EXHIBIT 10.21
IVANHOE ENERGY INC.
- and -
MACQUARIE CAPITAL MARKETS CANADA LTD.
- and -
CIBC MELLON TRUST COMPANY
SPECIAL WARRANT INDENTURE
Providing for the Issue of
Special Warrants
Dated as of January 26, 2010

 

 

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TABLE OF CONTENTS

         
Article 1 INTERPRETATION
    2  
1.1 Definitions
    2  
1.2 Words Importing the Singular
    8  
1.3 Interpretation Not Affected by Headings, Etc.
    8  
1.4 Day Not a Business Day
    8  
1.5 Time of the Essence
    8  
1.6 Currency
    8  
1.7 Applicable Law
    9  
1.8 Severability
    9  
1.9 Conflicts
    9  
 
       
Article 2 THE SPECIAL WARRANTS
    9  
2.1 Creation and Issue of Special Warrants
    9  
2.2 Terms of Special Warrants
    10  
2.3 Form of Special Warrant Certificates
    10  
2.4 Signing of Special Warrant Certificates
    12  
2.5 Certification by Trustee
    12  
2.6 Special Warrants to Rank Pari Passu
    13  
2.7 Issue in Substitution for Lost Certificates, Etc.
    13  
2.8 Cancellation of Surrendered Special Warrants
    13  
2.9 Global Special Warrant Certificate and Book-Entry Only System
    14  
2.10 Special Warrantholder not a Shareholder
    15  
 
       
Article 3 REGISTRATION, TRANSFER AND OWNERSHIP OF SPECIAL WARRANTS AND EXCHANGE
OF SPECIAL WARRANT CERTIFICATES
    15  
3.1 Registration and Transfer of Fully Registered Special Warrant Certificates
    15  
3.2 Registration and Transfer of Global Special Warrant Certificates
    16  
3.3 Certain Transfers by Persons in the United States
    17  
3.4 Other Registration and Transfer Matters
    18  
3.5 Exchange of Special Warrant Certificates
    19  
3.6 No Charges for Transfer or Exchange
    19  
3.7 Ownership of Special Warrants
    19  
 
       
Article 4 CONVERSION OF SPECIAL WARRANTS
    20  
4.1 Conversion by Holder
    20  
4.2 Conversion by Trustee
    21  
4.3 Effect of Conversion
    21  
4.4 No Fractional Common Shares or Warrants
    22  
4.5 Recording
    23  
4.6 Securities Restrictions
    23  
4.7 Adjustments
    26  
 
       
Article 5 COVENANTS
    32  
5.1 General Covenants
    32  
5.2 Remuneration and Expenses of Trustee
    34  
5.3 Securities Qualification Requirements
    34  
5.4 Performance of Covenants by Trustee
    35  
 
       

 

 

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Article 6 ESCROWED FUNDS
    35  
6.1 Initial Escrowed Funds and Distribution Amounts
    35  
6.2 Qualified Investments
    35  
6.3 Release of Escrowed Funds Upon Conversion of Special Warrants Prior to
Receipt of Release and Payment Certificate
    36  
6.4 Release of Escrowed Funds Upon Receipt of Release and Payment Certificate
    37  
6.5 Release of Escrowed Funds on Termination
    37  
6.6 Direction
    38  
6.7 Early Termination of any Investment of the Escrowed Funds
    38  
6.8 Method of Disbursement and Delivery
    38  
6.9 Acknowledgements
    38  
6.10 Miscellaneous
    39  
6.11 Tax Reporting
    41  
 
       
Article 7 ENFORCEMENT
    41  
7.1 Suits by Special Warrantholder
    41  
7.2 Limitation of Liability
    41  
 
       
Article 8 MEETINGS OF SPECIAL WARRANTHOLDERS
    41  
8.1 Right to Convene Meetings
    41  
8.2 Notice
    42  
8.3 Chairman
    42  
8.4 Quorum
    42  
8.5 Power to Adjourn
    43  
8.6 Show of Hands
    43  
8.7 Poll
    43  
8.8 Voting
    43  
8.9 Regulations
    44  
8.10 The Company and Trustee may be Represented
    45  
8.11 Powers Exercisable by Extraordinary Resolution
    45  
8.12 Meaning of “Extraordinary Resolution”
    46  
8.13 Powers Cumulative
    47  
8.14 Minutes
    47  
8.15 Instruments in Writing
    47  
8.16 Binding Effect of Resolutions
    47  
8.17 Holdings by the Company and Subsidiaries Disregarded
    48  
 
       
Article 9 SUPPLEMENTAL INDENTURES AND SUCCESSOR CORPORATIONS
    48  
9.1 Provision for Supplemental Indentures for Certain Purposes
    48  
9.2 Successor Entities
    49  
 
       
Article 10 CONCERNING TRUSTEE
    49  
10.1 Trust Indenture Legislation
    49  
10.2 Rights and Duties of Trustee
    50  
10.3 Evidence, Experts and Advisers
    51  
10.4 Documents, Money, Etc. held by Trustee
    52  
10.5 Action by Trustee to Protect Interests
    52  
10.6 Trustee not Required to Give Security
    52  
10.7 Protection of Trustee
    52  
10.8 Replacement of Trustee
    54  

 

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10.9 Conflict of Interest
    55  
10.10 Acceptance of Duties and Obligations
    55  
 
       
Article 11 GENERAL
    55  
11.1 Notice to the Company and the Trustee
    55  
11.2 Notice to Special Warrantholders
    57  
11.3 Satisfaction and Discharge of Indenture
    57  
11.4 Sole Benefit of Parties and Special Warrantholders
    57  
11.5 Discretion of Directors
    58  
11.6 Counterparts and Formal Date
    58  
11.7 Assignment
    58  

 

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SPECIAL WARRANT INDENTURE
THIS INDENTURE dated as of the 26th day of January, 2010
BETWEEN:
IVANHOE ENERGY INC., a company incorporated under the laws of the Yukon
Territory
(the “Company”)
AND:
MACQUARIE CAPITAL MARKETS CANADA LTD., a company incorporated under the laws of
Ontario
(the “Agent”)
AND:
CIBC MELLON TRUST COMPANY, a trust company existing under the laws of Canada
(the “Trustee”)
WHEREAS:

A.  
The Company proposes to create and issue Special Warrants (as hereinafter
defined) to be constituted and issued as herein provided;

B.  
The Company is authorized to create and issue the Special Warrants as herein
provided and to complete the transactions contemplated herein;

C.  
All things necessary have been done and performed to make the Special Warrant
Certificates (as hereinafter defined), when certified by the Trustee and issued
and delivered as herein provided, legal, valid and binding obligations of the
Company with the benefits of and subject to the terms of this Indenture;
  D.  
The foregoing recitals are made as representations by the Company and not by the
Trustee; and

E.  
The Trustee has agreed to enter into this Indenture (as hereinafter defined) and
to hold all rights, interests and benefits contained herein for and on behalf of
those persons who from time to time become holders of Special Warrants issued
pursuant to this Indenture.

 

 

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NOW THEREFORE THIS INDENTURE WITNESSES that for good and valuable consideration
mutually given, the receipt and sufficiency of which are hereby acknowledged, by
each of the Company and the Trustee, the Company hereby appoints the Trustee as
agent for the Special Warrantholders (as hereinafter defined), to hold all
rights, interests and benefits contained herein for and on behalf of those
persons who from time to time become holders of Special Warrants issued pursuant
to this Indenture, and the Company and the Trustee hereby covenant, agree and
declare as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Indenture and in the Special Warrant Certificates, unless there is
something in the subject matter or context inconsistent therewith:
“Adjustment Period” means the period commencing on the date hereof and ending at
the Time of Expiry.
“Agency Agreement” means the agency agreement dated as of January 12, 2010
between the Company and the Agent.
“Agent” means Macquarie Capital Markets Canada Ltd.
“Applicable Legislation” means such provisions of any statute of Canada or of a
province or territory thereof, and of regulations under any such statute,
relating to trust indentures or to the rights, duties and obligations of
corporations and of trustees under trust indentures, as are from time to time in
force and applicable to this Indenture.
“Applicable Securities Laws” means, collectively, the applicable securities laws
of the Qualifying Jurisdictions, the securities laws of the United States and
the states thereof, the regulations, rules, rulings and orders made thereunder,
the applicable policy statements issued by the securities regulatory authorities
in the Qualifying Jurisdictions, the United States Securities and Exchange
Commission and the securities legislation and policies of each other relevant
jurisdiction.
“Beneficial Holder” means any person who holds a beneficial interest in a Global
Special Warrant Certificate as shown on the books of the Depository or a
Participant.
“Book-Entry Only System” means the book-based securities transfer system
administered by a Depository in accordance with its operating procedures in
force from time to time.
“Business Day” means any day that is not a Saturday, Sunday or statutory holiday
in Vancouver, British Columbia, or a day when the principal office of the
Trustee in such city is not generally open to the public for the transaction of
business.

 

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“Common Shares” means the fully paid and non-assessable common shares of the
Company as constituted on the date hereof, provided that, in the event of any
adjustment pursuant to Section 4.7 hereof, Common Shares will thereafter mean or
include, as the case may be, the shares, other securities or property resulting
from such adjustment.
“Company” means Ivanhoe Energy Inc. and includes any successor corporation to or
of the Company.
“Company’s auditors” means the firm of accountants appointed by the shareholders
of the Company as the auditors of the Company from time to time.
“Conversion Date” means with respect to:

  (i)  
any Special Warrant exchanged by the holder thereof pursuant to Section 4.1(a)
hereof, the day on which the Special Warrant Certificate representing such
Special Warrant is surrendered to the Trustee in accordance with the provisions
of Section 4.1 hereof; and

  (ii)  
any Special Warrant exchanged by the Trustee in accordance with Section 4.2(a)
hereof, the day on which the Trustee is required to exchange such Special
Warrant pursuant to Section 4.2(a) hereof.

“counsel” means a barrister or solicitor or an attorney-at-law or a firm of
barristers and solicitors or attorneys-at-law, who may be counsel for the
Company, acceptable to the Trustee, acting reasonably.
“Current Market Price” of a Common Share at any date means the price per share
equal to the volume weighted average price at which the Common Shares have
traded on the TSX for any 20 consecutive Trading Days immediately preceding such
date or, if the Common Shares are not listed on the TSX, on any other stock
exchange or securities market on which the Common Shares are then listed as may
be selected by the directors, or, if the Common Shares are not listed on any
stock exchange, then on the over-the-counter market, with the weighted average
price per Common Share being determined by dividing the aggregate sale price of
all Common Shares sold on such stock exchange or market, as the case may be,
during the such 20 consecutive Trading Day period by the aggregate number of
Common Shares so sold or, if not traded on any recognized market or exchange, as
determined by the directors, acting reasonably.
“Depository” means CDS Clearing and Depository Services Inc. (“CDS”), or its
successor, or any other depository offering a book based securities registration
and transfer system similar to that administered by CDS which the Company, with
the consent of the Trustee, acting reasonably, may designate.
“director” means a director of the Company for the time being, and reference
without more to an action by the directors means an action by the directors of
the Company as a board or, to the extent empowered, by a committee of the board,
in each case by resolution duly passed.

 

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“Earnings” means any income (including interest or gains) net of any related
expenses derived from investing the Initial Escrowed Funds.
“Effective Date” means the date of this Indenture.
“Escrow Agent” means the role of the Trustee to, inter alia, hold and disburse
the Escrowed Funds on behalf of the Company and the Special Warrantholders
pursuant to the terms and conditions of this Indenture.
“Escrowed Funds” at any time means the aggregate of the Initial Escrowed Funds
and any Earnings derived from time to time from holding the Initial Escrowed
Funds less any amounts released to the Company and the Agent from time to time
pursuant to Section 6.3.
“Expiry Date” means the earliest of:

  (i)  
the date which is the first Business Day following the Qualification Date; and
    (ii)  
the Release Deadline.

“Extraordinary Resolution” has the meaning attributed thereto in Sections 8.12
and 8.15 hereof.
“Final Prospectus” means the (final) short form prospectus of the Company which
qualifies the distribution of the Underlying Securities in the Qualifying
Jurisdictions and includes any amendments or supplements thereto.
“Final Receipt” means the final decision document in respect of the Final
Prospectus issued in accordance with Multilateral Instrument 11-102 — Passport
System and National Policy 11-202 — Process for Prospectus Reviews in Multiple
Jurisdictions by the Ontario Securities Commission and the Company’s principal
regulator on its own behalf and on behalf of the regulators in the Qualifying
Jurisdictions (other than the Ontario Securities Commission).
“Fully Registered Special Warrant Certificate” means a Special Warrant
Certificate other than a Global Special Warrant Certificate.
“Global Special Warrant Certificate” means a Special Warrant Certificate that is
issued to and registered in the name of the Depository or its nominee.
“Initial Escrowed Funds” means an amount equal to the aggregate Issue Price
received from the issue of the Special Warrants.
“Issue Price” means $3.00 per Special Warrant.

 

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“National Policy 11-202” means National Policy 11-202 — Process for Prospectus
Reviews in Multiple Jurisdictions.
“Option” has the meaning ascribed thereto in the Agency Agreement.
“Option Special Warrants” means any special warrants of the Company issued
pursuant to the exercise of the Option, such special warrants to have
substantially the same terms and conditions as the Special Warrants.
“Participant” means a person recognized by the Depository as a participant in
the Book-Entry Only System administered by the Depository.
“Passport System” means the passport review system established under
Multilateral Instrument 11-102 Passport System.
“Person” includes an individual, corporation, partnership, trustee,
unincorporated organization or any other entity whatsoever, and words importing
persons have a similar extended meaning.
“Qualification Date” means the date on which the British Columbia Securities
Commission as the principal regulator under National Policy 11-202 and the
Passport System has issued the Final Receipt.
“Qualified Investments” means short term interest bearing or discount debt
obligations issued or guaranteed by the Government of Canada, by a Province of
Canada or, provided that such obligation is rated at least R-1 (high) by DBRS
Inc. or an equivalent rating service, by a Canadian chartered bank (which may
include a Canadian chartered bank which is an Affiliate (as defined in
Section 6.2(b)) of the Trustee).
“Qualifying Jurisdictions” means the provinces of Canada where purchasers of
Special Warrants are located and any other jurisdiction in Canada in which the
Company is required to file the Final Prospectus pursuant to the Agency
Agreement, or otherwise.
“Regulation D” means Regulation D under the U.S. Securities Act.
“Regulation S” means Regulation S under the U.S. Securities Act.
“Release and Payment Certificate” means a certificate executed by the Company in
the form attached as Schedule C hereto and addressed to the Trustee and the
Agent and acknowledged by the Agent confirming that the Release Condition has
been satisfied and directing the Trustee to release the Escrowed Funds in
satisfaction of the commission payable to the Agent pursuant to the Agency
Agreement, and the remainder to the Company.

 

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“Release Condition” means the filing and clearance of the Final Prospectus, as
evidenced by the Final Receipt.
“Release Deadline” means 5:00 p.m. (Toronto time) on the date which is 30 days
from the date of this Indenture.
“SEC” means the Securities and Exchange Commission in the United States.
“Securities Commissions” means, collectively, the securities regulatory
authorities of the Qualifying Jurisdictions.
“Share Rate” means the Common Shares issuable pursuant to the conversion of the
Special Warrants in accordance with Section 2.2 hereof, subject to adjustment in
accordance with Section 4.7 hereto.
“Special Warrant Certificate” means a certificate representing one or more
Special Warrants substantially in the form of the certificate attached hereto as
Schedule A.
“Special Warrantholder” or “holders” means the persons for the time being
entered in a register of holders described in Section 3.1 hereof as holders of
Special Warrants.
“Special Warrantholders’ Request” means an instrument, signed in one or more
counterparts by Special Warrantholders who hold in the aggregate not less than
10% of the total number of Special Warrants then outstanding, requesting the
Trustee to take some action or proceeding specified therein.
“Special Warrants” means the special warrants created and issued pursuant to
Sections 2.1(a) and 2.1(b) hereof and authorized for issue hereunder and
represented by Special Warrant Certificates issued and certified in accordance
with the provisions hereof and that have not at the particular time expired, or
been converted into Underlying Securities.
“Subsidiary of the Company” means any corporation or other corporate entity of
which Voting Shares carrying more than 50% of the votes attached to all
outstanding Voting Shares of such corporation are owned, directly or indirectly,
other than by way of security only, by one or more of the Company and any
Subsidiary of the Company, regardless of whether the Company or such Subsidiary
of the Company is not contractually or otherwise prohibited or restricted from
exercising sufficient of the voting rights attached to such Voting Shares to
elect at least a majority of the directors of such corporation.
“Termination Payment Time” means 5:00 p.m. (Toronto time) on the second Business
Day after the Release Deadline if the Release Condition has not been satisfied
at or prior to the Release Deadline.

 

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“this Special Warrant Indenture”, “this Indenture”, “hereto”, “hereunder”,
“hereof”, “herein”, “hereby” and similar expressions mean or refer to this
Special Warrant Indenture and any indenture, deed or instrument supplemental or
ancillary hereto, and the expressions “article”, “section”, “subsection”,
“paragraph”, “subparagraph”, “clause” and “subclause” followed by a number mean
the specified article, section, subsection, paragraph, subparagraph, clause or
subclause of this Indenture.
“Time of Expiry” means 5:00 p.m. (Toronto time) on the Expiry Date.
“Trading Day”, with respect to any stock exchange or over-the-counter market,
means a day on which shares may be traded through the facilities of such stock
exchange or in such over-the-counter market and otherwise means a day on which
shares may be traded through the facilities of the principal stock exchange on
which the Common Shares are then listed (or, if the Common Shares are not then
listed on any stock exchange, then in the over-the-counter market).
“Trustee” means CIBC Mellon Trust Company, including its successors and assigns.
“TSX” means the Toronto Stock Exchange.
“Underlying Securities” means the Common Shares and Warrants issuable pursuant
to the Special Warrants at or before the Time of Expiry.
“United States” means the United States, as that term is defined in Rule 902(1)
of Regulation S.
“U.S. Accredited Investor” means an “Accredited Investor” as defined in Rule
501(a) of Regulation D.
“U.S. Person” means a U.S. person, as that term is defined in Rule 902(k)
Regulation S.
“U.S. Purchaser” means (i) a person in the United States, or (ii) a U.S. Person
or person purchasing on behalf, or for the benefit or account, of any U.S.
Person or person in the United States.
“U.S. Securities Act” means the United States Securities Act of 1933, as
amended.
“Voting Shares” of any corporation means shares of one or more classes or series
of a class of shares of such corporation carrying voting rights under all
circumstances (and not by reason of the happening of a contingency) sufficient
if exercised to elect all of the directors of such corporation, irrespective of
whether or not shares of any other class or classes will have or may have the
right to vote for directors by reason of the happening of any contingency.

