SCHEDULE 1
 
The Corporation is authorized to issue an unlimited number of Common Shares, an
unlimited number of Preferred Shares, and an unlimited number of Exchangeable
Shares, such Common Shares, Preferred Shares, and Exchangeable Shares having
attached thereto the following rights, privileges, restrictions and conditions:
 
Common Shares
 
The rights of the holders of the Common Shares are equal in all respects and
include the following:
 

 
(a)
to vote at all meetings of the shareholders of the Corporation, except meetings
at which only holders of a specified class are entitled to vote;

 

 
(b)
subject to the rights, privileges, restrictions and conditions attaching to any
other class or series of shares of the Corporation, to receive any dividend
declared by the Corporation on the Common Shares; and

 

 
(c)
subject to the rights of the holders of the Exchangeable Shares, any series of
Preferred Shares, and any other class of shares ranking senior to the Common
Shares, in the event of the voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation, or any other distribution of its assets among its
shareholders for the purpose of winding-up its affairs (the “Distribution”),
holders of Common Shares shall be entitled to receive equally, share for share,
in any such Distribution.

 
Preferred Shares
 

 
(a)
The Preferred Shares may be issued from time to time in one or more series with
such rights, restrictions, privileges, conditions and designations attached
thereto as shall be fixed from time to time before issuance by any resolution or
resolutions providing for the issue of the shares of any series which may be
passed by the board of directors of the Corporation and confirmed and declared
by Articles of Amendment. Reference to one class or series of shares ranking on
a parity with another class or series of shares shall mean ranking on a parity
with respect to payment of dividends and distribution of assets in the event of
liquidation, dissolution or winding-up of the Corporation, whether voluntary or
involuntary, to the extent of their respective rights in that connection.

 
(b)
The Preferred Shares of each series shall rank on a parity with the Preferred
Shares of every other series; provided, however, that when in the case of any of
such shares any cumulative dividends or amounts payable on a return of capital
are not paid in full in accordance with their respective terms, the Preferred
Shares of all series shall participate rateably in respect of such dividends
(including all unpaid accumulated dividends which for such purpose shall be
calculated as if the same were accruing up to the date of payment) in accordance
with the sums which would be payable on said shares if all such dividends were
declared and paid in full in accordance with their respective terms, and on any
return of capital in accordance with the sums which would be payable on such
return of capital if all sums so payable were paid in full in accordance with
their respective terms, and provided further that in the event of there being
insufficient assets to satisfy in full all such claims as aforesaid, the claims
of the holders of the said shares with respect to return of capital shall first
be paid and satisfied and any assets remaining thereafter shall be applied
towards the payment and satisfaction of claims in respect of dividends as
aforesaid.

 
 

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(c)
The Preferred Shares shall be entitled to preference over the Common Shares of
the Corporation and any other shares of the Corporation ranking junior to the
Preferred Shares with respect to payment of dividends and distribution of assets
in the event of liquidation, dissolution or winding-up of the Corporation,
whether voluntary or involuntary, to the extent fixed in the case of each
respective series, and may also be given such other preferences over the Common
Shares of the Corporation and any other shares of the Corporation ranking junior
to the said Preferred Shares as may be fixed in the case of each such series.

Exchangeable Shares
 
The Exchangeable Shares in the capital of the Corporation shall have the
following rights, privileges, restrictions and conditions:
 
ARTICLE 1
 
INTERPRETATION
 
1.1
For the purposes of these share provisions:

 
"ABCA" means the Business Corporations Act (Alberta), as amended from time to
time prior to the Effective Date;
 
"Acquirer" means CanWest Petroleum Corporation, a corporation incorporated under
the laws of Colorado;
 
"Acquirer Control Transaction" means any merger, amalgamation, tender offer,
material sale of shares or rights or interests therein or thereto or similar
transactions involving Acquirer, or any proposal to carry out the same;
 
