number of Common Shares that a holder is entitled to receive upon exercise of the
Warrants shall be governed by the Warrant Indenture.

                ARTICLE VI - RIGHTS OF THE CORPORATION AND COVENANTS

6.1     Optional Purchases by the Corporation

Subject to compliance with securities legislation and approval of applicable regulatory authorities, the
Corporation may from time to time purchase by private contract or otherwise any of the Special
Warrants. Any such purchase shall be made at the lowest price or prices at which, in the opinion of the
directors, such Special Warrants are then obtainable, plus reasonable costs of purchase, and may be made
in such manner, from such persons and on such other terms as the Corporation, in its sole discretion, may
determine. Any Warrant Certificates representing the Special Warrants purchased pursuant to this
Section 6.1 shall forthwith be delivered to and cancelled by the Trustee. No Special Warrants shall be
issued in replacement thereof.

6.2     General Covenants

The Corporation covenants with the Trustee that so long as any Special Warrants remain outstanding:

(a)     it will reserve and keep available a sufficient number of Common Shares and Warrants for the
        purpose of enabling it to satisfy its obligations to issue Common Shares and Warrants upon the
        exercise of the Special Warrants and to satisfy its obligations to issue Common Shares upon the
        exercise of the Warrants;

(b)     it will cause the Common Shares and Warrants and the certificates representing the Common
        Shares and Warrants from time to time acquired pursuant to the exercise of the Special Warrants
        to be duly issued and delivered in accordance with the Warrant Certificates and the terms hereof;

(c)     all Common Shares and Warrants which shall be issued upon exercise of the right to acquire
        provided for herein and in the Warrant Certificates and all Common Shares issued upon exercise
        of the Warrants shall be fully paid and non-assessable;

(d)     it will maintain its corporate existence or the corporate existence of any successor corporation
        until at least [date];

(e)     it will use reasonable commercial efforts to ensure that all Common Shares outstanding or
        issuable from time to time (including without limitation the Common Shares issuable on the
        exercise of the Special Warrants or the Warrants) continue to be or are listed and posted for
        trading on The Canadian Venture Exchange, [The Toronto Stock Exchange] or such other stock
        exchange (acceptable to the Agents) on which the Common Shares are listed and posted for
        trading;
                                                  - 22 -


(f)   it will make all requisite filings under applicable Canadian securities legislation and stock
      exchange rules, including those necessary to remain a reporting issuer not in default in each of
      the Filing Jurisdictions until at least [date] and those necessary to report the exercise of the right
      to acquire Common Shares and Warrants pursuant to Special Warrants;

(g)   it will as soon as practicable file with and use its reasonable best efforts to obtain a receipt on or
      before the Clearing Date from each of the Securities Commissions for the Prospectus so that the
      resale of Common Shares and Warrants issuable upon exercise of the Special Warrants and the
      Common Shares issuable upon exercise of the Warrants will not be subject to the prospectus
      requirements nor any “hold period” under applicable securities legislation in such Filing
      Jurisdictions (except that it is not required to take such steps solely to enable a resale of Common
      Shares and Warrants from the holdings of a “control person”, as defined in applicable securities
      laws, if a “hold period” would otherwise be applicable);

(h)   it will send written notice to the Trustee and to each holder of Special Warrants of the issuance of
      the receipts referred to in subsection 6.2(g), together with a copy of the Prospectus, specifying the
      date on which the Special Warrants expire and, in the case of the Trustee, copies of the receipts, as
      soon as practicable but, in any event, not later than five (5) Business Days after the latest date on
      which such a receipt is issued by any of the Securities Commissions, such notice to be sent by
      mail to the addresses of such holders appearing in the register of the Warrantholders maintained
      by the Trustee;

(i)   if the Corporation pays a dividend or makes any other distribution in cash or property or
      securities of the Corporation (including rights, options or warrants to acquire Common Shares or
      securities convertible into or exchangeable for Common Shares and including evidences of its
      indebtedness) to all or substantially all of the holders of Common Shares of record on a date after
      the Effective Date and prior to the exercise of the Special Warrants, the Corporation agrees that it
      will pay the same amount of such dividend or make the same distribution of cash, property or
      securities as a deposit to the Trustee, as if the Warrantholders on such date were the holders of
      the number of Common Shares which the Warrantholders are entitled to receive upon the
      exercise of the Special Warrants and such payments or other distributions shall be held and dealt
      with by the Trustee in accordance with Article IV;

(j)   it will give written notice to the Trustee and each Warrantholder specifying the particulars of
      each payment or distribution made in accordance with subsection 6.2(i), within three (3) Business
      Days of such payment or distribution;

(k)   if the Corporation shall not have received a receipt for the Prospectus on or before the Clearing
      Date, the Corporation will continue, until such time as the Common Shares and Warrants issuable
      upon the exercise or deemed exercise of the Special Warrants are not subject to a statutory “hold
      period” under applicable securities laws in the Filing Jurisdictions, to use its reasonable best
      efforts to obtain a receipt for the Prospectus from each of the Securities Commissions;

(l)   it will provide to Warrantholders copies of all documentation required to be provided by
      applicable law to registered holders of Common Shares, as if such Warrantholders were
      registered shareholders of the Corporation; and

(m)   generally, it will well and truly perform and carry out all of the acts or things to be done by it as
      provided in this Indenture.
                                                  - 23 -


6.3     Trustee’s Remuneration and Expenses

The Corporation covenants that it will pay to the Trustee from time to time reasonable remuneration for
its services hereunder and will pay or reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in the administration or execution of the
trusts hereby created (including the reasonable compensation and the disbursements of its Counsel and
all other advisers and assistants not regularly in its employ) both before any default hereunder and
thereafter until all duties of the Trustee hereunder shall be finally and fully performed, except any such
expense, disbursement or advance as may arise out of or result from the Trustee’s negligence, willful
misconduct or bad faith.

6.4     Securities Qualification Requirements

(a)     If, in the opinion of Counsel, any instrument (except as required by subsection 6.2(g)) is required
        to be filed with, or a
								
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