 

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“Warrant Indenture” means the warrant indenture among the Company, the Agent and
the Trustee to be dated as of the date hereof which will govern the Warrants.
“Warrants” means the Common Share purchase warrants of the Company, with each
whole Warrant entitling the holder thereof, subject to the terms and conditions
of the Warrant Indenture, to purchase one (1) Share at a price of $3.16 at any
time on or before the first anniversary of the Effective Date.
“Written Order of the Company”, “Written Request of the Company”, “Written
Consent of the Company”, “Written Direction of the Company” and “Certificate of
the Company” mean a written order, request, consent, direction and certificate,
respectively, signed in the name of the Company by any director or officer of
the Company or by any other individual to whom such signing authority is
delegated by the directors from time to time, and may consist of one or more
instruments so executed respectively.
1.2 Words Importing the Singular
Words importing the singular include the plural and vice versa and words
importing a particular gender or neuter include both genders and neuter.
1.3 Interpretation Not Affected by Headings, Etc.
The division of this Indenture into articles, sections, subsections, paragraphs,
subparagraphs, clauses and subclauses, the provision of a table of contents and
the insertion of headings are for convenience of reference only and will not
affect the construction or interpretation of this Indenture.
1.4 Day Not a Business Day
If the day on or before which any action which would otherwise be required to be
taken hereunder is not a Business Day in the place where the action is required
to be taken, that action will be required to be taken on or before the requisite
time on the next succeeding day that is a Business Day.
1.5 Time of the Essence
Time will be of the essence in all respects in this Indenture and the Special
Warrant Certificates.
1.6 Currency
All dollar amounts herein and in the Special Warrant Certificates are expressed
in Canadian dollars.

 

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1.7 Applicable Law
This Indenture and the Special Warrant Certificates will be construed and
enforced in accordance with the laws prevailing in the Province of British
Columbia and the federal laws of Canada applicable therein and will be treated
in all respects as British Columbia contracts.
1.8 Severability
If any provision of this Indenture shall be held by any court of competent
jurisdiction to be invalid or unenforceable, in whole or in part, such
invalidity or unenforceability shall not affect the validity or enforceability
of the remaining provisions, or part thereof, of this Indenture and such
remaining provisions, or part thereof, shall remain enforceable and binding.
1.9 Conflicts
In the event of any conflict or inconsistency between the provisions of this
Indenture and the Special Warrant Certificates, the provisions of this Indenture
will govern.
ARTICLE 2
THE SPECIAL WARRANTS
2.1 Creation and Issue of Special Warrants

  (a)  
Creation of Special Warrants: 41,666,667 Special Warrants entitling the holders
thereof to be issued, subject to adjustment in accordance with the provisions of
this Indenture, an aggregate of (i) 41,666,667 Common Shares and (ii) 10,416,667
Warrants, together with such additional indeterminate number of Underlying
Securities as may be required to be issued pursuant to any adjustment required
to be made by the provisions of Section 4.7 hereof on the terms and subject to
the conditions herein provided, are hereby created and authorized for issue at a
price of $3.00 for each Special Warrant.

  (b)  
Certification of Special Warrants: Upon the issue of the Special Warrants and
upon receipt of the issue price therefor, one or more Global Special Warrant
Certificates will be executed by the Company and delivered to the Trustee,
certified by the Trustee upon the Written Order of the Company and delivered by
the Trustee to the Company or to the order of the Company pursuant to a Written
Direction of the Company, without any further act of or formality on the part of
the Company and without the Trustee receiving any consideration therefor.

 

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2.2 Terms of Special Warrants

  (a)  
Conversion Terms: Subject to Section 4.7 hereof, each Special Warrant issued
hereunder will entitle the holder thereof, upon the conversion thereof in
accordance with the provisions of Article 4 hereof, and without payment of any
additional consideration, to be issued, one (1) Common Share and one quarter of
one (0.25) of one Warrant.

  (b)  
Adjustment: The number of Underlying Securities issued upon the conversion of
the Special Warrants in accordance with the provisions hereof will be adjusted
in accordance with Section 4.7 hereof.

2.3 Form of Special Warrant Certificates

  (a)  
Form: The Special Warrants (including the certificate of the Trustee endorsed
thereon) shall be issued pursuant to one or more Global Special Warrant
Certificates substantially in the form of the certificate attached hereto as
Schedule A, will be dated as of the date of issuance, will bear such
distinguishing letters and numbers as the Company, with the approval of the
Trustee and the Depository, may prescribe and such legends as permitted under
this Indenture and will be issuable in any whole number denomination.

  (b)  
Production: The Global Special Warrant Certificates may be engraved,
lithographed or printed (the expression “printed” including for purposes hereof
both original typewritten material as well as mimeographed, mechanically,
photographically, photostatically or electronically reproduced, typewritten or
other written material), or partly in one form and partly in another, as the
Company may determine.

  (c)  
Legends: Certificates representing Special Warrants, as well as all certificates
issued in exchange for or in substitution of such certificates representing
Special Warrants, will, if directed by the Company, bear the following legend:

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST
NOT TRADE THE SECURITY BEFORE MAY 26, 2010.”

 

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  (d)  
Additional United States Legend: Certificates representing Special Warrants
originally issued to a U.S. Person, a person in the United States, or a person
purchasing for the account or benefit of a U.S. Person or a person in the United
States, as well as all certificates issued in exchange for or in substitution of
such certificates representing Special Warrants, will bear the following
additional legend:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY
PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH
SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE
COMPANY, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION
S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH CANADIAN LAWS AND
REGULATIONS, (C) INSIDE THE UNITED STATES, PURSUANT TO THE EXEMPTION FROM
REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF
AVAILABLE, IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS OF THE UNITED
STATES, OR (D) INSIDE OR OUTSIDE THE UNITED STATES, PURSUANT TO ANOTHER
EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE
STATE SECURITIES LEGISLATION AFTER PROVIDING A LEGAL OPINION SATISFACTORY TO THE
COMPANY THAT SUCH TRANSFER IS EXEMPT FROM OR OTHERWISE NOT SUBJECT TO
REGISTRATION UNDER THE U.S. SECURITIES ACT AND APPLICABLE SECURITIES LAWS.”

  (e)  
Global Special Warrant Certificate Legend: Special Warrant Certificates in the
form of a Global Special Warrant Certificate, as well as all certificates issued
in exchange for or in substitution of such certificates representing Special
Warrants, will, if directed by the Company, bear the following legend:

“UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF CDS
CLEARING AND DEPOSITARY SERVICES INC. (“CDS”) TO IVANHOE ENERGY INC. (THE
“ISSUER”) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IN RESPECT THEREOF IS REGISTERED IN THE NAME OF CDS &
CO., OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
CDS (AND ANY PAYMENT IS MADE TO CDS & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED HOLDER HEREOF, CDS & CO., HAS A PROPERTY INTEREST IN THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HEREIN AND IT IS A VIOLATION OF ITS RIGHTS FOR
ANOTHER PERSON TO HOLD, TRANSFER OR DEAL WITH THIS CERTIFICATE.”

 

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  (f)  
Registration of the Special Warrants and the Underlying Securities: The Trustee
understands and acknowledges that the Special Warrants and the Underlying
Securities have not been and will not be registered under the U.S. Securities
Act or applicable state securities laws and the Special Warrants must not be
converted in the United States unless the Special Warrants and the Underlying
Securities have been registered under the U.S. Securities Act and any applicable
state securities laws or unless an exemption from such registration is
available.

  (g)  
Rights: Each Special Warrant will entitle the holder thereof to such other
rights and privileges which are set forth in this Indenture.

2.4 Signing of Special Warrant Certificates

  (a)  
Signing Officers: The Special Warrant Certificates will be signed by any one
officer of the Company or any one director or by any other individual to whom
such signing authority is delegated by the directors from time to time.

  (b)  
Signatures: The signature of any officer of the Company or director or any
individual referred to in Section 2.4(a) hereof may be a manual signature,
engraved, lithographed or printed in facsimile and Special Warrant Certificates
bearing such facsimile signature will, subject to Section 2.5 hereof, be binding
on the Company as if they had been manually signed by such officer of the
Company or director or individual.

  (c)  
No Longer Officer: Notwithstanding that any individual whose manual or facsimile
signature appears on a Special Warrant Certificate as one of the officers of the
Company or directors referred to in Section 2.4(a) hereof no longer holds the
same or any other office with, or is no longer a director of, the Company at the
date of issue of any Special Warrant Certificate or at the date of certification
or delivery thereof, such Special Warrant Certificate will, subject to
Section 2.5 hereof, be valid and binding on the Company.

2.5 Certification by Trustee

  (a)  
Certification: No Special Warrant Certificate will be issued or, if issued, will
be valid for any purpose or entitle the holder to the benefits hereof or thereof
until it has been certified by manual signature by or on behalf of the Trustee
substantially in the form of the certificate attached hereto as Schedule A or in
such other form as may be approved by the Trustee. The certification by the
Trustee on a Special Warrant Certificate will be conclusive evidence as against
the Company that such Special Warrant Certificate has been issued hereunder and
that the holder thereof is entitled to the benefits hereof.

  (b)  
Certification No Representation: The certification by the Trustee on any Special
Warrant Certificate issued hereunder will not be construed as a representation
or warranty by the Trustee as to the validity of this Indenture or such Special
Warrant Certificate (except the due certification thereof) or as to the
performance by the Company of the obligations thereof under this Indenture, and
the Trustee will in no respect be liable or answerable for the use made of any
Special Warrant Certificate or of the consideration therefor, except as
otherwise specified herein.

 

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2.6 Special Warrants to Rank Pari Passu
All Special Warrants will rank pari passu, whatever may be the actual dates of
issue of the Special Warrant Certificates by which they are represented. All
Special Warrants will also rank pari passu with the Option Special Warrants.
2.7 Issue in Substitution for Lost Certificates, Etc.

  (a)  
Substitution: If any Special Warrant Certificate becomes mutilated or is lost,
destroyed or stolen, the Company, subject to applicable law and to
Section 2.7(b) hereof, will issue, and thereupon the Trustee will certify and
deliver, a new Special Warrant Certificate of like denomination and tenor and
bearing the applicable legends as the one mutilated, lost, destroyed or stolen
in exchange for and in place of and on surrender and cancellation of such
mutilated certificate or in lieu of and in substitution for such lost, destroyed
or stolen certificate and the Special Warrants evidenced thereby will be
entitled to the benefits hereof and will rank equally in accordance with its
terms with all other Special Warrants issued or to be issued hereunder.

  (b)  
Cost of Substitution: The applicant for the issue of a new Special Warrant
Certificate pursuant to this Section 2.7 will bear the reasonable cost of the
issue thereof and, in the case of loss, destruction or theft, will as a
condition precedent to the issue thereof:

  (i)  
furnish to the Company and to the Trustee such evidence of ownership and of the
loss, destruction or theft of the Special Warrant Certificate to be replaced as
is satisfactory to the Company and to the Trustee in their discretion, acting
reasonably;

  (ii)  
if so requested, furnish an indemnity and surety bond in amount and form
satisfactory to the Company and to the Trustee in their discretion, acting
reasonably; and

  (iii)  
if so requested, pay the reasonable charges of the Company and the Trustee in
connection therewith.

2.8 Cancellation of Surrendered Special Warrants
All Special Warrant Certificates surrendered to the Trustee in accordance with
the provisions of this Indenture will be cancelled by the Trustee and, if
requested in writing by the Company, the Trustee will furnish the Company with a
cancellation certificate identifying each Special Warrant Certificate so
cancelled, the number of Special Warrants represented thereby and the number of
Underlying Securities, if any, issued pursuant to such Special Warrants.

 

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2.9 Global Special Warrant Certificate and Book-Entry Only System

  (a)  
Global Special Warrant Certificate: Unless the Book-Entry Only System is
terminated or required to do so by applicable law:

  (i)  
Special Warrant Certificates will only be issued in the form of one or more
Global Special Warrant Certificates, which will be registered in the name of and
deposited with the Depository or its nominee; and

  (ii)  
Beneficial Holders shall not be entitled to have Special Warrants registered in
their names, shall not receive or be entitled to receive Special Warrant
Certificates in definitive form and shall not be considered owners or holders
thereof under this Indenture or any supplemental indenture except in
circumstances where the Depository resigns or is removed from its responsibility
and the Trustee is unable or does not wish to locate a qualified successor.
Beneficial interests in a Global Special Warrant Certificate will be represented
only through the Book-Entry Only System. Transfers of Special Warrants between
Participants shall occur in accordance with the Depository’s rules and
procedures and pursuant to an exemption under Applicable Securities Laws. The
Company and the Trustee shall not have any responsibility or liability for any
aspects of the records relating to or payments made by the Depository, or its
nominee, on account of the beneficial interests in the Special Warrants. Nothing
herein shall prevent the owners of beneficial interests in the Special Warrants
from voting such Special Warrants using duly executed proxies.

  (b)  
Certain Actions, Notices and Payments: All references herein to actions by,
notices given or payments made to Special Warrantholders shall, where Special
Warrants are held through the Depository, refer to actions taken by, or notices
given or payments made to, the Depository upon instruction from the Participants
in accordance with its rules and procedures. For the purposes of any provision
hereof requiring or permitting actions with the consent of or at the direction
of Special Warrantholders evidencing a specified percentage of the aggregate
Special Warrants outstanding, such direction or consent may be given by holders
of Special Warrants acting through the Depository and the Participants owning
Special Warrants evidencing the requisite percentage of the Special Warrants.
The rights of a Special Warrantholder whose Special Warrants are held through
the Depository shall be exercised only through the Depository and the
Participants and shall be limited to those established by law and agreements
between such holders and the Depository and the Participants upon instructions
from the Participants. Each of the Trustee and the Company may deal with the
Depository for all purposes as the authorized representative of the respective
Special Warrantholders and such dealing with the Depository shall constitute
satisfaction or performance, as applicable, of their respective obligations
hereunder. For so long as Special Warrants are held through the Depository, if
any notice or other communication is required to be given to Special
Warrantholders, the Trustee will give such notices and communications to the
Depository.

 

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  (c)  
Resignation or Removal of the Depository: If the Depository resigns or is
removed from its responsibility as depository and the Trustee is unable or does
not wish to locate a qualified successor, the Depository shall surrender the
Global Special Warrant Certificates to the Trustee with instructions for
registration of Special Warrants in the name and in the amount specified by the
Depository and the Company shall issue and the Trustee shall certify and deliver
the aggregate number of Special Warrants then outstanding in the form of Fully
Registered Special Warrant Certificates representing such Special Warrants.

2.10 Special Warrantholder not a Shareholder
Except as provided in Sections 4.7 and 5.1(m), nothing in this Indenture or in
the holding of a Special Warrant represented by a Special Warrant Certificate,
or otherwise, will, in itself, be construed as conferring on any Special
Warrantholder any right or interest whatsoever as a shareholder of the Company,
including but not limited to any right to vote at, to receive notice of, or to
attend, any meeting of shareholders.
ARTICLE 3
REGISTRATION, TRANSFER AND OWNERSHIP OF SPECIAL WARRANTS AND
EXCHANGE OF SPECIAL WARRANT CERTIFICATES
3.1 Registration and Transfer of Fully Registered Special Warrant Certificates

  (a)  
Register: With respect to Special Warrants issued pursuant to Fully Registered
Special Warrant Certificates, the Company will cause to be kept by the Trustee
at its principal office in Vancouver, British Columbia:

  (i)  
a register of holders in which will be entered 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 will be entered.

  (b)  
Transfer: Subject to Section 3.3, no transfer of any Fully Registered Special
Warrant Certificates will be valid unless entered on the register of transfers
referred to in Section 3.1(a) hereof, or on any branch register maintained
pursuant to Section 3.4(e) hereof, upon surrender to the Trustee of the Special
Warrant Certificate representing such Special Warrant, with a properly completed
transfer form in substantially the form attached to the Special Warrant
Certificate executed by the registered holder or the executors, administrators
or other legal representatives thereof or the attorney thereof duly appointed by
an instrument in writing in form and executed in a manner satisfactory to the
Trustee, acting reasonably, and, upon compliance with such requirements and such
other reasonable requirements as the Trustee may prescribe, such transfer will
be duly noted on one of such registers by the Trustee.

 

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3.2 Registration and Transfer of Global Special Warrant Certificates

  (a)  
Register: With respect to Special Warrants issuable in whole or in part as one
or more Global Special Warrant Certificates, the Company shall cause to be kept
by and at the principal offices of the Trustee in Vancouver, British Columbia a
register in which shall be entered the name and address of the holder of each
such Global Special Warrant Certificate (being the Depository, or its nominee,
for such Global Special Warrant Certificate) as holder thereof and particulars
of the Global Special Warrant Certificate held by it, and of all transfers
thereof. If any Special Warrants are at any time not represented by a Global
Special Warrant Certificate, the provisions of Section 3.1 shall govern with
respect to registrations and transfers of such Special Warrants.

  (b)  
Transfer: Notwithstanding any other provision of this Indenture, a Global
Special Warrant Certificate may not be transferred by the registered holder
thereof and accordingly, no definitive certificates shall be issued to
Beneficial Holders except in the following circumstances or as otherwise
specified in a resolution of the directors of the Company or supplemental
indenture relating to the Special Warrants:

  (i)  
Global Special Warrant Certificates may be transferred by a Depository to a
nominee of such Depository or by a nominee of a Depository to such Depository or
to another nominee of such Depository or by a Depository or its nominee to a
successor Depository or its nominee;

  (ii)  
Global Special Warrant Certificates may be transferred at any time after the
Depository for such Global Special Warrant Certificates (a) has notified the
Trustee, or the Company has notified the Trustee, that it is unwilling or unable
to continue as Depository for such Global Warrant Certificates, or (b) ceases to
be eligible to be a Depository, provided that at the time of such transfer the
Company has not appointed a successor Depository for such Global Special Warrant
Certificates;

  (iii)  
Global Special Warrant Certificates may be transferred at any time after the
Company has determined, in its sole discretion, to terminate the Book-Entry Only
System in respect of such Global Special Warrant Certificates and has
communicated such determination to the Trustee in writing;

  (iv)  
Global Special Warrant Certificates may be transferred if required by applicable
law; or

  (v)  
Global Special Warrant Certificates may be transferred if the Book-Entry Only
System ceases to exist.