"Acquirer Dividend Declaration Date" means the date on which the board of
directors of Acquirer declares any dividend on the Acquirer Shares;
 
"Acquirer Shares" means the shares in the common stock of Acquirer and any other
securities into which such shares may be changed, exchanged or converted;
 
"Affiliate" has the meaning ascribed thereto in the Securities Act, unless
otherwise expressly stated herein;
 
 
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"Board of Directors" means the board of directors of the Corporation;
 
"Business Day" means any day on which commercial banks are generally open for
business in Vancouver, British Columbia and Calgary, Alberta, other than a
Saturday, a Sunday or a day observed as a holiday in Vancouver, British Columbia
or in Calgary, Alberta;
 
"Callco" means 1259882 Alberta Ltd., a corporation existing under the laws of
the Province of Alberta and an indirect wholly-owned subsidiary of Acquirer or
any other direct or indirect wholly-owned subsidiary designated by Acquirer from
time to time in replacement thereof;
 
"Callco Call Notice" has the meaning ascribed thereto in Section 6.3 of these
share provisions;
 
"Canadian Dollar Equivalent" means in respect of an amount expressed in a
currency other than Canadian dollars (the "Foreign Currency Amount") at any date
the product obtained by multiplying:
 

 
(a)
the Foreign Currency Amount, by

 

 
(b)
the noon spot exchange rate on such date for such foreign currency expressed in
Canadian dollars as reported by the Bank of Canada or, in the event such spot
exchange rate is not available, such spot exchange rate on such date for such
foreign currency expressed in Canadian dollars as may be deemed by the Board of
Directors to be appropriate for such purpose;

 
"Change of Law" means any amendment to the ITA and other applicable provincial
income tax laws that permits holders of Exchangeable Shares who are resident in
Canada, hold the Exchangeable Shares as capital property and deal at arm's
length with Acquirer and the Corporation (all for the purposes of the ITA and
other applicable provincial income tax laws) to exchange their Exchangeable
Shares for Acquirer Shares on a basis that will not require such holders to
recognize any gain or loss or any actual or deemed dividend in respect of such
exchange for the purposes of the ITA or applicable provincial income tax laws;
 
"Change of Law Call Date" has the meaning provided in Section 10.2 of these
share provisions;
 
"Change of Law Call Purchase Price" has the meaning provided in Section 10.1 of
these share provisions;
 
"Change of Law Call Right" has the meaning provided in Section 10.1 of these
share provisions;
 
 
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"Current Market Price" means, in respect of an Acquirer Share on any date, the
Canadian Dollar Equivalent of the average of the closing bid and asked prices of
Acquirer Shares during a period of 20 consecutive trading days ending not more
than three trading days before such date on the American Stock Exchange, or, if
the Acquirer Shares are not then listed on the American Stock Exchange, on such
other stock exchange or automated quotation system on which the Acquirer Shares
are listed or quoted, as the case may be, as may be selected by the Board of
Directors for such purpose; provided, however, that if in the opinion of the
Board of Directors the public distribution or trading activity of Acquirer
Shares during such period does not create a market which reflects the fair
market value of an Acquirer Share, then the Current Market Price of an Acquirer
Share shall be determined by the Board of Directors, in good faith and in its
sole discretion, and provided further that any such selection, opinion or
determination by the Board of Directors shall be conclusive and binding;
 
"Effective Date" means the effective date of the Reorganization, being the date
shown on the certificate of amendment to be issued under the ABCA giving effect
to the Reorganization;
 
"Exchangeable Share Consideration" means, with respect to each Exchangeable
Share, for any acquisition of, redemption of or distribution of assets of the
Corporation in respect of, or purchase pursuant to, these share provisions, the
Support Agreement or the Voting and Exchange Trust Agreement:
 

 
(a)
the Current Market Price of one Acquirer Share deliverable in connection with
such action; plus

 
 
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(b)
a cheque or cheques payable at par at any branch of the bankers of the payor in
the amount of all declared, payable and unpaid, and all undeclared but payable,
cash dividends deliverable in connection with such action; plus