 

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  (c)  
Certain Matters in respect of the Book-Entry Only System: With respect to the
Global Special Warrant Certificates, unless and until definitive certificates
have been issued to Beneficial Holders pursuant to subsection 3.2(b):

  (i)  
the Company and the Trustee may deal with the Depository for all purposes as the
sole holder of such Special Warrants and the authorized representative of the
Beneficial Holders;

  (ii)  
the rights of the Beneficial Holders shall be exercised only through the
Depository and shall be limited to those established by law and agreements
between such Beneficial Holders and the Depository or the Participants;

  (iii)  
the Depository will make book entry transfers among the Participants;

  (iv)  
whenever this Indenture requires or permits actions to be taken based upon
instructions or directions of Special Warrantholders evidencing a specified
percentage of the outstanding Special Warrants, the Depository shall be deemed
to be counted in that percentage only to the extent that it has received
instructions to such effect from the Beneficial Holders or the Participant, and
has delivered such instructions to the Trustee; and

  (v)  
upon surrender by the Depository of the certificate(s) representing the Global
Special Warrant Certificates and receipt of new registration instructions from
the Depository, the Trustee shall deliver Fully Registered Warrant Certificates
for such Special Warrants to the holders thereof in accordance with the new
registration instructions and thereafter, the registration and transfer of such
Special Warrants will be governed by Section 3.1 and the remaining Sections of
this Article 3.

3.3 Certain Transfers by Persons in the United States

  (a)  
If the Special Warrant Certificate surrendered pursuant to Section 3.1(b) or
Section 3.2(b) hereof bears the legend set forth in Section 2.3(d) hereof and:

  (i)  
the holder thereof is selling Special Warrants represented thereby outside the
United States in compliance with the requirements of Rule 904 of Regulation S
and in compliance with applicable Canadian laws and regulations, and provided
that the Company is a “foreign issuer” within the meaning of Regulation S at the
time of sale, the Trustee will not register such transfer unless the holder
thereof delivers to the Trustee a declaration in the form set forth as
Schedule B hereof, together with such additional information as the Trustee may
reasonably request, in which case the Special Warrant Certificate representing
the Special Warrants transferred to the transferee will only bear the legend set
forth in Section 2.3(c) hereof; or

 

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  (ii)  
the holder thereof is selling Special Warrants represented thereby in compliance
with the requirements of Rule 144 under the U.S. Securities Act, the legend set
forth in Section 2.3(d) hereof may be removed by delivery to the Trustee and the
Company of an opinion of counsel, of recognized standing reasonably satisfactory
to the Company, that such legend is no longer required under applicable
requirements of the U.S. Securities Act or state securities laws.

3.4 Other Registration and Transfer Matters

  (a)  
Register of Transfers: The transferee of any Special Warrant will, after
surrender to the Trustee of the Special Warrant Certificate representing such
Special Warrant as required by Section 3.1(b) hereof and upon compliance with
all other conditions in respect thereof required by this Indenture or by law, be
entitled to be entered on the register of holders referred to in Section 3.1(a)
hereof, or on any branch register of holders maintained pursuant to
Section 3.4(e) hereof, as the owner of such Special Warrant free from all
equities or rights of set-off or counterclaim between the Company and the
transferor or any previous holder of such Special Warrant, except in respect of
equities of which the Company is required to take notice by statute or by order
of a court of competent jurisdiction.

  (b)  
Refusal of Registration: The Company will be entitled, and may direct the
Trustee, to refuse to recognize any transfer, or enter the name of any
transferee, of any Special Warrant on the registers referred to in
Section 3.1(a) hereof or on any branch register maintained pursuant to
Section 3.4(e) hereof if such transfer would constitute a violation of the
securities laws of any jurisdiction or the instruments, rules, regulations or
policies of any regulatory authority (including the TSX or any other stock
exchange or securities market upon which the Common Shares are listed and posted
for trading or which an application has been made to list the Common Shares)
having jurisdiction.

  (c)  
No Notice of Trusts: Subject to applicable law, neither the Company nor the
Trustee will be bound to take notice of or see to the execution of any trust,
whether express, implied or constructive, in respect of any Special Warrant, and
may transfer any Special Warrant on the direction of the person registered as
the holder thereof, whether named as trustee or otherwise, as though that person
were the beneficial owner thereof.

  (d)  
Inspection: The registers referred to in Section 3.1(a) hereof, and any branch
register maintained pursuant to Section 3.4(e) hereof, will be open for
inspection by the Company, the Agent and any Special Warrantholder during the
normal business hours of the Trustee. The Trustee will from time to time when
requested to do so in writing by the Company or any Special Warrantholder (upon
payment of the reasonable charges of the Trustee) furnish the Company or such
Special Warrantholder with a list of the names and addresses of holders of
Special Warrants entered on such registers and showing the number of Special
Warrants held by each such holder.

 

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  (e)  
Location of Registers: The Company may at any time and from time to time change
the place at which the registers referred to in Section 3.1(a) hereof are kept,
cause branch registers of holders or transfers to be kept, in each case subject
to the approval of the Trustee, at other places and close such branch registers
or change the place at which such branch registers are kept. Notice of all such
changes or closures will be given by the Company to the Trustee, the Agent and
to the holders of Special Warrants in accordance with Section 11.2 hereof.

3.5 Exchange of Special Warrant Certificates

  (a)  
Exchange: One or more Special Warrant Certificates (other than Global Special
Warrant Certificates) may at any time prior to the Time of Expiry, on compliance
with the reasonable requirements of the Trustee, be exchanged for one or more
Special Warrant Certificates of different denominations representing in the
aggregate the same number of Special Warrants as the Special Warrant Certificate
or Special Warrant Certificates being exchanged.

  (b)  
Place of Exchange: Special Warrant Certificates may be exchanged only at the
principal offices of the Trustee in Vancouver, British Columbia or Toronto,
Ontario or at any other place designated by the Company with the approval of the
Trustee.

  (c)  
Cancellation: Any Special Warrant Certificate tendered for exchange pursuant to
this Section 3.5 will be surrendered to the Trustee and cancelled.

  (d)  
Execution: The Company will sign all Special Warrant Certificates in accordance
with Section 2.4 hereof necessary to carry out exchanges pursuant to this
Section 3.5 and such Special Warrant Certificates will be certified by the
Trustee.

  (e)  
Special Warrant Certificates: Special Warrant Certificates exchanged for Special
Warrant Certificates that bear any of the legends set forth in Section 2.3
hereof will bear the same legends.

3.6 No Charges for Transfer or Exchange
No charge will be levied on a presenter of a Special Warrant Certificate
pursuant to this Indenture for the transfer of any Special Warrant or the
exchange of any Special Warrant Certificate. All costs of such transfer or
exchange will be borne by the Company.
3.7 Ownership of Special Warrants

  (a)  
Owner: Except with respect to Global Special Warrant Certificates, the Company
and the Trustee may deem and treat the person in whose name any Special Warrant
is registered as the absolute owner of such Special Warrant for all purposes,
and such person will for all purposes of this Indenture be and be deemed to be
the absolute owner thereof, and the Company and the Trustee will not be affected
by any notice or knowledge to the contrary, except as may otherwise be set forth
herein or as required by statute or by order of a court of competent
jurisdiction.

 

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  (b)  
Rights of Registered Holder: The registered holder of any Special Warrant will
be entitled to the rights represented thereby free from all equities and rights
of set-off or counterclaim between the Company and the original or any
intermediate holder thereof and all persons may act accordingly, and the issue
and delivery to any such registered holder of the Underlying Securities issuable
pursuant thereto will be a good discharge to the Company and the Trustee
therefor, and neither the Company nor the Trustee will be bound to inquire into
the title of any such registered holder.

ARTICLE 4
CONVERSION OF SPECIAL WARRANTS
4.1 Conversion by Holder

  (a)  
Conversion: Subject to the limitation set forth in Section 4.1(b) hereof and
Section 4.7 hereof, the holder of any Special Warrant may at any time prior to
the Time of Expiry exercise the right thereby conferred to be issued Underlying
Securities by surrendering to the Trustee at the principal office of the Trustee
in Vancouver, British Columbia or Toronto, Ontario, or to any other person or at
any other place designated by the Company with the approval of the Trustee,
during normal business hours on a Business Day at such place, the Special
Warrant Certificate representing such Special Warrant, with a completed and
executed notice of conversion substantially in the form attached to such Special
Warrant Certificate.

  (b)  
Surrender: Any Special Warrant Certificate with a completed and executed notice
of conversion referred to in Section 4.1(a) hereof will be deemed to have been
surrendered to the Trustee only on personal delivery thereof to, or, if sent by
mail or other means of transmission, on actual receipt thereof by, the Trustee
or one of the other persons at the office or one of the other places specified
in Section 4.1(a) hereof.

  (c)  
Notice of Conversion: Any notice of conversion referred to in Section 4.1(a)
hereof must be signed by the Special Warrantholder, or the executors,
administrators or other legal representatives thereof or the attorney thereof
duly appointed by an instrument in writing in form and executed in a manner
satisfactory to the Trustee, acting reasonably, and, if any Underlying
Securities thereby issuable are to be issued to a person or persons other than
the Special Warrantholder, must specify the name or names and the address or
addresses of each such person or persons and the number of Underlying Securities
to be issued to each such person if more than one is so specified (and, in this
case, the signature appearing on the notice of conversion must be Signature
Guaranteed by a Schedule I Canadian chartered bank or a member of a Medallion
Guarantee program, with the stamp affixed thereon bearing the actual words
“Signature Guarantee” or “Signature Medallion Guaranteed” and otherwise be in
accordance with industry standards).

 

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  (d)  
Conversion of Less than All: The holder of any Special Warrants may exercise his
right to acquire a number of Underlying Securities less than the aggregate
number which the holder is entitled to acquire pursuant to the surrendered
Special Warrant Certificate(s). In the event of any conversion of a number of
Special Warrants less than the number which the holder is entitled to convert,
the holder of the Special Warrants upon such conversion will, in addition, be
entitled to receive, without charge therefor, a new Special Warrant
Certificate(s) in respect of the balance of the Special Warrants represented by
the surrendered Special Warrant Certificate(s) and which were not then
converted, and with respect to a Global Special Warrant Certificate, the
Depository shall make notations on the Global Special Warrant Certificate of the
Special Warrants so converted.

4.2 Conversion by Trustee

  (a)  
Conversion by Trustee: If any Special Warrant has not been converted pursuant to
Section 4.1 hereof prior to the Qualification Date, such Special Warrant will be
converted by the Trustee for and on behalf of the holder thereof and, without
any action on the part of the holder thereof (including the surrender of any
Special Warrant Certificate), and the Special Warrants will be deemed to have
been converted into Underlying Securities on the first Business Day following
the Qualification Date.

  (b)  
Rights on Conversion by Trustee: The holder of any Special Warrant converted
pursuant to Section 4.2(a) hereof will have no further rights as a Special
Warrantholder except to receive the certificates representing the Underlying
Securities issued upon the conversion thereof to such holder in accordance with
Sections 4.3 and 4.4 hereof.

  (c)  
Direction of Trustee: By taking delivery of a Special Warrant Certificate, the
holder of the Special Warrants represented thereby is deemed to have irrevocably
authorized and directed the Trustee to convert such Special Warrants pursuant
to, and in accordance with, Section 4.2(a) hereof.

4.3 Effect of Conversion

  (a)  
Effect of Conversion: Upon the conversion of any Special Warrants in accordance
with Section 4.1 or Section 4.2 hereof, the Underlying Securities thereby
issuable will be deemed to have been issued, and the person or persons to whom
such Underlying Securities are to be issued will be deemed to have become the
holder or holders of record thereof, on the Conversion Date, unless the transfer
registers maintained by or on behalf of the Company for the Common Shares are
closed on that date, in which case such Underlying Securities will be deemed to
have been issued, and such person or persons will be deemed to have become the
holder or holders of record thereof, on the date on which such transfer
registers are reopened, but such Underlying Securities will be issued on the
basis of the number of Underlying Securities to which such person or persons
were entitled on the Conversion Date. The certificates representing the
Underlying Securities which are issued to a holder of Special Warrants upon the
conversion of Special Warrants by the Trustee pursuant to Section 4.2(a) hereof
will be issued in the name of such holder.

 

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  (b)  
Certificates and Customer Confirmations: Within three Business Days after the
Conversion Date:

  (i)  
the Trustee will mail to the person or persons in whose name or names the
Underlying Securities thereby issued have been issued, at the respective
addresses thereof, or, if so specified, deliver to such person or persons at the
place where a Special Warrant Certificate representing Special Warrants was
surrendered, certificates representing the Underlying Securities so issued; and

  (ii)  
in the case of the conversion of Special Warrants under a Global Special Warrant
Certificate, the Company shall cause the Depository to be entered and issued, as
the case may be, to the person or person in whose name or names such Underlying
Securities have been issued, a Book-Entry Only System customer confirmation.

  (c)  
Issue to Other than Holder: If any Underlying Securities issuable pursuant to
any Special Warrants are to be issued to a person or persons other than the
Special Warrantholder, the Special Warrantholder must pay to the Company an
amount equal to all exigible transfer taxes or other government charges, and
neither the Company nor the Trustee will be required to issue or deliver any
certificates representing any such Underlying Securities unless or until such
amount has been so paid or the Special Warrantholder has established to the
satisfaction of the Company in its discretion, acting reasonably, that such
taxes and charges have been paid or that no such taxes or charges are owing.

4.4 No Fractional Common Shares or Warrants

  (a)  
The Company will not, whether pursuant to an adjustment in accordance with
Section 4.7 hereof or under any other circumstance, be obligated after the
aggregation of the number of Common Shares and Warrants to be issued to each
holder of Special Warrants to issue any fraction of a Common Share or Warrant on
the conversion of Special Warrants. If a holder of a Special Warrant would
otherwise be entitled to a fractional Common Share or Warrant pursuant to the
conversion of the Special Warrants, the number of Common Shares and Warrants to
be issued will be rounded down to the next whole number, if the holder is
entitled to receive less than 0.5 of a Common Share or Warrant and rounded up to
the next whole number, if the holder is entitled to receive 0.5 or more of a
Common Share or Warrant, and the holder of such Special Warrants will not be
entitled to any cash compensation in respect of such fraction.

 

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  (b)  
For the purpose of Section 4.4(a), in the case of a holder of Special Warrants
exercising Special Warrants represented by more than one Special Warrant
Certificate, the fractional interest of such holder will be the fractional
interest of a Common Share or Warrant such Special Warrantholder would otherwise
be entitled to receive if the Special Warrants being exercised were represented
by one Special Warrant Certificate.

4.5 Recording
The Trustee will record the particulars of each Special Warrant converted, which
particulars will include the name and address of each person to whom Underlying
Securities are thereby issued, the number of Underlying Securities so issued and
the Conversion Date in respect thereof. Within three Business Days after each
Conversion Date, the Trustee will provide such particulars in writing to the
Company.
4.6 Securities Restrictions

  (a)  
General: No Common Shares or Warrants will be issued pursuant to the conversion
of any Special Warrant if the issue of such Common Shares or Warrants would
constitute a violation of the securities laws of any jurisdiction and, without
limiting the generality of the foregoing, the certificates representing the
Underlying Securities thereby issued will bear such legend or legends as may, in
the opinion of counsel to the Company, be necessary or advisable in order to
avoid a violation of any securities laws of any jurisdiction or to comply with
the requirements of any stock exchange on which the Common Shares are then
listed, provided that if, at any time, in the opinion of counsel to the Company,
such legend or legends are no longer necessary or advisable in order to avoid a
violation of any such laws or requirements, or the holder of any such legended
certificate, at such holder’s expense, provides the Company with evidence
satisfactory in form and substance to the Company (which may include an opinion
of counsel satisfactory to the Company) to the effect that such holder is
entitled to sell or otherwise transfer such Common Shares or Warrants in a
transaction in which such legend or legends are not required, such legended
certificate may thereafter be surrendered to the Company in exchange for a
certificate which does not bear such legend or legends.

  (b)  
Canadian Legends: Certificates representing Underlying Securities issued upon
the conversion of Special Warrants on or prior to the date that is four months
and a day following the date of issuance of the Special Warrants, and without
the British Columbia Securities Commission, as the principal regulator under
National Policy 11-202 and the Passport System, having issued a receipt for the
Final Prospectus, will bear the legend provided in subsection 4.6(d) and the
following legend:

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST
NOT TRADE THE SECURITY BEFORE MAY 26, 2010.”

 

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And the Common Shares forming part of the Underlying Securities shall also bear
the following legend:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK
EXCHANGE BUT CANNOT BE TRADED THROUGH THE FACILITIES OF THE EXCHANGE SINCE THEY
ARE NOT FREELY TRANSFERABLE AND CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH
SECURITIES IS NOT “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON THE TORONTO
STOCK EXCHANGE”

  (c)  
U.S. Legends: If the Special Warrant Certificate representing the Special
Warrants converted in accordance with this Article 4 bears the legend set forth
in Section 2.3(d) hereof, then any certificate representing Underlying
Securities issued upon the conversion thereof, will bear the following legend:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY
PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH
SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE
COMPANY, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION
S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH CANADIAN LAWS AND
REGULATIONS, (C) INSIDE THE UNITED STATES, PURSUANT TO THE EXEMPTION FROM
REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF
AVAILABLE, IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS OF THE UNITED
STATES, OR (D) INSIDE OR OUTSIDE THE UNITED STATES, PURSUANT TO ANOTHER
EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE
STATE SECURITIES LEGISLATION AFTER PROVIDING A LEGAL OPINION SATISFACTORY TO THE
COMPANY THAT SUCH TRANSFER IS EXEMPT FROM OR OTHERWISE NOT SUBJECT TO
REGISTRATION UNDER THE U.S. SECURITIES ACT AND APPLICABLE SECURITIES LAWS.”;

 

24

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provided that, if such Common Shares or Warrants are being sold outside the
United States in compliance with the requirements of Rule 904 of Regulation S
and in compliance with Canadian local laws and regulations, and provided that
the Company is a “foreign issuer” within the meaning of Regulation S at the time
of sale, any such legend may be removed by providing a declaration to the
registrar and transfer agent for the Common Shares and Warrants in the form set
forth in Schedule B hereof, together with such additional information as the
registrar and transfer agent may request (and the Company hereby covenants and
agrees to use reasonable commercial efforts to cause the registrar and transfer
agent for the Underlying Securities to deliver certificates representing
Underlying Securities bearing no such legend within three Business Days of the
date of delivery of such a declaration), and provided, further, that, if any
such Common Shares or Warrants are being sold in the United States pursuant to
Rule 144 under the U.S. Securities Act, the legend may be removed by delivery to
the Company of an opinion of counsel, of recognized standing reasonably
satisfactory to the Company, that such legend is no longer required under
applicable requirements of the U.S. Securities Act or state securities laws.

  (d)  
Book-Entry Only System Legend: Certificates representing Underlying Securities
issued upon the conversion of Special Warrants where such Special Warrants were
previously held pursuant to a Global Special Warrant Certificate, as well as all
certificates issued in exchange for or in substitution of such certificates
representing Underlying Securities, will, if directed by the Company, bear the
following legend:

“UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF CDS
CLEARING AND DEPOSITARY SERVICES INC. (“CDS”) TO IVANHOE ENERGY INC. (THE
“ISSUER”) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IN RESPECT THEREOF IS REGISTERED IN THE NAME OF CDS &
CO., OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
CDS (AND ANY PAYMENT IS MADE TO CDS & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED HOLDER HEREOF, CDS & CO., HAS A PROPERTY INTEREST IN THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HEREIN AND IT IS A VIOLATION OF ITS RIGHTS FOR
ANOTHER PERSON TO HOLD, TRANSFER OR DEAL WITH THIS CERTIFICATE.”

 

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4.7 Adjustments

  (a)  
Adjustment: The rights of the holder of any Special Warrant, including the
number of Underlying Securities issuable upon the conversion or deemed
conversion of such Special Warrant, will be adjusted from time to time in the
events and in the manner provided in, and in accordance with the provisions of,
this section.

  (b)  
Triggering Events: The Share Rate in effect at any date will be subject to
adjustment from time to time as follows:

  (i)  
Share Reorganization: If, and whenever at any time during the Adjustment Period,
the Company will (A) subdivide, redivide or change the outstanding Common Shares
into a greater number of shares, (B) reduce, consolidate or combine the
outstanding Common Shares into a lesser number of shares, or (C) issue Common
Shares (or securities convertible or exchangeable into Common Shares) to all or
substantially all of the holders of Common Shares by way of a stock dividend or
other distribution, then, in each such event, the Share Rate will, on the record
date for such event or, if no record date is fixed, the effective date of such
event, be adjusted so that it will equal the rate determined by multiplying the
Share Rate in effect immediately prior to such date by a fraction, of which the
denominator will be the total number of Common Shares outstanding on such date
before giving effect to such event, and of which the numerator will be the total
number of Common Shares outstanding on such date after giving effect to such
event (including Common Shares into which such convertible or exchangeable
securities by way of stock dividend may be issued). Such adjustment will be made
successively whenever any such event will occur. Any such issue of Common Shares
by way of a stock dividend or other distribution will be deemed to have been
made on the record date for such stock dividend or other distribution for the
purpose of calculating the number of outstanding Common Shares under
Sections 4.7(b)(i) and (ii) hereof.

  (ii)  
Rights Offering: If, and whenever at any time during the Adjustment Period, the
Company will fix a record date for the issue of rights, options or warrants to
all or substantially all of the holders of Common Shares entitling the holders
thereof, within a period expiring not more than 45 days after the record date
for such issue, to subscribe for or purchase Common Shares (or securities
convertible into or exchangeable for Common Shares) at a price per share (or
having a conversion or exchange price per share) less than 95% of the Current
Market Price on the earlier of such record date and the date on which the
Company announces its intention to make such issue, then, in each such case, the
Share Rate will be adjusted immediately after such record date so that it will
equal the rate determined by multiplying the Share Rate in effect on such record
date by a fraction, of which the denominator will be the total number of Common
Shares outstanding on such record date plus the number arrived at when
(A) either the product of (1) the number of Common Shares offered for
subscription and (2) the price at which

 

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those Common Shares are offered, or the product of (3) the conversion price
thereof and (4) the maximum number of Common Shares for or into which the
convertible or exchangeable securities so offered pursuant to the rights
offering may be converted or exchanged, as the case may be, is divided by
(B) the Current Market Price on the record date, and of which the numerator will
be the total number of Common Shares outstanding on such record date plus the
total number of additional Common Shares so offered for subscription or purchase
(or into or for which the convertible or exchangeable securities so offered are
convertible or exchangeable). Any Common Shares owned by or held for the account
of the Company or any Subsidiary of the Company will be deemed not to be
outstanding for the purpose of any such computation. Such adjustment will be
made successively whenever such a record date is fixed, provided that if two or
more such record dates or record dates referred to in Section 4.7(b)(iii) hereof
are fixed within a period of 25 Trading Days, such adjustment will be made
successively as if each of such record dates occurred on the earliest of such
record dates. To the extent that any such rights, options or warrants are not
exercised prior to the expiration thereof, the Share Rate will then be
readjusted to the Share Rate which would then be in effect based upon the number
of Common Shares (or securities convertible into or exchangeable for Common
Shares) actually issued upon the exercise of such rights, options or warrants,
as the case may be.

  (iii)  
Distribution: If, and whenever at any time during the Adjustment Period, the
Company will fix a record date for the making of a distribution to all or
substantially all of the holders of Common Shares of (A) shares of any class
other than Common Shares whether of the Company or any other corporation,
(B) rights, options or warrants to acquire Common Shares or securities
exchangeable for or convertible into Common Shares or property or other assets
of the Company (other than rights, options or warrants exercisable by the
holders thereof within a period expiring not more than 45 days after the record
date for such issue or distribution to acquire Common Shares or securities
exchangeable for or convertible into Common Shares at a price per share, or at
an exchange or conversion price per share in the case of securities exchangeable
for or convertible into Common Shares, of at least 95% of the Current Market
Price of the Common Shares on such record date), (C) evidences of indebtedness,
or (D) cash, securities or other property or assets (other than cash dividends
paid in the ordinary course), then, in each such case, the Share Rate will be
adjusted immediately after such record date so that it will equal the rate
determined by multiplying the Share Rate in effect on such record date by a
fraction, of which the denominator will be the total number of Common Shares
outstanding on such record date multiplied by the Current Market Price on the
earlier of such record date and the date on which the Company announces its
intention to make such distribution, less the aggregate fair market value (as
determined by the directors, acting

 

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reasonably, at the time such distribution is authorized) of such shares or
rights, options or warrants or evidences of indebtedness or cash, securities or
other property or assets so distributed, and of which the numerator will be the
total number of Common Shares outstanding on such record date multiplied by such
Current Market Price. Any Common Shares owned by or held for the account of the
Company or any Subsidiary of the Company will be deemed not to be outstanding
for the purpose of any such computation. Such adjustment will be made
successively whenever such a record date is fixed, provided that if two or more
such record dates or record dates referred to in Section 4.7(b)(ii) hereof are
fixed within a period of 25 Trading Days, such adjustment will be made
successively as if each of such record dates occurred on the earliest of such
record dates. To the extent that any such rights, options or warrants so
distributed are not exercised prior to the expiration thereof, the Share Rate
will then be readjusted to the Share Rate which would then be in effect based
upon such rights, options or warrants or evidences of indebtedness or cash,
securities or other property or assets actually distributed or based upon the
number or amount of securities or the property or assets actually issued or
distributed upon the exercise of such rights, options or warrants, as the case
may be.

  (c)  
Reclassifications: If and whenever at any time during the Adjustment Period,
there is (A) any reclassification of the outstanding Common Shares, any change
of the Common Shares into other shares or any other reorganization of the
Company (other than as described in Section 4.7(b) hereof), (B) any
consolidation, amalgamation, arrangement, merger or other form of business
combination of the Company with or into any other corporation, trust,
partnership or other entity resulting in any reclassification of the outstanding
Common Shares, any change of the Common Shares into other shares or any other
reorganization of the Company, or (C) any sale, conveyance, lease, exchange or
transfer of the undertaking or assets of the Company as an entirety or
substantially as an entirety to another corporation or entity, then, in each
such event, each holder of any Special Warrant which is thereafter exchanged
will be entitled to receive, and will accept, in lieu of the number of
Underlying Securities to which such holder was theretofore entitled upon such
exchange, the kind and number or amount of shares or other securities or
property which such holder would have been entitled to receive as a result of
such event if, on the effective date of such event in (A), (B) or (C), such
holder had been the registered holder of the number of Underlying Securities to
which such holder was theretofore entitled upon such conversion or exchange. If
necessary as a result of any such event, appropriate adjustments will be made in
the application of the provisions set forth in this Section 4.7(c) with respect
to the rights and interests thereafter of the holders of Special Warrants to the
end that the provisions set forth in this Section 4.7(c) will thereafter
correspondingly be made applicable, as nearly as may reasonably be, in the
relation to any shares or other securities or

 

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property thereafter deliverable upon the exercise of any Special Warrant. Any
such adjustments will be set forth in an indenture supplemental hereto with the
successor to the Company or such corporation or other entity, as applicable,
contemporaneously with such reclassification, consolidation, amalgamation,
arrangement, merger, other form of business combination or other event and which
supplemental indenture will be approved by the directors, acting reasonably, and
will for all purposes be conclusively deemed to be an appropriate adjustment and
such supplemental indenture will provide for adjustments which will be as nearly
equivalent as may be practicable to the adjustments provided in this Section 4.7
and which will apply to successive reclassifications, reorganizations,
amalgamations, mergers, other forms of business combination or other events.

  (d)  
Deferral of Adjustment: In any case in which this Section 4.7 will require that
an adjustment will become effective immediately after a record date for or an
effective date of an event referred to herein, the Company may defer, until the
occurrence and consummation of such event, issuing to the holder of any Special
Warrant exchanged after such record date or effective date and before the
occurrence and consummation of such event the additional Common Shares or other
securities or property issuable upon such exchange by reason of the adjustment
required by such event, provided, however, that the Company will deliver to such
holder an appropriate instrument evidencing such holder’s right to receive such
additional Common Shares or other securities or property upon the occurrence and
consummation of such event and the right to receive any dividend or other
distribution in respect of such additional Common Shares or other securities or
property declared in favour of the holders of record of Common Shares or of such
other securities or property on or after the Conversion Date or such later date
as such holder would, but for the provisions of this subsection, have become the
holder of record of such additional Common Shares or of such other securities or
property pursuant to Section 4.3(a) hereof.

  (e)  
Adjustments Cumulative: The adjustments provided for in this Section 4.7 (in
both the number of Common Shares and of securities to be received on an exercise
of the Special Warrants) are cumulative, will, in the case of any adjustment to
the Share Rate, be computed to the nearest one one-hundredth of a Common Share
and will apply (without duplication) to successive subdivisions, consolidations,
distributions, issues or other events resulting in any adjustment under the
provisions of this Section 4.7, provided that, notwithstanding any other
provision of this section, no adjustment of the Share Rate will be required
(i) unless such adjustment would require an increase or decrease of at least 1%
in the Share Rate then in effect (provided, however, that any adjustment which
by reason of this Section 4.7(e) is not required to be made will be carried
forward and taken into account in any subsequent adjustment), (ii) if, in
respect of any event described in this Section 4.7 (other than the events
referred to in clauses (A) and (B) of Section 4.7(b)(i) hereof and in
Section 4.7(c) hereof), the holders of Special Warrants are entitled to
participate in such event, or are entitled to participate within 45 days in a
comparable event, on the same terms, with the necessary

 

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changes, as if the Special Warrants had been exercised prior to or on the
effective date of or record date for such event, (iii) in respect of any Common
Shares issuable or issued pursuant to any stock option or any stock option or
stock purchase plan in force from time to time for directors, officers or
employees of the Company or of Subsidiaries of the Company, or (iv) in respect
of any Underlying Securities issuable or issued pursuant to the conversion of
Special Warrants. After any adjustment pursuant to this Section 4.7, the term
“Common Shares” where used in this Indenture will 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 Special Warrantholder is
entitled to receive upon the exercise of its Special Warrant, and the number of
Underlying Securities indicated by any exercise made pursuant to a Special
Warrant will be interpreted to mean the number of Common Shares or other
property or securities a Special Warrantholder is entitled to receive, as a
result of such adjustment and all prior adjustments pursuant to this
Section 4.7, upon the full exercise of a Special Warrant;

  (f)  
Resolution of Questions: If any question arises with respect to the adjustments
provided in this Section 4.7, such question will be conclusively determined by
the Company’s auditors or, if they are unable or unwilling to act, by such firm
of chartered accountants as is appointed by the Company and is acceptable to the
Trustee. Such accountants will have access to all necessary records of the
Company and such determination will be binding upon the Company, the Trustee and
the Special Warrantholders.

  (g)  
Other Actions: If, and whenever at any time during the Adjustment Period, the
Company will take any action affecting or relating to the Common Shares, other
than any action described in this Section 4.7, which in the opinion of the
directors would prejudicially affect the rights of holders of Special Warrants,
the Share Rate will, subject to receipt of any applicable regulatory approvals,
be adjusted by the directors in such manner, if any, and at such time, as the
directors may reasonably determine to be equitable in the circumstances to such
holders.

  (h)  
Additional Actions: As a condition precedent to the taking of any action which
would require an adjustment in any of the rights under the Special Warrants, the
Company will take any action which may, in the opinion of counsel to the
Company, be necessary in order that the Company, or any successor to the Company
or successor to the undertaking or assets of the Company, will have unissued and
reserved in its authorized capital and will be obligated to and may validly and
legally issue all the Common Shares or other securities or property which the
holders of Special Warrants would be entitled to receive thereafter on the
exercise thereof in accordance with the provisions hereof.

 

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  (i)  
Notice to Trustee: The Company covenants with the Trustee that at least ten
Business Days before the earlier of the effective date of or record date for any
event referred to in this Section 4.7 that requires or might require an
adjustment in any of the rights under the Special Warrants, the Company will:

  (i)  
file with the Trustee a Certificate of the Company specifying the particulars of
such event and, to the extent determinable, any adjustment required and the
computation of such adjustment; and

  (ii)  
give notice to the Special Warrantholders of the particulars of such event and,
to the extent determinable, any adjustment required, in accordance with
Section 11.2(a) hereof.

Such notice will set forth such particulars as have been determined at the date
such notice is given. If any adjustment for which such notice is given is not
then determinable, promptly after such adjustment is determinable the Company
will:

  (iii)  
file with the Trustee a Certificate of the Company showing the computation of
such adjustment; and

  (iv)  
give notice to the Special Warrantholders of such adjustment in accordance with
Section 11.2(a) hereof.

Where a notice pursuant to this Section 4.7(i) has been given, the Trustee will
be entitled to act and rely on any adjustment calculation of the Company or of
the Company’s auditors.

  (j)  
Duty of Trustee: Subject to Section 10.2(a) hereof, the Trustee will not:

  (i)  
at any time be under any duty or responsibility to any Special Warrantholder to
determine whether any facts exist which may require any adjustment in the Share
Rate, or with respect to the nature or extent of any such adjustment when made,
or with respect to the method employed in making such adjustment;

  (ii)  
be accountable with respect to the validity or value (or the kind or amount) of
any Common Shares, Warrants or of any shares or other securities or property
which may at any time be issued or delivered upon the exercise of any Special
Warrant; or

  (iii)  
be responsible for any failure of the Company to make any cash payment or to
issue, transfer or deliver Underlying Securities, share certificates or warrant
certificates upon the surrender of any Special Warrants for the purpose of
exercise, or to comply with any of the covenants contained in this Section 4.7.

 

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ARTICLE 5
COVENANTS
5.1 General Covenants
The Company represents, warrants and covenants with the Trustee that so long as
any Special Warrants remain outstanding:

  (a)  
Authorization and Issue of Special Warrants: The Company is duly authorized to
create and issue the Special Warrants and, when issued and countersigned as
herein provided, they will be valid and enforceable against the Company in
accordance with the terms herein.

  (b)  
Maintenance: The Company will use its commercially reasonable efforts to at all
times maintain its corporate existence and keep or cause to be kept proper books
of account in accordance with generally accepted accounting principles in the
United States or Canada or in accordance with international financial reporting
standards.

  (c)  
Reservation of Common Shares: The Company will reserve and conditionally allot
and keep available sufficient unissued Common Shares to enable it to satisfy its
obligations on the conversion of the Special Warrants including the issuance of
Common Shares underlying the Warrants.

  (d)  
Issue of Underlying Securities: The Company will cause the Underlying Securities
from time to time issued pursuant to the conversion of the Special Warrants, and
the certificates representing such Underlying Securities, to be issued and
delivered in accordance with the provisions of this Indenture and the terms
hereof and all Common Shares and Warrants that are issued on the conversion of
the Special Warrants will be fully paid and non-assessable shares and warrants
respectively.

  (e)  
Open Registers: The Company will cause the Trustee to keep open the registers of
holders and registers of transfers referred to in Section 3.1 hereof as required
by such Section and will not take any action or omit to take any action which
would have the effect of preventing the Special Warrantholders from converting
any of the Special Warrants or receiving any of the Underlying Securities
issuable upon such conversion.

  (f)  
Filings: The Company will make all requisite filings, including filings with
appropriate securities commissions and stock exchanges, in connection with the
conversion of the Special Warrants and the issue of the Underlying Securities in
connection therewith.

  (g)  
Notice of Receipt: Upon the issuance of a receipt therefor, the Company will
send or cause to be sent to each Special Warrantholder a commercial copy of the
Final Prospectus and written notice specifying the date that the Special
Warrants expire and such notice will be sent within one Business Day after the
British Columbia Securities Commission, as the principal regulator under
National Policy 11-202 and the Passport System, issues the Final Receipt.

 

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  (h)  
General Performance: The Company, using reasonable commercial efforts, will well
and truly perform and carry out all acts and things to be done by it as provided
in this Indenture or in order to consummate the transactions contemplated hereby
and it will do, execute, acknowledge and deliver or cause to be done, executed,
acknowledged and delivered, all other acts, deeds and assurances in law as the
Trustee may reasonably require for the better accomplishing and effecting of the
intentions and provisions of this Indenture, including without limitation, to
execute and deliver the Warrant Indenture as of the date hereof.

  (i)  
Reporting Issuer Status: The Company will use its commercially reasonable
efforts to maintain its status as a reporting issuer in each of the Qualifying
Jurisdictions and not be in default in any material respect of the applicable
requirements of the applicable securities laws of each of the Qualifying
Jurisdictions.

  (j)  
Listing or Quotation of Common Shares: The Company will use commercially
reasonable efforts to maintain the listing of its Common Shares on TSX and the
quotation of its Common Shares on the NASDAQ Stock Market for a period of
18 months from the date hereof.

  (k)  
Final Prospectus: The Company will use commercially reasonable efforts to file
and cause the Ontario Securities Commission, and the British Columbia Securities
Commission, as the principal regulator under National Policy 11-202 and the
Passport System, to issue the Final Receipt as soon as reasonably practicable.

  (l)  
Disclosure Documentation: The Company will provide to Special Warrantholders
copies of all documentation required to be provided by applicable law to
registered holders of Common Shares, as if such Special Warrantholders were
registered shareholders of the Company.

  (m)  
Notice of Distribution: It will give written notice to the Trustee and each
Special Warrantholder specifying the particulars of each payment or distribution
made in accordance with Section 4.7, within three Business Days of such payment
or distribution.

Any notices or deliveries required to be provided to holders of Special Warrants
hereunder will be sent by prepaid mail or delivery to each holder of Special
Warrants at the address of such holder appearing on the register of Special
Warrants maintained hereunder.