 

 
(c)
such stock or other property constituting any declared and unpaid non-cash
dividends deliverable in connection with such action,

 
provided that (i) the part of the consideration which represents (a) above shall
be fully paid and satisfied by the delivery of one Acquirer Share, such share to
be duly issued, fully paid and non-assessable, (ii) the part of the
consideration which represents (c) above shall be fully paid and satisfied by
delivery of such non-cash items, (iii) any such consideration shall be delivered
free and clear of any lien, claim, encumbrance, security interest or adverse
claim or interest and (iv) any such consideration shall be paid less any tax
required to be deducted and withheld therefrom and without interest;
 
"Exchangeable Share Price" means, for each Exchangeable Share, an amount equal
to the aggregate of:
 

 
(a)
the Current Market Price of one Acquirer Share; plus

 

 
(b)
an additional amount equal to the full amount of all cash dividends declared,
payable and unpaid, on such Exchangeable Share; plus

 

 
(c)
an additional amount representing the full amount of all non-cash dividends
declared, payable and unpaid, on such Exchangeable Share; plus

 

 
(d)
an additional amount equal to the full amount of all dividends declared and
payable or paid on Acquirer Shares which have not been declared or paid on
Exchangeable Shares in accordance herewith;

 
"Exchangeable Share Voting Event" means any matter in respect of which holders
of Exchangeable Shares are entitled to vote as shareholders of the Corporation
in order to approve or disapprove, as applicable, any change to, or in the
rights of the holders of, the Exchangeable Shares, where the approval or
disapproval, as applicable, of such change would be required to maintain the
equivalence of the Exchangeable Shares and the Acquirer Shares;
 
"Governmental Entity" means any (a) multinational, federal, provincial,
territorial, state, regional, municipal, local or other government, governmental
or public department, central bank, court, tribunal, arbitral body, commission,
board, bureau or agency, domestic or foreign, (b) subdivision, agent,
commission, board, or authority of any of the foregoing, or
(c) quasi-governmental or private body exercising any regulatory, expropriation
or taxing authority under or for the account of any of the foregoing;
 
"Holder" means, when used with reference to the Exchangeable Shares, the holders
of Exchangeable Shares shown from time to time in the register maintained by or
on behalf of the Corporation in respect of the Exchangeable Shares;
 
"ITA" means the Income Tax Act (Canada), as amended from time to time;
 
"Liquidation Amount" has the meaning ascribed thereto in Section 5.1 of these
share provisions;
 
"Liquidation Call Right" has the meaning ascribed thereto in Section 8.1 of
these share provisions;
 
"Liquidation Date" has the meaning ascribed thereto in Section 5.1 of these
share provisions;
 
"Person" includes any individual, firm, partnership, joint venture, venture
capital fund, limited liability company, unlimited liability company,
association, trust, trustee, executor, administrator, legal personal
representative, estate, group, body corporate, corporation, unincorporated
association or organization, Governmental Entity, syndicate or other entity,
whether or not having legal status;
 
"Purchase Price" has the meaning ascribed thereto in Section 6.3 of these share
provisions;
 
 
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"Redemption Call Purchase Price" has the meaning ascribed thereto in Section
9.1(a) of these share provisions;
 
"Redemption Call Right" has the meaning ascribed thereto in Section 9.1(a) of
these share provisions;
 
"Redemption Date" means the date, if any, established by the Board of Directors
for the redemption by the Corporation of all but not less than all of the
outstanding Exchangeable Shares pursuant to Article 7 of these share provisions,
which date shall be no earlier than the seventh anniversary of the Effective
Date, unless:
 

 
(a)
the number of Exchangeable Shares outstanding (other than Exchangeable Shares
held by Acquirer and its Affiliates) is less than one-third of the
number Exchangeable Shares outstanding at the time of filing of the articles of
amendment creating these share provisions;

 