 

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5.2 Remuneration and Expenses of Trustee
The Company will pay to the Trustee from time to time reasonable remuneration
for the services of the Trustee hereunder and will, on the request of the
Trustee, pay to or reimburse the Trustee for all reasonable expenses,
disbursements and advances made or incurred by the Trustee in the administration
or execution of the duties and obligations hereof (including reasonable
compensation and disbursements of its counsel and other advisers and assistants
not regularly in the employment thereof), both before any default hereunder and
thereafter until all duties of the Trustee hereunder have been finally and fully
performed, except any such expense, disbursement or advance that arises out of
or results from gross negligence, fraud, wilful misconduct or bad faith of the
Trustee.
5.3 Securities Qualification Requirements

  (a)  
Compliance with Laws: If, in the opinion of counsel, any instrument (not
including a prospectus, except as contemplated by Section 5.1(j) hereof) is
required to be filed with, or any permission, order or ruling is required to be
obtained from, any securities regulatory authority or any stock exchange or any
other actions are required under any applicable law of the Qualifying
Jurisdictions or any stock exchange rules before any securities or property,
including Underlying Securities which a Special Warrantholder is entitled to
receive pursuant to the conversion or deemed conversion of a Special Warrant may
properly and legally be issued and delivered upon the conversion or deemed
conversion of a Special Warrant, the Company covenants that it will use
reasonable efforts to file such instrument, obtain such permission, order or
ruling or take all such other actions at its expense, as is required or
appropriate in the circumstances.

  (b)  
Notice of Issue: The Company will give written notice of, and will make all
necessary filings in respect of, the issue of the Underlying Securities pursuant
to the conversion or deemed conversion of Special Warrants, in such detail as
may be required, to any stock exchange upon which the Common Shares may be
listed or to the securities regulatory authority in any of the Qualifying
Jurisdictions if there is therein any applicable law, ruling or order requiring
the giving of any such notice or the making of any such filings in order that
the subsequent disposition of the Underlying Securities so issued will not be
subject to the prospectus requirements of such applicable law, ruling or order
(subject to any hold periods applicable to Underlying Securities issued pursuant
to the conversion of Special Warrants prior to the Qualification Date).

  (c)  
No U.S. Registration: The Company has no obligation to register or qualify the
Special Warrants or the Underlying Securities under the U.S. Securities Act or
the securities laws of any state of the United States.

 

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5.4 Performance of Covenants by Trustee
If the Company fails to perform any of the obligations thereof under this
Indenture, the Trustee may notify the Special Warrantholders of such failure or
may itself perform any of such obligations capable of being performed by the
Trustee, but will not be bound to do so or to notify the Special Warrantholders
that it is so doing. All amounts expended or advanced by the Trustee in so doing
will be repayable as provided in Section 5.2 hereof. No such performance,
expenditure or advance by the Trustee will relieve the Company of any default or
of its continuing obligations hereunder.
ARTICLE 6
ESCROWED FUNDS
6.1 Initial Escrowed Funds and Distribution Amounts
The Company will deposit or cause to be deposited the Initial Escrowed Funds
with the Trustee forthwith upon receipt thereof and the Trustee will accept and
hold the Escrowed Funds in escrow for and on behalf of the persons who have an
interest therein pursuant hereto, will disburse and deal with the Escrowed Funds
in the manner contemplated by this Article 6 and at all times will keep the
Escrowed Funds in a segregated account, all on the terms and subject to the
conditions hereof. The Company acknowledges and agrees that it is a condition of
the payment by the holders of Special Warrants of the Issue Price therefor that
the Escrowed Funds are held in escrow by the Trustee in accordance with the
provisions of this Article 6. The Trustee will retain the Escrowed Funds for the
benefit of the holders of Special Warrants and, upon the delivery of the Release
and Payment Certificate to the Trustee and satisfaction of the Release
Condition, retroactively for the benefit of the Company, in accordance with the
provisions of this Article 6.
6.2 Qualified Investments

  (a)  
Investment Directions: The Trustee will invest the Escrowed Funds in Qualified
Investments in its name in accordance with such directions as it may receive
from the Company from time to time. Any such direction will be in writing and
will specify the Qualified Investments to be made including, if applicable, the
name of the issuer. Any such direction will be provided to the Trustee no later
than 9:00 a.m. (Toronto time) on the day on which the investment is to be made.
Any such direction received by the Trustee after 9:00 a.m. (Toronto time) or
received on a non-Business Day, will be deemed to have been given prior to 9:00
a.m. (Toronto time) the next Business Day. Any direction from the Company for
the release of the Escrowed Funds must be received prior to 11:00 a.m. (Toronto
time) on the day on which the release of Escrowed Funds is to be made. Any such
direction for the release of Escrowed Funds received after 11:00 a.m. (Toronto
time) or on a non-Business Day, will be handled on a commercially reasonable
efforts basis and may result in Escrowed Funds being released on the next
Business Day.

 

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  (b)  
Absence of Directions: In the event that the Trustee does not receive a
direction or only a partial direction to invest the Escrowed Funds in Qualified
Investments, the Trustee may hold cash balances constituting part or all of the
Escrowed Funds and may, but need not, invest same in its deposit department, the
deposit department of one of its Affiliates, or the deposit department of a
Canadian chartered bank; but the Trustee, its Affiliates or a Canadian chartered
bank will not be liable to account for any profit to any parties to this
Indenture or to any other person or entity other than at a rate, if any,
established from time to time by the Trustee, its Affiliates or a Canadian
chartered bank. For the purpose of this Section, “Affiliate” means affiliated
companies within the meaning of the Business Corporations Act (British Columbia)
(“BCBCA”); and includes Canadian Imperial Bank of Commerce, CIBC Mellon Global
Securities Services Company and Mellon Bank, N.A. and each of their affiliates
within the meaning of the BCBCA.

  (c)  
Accounts: The Trustee will maintain accurate books, records and accounts of the
transactions effected or controlled by the Trustee hereunder and the receipt,
investment, re-investment and disbursement of the property hereunder and will
provide to the Company records and statements thereof periodically upon written
request.

6.3 Release of Escrowed Funds Upon Conversion of Special Warrants Prior to
Receipt of Release and Payment Certificate
If, at any time prior to the receipt by the Trustee of the Release and Payment
Certificate, a holder of Special Warrants elects to convert such Special
Warrants into Underlying Securities pursuant to Section 4.1 hereof, the Trustee
will:

  (a)  
notify the Company and the Agent in writing of the conversion of such Special
Warrants;

  (b)  
subject to receiving a Certificate of the Company as to the amount of the
commission payable to the Agent in respect of the Special Warrants so converted,
notify the Company and the Agent in writing of the total amount of Escrowed
Funds that will remain in escrow after deducting an amount of the Escrowed Funds
equal to, but not exceeding, the aggregate Issue Price of the Special Warrants
so converted, plus a pro rata portion of any Earnings;

  (c)  
provided that the total amount of Escrowed Funds that will remain in escrow
after such deduction will be not less than an amount equal to (i) the product
obtained by multiplying the number of unconverted Special Warrants by the Issue
Price, plus (ii) a pro rata portion of any Earnings, immediately liquidate any
Qualified Investment of the Escrowed Funds to the extent necessary to release to
the Company and the Agent an amount of the Escrowed Funds equal to, but not
exceeding, the aggregate Issue Price of the Special Warrants so converted, plus
a pro rata portion of any Earnings; and

  (d)  
release and deliver (i) to the Written Direction of the Company an amount of the
Escrowed Funds equal to, but not exceeding, the aggregate Issue Price of the
Special Warrants so converted, plus a pro rata portion of any Earnings, less an
amount equal to the commission payable to the Agent in respect of the converted
Special Warrants, and (ii) to, or to the written direction of the Agent, an
amount of the Escrowed Funds equal to the commission payable to the Agent in
respect of the converted Special Warrants.

 

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6.4 Release of Escrowed Funds Upon Receipt of Release and Payment Certificate

  (a)  
Delivery of Certificate: Upon satisfaction of the Release Condition on or before
the Release Deadline, the Company will forthwith cause the Release and Payment
Certificate in the form attached as Schedule C hereto, executed by the Company
and acknowledged by the Agent to be delivered to the Trustee by facsimile or
courier to the address of the Trustee set out in Section 11.1. The Trustee will
be entitled to act and rely upon, and will be protected in acting and relying
upon the Release and Payment Certificate received from the Company.

  (b)  
Liquidation of Qualified Investments: Upon receipt of the Release and Payment
Certificate, the Trustee will immediately liquidate any Qualified Investment of
the Escrowed Funds, as soon as reasonably practicable given standard business
investment standards.

  (c)  
Release of Escrowed Funds: The Escrowed Funds will, as soon as reasonably
practicable following receipt by the Trustee of the Release and Payment
Certificate and the liquidation of any Qualified Investment of the Escrowed
Funds, be released and delivered by the Trustee as directed in the Release and
Payment Certificate.

6.5 Release of Escrowed Funds on Termination
If the Release Condition has not been satisfied at or prior to the Release
Deadline, on the Release Deadline, the Trustee will forthwith (and, in any
event, no later than the Termination Payment Time) return to each Special
Warrantholder an amount equal to the Issue Price of each Special Warrant held by
such Special Warrantholder plus its pro rata share of any Earnings. For greater
certainty, a Special Warrantholder who has previously converted all or a portion
of such holder’s Special Warrants pursuant to Section 4.1(a) shall not be
entitled to receive any Earnings in respect of such Special Warrants so
converted. In the event that the Escrowed Funds are not sufficient to fund the
return to each Special Warrantholder of an amount equal to the Issue Price of
each Special Warrant held by such Special Warrantholder plus its pro rata share
of any Earnings on the Release Deadline, the Company will fund any such
shortfall at the time of payment of the Escrowed Funds to the Special
Warrantholders. Payment made in accordance with this Article 6 will be made in
accordance with Section 6.8 hereof and the Trustee will mail such payment to
such Special Warrantholders at their address last appearing on the register of
the Special Warrants maintained by the Trustee. All Special Warrant Certificates
representing Special Warrants in respect of which the aggregate Issue Price plus
a pro rata share of any Earnings have been paid to the holder thereof will be
deemed to have been cancelled as and from the Termination Payment Time and the
Trustee will record the deemed cancellation of such Special Warrant Certificates
on the register of the Special Warrants. Upon the Written Request of the
Company, the Trustee will furnish the Company with a certificate identifying the
Special Warrant Certificates deemed to have been cancelled. All Special Warrants
represented by Special Warrant Certificates which have been deemed to have been
cancelled pursuant to this Section 6.5 will be without further force and effect
whatsoever.

 

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6.6 Direction
In order to permit the Trustee to carry out its obligations under this
Article 6, the Company hereby specifically authorizes and directs the Trustee to
make any stipulated payment or to take any stipulated action in accordance with
the provisions of this Indenture.
6.7 Early Termination of any Investment of the Escrowed Funds
In making any payment pursuant to this Indenture, the Trustee has the authority
to liquidate any investments in order to make payments contemplated under this
Article 6 and will not be liable for any loss sustained in the escrow account
for early termination of any investment of the Escrowed Funds necessary to
enable the Trustee to make such payment.
6.8 Method of Disbursement and Delivery

  (a)  
Method of Disbursement: All disbursements of money made in accordance with the
provisions of this Article 6 will be made by cheque drawn upon a Canadian
Schedule I chartered bank or by official cheque or wire transfer drawn upon the
account of the Trustee made payable to or to the order of the persons entitled
to disbursement and in the correct amount, and if not so directed, by wire
transfer as may be directed in writing by the Special Warrantholders, the
Company or the Agent (less all amounts required to be withheld by the Company by
law, including without limitation, under the Income Tax Act (Canada), as
directed by the Company).

  (b)  
Discharge of Trustee Upon Delivery: If the Trustee delivers any such wire
transfer or cheque as required under subsection 6.8(a), the Trustee will have no
further obligation or liability for the amount represented thereby, unless any
such wire transfer or cheque is not paid on due presentation; provided that in
the event of the non-receipt of such wire transfer or cheque by the payee, or
the loss or destruction of such cheque, the Trustee, upon being furnished with
reasonable evidence of such non-receipt, loss or destruction and funding and
indemnity reasonably satisfactory to it, will initiate a new wire transfer or
issue to such payee a replacement cheque for the amount of such wire transfer or
cheque.

6.9 Acknowledgements

  (a)  
Receipt of Initial Escrow Funds: The Trustee will acknowledge receipt from the
Company of the Initial Escrowed Funds by providing a written receipt and the
Trustee hereby confirms that such funds will, upon receipt, be deposited in a
segregated account in the name of the Company designated as “CIBC Mellon Trust
Company in trust for Ivanhoe Energy Inc. — Special Warrants” or as otherwise
directed by the Company and, pending the satisfaction of the Release Condition,
will be used in accordance with Section 6.2 and Section 10.4 hereof.

 

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  (b)  
Company Direction to Trustee: The Company hereby:

  (i)  
acknowledges that the amount to be received by the Trustee pursuant to
subsection 6.9(a) will represent the aggregate Issue Price received by the
Company for the Special Warrants; and

  (ii)  
irrevocably directs the Trustee to retain such amounts in accordance with the
terms of this Indenture pending payment of such amounts in accordance with the
terms of this Indenture.

6.10 Miscellaneous

  (a)  
Scope of Trustee’s Obligations and Duties: The Trustee will disburse Escrowed
Funds according to this Indenture only to the extent that Escrowed Funds have
been deposited with it. The Trustee will be protected in acting and relying upon
any written notice, request, waiver, consent, certificates, receipts, statutory
declaration or other paper or document furnished to it, not only as to its due
execution and the validity and effectiveness of its provisions but also as to
the truth and acceptability of any information therein contained which it in
good faith believes to be genuine and what it purports to be. The Trustee will
have no duties except those which are expressly set forth herein, and it will
not be bound by any notice of a claim or demand with respect to, or any waiver,
modification, amendment, termination or rescission of this Indenture, unless
received by it in writing, and signed by the parties hereto and if its duties
herein are affected, unless it will have given its prior written consent
thereto. The duties and obligations of the Trustee will be determined solely by
the provisions hereof and, accordingly, the Trustee will not be responsible
except for the performance of such duties and obligations as it has undertaken
herein. The Trustee will retain the right not to act and will not be held liable
for refusing to act unless it has received clear and reasonable instructions
which comply with the terms of this Indenture. Such documentation must not
require the exercise of any discretion or independent judgment. The Trustee is
acting hereunder as Escrow Agent at the request of the Company and the Special
Warrantholders and will not be responsible as Escrow Agent except for its duties
of receiving, holding and disbursing the Escrowed Funds pursuant to the terms
and conditions of this Indenture. Any certificate of a party referred to herein,
unless otherwise specified, will, in the case of the Company, refer to a
certificate signed in the name of the Company by any officer or director of the
Company, and, in the case of any other party, refer to a certificate of an
authorized officer of such party. The Trustee will not be liable for any error
in judgment or for any act done or step taken or omitted by it in good faith or
for any mistake, in fact or law, or for anything which it may do or refrain from
doing in connection therewith, except arising out of its own gross negligence or
wilful misconduct. In the event of any disagreement arising regarding the terms
of this Indenture, the Trustee will be entitled, at its option, to refuse to
comply with any or all demands whatsoever until the dispute is settled, either
by agreement amongst the various parties or by a court of competent
jurisdiction. None of the provisions of this Indenture will require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties or in the exercise of any of its rights or
powers. The Trustee will not be responsible for any losses which may occur as a
result of the investment of the Escrowed Funds where the Escrowed Funds have
been invested in accordance with the terms of this Indenture.

 

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  (b)  
Special Warrantholders’ Rights Against Escrowed Funds: In addition to the other
rights granted to holders of Special Warrants in this Indenture, until the
release of the Escrowed Funds pursuant to the terms of this Indenture, each
holder of Special Warrants has a pro rata claim against the Escrowed Funds,
which claim will subsist until such time as the Underlying Securities issuable
upon the deemed conversion of the Special Warrants are issued or such amount is
paid to such holder in full. In the event that, prior to the release of the
Escrowed Funds in accordance with the terms of this Indenture, the Company:
(i) makes a general assignment for the benefit of creditors or any proceeding is
instituted by the Company seeking relief on behalf thereof as a debtor, or to
adjudicate the Company a bankrupt or insolvent, or seeking liquidation,
winding-up, reorganization, arrangement, adjustment or composition of the
Company or the debts of the Company under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, or seeking appointment of a
receiver, receiver and manager, trustee, custodian or similar official for the
Company or any substantial part of the property and assets of the Company or the
Company takes any corporate action to authorize any of the actions set forth
above; or (ii) is declared bankrupt, or a receiver, receiver and manager,
trustee, custodian or similar official is appointed for the Company or any
substantial part of its property and assets of the Company or an encumbrancer
legally takes possession of any substantial part of the property or assets of
the Company or a distress or execution or any similar process is levied or
enforced against such property and assets and remains unsatisfied for such
period as would permit such property or such part thereof to be sold thereunder,
the right of each holder of Special Warrants to be issued Common Shares or
Warrants upon the deemed conversion of the Special Warrants of such holder will
terminate and such holder will be entitled to assert a claim against the
Escrowed Funds and Earnings in an amount equal to its pro rata share of the
Escrowed Funds and Earnings less any withholding tax or charges required to be
withheld in respect thereof.

  (c)  
Unclaimed Amounts: In the event that the Trustee holds any amount of interest or
other distributable amount which is unclaimed or which cannot be paid for any
reason other than the negligence or wilful misconduct of the Trustee, the
Trustee will be under no obligation to invest or reinvest the same but will only
be obligated to hold the same on behalf of the person or persons entitled
thereto in a current or other non-interest bearing account pending payment to
the person or persons entitled thereto. The Trustee will, as and when required
by law, and may at any time prior to such required time, pay all or part of such
interest or other distributable amount so held to the Public Trustee of British
Columbia (or other appropriate official or agency), whose receipt will be good
discharge and release of the Trustee for such amounts.

 

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  (d)  
Reliance: The Trustee will be entitled to act and rely absolutely on the Release
and Payment Certificate and will be entitled to release the Escrowed Funds upon
the receipt of the Release and Payment Certificate as provided for in this
Indenture.

6.11 Tax Reporting
The Trustee will prepare, file and, to the extent required, mail to the Company
and Special Warrantholders any tax filings, forms or elections required in
connection with amounts distributed by the Trustee to the Company or the Special
Warrantholders in accordance with this Indenture as directed from time to time
by the Company pursuant to a Written Direction of the Company.
ARTICLE 7
ENFORCEMENT
7.1 Suits by Special Warrantholder
All or any of the rights conferred on the holder of any Special Warrant by the
terms of the Special Warrant Certificate representing such Special Warrant or of
this Indenture may be enforced by such holder by appropriate legal proceedings
but without prejudice to the right which is hereby conferred on the Trustee to
proceed in the name thereof or on behalf of the holders of Special Warrants to
enforce each and every provision herein contained for the benefit of the Special
Warrantholders.
7.2 Limitation of Liability
The obligations hereunder are not personally binding on, nor will resort
hereunder be had to the private property of, any past, present or future
director, shareholder, officer, employee or agent of the Company, but only the
property of the Company or any successor entity will be bound in respect hereof.
ARTICLE 8
MEETINGS OF SPECIAL WARRANTHOLDERS
8.1 Right to Convene Meetings

  (a)  
Convening of Meeting: The Trustee may at any time and from time to time convene
a meeting of Special Warrantholders (which meeting will include the holders of
Option Special Warrants and for purposes of this Article 8, Special
Warrantholders includes holders of Option Special Warrants and Special Warrants
includes Option Special Warrants), and will do so on receipt of a Written
Request of the Company or a Special Warrantholders’ Request and on being funded
and indemnified to its reasonable satisfaction by the Company or by one or more
of the Special Warrantholders signing such Special Warrantholders’ Request
against the costs which it may incur in connection with calling and holding such
meeting.