 
(b)
an Acquirer Control Transaction occurs, in which case, provided that the Board
of Directors determines, in good faith and in its sole discretion, that it is
not reasonably practicable to substantially replicate the terms and conditions
of the Exchangeable Shares in connection with such an Acquirer Control
Transaction and that the redemption of all but not less than all of the
outstanding Exchangeable Shares is necessary to enable the completion of such
Acquirer Control Transaction in accordance with its terms, the Board of
Directors may accelerate such redemption date to such date prior to the seventh
anniversary of the Effective Date as it may determine, upon such number of days'
prior written notice to the registered holders of the Exchangeable Shares and
the Trustee as the Board of Directors may determine to be reasonably practicable
in such circumstances; or

 

 
(c)
an Exchangeable Share Voting Event is proposed and the holders of the
Exchangeable Shares fail to take the necessary action at a meeting or other vote
of holders of Exchangeable Shares, to approve or disapprove, as applicable, the
Exchangeable Share Voting Event, in which case the redemption date shall be the
Business Day following the day on which the holders of the Exchangeable Shares
failed to take such action,

 
provided, however, that the accidental failure or omission to give any notice of
redemption under clauses (a), (b) or (c) above to any of such holders of
Exchangeable Shares shall not affect the validity of any such redemption;
 
"Redemption Price" has the meaning ascribed thereto in Section 7.1 of these
share provisions;
 
"Reorganization" means the Reorganization contemplated by the Reorganization
Agreement, including the filing of the articles amendment creating these share
provisions;
 
"Reorganization Agreement" means the Reorganization Agreement by and between
Acquirer and the Corporation dated as of June 9, 2006, as amended and restated
from time to time, providing for, among other things, the Reorganization
resulting in the first issuance of Exchangeable Shares;
 
 
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"Retracted Shares" has the meaning ascribed thereto in Section 6.1(a) of these
share provisions;
 
"Retraction Call Right" has the meaning ascribed thereto in Section 6.1(c) of
these share provisions;
 
"Retraction Date" has the meaning ascribed thereto in Section 6.1(b) of these
share provisions;
 
"Retraction Price" has the meaning ascribed thereto in Section 6.1 of these
share provisions;
 
"Retraction Request" has the meaning ascribed thereto in Section 6.1 of these
share provisions;
 
"Securities Act" means the Securities Act (Alberta) and the rules, regulations
and policies made thereunder, as now in effect and as they may be amended from
time to time prior to the Effective Date;
 
"Subdivision" has the meaning ascribed thereto in Section 3.2 of these share
provisions;
 
"Support Agreement" means the agreement made between Acquirer, Callco and the
Corporation substantially in the form and content of Schedule F annexed to the
Reorganization Agreement, with such changes thereto as the parties to the
Reorganization Agreement, acting reasonably, may agree;
 
"Transfer Agent" means Computershare Trust Company of Canada or such other
Person as may from time to time be appointed by the Corporation as the registrar
and transfer agent for the Exchangeable Shares;
 
"Trustee" means Computershare Trust Company of Canada or such other trustee as
is chosen by Acquirer and the Corporation, acting reasonably, to act as trustee
under the Voting and Exchange Trust Agreement, being a corporation organized and
existing under the laws of Canada, and any successor trustee appointed under the
Voting and Exchange Trust Agreement; and
 
"Voting and Exchange Trust Agreement" means the agreement made among Acquirer,
the Corporation and the Trustee substantially in the form and content of
Schedule E annexed to the Reorganization Agreement with such changes thereto as
the parties to the Reorganization Agreement, acting reasonably, may agree.
 
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ARTICLE 2
 
RANKING OF EXCHANGEABLE SHARES
 
2.1
The Exchangeable Shares shall be entitled to a preference over the Common Shares
and any other shares ranking junior to the Exchangeable Shares with respect to
the payment of dividends and the distribution of assets in the event of the
liquidation, dissolution or winding-up of the Corporation, whether voluntary or
involuntary, or any other distribution of the assets of the Corporation, among
its shareholders for the purpose of winding-up its affairs.

 
ARTICLE 3
 
DIVIDENDS
 
3.1
A holder of an Exchangeable Share shall be entitled to receive and the Board of
Directors shall, subject to applicable law, on each Acquirer Dividend
Declaration Date, declare a dividend on each Exchangeable Share:

 

 
(a)
in the case of a cash dividend declared on the Acquirer Shares, in an amount in
cash for each Exchangeable Share in U.S. dollars, or the Canadian Dollar
Equivalent thereof on the Acquirer Dividend Declaration Date, in each case,
corresponding to the cash dividend declared on each Acquirer Share;

 

 
(b)
in the case of a stock dividend declared on the Acquirer Shares, to be paid in
Acquirer Shares, subject to Section 3.2, by the issue or transfer by the
Corporation of such number of Exchangeable Shares for each Exchangeable Share as
is equal to the number of Acquirer Shares to be paid on each Acquirer Share; and

 

 
(c)
in the case of a dividend declared on the Acquirer Shares in property other than
cash or Acquirer Shares, in such type and amount of property for each
Exchangeable Share as is the same as or economically equivalent to (to be
determined by the Board of Directors as contemplated by Section 3.6) the type
and amount of property declared as a dividend on each Acquirer Share.

 
Such dividends shall be paid out of money, assets or property of the Corporation
properly applicable to the payment of dividends, or out of authorized but
unissued shares of the Corporation, as applicable.
 
3.2
In the case of a stock dividend declared on the Acquirer Shares to be paid in
Acquirer Shares, in lieu of declaring the stock dividend contemplated by
Section 3.1(b) on the Exchangeable Shares, the Board of Directors may, in good
faith and in its discretion and subject to applicable law and to obtaining all
required regulatory approvals, subdivide, redivide or change (the "Subdivision")
each issued and unissued Exchangeable Share on the basis that each Exchangeable
Share before the subdivision becomes a number of Exchangeable Shares equal to
the sum of (i) one Acquirer Share and (ii) the number of Acquirer Shares to be
paid as a share dividend on each Acquirer Share. In making such Subdivision, the
Board of Directors shall consider the effect thereof upon the then outstanding
Exchangeable Shares and the general taxation consequences of the Subdivision to
the holders of the Exchangeable Shares. In such instance, and notwithstanding
any other provision hereof, such Subdivision shall become effective on the
effective date specified in Section 3.4 without any further act or formality on
the part of the Board of Directors or of the holders of Exchangeable Shares. For
greater certainty, subject to applicable law, no approval of the Holders to an
amendment to the articles of the Corporation shall be required to give effect to
such Subdivision.

 
 
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3.3
Cheques of the Corporation payable at par at any branch of the bankers of the
Corporation shall be issued in respect of any cash dividends contemplated by
Section 3.1(a) and the sending of such a cheque to each holder of an
Exchangeable Share shall satisfy the cash dividend represented thereby unless
the cheque is not paid on presentation. Subject to applicable law, certificates
registered in the name of the registered holder of Exchangeable Shares shall be
issued or transferred in respect of any stock dividends contemplated by
Section 3.1(b) or any Subdivision contemplated by Section 3.2 and the sending of
such a certificate to each holder of an Exchangeable Share shall satisfy the
stock dividend represented thereby. Such other type and amount of property in
respect of any dividends contemplated by Section 3.1(c) shall be issued,
distributed or transferred by the Corporation in such manner as it shall
determine and the issuance, distribution or transfer thereof by the Corporation
to each holder of an Exchangeable Share shall satisfy the dividend represented
thereby. No holder of an Exchangeable Share shall be entitled to recover by
action or other legal process against the Corporation any dividend that is
represented by a cheque that has not been duly presented to the Corporation's
bankers for payment or that otherwise remains unclaimed for a period of six
years from the date on which such dividend was first payable.