 

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  (b)  
Failure to Convene: If the Trustee fails, within ten days after receipt of such
Written Request of the Company or Special Warrantholders’ Request, funding and
indemnification, to give notice convening a meeting, the Company or any of such
Special Warrantholders, as the case may be, may convene such meeting.

  (c)  
Place of Meeting: Every such meeting will be held in Vancouver, British
Columbia, or such other place as is approved or determined by the Trustee and
the Company.

8.2 Notice

  (a)  
Notice: At least 21 days’ notice of any meeting must be given to the Special
Warrantholders in the manner provided for in Section 11.2, to the Trustee
(unless the meeting has been called by it) and to the Company (unless the
meeting has been called by it).

  (b)  
Contents: The notice of the meeting must state the time when and the place where
the meeting is to be held and must state briefly the general nature of the
business to be transacted thereat, and will contain such information as is
reasonably necessary to enable the Special Warrantholders to make a reasoned
decision on the matter, but it will not be necessary for the notice to set out
the terms of any resolution to be proposed or any of the provisions of this
article.

8.3 Chairman
An individual (who need not be a Special Warrantholder) designated in writing by
the Trustee, or by the Company in the case of a meeting called by the Company,
will be chairman of the meeting or, if no individual is so designated or the
individual so designated is not present within 15 minutes after the time fixed
for the holding of the meeting, the Special Warrantholders present in person or
by proxy may choose an individual present to be chairman.
8.4 Quorum

  (a)  
Quorum: Subject to the provisions of Section 8.12 hereof, at any meeting of
Special Warrantholders a quorum will consist of two or more Special
Warrantholders, present in person or represented by proxy at the commencement of
the meeting, who hold in the aggregate not less than 25% of the total number of
Special Warrants then outstanding.

 

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  (b)  
No Quorum: If a quorum of Special Warrantholders is not present within 30
minutes after the time appointed for holding a meeting, the meeting, if convened
by Special Warrantholders or on a Special Warrantholders’ Request, will be
dissolved, but, subject to Section 8.12 hereof, in any other case will stand
adjourned to the same day in the next week (unless such day is not a Business
Day, in which case it will be adjourned to the next following Business Day) at
the same time and place and no notice of the adjournment need be given.

  (c)  
Adjourned Meeting: At the adjourned meeting the Special Warrantholders present
in person or by proxy will form a quorum and may transact any business for which
the meeting was originally convened notwithstanding the number of Special
Warrants that they hold.

8.5 Power to Adjourn
The chairman of a meeting at which a quorum of Special Warrantholders is present
may, with the consent of the meeting, adjourn the meeting, and no notice of such
adjournment need be given except as the meeting prescribes.
8.6 Show of Hands
Every question submitted to a meeting, other than an Extraordinary Resolution,
will be decided in the first place by a majority of the votes given on a show of
hands and, unless a poll is duly demanded as herein provided, a declaration by
the chairman that a resolution has been carried or carried unanimously or by a
particular majority or lost or not carried by a particular majority will be
conclusive evidence of the fact.
8.7 Poll

  (a)  
Extraordinary Resolution: On every Extraordinary Resolution, and on every other
question submitted to a meeting on which a poll is directed by the chairman or
requested by one or more Special Warrantholders acting in person or by proxy and
holding in the aggregate not less than 5% of the total number of Special
Warrants then outstanding, a poll will be taken in such manner as the chairman
directs.

  (b)  
Other: Questions other than those required to be determined by Extraordinary
Resolution will be decided by a majority of the votes cast on the poll.

8.8 Voting
On a show of hands each person present and entitled to vote, whether as a
Special Warrantholder or as proxy for one or more absent Special Warrantholder,
or both, will have one vote, and on a poll each Special Warrantholder present in
person or represented by a proxy duly appointed by instrument in writing will be
entitled to one vote in respect of each Special Warrant held by such holder. A
proxy need not be a Special Warrantholder.

 

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8.9 Regulations

  (a)  
Ability to Make: The Trustee, or the Company with the approval of the Trustee,
may from time to time make or vary such regulations as it thinks fit:

  (i)  
for the form of instrument appointing a proxy, the manner in which it must be
executed and verification of the authority of a person who executes it on behalf
of a Special Warrantholder;

  (ii)  
governing the places at which and the times by which voting certificates or
instruments appointing proxies must be deposited;

  (iii)  
generally for the calling of meetings of Special Warrantholders and the conduct
of business thereof;

  (iv)  
for the issue of voting certificates by any bank, trust company or other
depositary satisfactory to the Trustee stating that the Special Warrant
Certificates specified therein have been deposited with it by a named person and
will remain on deposit until after the meeting, which voting certificate will
entitle the persons named therein to be present and vote at any such meeting and
at any adjournment thereof or to appoint a proxy or proxies to represent them
and vote for them at any such meeting and at any adjournment thereof in the same
manner and with the same effect as though the persons so named in such voting
certificates were the actual holders of the Special Warrant Certificates
specified therein; and

  (v)  
for the deposit of voting certificates and instruments appointing proxies at
some approved place or places other than the place at which the meeting is to be
held and authorizing particulars of such instruments appointing proxies to be
sent by mail, facsimile or other means of prepaid, transmitted, recorded
communication before the meeting to the Company or to the Trustee at the place
where the meeting is to be held and for voting pursuant to instruments
appointing proxies so deposited as though the instruments themselves were
produced at the meeting.

Any regulations so made will be binding and effective and the votes given in
accordance therewith will be valid and will be counted.

  (b)  
Recognition: Except as such regulations provide, the only persons who will be
recognized at a meeting as the holders of any Special Warrants, or as entitled
to vote or, subject to Section 8.10 hereof, to be present at the meeting in
respect thereof, will be the registered holders of such Special Warrants or
their duly appointed proxies and their counsel.

 

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8.10 The Company and Trustee may be Represented
The Company and the Trustee by their respective employees, officers or
directors, and the counsel of the Company and the Trustee, may attend any
meeting of Special Warrantholders, but will not be entitled to vote thereat,
whether in respect of any Special Warrants held by them or otherwise.
8.11 Powers Exercisable by Extraordinary Resolution
In addition to all other powers conferred on them by the other provisions of
this Indenture or by law, the Special Warrantholders at a meeting will, subject
to Section 8.12 have the power, exercisable from time to time by Extraordinary
Resolution:

  (a)  
to agree to or sanction any modification, abrogation, alteration or compromise
of the rights of the Special Warrantholders or (subject to the prior consent of
the Trustee therefor) the Trustee in its capacity as Special Warrant agent and
trustee hereunder or on behalf of Special Warrantholders against the Company
which shall be agreed to by the Company whether such rights arise under this
Indenture or under the Special Warrant Certificates or otherwise;
    (b)  
to amend, alter or repeal any Extraordinary Resolution previously passed;

  (c)  
subject to arrangements as to financing and indemnity satisfactory to the
Trustee, to direct or authorize the Trustee to enforce any obligation of the
Company under this Indenture or to enforce any right of the Special
Warrantholders in any manner specified in the Extraordinary Resolution;

  (d)  
to direct or authorize the Trustee to refrain from enforcing any obligation or
right referred to in Section 8.11(c) hereof;

  (e)  
to waive and direct the Trustee to waive any default by the Company in complying
with any provision of this Indenture, either unconditionally or on any condition
specified in the Extraordinary Resolution;

  (f)  
to appoint a committee with power and authority to exercise, and to direct the
Trustee to exercise, on behalf of the Special Warrantholders, such of the powers
of the Special Warrantholders as are exercisable by Extraordinary Resolution;

  (g)  
to restrain any Special Warrantholder from taking or instituting any suit,
action or proceeding against the Company for the enforcement of any obligation
of the Company under this Indenture or to enforce any rights of the Special
Warrantholders;

  (h)  
to direct any Special Warrantholder who, as such, has brought any suit, action
or proceeding, to stay or discontinue or otherwise deal therewith on payment of
the costs, charges and expenses reasonably and properly incurred by him in
connection therewith;

 

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  (i)  
to assent to any change in or omission from the provisions contained in the
Special Warrant Certificates and this Indenture or any ancillary or supplemental
instrument which may be agreed to by the Company, and to authorize the Special
Warrantholders to concur in and execute any ancillary or supplemental indenture
embodying the change or omission;

  (j)  
to assent to any compromise or arrangement with any creditor or creditors or any
class or classes of creditors, whether secured or otherwise, and with holders of
any shares or other securities of the Company; and

  (k)  
from time to time and at any time to remove the Trustee and appoint a successor,
agent or trustee.

8.12 Meaning of “Extraordinary Resolution”

  (a)  
Meaning: The expression “Extraordinary Resolution” when used in this Indenture
means, subject to the provisions of this Section 8.12 and of Sections 8.15 and
8.16 hereof, a motion proposed at a meeting of Special Warrantholders duly
convened for that purpose and held in accordance with the provisions of this
Article 8 at which there are present in person or by proxy Special
Warrantholders holding in the aggregate at least 25% of the total number of
Special Warrants then outstanding and passed by the affirmative votes of Special
Warrantholders who hold in the aggregate not less than 66 2/3% of the total
number of Special Warrants represented at the meeting and voted on the motion.

  (b)  
Quorum: If, at a meeting called for the purpose of considering an Extraordinary
Resolution, the quorum required by Section 8.12(a) hereof is not present within
30 minutes after the time appointed for the meeting, the meeting, if convened by
Special Warrantholders or on a Special Warrantholders’ Request, will be
dissolved, but in any other case will stand adjourned to such day, being not
less than ten Business Days or more than 30 Business Days later, and to such
place and time, as is appointed by the chairman.

  (c)  
Notice: Not less than seven Business Days’ notice must be given to the Special
Warrantholders of the time and place of such adjourned meeting.

  (d)  
Form of Notice: The notice must state that at the adjourned meeting the Special
Warrantholders present in person or by proxy will form a quorum but it will not
be necessary to set forth the purposes for which the meeting was originally
called or any other particulars.

  (e)  
Quorum at Adjourned Meeting: At the adjourned meeting the Special Warrantholders
present in person or by proxy will form a quorum and may transact any business
for which the meeting was originally convened, and a motion proposed at such
adjourned meeting and passed by the requisite vote as provided in
Section 8.12(a) hereof will be an Extraordinary Resolution within the meaning of
this Indenture notwithstanding that Special Warrantholders holding in the
aggregate 25% of the total number of Special Warrants outstanding may not be
present in person or by proxy.

  (f)  
Poll: Votes on an Extraordinary Resolution must always be given on a poll and no
demand for a poll on an Extraordinary Resolution will be necessary.

 

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8.13 Powers Cumulative
Any one or more of the powers, and any combination of the powers, in this
Indenture stated to be exercisable by the Special Warrantholders by
Extraordinary Resolution or otherwise, may be exercised from time to time, and
the exercise of any one or more of such powers or any combination of such powers
from time to time will not prevent the Special Warrantholders from exercising
such power or powers or combination of powers thereafter from time to time.
8.14 Minutes
Minutes of all resolutions passed and proceedings taken at every meeting of
Special Warrantholders will be made and duly entered in books from time to time
provided for such purpose by the Trustee at the expense of the Company, and any
such minutes, if signed by the chairman of the meeting at which such resolutions
were passed or such proceedings were taken, will be prima facie evidence of the
matters therein stated, and, until the contrary is proved, every such meeting in
respect of the proceedings of which minutes have been so made, entered and
signed will be deemed to have been duly convened and held, and all resolutions
passed and proceedings taken thereat to have been duly passed and taken.
8.15 Instruments in Writing
Any action that may be taken and any power that may be exercised by Special
Warrantholders at a meeting held as provided in this Article 8 may also be taken
and exercised by Special Warrantholders who hold in the aggregate not less than
50% of the total number of Special Warrants at the time outstanding or in the
case of an Extraordinary Resolution, Special Warrantholders who hold in the
aggregate not less than 66 2/3% of the total number of Special Warrants at the
time outstanding, by their signing, each in person or by attorney duly appointed
in writing, an instrument in writing in one or more counterparts, and the
expression “Extraordinary Resolution” when used in this Indenture includes a
resolution embodied in an instrument so signed.
8.16 Binding Effect of Resolutions
Every resolution and every Extraordinary Resolution passed in accordance with
the provisions of this Article 8 at a meeting of Special Warrantholders will be
binding on all Special Warrantholders, whether present at or absent from the
meeting and whether voting for or against the resolution or abstaining, and
every instrument in writing signed by Special Warrantholders in accordance with
Section 8.15 hereof will be binding on all Special Warrantholders, whether
signatories thereto or not, and every Special Warrantholder and the Trustee
(subject to the provisions for its indemnity herein contained) will be bound to
give effect accordingly to every such resolution and instrument in writing.

 

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8.17 Holdings by the Company and Subsidiaries Disregarded
In determining whether Special Warrantholders holding the required total number
of Special Warrants are present in person or by proxy for the purpose of
constituting a quorum, or have voted or consented to a resolution, Extraordinary
Resolution, consent, waiver, Special Warrantholders’ Request or other action
under this Indenture, a Special Warrant held by the Company or by a Subsidiary
of the Company will be deemed to be not outstanding. The Company will provide
the Trustee with a certificate of the Company providing details of any Special
Warrants held by the Company or by a Subsidiary of the Company upon the written
request of the Trustee.
ARTICLE 9
SUPPLEMENTAL INDENTURES AND SUCCESSOR CORPORATIONS
9.1 Provision for Supplemental Indentures for Certain Purposes
From time to time the Company (when authorized by the directors and subject to
any applicable regulatory approvals) and the Trustee may, subject to the
provisions hereof, and will when so directed hereby, execute and deliver by
their proper officers indentures or instruments supplemental hereto, which
thereafter will form part hereof, for any or all of the following purposes:

  (a)  
increasing the number of Special Warrants authorized for issue hereunder and the
corresponding number of Underlying Securities to which Special Warrantholders
are entitled;

  (b)  
setting forth any adjustments resulting from the application of the provisions
of Section 4.7 hereof;

  (c)  
adding hereto such additional covenants and enforcement provisions as in the
opinion of counsel are necessary or advisable, and are not in the opinion of the
Trustee, relying on the advice of counsel, prejudicial to the interests of the
Special Warrantholders or any of them;

  (d)  
giving effect to any Extraordinary Resolution passed as provided in Article 8
hereof;

  (e)  
making such provisions not inconsistent with this Indenture as are (i) necessary
or desirable with respect to matters or questions arising hereunder or for the
purpose of obtaining a listing or quotation of the Common Shares on a stock
exchange or over-the-counter market, and (ii) not, in the opinion of counsel,
prejudicial to the interests of the Special Warrantholders;

 

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  (f)  
adding to, deleting or altering the provisions hereof in respect of the transfer
of Special Warrants or the conversion of Special Warrant Certificates, and
making any modification in the form of the Special Warrant Certificates that
does not affect the substance thereof;

  (g)  
modifying any provision of this Indenture (including, without limitation, making
any modification which increases the number or amount of Common Shares issuable
pursuant to the Special Warrants) or relieving the Company from any obligation,
condition or restriction herein contained, except that no such modification or
relief will be or become operative or effective if, in the opinion of counsel,
it would impair any right of the Special Warrantholders or of the Trustee, and
the Trustee may in its uncontrolled discretion decline to enter into any such
supplemental indenture which, in its opinion, will not afford adequate
protection to the Trustee when it becomes operative; and

  (h)  
for any other purpose not inconsistent with the terms of this Indenture,
including the correction or rectification of any ambiguity, defective or
inconsistent provision, error or omission herein, if in the opinion of counsel,
the rights of the Trustee and of the Special Warrantholders are not prejudiced
thereby.

9.2 Successor Entities
In the case of the consolidation, amalgamation, arrangement, merger, other form
of business combination or transfer of the undertaking or assets of the Company
as an entirety, or substantially as an entirety, to another corporation or other
entity, the successor corporation or other entity resulting from such
consolidation, amalgamation, arrangement, merger, other form of business
combination or transfer (if not the Company) will be bound by the provisions
hereof and for the due and punctual performance and observance of each and every
covenant and obligation contained in this Indenture to be performed by the
Company and will execute and deliver to the Trustee a supplemental indenture and
such other instruments as are satisfactory in form to the Trustee and in the
opinion of counsel are necessary or advisable to evidence the express assumption
by the successor corporation of such obligations.
ARTICLE 10
CONCERNING TRUSTEE
10.1 Trust Indenture Legislation
If and to the extent that any provision of this Indenture limits, qualifies or
conflicts with a mandatory requirement of Applicable Legislation, the mandatory
requirement will prevail. The Company, the Agent and the Trustee each will at
all times in relation to this Indenture and any action to be taken hereunder
observe and comply with and be entitled to the benefits of Applicable
Legislation.

 

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10.2 Rights and Duties of Trustee

  (a)  
Duty of Trustee: In the exercise of the rights and duties prescribed or
conferred by the terms of this Indenture, the Trustee will act honestly and in
good faith and will exercise that degree of care, diligence and skill that a
reasonably prudent special warrant agent would exercise in comparable
circumstances. The Trustee will not be bound to give any notice or do or take
any act, action or proceeding by virtue of the powers conferred on it hereby
unless and until it will have been required so to do under the terms hereof; nor
will the Trustee be required to take notice of any default hereunder, unless and
until notified in writing of such default, which notice will distinctly specify
the default desired to be brought to the attention of the Trustee and, in the
absence of any such notice, the Trustee may for all purposes of this Indenture
conclusively assume that no default has been made in the observance or
performance of any of the representations, warranties, covenants, agreements or
conditions contained therein. Any such notice will in no way limit any
discretion herein given to the Trustee to determine whether or not the Trustee
will take action with respect to any default.

  (b)  
No Relief From Liability: No provision of this Indenture will be construed to
relieve the Trustee from liability for its own negligent act, negligent failure
to act, wilful misconduct or bad faith.

  (c)  
Actions: The obligation of the Trustee to commence or continue any act, action
or proceeding in connection herewith, including without limitation, for the
purpose of enforcing any right of the Trustee or the Special Warrantholders
hereunder is on the condition that the Trustee will have received a Special
Warrantholders’ Request specifying the act, action or proceeding which the
Trustee is requested to take and, when required by notice to the Special
Warrantholders by the Trustee, the Trustee is furnished by one or more Special
Warrantholders with sufficient funds to commence or continue such act, action or
proceeding and an indemnity reasonably satisfactory to the Trustee to protect
and hold it harmless against the costs, charges, expenses and liabilities to be
incurred thereby and any loss and damage it may suffer by reason thereof.

  (d)  
Funding: No provision of this Indenture will require the Trustee to expend or
risk its own funds or otherwise incur financial liability in the performance of
any of its duties or in the exercise of any of its rights or powers unless it is
so indemnified.

  (e)  
Deposit of Special Warrants: The Trustee may, before commencing or at any time
during the continuance of any such act, action or proceeding, require the
Special Warrantholder at whose instance it is acting to deposit with the Trustee
the Special Warrant Certificates held by them, for which certificates the
Trustee will issue receipts.

  (f)  
Restriction: Every provision of this Indenture that relieves the Trustee of
liability or entitles it to rely on any evidence submitted to it is subject to
the provisions of (i) Applicable Legislation, (ii) this Section 10.2(f) and
(iii) Section 10.3 hereof.

 

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10.3 Evidence, Experts and Advisers

  (a)  
Evidence: In addition to the reports, certificates, opinions and other evidence
required by this Indenture, the Company will furnish to the Trustee such
additional evidence of compliance with any provision hereof, and in such form,
as is prescribed by Applicable Legislation or as the Trustee reasonably requires
by written notice to the Company.

  (b)  
Reliance by Trustee: In the exercise of any right or duty hereunder the Trustee,
if it is acting in good faith, may act and rely, as to the truth of any
statement or the accuracy of any opinion expressed therein, on any statutory
declaration, opinion, report, certificate or other evidence furnished to the
Trustee pursuant to the provisions hereof or of Applicable Legislation or
pursuant to a request of the Trustee, if such evidence complies with Applicable
Legislation and the Trustee examines such evidence and determines that it
complies with the applicable requirements of this Indenture.

  (c)  
Statutory Declaration: Whenever Applicable Legislation requires that evidence
referred to in Section 10.3(a) hereof be in the form of a statutory declaration,
the Trustee may accept such statutory declaration in lieu of a Certificate of
the Company required by any provision hereof. Any such statutory declaration may
be made by any one or more of the Chairman, President, Chief Financial Officer
or Secretary of the Company or by any other officer(s) or director(s) of the
Company to whom such authority is delegated by the directors from time to time.
In addition, the Trustee may act and rely and will be protected in acting and
relying upon any resolution, certificate, direction, instruction, statement,
instrument, opinion, report, notice, request, consent, order, letter, telegram,
cablegram or other paper or document believed by it to be genuine and to have
been signed, sent or presented by or on behalf of the proper party or parties.

  (d)  
Proof of Execution: Proof of the execution of any document or instrument in
writing, including a Special Warrantholders’ Request, by a Special Warrantholder
may be made by the certificate of a notary public, or other officer with similar
powers, that the person signing such instrument acknowledged to him the
execution thereof, or by an affidavit of a witness to such execution, or in any
other manner that the Trustee considers adequate.

  (e)  
Experts: The Trustee may employ or retain such counsel, accountants, appraisers,
or other experts or advisers as it reasonably requires for the purpose of
determining and discharging its rights and duties hereunder and may pay the
reasonable remuneration and disbursements for all services so performed by any
of them, without taxation of costs of any counsel, and will not be responsible
for any misconduct or negligence on the part of any of them who has been
selected with due care by the Trustee. The Trustee may act and rely and will be
protected in acting or not acting and relying in good faith on the opinion or
advice of or information obtained from any counsel, accountant or other expert
or advisor, whether retained or employed by the Company or by the Trustee, in
relation to any matter arising in the administration of the duties and
obligations hereof.

 

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10.4 Documents, Money, Etc. held by Trustee
Any security, document of title or other instrument that may at any time be held
by the Trustee subject to the provisions of this Indenture hereof may be placed
in the deposit vaults of the Trustee or of any Canadian chartered bank or
deposited for safekeeping with any such bank.
The Trustee shall maintain accurate books, records and accounts of the
transactions effected or controlled by the Trustee hereunder and the receipt,
investment, reinvestment and disbursement of the property hereunder and shall
provide to the Company records and statements thereof periodically upon request.
10.5 Action by Trustee to Protect Interests
The Trustee will have power to institute and to maintain such actions and
proceedings as it considers necessary or expedient to protect or enforce its
interests and the interests of the Special Warrantholders.
10.6 Trustee not Required to Give Security
The Trustee will not be required to give any bond or security in respect of the
execution of the duties and obligations and powers of this Indenture.
10.7 Protection of Trustee

  (a)  
Protection: By way of supplement to the provisions of any applicable law for the
time being relating to Agent, it is expressly declared and agreed that:

  (i)  
the Trustee will not be liable for or by reason of, or required to substantiate,
any statement of fact, representation or recital in this Indenture or in the
Special Warrant Certificates (except the representation contained in
Section 10.9 hereof or in the certificate of the Trustee on the Special Warrant
Certificates or other representation of the Trustee made herein or therein), but
all such statements or recitals are and will be deemed to be made by the
Company;

  (ii)  
nothing herein contained will impose on the Trustee any obligation to see to, or
to require evidence of, the registration or filing (or renewal thereof) of this
Indenture or any instrument ancillary or supplemental hereto;

  (iii)  
the Trustee will not be bound to give notice to any person of the execution
hereof;

  (iv)  
the Trustee will not incur any liability or responsibility whatsoever or be in
any way responsible for the consequence of any breach by the Company of any
obligation or warranty herein contained or of any act of any director, officer,
employee or agent of the Company;

 

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  (v)  
the Trustee, in its personal or any other capacity, may buy, lend upon and deal
in securities of the Company and in the Special Warrants and generally may
contract and enter into financial transactions with the Company or any related
corporation without being liable to account for any profit made thereby;

  (vi)  
the Trustee will incur no liability with respect to the delivery or non-delivery
of any certificate or certificates whether delivered by hand, mail or any other
means provided that they are sent in accordance with the provisions hereof;

  (vii)  
if the Trustee delivers any cheque as required hereunder, the Trustee will have
no further obligation or liability for the amount represented thereby, unless
any such cheque is not honoured on presentation, provided that in the event of
the non-receipt of such cheque by the payee, or the loss or destruction thereof,
the Trustee, upon being furnished with reasonable evidence of such non-receipt,
loss or destruction and, if required by the Trustee, an indemnity reasonably
satisfactory to it, will issue to such payee a replacement cheque for the amount
of such cheque; and

  (viii)  
the Trustee will disburse funds in accordance with the provisions hereof only to
the extent that funds have been deposited with it.

  (b)  
Indemnity: In addition to and without limiting any protection of the Trustee
hereunder or otherwise by law, the Company agrees to indemnify the Trustee,
employees, directors and officers (each an “Indemnified Person”), and save each
Indemnified Person harmless from all liabilities, suits, damages, costs,
expenses and actions which may be brought against or suffered by it arising out
of or connected with the performance by the Trustee of its duties hereunder,
except to the extent that such liabilities, suits, damages, costs and actions
are attributable to the gross negligence, fraud, wilful misconduct or bad faith
of the Trustee or an Indemnified Person. Notwithstanding any other provision
hereof, this indemnity will survive any removal or resignation of the Trustee,
discharge of this Indenture and termination of any duties and obligations
hereunder.

  (c)  
Notice to Trustee: The Trustee will not be bound to give any notice or do or
take any act, action or proceeding by virtue of the powers conferred on it
hereby unless and until it will have been required to do so under the terms
hereof; nor will the Trustee be required to take notice of any default
hereunder, unless and until notified in writing of such default, which notice
will describe the default desired to be brought to the attention of the Trustee
and in the absence of any such notice the Trustee may for all purposes of this
Indenture conclusively assume that no default has been made in the observance or
performance of any of the representations, warranties, covenants, agreements or
conditions contained herein. Any such notice will in no way limit the discretion
herein given to the Trustee to determine whether or not the Trustee will take
action with respect to any default.

 

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10.8 Replacement of Trustee

  (a)  
Resignation: The Trustee may resign and be discharged from all further duties
and liabilities hereunder, except as provided in this Section 10.8, by giving to
the Company and the Special Warrantholders not less than 60 Business Days notice
in writing or, if a new Trustee has been appointed, such shorter notice as the
Company accepts as sufficient, provided that such resignation and discharge will
be subject to the appointment of a successor thereto in accordance with the
provisions hereof.

  (b)  
Removal: The Special Warrantholders by Extraordinary Resolution may at any time
remove the Trustee and appoint a new Trustee.

  (c)  
Appointment of New Trustee: If the Trustee so resigns or is so removed or is
dissolved, becomes bankrupt, goes into liquidation or otherwise becomes
incapable of acting hereunder, the Company will forthwith appoint a new Trustee,
unless a new Trustee has already been appointed by the Special Warrantholders.

  (d)  
Failure to Appoint: Failing such appointment by the Company, the retiring
Trustee or any Special Warrantholder may apply, at the expense of the Company,
to the British Columbia Supreme Court, on such notice as the Court directs, for
the appointment of a new Trustee.

  (e)  
New Trustee: Any new Trustee appointed under this Section must be a corporation
authorized to carry on the business of a transfer agent or trust company in the
Provinces of Ontario and British Columbia and, if required by the Applicable
Legislation of any other province, in such other province. On any such
appointment, the new Trustee will be vested with the same powers, rights, duties
and responsibilities as if it had been originally named herein as Trustee
without any further assurance, conveyance, act or deed, but there will be
immediately executed, at the expense of the Company, all such conveyances or
other instruments as, in the opinion of counsel, are necessary or advisable for
the purpose of assuring the transfer of such powers, rights, duties and
responsibilities to the new Trustee. The predecessor Trustee will transfer,
deliver and pay over to the successor new Trustee, who will be entitled to
receive, all monies, securities, records or other property held by the
predecessor Trustee pursuant to the terms hereof and the predecessor Trustee
will thereupon be discharged as Trustee hereunder. Any new Trustee so appointed
by the Company or by the Court will be subject to removal as aforesaid by the
Special Warrantholders and by the Company.

  (f)  
Notice of New Trustee: On the appointment of a new Trustee, the Company will
promptly give notice thereof to the Special Warrantholders in accordance with
Section 11.2(a) hereof.

 

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  (g)  
Successor Trustee: A corporation into or with which the Trustee is merged or
consolidated or amalgamated, or a corporation succeeding to the business of the
Trustee, will be the successor to the Trustee hereunder without any further act
on its part or on the part of any party hereto if such corporation would be
eligible for appointment as a new Trustee under Section 10.8(e) hereof.

  (h)  
Certificates: A Special Warrant Certificate certified but not delivered by a
predecessor Trustee may be delivered by the new or successor Trustee in the name
of the predecessor Trustee or successor Trustee.

10.9 Conflict of Interest
The Trustee represents to the Company that, at the time of the execution and
delivery hereof, no material conflict of interest exists between its role as
Trustee hereunder and its role in any other capacity and if a material conflict
of interest arises hereafter it will, within 90 days after ascertaining that it
has such material conflict of interest, either eliminate the conflict of
interest or resign its duties and obligations hereunder.
10.10 Acceptance of Duties and Obligations
The Trustee hereby accepts the duties and obligations in this Indenture declared
and provided for and agrees to perform them on the terms and conditions herein
set forth. The Trustee accepts the duties and responsibilities under this
Indenture solely as custodian, bailee and agent. No trust is intended to be or
will be created hereby and the Trustee will owe no duties hereunder as a
trustee. Neither the Trustee nor any person related to the Trustee will be
appointed a receiver or receiver and manager or liquidator of all or any part of
the assets or undertaking of the Company. The Trustee will not be required to
give any bond or security in respect of the execution of the trusts and powers
on this Indenture or otherwise in respect of the premises.
ARTICLE 11
GENERAL
11.1 Notice to the Company and the Trustee

  (a)  
Company: Unless herein otherwise expressly provided, a notice to be given
hereunder to the Company or the Trustee will be validly given if delivered or if
sent by registered letter, postage prepaid, or if sent by facsimile transmission
(if receipt of such transmission is confirmed):

  (i)  
if to the Company:

Ivanhoe Energy Inc.
654-999 Canada Place
Vancouver, British Columbia V6C 3E1
Attention: Corporate Secretary
Facsimile: (604) 682-2060

 

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  (ii)  
if to the Agent:
       
Macquarie Capital Markets Canada Ltd.
2020, 335 8th Avenue S.W.
Calgary, Alberta T2P 1C9

Attention: Thomas Ebbern
Facsimile: (403) 269-7870
    (iii)  
if to the Trustee:
       
CIBC Mellon Trust Company
1600 — 1066 West Hastings Street
Vancouver, British Columbia V6E 3X1
       
Attention: Corporate Trust Department
Facsimile: (604) 688-4301

and any such notice delivered or sent in accordance with the foregoing will be
deemed to have been received on the date of delivery or facsimile transmission
or, if mailed, on the second Business Day following the day of the mailing of
the notice. The original of any document sent by facsimile transmission to the
Trustee will be subsequently mailed to the Trustee.

  (b)  
Change of Address: The Company, the Agent or the Trustee, as the case may be,
may from time to time notify the other in the manner provided in Section 11.1(a)
hereof of a change of address which, from the effective date of such notice and
until changed by like notice, will be the address of the Company, the Agent or
the Trustee, as the case may be, for all purposes of this Indenture.

  (c)  
Postal Interruption: If, by reason of a strike, lockout or other work stoppage,
actual or threatened, involving Canadian postal employees, a notice to be given
to the Trustee or to the Company hereunder could reasonably be considered
unlikely to reach or likely to be delayed in reaching its destination, the
notice will be valid and effective only if it is delivered to an officer of the
party to which it is addressed. Any notice delivered in accordance with the
foregoing will be deemed to have been received on the date of delivery to such
officer.

 

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11.2 Notice to Special Warrantholders

  (a)  
Notice: Unless herein otherwise expressly provided, a notice to be given
hereunder to Special Warrantholders will be deemed to be validly given if the
notice is sent by ordinary surface or air mail, postage prepaid, addressed to
the Special Warrantholders or delivered (or so mailed to certain Special
Warrantholders and so delivered to the other Special Warrantholders) at their
respective addresses appearing on any of the registers of holders described in
Section 3.1 hereof, provided, however, that if, by reason of a strike, lockout
or other work stoppage, actual or threatened, involving Canadian postal
employees, the notice could reasonably be considered unlikely to reach or likely
to be delayed in reaching its destination, the notice will be valid and
effective if it is printed once in the national edition of the Globe & Mail. All
notices may be given to whichever of the holders of a Special Warrant (if more
than one) is named first in the appropriate register hereinbefore provided, and
any notice so given shall be sufficient notice to all holders of such Special
Warrant and any other persons (if any) interested in such Special Warrant.

  (b)  
Date of Notice: A notice so given by mail or so delivered will be deemed to have
been given on the fifth Business Day after it has been mailed or on the day on
which it has been delivered, as the case may be, and a notice so given by
publication will be deemed to have been given on the day on which it has been
published as required. In determining under any provision hereof the date when
notice of a meeting or other event must be given, the date of giving notice will
be included and the date of the meeting or other event will be excluded.
Accidental error or omission in giving notice or accidental failure to mail
notice to any Special Warrantholder will not invalidate any action or proceeding
founded thereon.

11.3 Satisfaction and Discharge of Indenture
If all certificates representing Underlying Securities required to be issued in
compliance with the provisions hereof have been issued hereunder in accordance
with such provisions, if all payments required to be made in compliance with the
provisions of this Indenture have been made in accordance with such provisions
and payment to the Trustee of the fees and other remuneration payable to the
Trustee have been made, this Indenture will cease to be of further effect and,
on demand of and at the cost and expense of the Company and on delivery to the
Trustee of a Certificate of the Company stating that all conditions precedent to
the satisfaction and discharge of this Indenture have been complied with and on
payment to the Trustee of the fees and other remuneration payable to the
Trustee, the Trustee will execute proper instruments acknowledging the
satisfaction of and discharging this Indenture, provided that if the Trustee has
not then performed any of its obligations hereunder, any such satisfaction and
discharge of the Company’s obligations hereunder shall not affect or diminish
the rights of any Special Warrantholder or the Company against the Trustee.
11.4 Sole Benefit of Parties and Special Warrantholders
Nothing in this Indenture or the Special Warrant Certificates, expressed or
implied, will give or be construed to give to any person other than the parties
hereto and the Special Warrantholders, as the case may be, any legal or
equitable right, remedy or claim under this Indenture or the Special Warrant
Certificates, or under any covenant or provision herein or therein contained,
all such covenants and provisions being for the sole benefit of the parties
hereto and the Special Warrantholders.

 

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11.5 Discretion of Directors
Any matter provided herein to be determined by the directors will be determined
by the directors in their sole discretion, acting reasonably, and a
determination so made will be conclusive.
11.6 Counterparts and Formal Date
This Indenture may be executed in several counterparts, each of which when so
executed will be deemed to be an original and such counterparts together will
constitute one and the same instrument and notwithstanding the date of their
execution will be deemed to be dated as of this Indenture.
11.7 Assignment
This Indenture may not be assigned by either party hereto without the consent in
writing of the other party. This Indenture shall enure to and bind the parties
and their lawful successors and permitted assigns.
[Remainder of page intentionally blank]

 

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IN WITNESS WHEREOF the parties hereto have executed this Special Warrant
Indenture as of the day and year first above written.

          IVANHOE ENERGY INC.    
 
       
Per:
  (signed) “Beverly A. Bartlett”
 
Name: Beverly A. Bartlett    
 
  Title:   Vice President & Corporate Secretary    
 
        MACQUARIE CAPITAL MARKETS CANADA LTD.    
 
       
Per:
  (signed) David Vetters
 
Name: David Vetters    
 
  Title:   Managing Director    
 
       
Per:
  (signed) Josh Woitas
 
Name: Josh Woitas    
 
  Title:   Senior Manager    
 
        CIBC MELLON TRUST COMPANY    
 
       
Per:
  (signed) Tricia Murphy
 
Name: Tricia Murphy
Title:   Manager, Client Relations    
 
       
Per:
  (signed) Margot Sulymka
 
Name: Margot Sulymka    
 
  Title:   Associate Manager, Corporate Trust    

 

59

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SCHEDULE A TO THE SPECIAL WARRANT INDENTURE DATED AS OF
JANUARY 25, 2010 AMONG IVANHOE ENERGY INC. MACQUARIE CAPITAL
MARKETS CANADA LTD. AND
CIBC MELLON TRUST COMPANY

SPECIAL WARRANT CERTIFICATE
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST
NOT TRADE THE SECURITY BEFORE MAY •, 2010.”;
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF CDS
CLEARING AND DEPOSITARY SERVICES INC. (“CDS”) TO IVANHOE ENERGY INC. (THE
“ISSUER”) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IN RESPECT THEREOF IS REGISTERED IN THE NAME OF CDS &
CO., OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
CDS (AND ANY PAYMENT IS MADE TO CDS & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF CDS), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED HOLDER HEREOF, CDS & CO., HAS A PROPERTY INTEREST IN THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HEREIN AND IT IS A VIOLATION OF ITS RIGHTS FOR
ANOTHER PERSON TO HOLD, TRANSFER OR DEAL WITH THIS CERTIFICATE.
THE FOLLOWING LEGEND FOR U.S. PURCHASERS ONLY
THE SPECIAL WARRANTS (AS DEFINED BELOW), THE COMMON SHARES (AS DEFINED BELOW)
AND THE WARRANTS (AS DEFINED BELOW) ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE “SECURITIES ACT”)
OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND SUCH SPECIAL
WARRANTS MAY NOT BE EXERCISED WITHIN THE UNITED STATES OR BY OR ON BEHALF OF ANY
PERSON IN THE UNITED STATES UNLESS REGISTERED UNDER THE SECURITIES ACT AND THE
SECURITIES LAWS OF ALL APPLICABLE STATES OF THE UNITED STATES OR AN EXEMPTION
FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE. “UNITED STATES” IS AS DEFINED
BY REGULATION S UNDER THE SECURITIES ACT.
“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY
PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH
SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE
COMPANY, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION
S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH CANADIAN LAWS AND
REGULATIONS, (C) INSIDE THE UNITED STATES, PURSUANT TO THE EXEMPTION FROM
REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF
AVAILABLE, IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS OF THE UNITED
STATES, OR (D) INSIDE OR OUTSIDE THE UNITED STATES, PURSUANT TO ANOTHER
EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE
STATE SECURITIES LEGISLATION AFTER PROVIDING A LEGAL OPINION SATISFACTORY TO THE
COMPANY THAT SUCH TRANSFER IS EXEMPT FROM OR OTHERWISE NOT SUBJECT TO
REGISTRATION UNDER THE U.S. SECURITIES ACT AND APPLICABLE SECURITIES LAWS.”

 

 

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Certificate Number:                     
  Number of Special Warrants:                     

SPECIAL WARRANTS
convertible into Common Shares and Warrants of
IVANHOE ENERGY INC.
THIS IS TO CERTIFY THAT, for value received,                      (the “holder”)
is the registered holder of the number of special warrants (“Special Warrants”)
of Ivanhoe Energy Inc. (the “Company”) specified above and is thereby entitled,
without payment of any additional consideration, to be issued fully paid and
non-assessable common shares of the Company (“Common Shares”) and common share
purchase warrants of the Company (“Warrants” and together with the Common
Shares, the “Underlying Securities”)) on the first Business Day following the
Qualification Date (as defined in the Special Warrant Indenture hereinafter
referred to) on the basis of one (1) Common Share and one quarter of one (0.25)
Warrant for each one Special Warrant, subject to adjustment in accordance with
the provisions of the Special Warrant Indenture.
This Special Warrant Certificate represents Special Warrants issued under the
provisions of a special warrant indenture (which indenture, together with all
instruments supplemental or ancillary thereto, is herein referred to as the
“Special Warrant Indenture”) dated as of January •, 2010 among the Company,
Macquarie Capital Markets Canada Ltd. and CIBC Mellon Trust Company (the
“Trustee”). Reference is hereby made to the Special Warrant Indenture for
particulars of the rights of the holders of the Special Warrants, the Company
and the Trustee in respect thereof and of the terms and conditions upon which
the Special Warrants are issued and held, all to the same effect as if the
provisions of the Special Warrant Indenture were herein set forth in full, to
all of which the holder, by acceptance hereof, assents. In the event of a
conflict between the provisions of this Special Warrant Certificate and the
Special Warrant Indenture, the terms of the Special Warrant Indenture will
govern. The Company will furnish to the holder, on request, a copy of the
Special Warrant Indenture. Terms used in this Special Warrant Certificate and
not otherwise defined herein have the meanings assigned to them in the Special
Warrant Indenture.
An amount equal to the aggregate Issue Price paid for the Special Warrants has
been deposited in escrow with the Trustee, pending satisfaction of the Release
Condition. Provided the Release Condition is satisfied at or prior to the
Release Deadline, the Escrowed Funds will be released as directed by the Company
in satisfaction of the commission payable to the Agent pursuant to the Agency
Agreement and the remainder to the Company. If the Release Condition is not
satisfied at or prior to the Release Deadline, the Trustee will return to each
Special Warrantholder an amount equal to the Issue Price paid by such holder and
such holder’s pro rata entitlement to Earnings less applicable withholding
taxes, if any. If a Special Warrantholder elects to convert any Special Warrants
into Underlying Securities prior to the satisfaction of the Release Condition,
the aggregate Issue Price deposited in escrow in respect of the converted
Special Warrants, together with Earnings in respect thereof, will be released
from escrow as directed by the Company for the Company’s use in its absolute
discretion and such holder will no longer be entitled to the return of any
Escrowed Funds if the Release Condition is not satisfied by the Release
Deadline.

 

2

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The Special Warrants represented by this Special Warrant Certificate may be
converted by the holder at any time after the Effective Date and prior to the
Time of Expiry; provided that if such Special Warrants have not been converted
as hereinafter provided prior to the Qualification Date, such Special Warrants
will be deemed to be converted into Underlying Securities by the Trustee for and
on behalf of the holder on the first Business Day following the Qualification
Date without the taking of any action by the holder, including the surrender of
this Special Warrant Certificate, which will thereupon be cancelled by the
Trustee.
The holder of this Special Warrant and any transferee hereof are cautioned that
in the event that the Special Warrants are deemed to be converted, certificates
representing the Underlying Securities, will be mailed or delivered to the
latest address of record of the registered holder or to the direction of the
registered holder, and the Company and the Trustee are not bound to take notice
of any transfers or assignments unless the transferee is a duly registered
holder of the Special Warrant prior to such mailing or delivery.
On and after the date of any conversion of the Special Warrants represented by
this Special Warrant Certificate, the holder will have no rights as a Special
Warrantholder except to receive certificates representing the Underlying
Securities issued upon the conversion thereof to such holder and as set forth in
the Indenture.
The Company will not be obligated after the aggregation of the number of
Underlying Securities to be issued to a holder of Special Warrants to issue any
fraction of an Underlying Securities on the conversion of Special Warrants. If a
holder of Special Warrants would otherwise be entitled to a fractional
Underlying Securities pursuant to the Special Warrants, the number of Underlying
Securities to be issued will be rounded down to the next whole number, if the
holder is entitled to receive less than 0.5 of an Underlying Securities and
rounded up to the next whole number, if the holder is entitled to receive 0.5 or
more of an Underlying Securities, and the holder of such Special Warrants will
not be entitled to any cash compensation in respect of such fraction.
No Underlying Securities will be issued pursuant to any conversion of any
Special Warrant if the issue of such security would constitute a violation of
the securities laws of the applicable jurisdiction.
The Special Warrant Indenture provides for adjustments to the rights of the
holders of Special Warrants on the happening of certain stated events, including
the subdivision or consolidation of the outstanding Common Shares, certain
distributions of Common Shares or of securities convertible into or exchangeable
for Common Shares or of other securities or assets of the Company, certain
offerings of rights, warrants or options and certain capital reorganizations.
The Special Warrant Indenture contains provisions making binding on all holders
of Special Warrants outstanding thereunder resolutions passed by holders of a
specified majority of all outstanding Special Warrants at meetings of such
holders held in accordance with such provisions and instruments in writing
signed by holders of a specified majority of all outstanding Special Warrants.

 

3

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On presentation at the principal office of the Trustee in Vancouver, British
Columbia, or Toronto, Ontario, subject to the provisions of the Special Warrant
Indenture and on compliance with the reasonable requirements of the Trustee, one
or more Special Warrant Certificates may be exchanged at no cost to the holder
for one or more Special Warrant Certificates of different denominations
representing in the aggregate the same number of Special Warrants as the Special
Warrant Certificate or Special Warrant Certificates being exchanged.
The Special Warrants represented by this Special Warrant Certificate may only be
transferred, upon compliance with the conditions prescribed in the Special
Warrant Indenture, on the register of transfers to be kept at the principal
office of the Trustee in Vancouver, British Columbia, or Toronto, Ontario by the
holder or the executors, administrators or other legal representatives thereof
or the attorney thereof appointed by an instrument in writing in form and
executed in a manner satisfactory to the Trustee and, upon compliance with such
requirements and such other reasonable requirements as the Trustee may
prescribe, such transfer will be duly recorded on such register of transfers by
the Trustee. Notwithstanding the foregoing, the Company will be entitled, and
may direct the Trustee, to refuse to record any transfer of any Special Warrant
on such register if such transfer would constitute a violation of the securities
laws of any jurisdiction.
The holding of this Special Warrant Certificate will not constitute the holder a
shareholder of the Company or entitle such holder to any right or interest in
respect thereof except as otherwise provided in the Special Warrant Indenture.
This Special Warrant Certificate will not be valid for any purpose until it has
been certified by or on behalf of the Trustee for the time being under the
Special Warrant Indenture. Time is of the essence hereof.
The Special Warrant Certificate will be construed and enforced in accordance
with the laws prevailing in the Province of British Columbia and the federal
laws of Canada applicable therein and will be treated in all respects as a
British Columbia contract.
[The remainder of this page has been intentionally left blank]

 

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IN WITNESS WHEREOF the Company has caused this Special Warrant Certificate to be
signed by its officers or other individuals duly authorized in that behalf as of
January 25, 2010.

            IVANHOE ENERGY INC.
      By:      

This Special Warrant Certificate is one of the Special Warrant Certificates
referred to in the Special Warrant Indenture.

            CIBC MELLON TRUST COMPANY
      By:      

Countersigned by the Trustee as of this 25th day of January, 2010.

 

5

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TO: IVANHOE ENERGY INC. (the “Company”)
NOTICE OF CONVERSION
The undersigned holder of the Special Warrants represented by this Special
Warrant Certificate hereby exercises the right thereof to be issued the
Underlying Securities which are issuable pursuant to the conversion of such
Special Warrants on the terms specified in such Special Warrant Certificate and
in the Special Warrant Indenture.
The undersigned certifies that (check applicable box(es), if any)

             
 
  o   A  
The undersigned holder (i) at the time of exercise of the Special Warrants is
not in the United States; (ii) it is not a U.S. person, and is not exercising
the Special Warrants on behalf of a U.S. person; and (iii) did not execute or
deliver this exercise form in the United States.
 
           
 
  o   B  
The undersigned holder (i) purchased the Special Warrants directly from the
Company pursuant to a written subscription agreement for the purchase of Special
Warrants, (ii) is exercising the Special Warrants solely for its own account and
not on behalf of any other Person; and (iii) was an “Accredited Investor”, as
that term is defined in Regulation D under the U.S. Securities Act, both on the
date the Special Warrants were purchased from the Company and on the date of
exercise of the Special Warrants.
 
           
 
  o   C  
The undersigned holder has delivered to the Company an opinion of counsel (which
will not be sufficient unless it is from counsel of recognized standing and such
opinion is in form and substance satisfactory to the Company) to the effect that
an exemption form the registration requirements of the U.S. Securities Act and
applicable state securities laws is available.

Note:  
Certificates representing Underlying Securities will not be registered or
delivered to an address in the United States unless Box B or C above is checked.

 

 

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The undersigned hereby irrevocably directs that the said Underlying Securities
be issued, registered and delivered as follows:

                      Number of Common     Name(s) in Full   Address(es)  
Shares   Number of Warrants
                                        
 
                                        
                                            
                                        
                                        
                                            
                                          
                                        
                                        
                                            
                                          
                                        

(Please print full name in which certificates representing the Underlying
Securities are to be issued. If any Underlying Securities are to be issued to a
person or persons other than the holder, the holder must pay to the Trustee, all
exigible transfer taxes or other government charges.
DATED this  _____  day of                     , 20  _____.

                 
 
    )          
 
    )          
 
    )    
 
Signature of Registered Holder    
 
    )          
 
    )          
 
Signature Guaranteed
)    
 
Name of Registered Holder    
 
    )          

o Please check if the certificates representing the Underlying Securities are to
be delivered at the office where this Special Warrant Certificate is
surrendered, failing which such certificates will be mailed to the address set
out above. Certificates will be delivered or mailed as soon as practicable after
the surrender of this Special Warrant Certificate to the Trustee.
Instructions:

1.  
The registered holder may exercise its right to receive Underlying Securities on
exercise hereof by completing this form and surrendering this form and the
Special Warrant Certificate representing the Special Warrants being exercised to
the Trustee.

2.  
If the Notice of Conversion indicates that the Underlying Securities are to be
issued to a person or persons other than the registered holder of the Special
Warrant Certificate, the signature of such registered holder on the Notice of
Conversion must be guaranteed by a Schedule I Canadian chartered bank, or a
member of a recognized Medallion Guarantee program. The stamp affixed thereon by
the guarantor must bear the actual words “Signature Guaranteed” or “Medallion
Guaranteed” and otherwise be in accordance with industry standards.

 

2

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FORM OF TRANSFER

CIBC MELLON TRUST COMPANY
1600 — 1066 West Hastings Street
Vancouver, British Columbia V6E 3X1
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers to
                                                                    
                                                                           
                                                                 
                                               (print name and address) the
Special Warrants represented by this Special Warrant Certificate and hereby
appoints                                                                 as its
attorney with full power of substitution to transfer the Special Warrants on the
appropriate register of the Trustee.
DATED this  _____  day of                     , 201  _____.

                 
 
    )          
 
    )          
 
    )    
 
Signature of Transferor    
 
    )          
 
    )          
 
Signature Guaranteed
)    
 
Name of Transferor    
 
    )          

CERTAIN REQUIREMENTS RELATING TO TRANSFERS

1.  
In the case of any transfer of Special Warrants to a Person resident in, or
otherwise subject to the securities laws of, any province or territory of
Canada, either the transferee must be an Accredited Investor within the meaning
of such applicable securities laws in Canada or the transfer must otherwise be
exempt from the prospectus and registration requirements of applicable
securities laws in Canada.

2.  
The Special Warrant Indenture contains certain other requirements relating to
the transfer of Special Warrants, including, among other things, a requirement
in certain cases that a written opinion of U.S. counsel of recognized standing
be delivered in connection with the transfer of Special Warrants by a U.S.
Person or a person in the United States or a person holding Special Warrants for
the account or benefit of a U.S. Person or a person in the United States, to a
person in the United States or for the account or benefit of a U.S. Person or a
person in the United States.

3.  
The signature of the transferor must correspond in every particular with the
surname and the first name(s) or initials shown on the face of this certificate
and the endorsement must be signature guaranteed, in either case, by a
Schedule 1 Canadian chartered bank, a firm which is a member of a recognized
stock exchange in Canada, a national securities exchange in the United States,
or the National Association of Securities dealers or a member of a recognized
medallion program. The stamp affixed thereon by the guarantor must bear the
actual words “signature guarantee”, or “medallion guaranteed” and otherwise be
in accordance with industry standards.

 

 

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SCHEDULE B TO THE SPECIAL WARRANT INDENTURE DATED AS OF
JANUARY •, 2010 AMONG IVANHOE ENERGY INC., MACQUARIE CAPITAL
MARKETS CANADA LTD. AND
CIBC MELLON TRUST COMPANY

DECLARATION FOR REMOVAL OF LEGEND

To:  
IVANHOE ENERGY INC. (the “Company”) and its
Registrar/Transfer Agent for the subject securities.

The undersigned (a) represents and warrants that the sale of
                     [specify the number of Common Shares, Warrants or Special
Warrants] of the Company’s                      [Common Shares, Warrants or
Special Warrants] 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 Company as that term is defined in Rule 405 of 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 in, on or through the facilities of a
“designated offshore securities market” (which includes 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 described in Rule 144(a)(3) under the U.S. Securities Act), (5) the
seller does not intend to replace the securities sold in reliance on Rule 904 of
the U.S. Securities Act 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 under the U.S.
Securities Act.

         
By:
      Date:                                         
 
       
 
  Signature    

         
Name (please print)
       
 
 
 
   

 

 

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AFFIRMATION BY SELLER’S BROKER-DEALER (IF ANY)
We have read the foregoing representations of our customer,
                                         (the “Seller”), with regard to our
sale, for such Seller’s account, of the securities of the Company described
therein, and on behalf of ourselves we certify and affirm that (A) we have no
knowledge that the transaction had been prearranged with a buyer in the United
States, (B) the transaction was executed on or through the facilities of the
Toronto Stock Exchange and (C) neither we, nor any person acting on our behalf,
engaged in any directed selling efforts in connection with the offer and sale of
such securities. Terms used herein have the meanings given to them by
Regulation S.

                Name of Firm    
 
       
By:
       
 
 
 
Authorized Officer    
 
        Date:                                                                 

 

2

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SCHEDULE C TO THE SPECIAL WARRANT INDENTURE DATED AS OF
JANUARY __, 2010 AMONG IVANHOE ENERGY INC., MACQUARIE CAPITAL
MARKETS CANADA LTD. AND
CIBC MELLON TRUST COMPANY

RELEASE AND PAYMENT CERTIFICATE

     
TO:
  CIBC Mellon Trust Company (the “Trustee”), as Trustee relating to the issue of
special warrants (“Special Warrants”) of Ivanhoe Energy Inc. (the “Company”)
 
   
AND TO:
  Macquarie Capital Markets Canada Ltd. (the “Agent”)

This Release and Payment Certificate is being provided pursuant to
Section 6.3(a) of the Special Warrant Indenture (the “Indenture”) dated
January 25, 2010 among the Company, the Trustee and the Agent. Capitalized terms
not defined herein have the meaning ascribed to them in the Indenture.
The undersigned,                     , the                      of the Company,
hereby certifies for and on behalf of the Company and not in a personal capacity
that the Release Condition has been met.
The Company hereby directs the Trustee to release the Escrowed Funds as follows:

  (1)  
in satisfaction of the commission payable to the Agent pursuant to the Agency
Agreement:

         
 
  Amount:   $                    
 
       
 
  Wire Instructions:  
                                                            
 
                                                                  
 
                                                                  

  (2)  
with respect to any Escrowed Funds not allocated to (1) above, to the Company:

         
 
  Amount:   $                    
 
       
 
  Wire Instructions:  
                                                            
 
                                                                  
 
                                                                  

 

 

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DATED at Vancouver, British Columbia, this  _____  day of  _____, 2010.

          IVANHOE ENERGY INC.    
 
       
Per:
       
 
 
 
Name:    
 
  Title:    
 
        ACKNOWLEDGED by
MACQUARIE CAPITAL MARKETS CANADA LTD.    
 
       
Per:
       
 
 
 
Name:    
 
  Title:    

 

2