 
3.4
The record date for the determination of the holders of Exchangeable Shares
entitled to receive payment of, and the payment date for, any dividend declared
on the Exchangeable Shares under Section 3.1 shall be the same dates as the
record date and payment date, respectively, for the corresponding dividend
declared on the Acquirer Shares. The record date for the determination of the
holders of Exchangeable Shares entitled to receive Exchangeable Shares in
connection with any Subdivision of the Exchangeable Shares under Section 3.2 and
the effective date of such Subdivision shall be the same dates as the record
date and payment date, respectively, for the corresponding dividend declared on
the Acquirer Shares.

 
3.5
If on any payment date for any dividends declared on the Exchangeable Shares
under Section 3.1 the dividends are not paid in full on all of the Exchangeable
Shares then outstanding, any such dividends that remain unpaid shall be paid on
the earliest subsequent date or dates determined by the Board of Directors on
which the Corporation shall have sufficient moneys, assets or property properly
applicable to the payment of such dividends.

 
 
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3.6
The Board of Directors shall determine, in good faith and in its sole
discretion, economic equivalence for the purposes of Sections 3.1 and 3.2 and
Article 14, and each such determination shall be conclusive and binding on the
Corporation and its shareholders. In making each such determination, the
following factors shall, without excluding other factors determined by the Board
of Directors to be relevant, be considered by the Board of Directors:

 

 
(a)
in the case of any stock dividend or other distribution payable in Acquirer
Shares, the number of such shares issued in proportion to the number of Acquirer
Shares previously outstanding;

 

 
(b)
in the case of the issuance or distribution of any rights, options or warrants
to subscribe for or purchase Acquirer Shares (or securities exchangeable for or
convertible into or carrying rights to acquire Acquirer Shares), the
relationship between the exercise price of each such right, option or warrant
and the Current Market Price, the volatility of the Acquirer Shares and the term
of any such instrument;

 

 
(c)
in the case of the issuance or distribution of any other form of property
(including any shares or securities of Acquirer of any class other than Acquirer
Shares, any rights, options or warrants other than those referred to in
Section 3.6(b) above, any evidences of indebtedness of Acquirer or any assets of
Acquirer) the relationship between the fair market value (as determined by the
Board of Directors in the manner above contemplated) of such property to be
issued or distributed with respect to each outstanding Acquirer Share and the
Current Market Price; and

 

 
(d)
in all such cases, the general taxation consequences of the relevant event to
holders of Exchangeable Shares to the extent that such consequences may differ
from the taxation consequences to holders of Acquirer Shares as a result of
differences between taxation laws of Canada and the United States (except for
any differing consequences arising as a result of differing marginal taxation
rates and without regard to the individual circumstances of holders of
Exchangeable Shares).

 
3.7
Except as provided in this Article 3, the holders of Exchangeable Shares shall
not be entitled to receive dividends in respect thereof.

 
ARTICLE 4
 
CERTAIN RESTRICTIONS
 
4.1
So long as any of the Exchangeable Shares are outstanding, the Corporation shall
not at any time without, but may at any time with, the approval of the holders
of the Exchangeable Shares given as specified in Section 13.2 of these share
provisions:

 

 
(a)
pay any dividends on the Common Shares or any other shares ranking junior to the
Exchangeable Shares with respect to the payment of dividends, other than stock
dividends payable in Common Shares or any such other shares ranking junior to
the Exchangeable Shares, as the case may be;

 
 
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(b)
redeem or purchase or make any capital distribution in respect of Common Shares
or any other shares ranking junior to the Exchangeable Shares with respect to
the payment of dividends or on any liquidation, dissolution or winding-up of the
Corporation or any other distribution of the assets of the Corporation;

 

 
(c)
redeem or purchase or make any capital distribution in respect of any other
shares of the Corporation ranking equally with the Exchangeable Shares with
respect to the payment of dividends or on any liquidation, dissolution or
winding-up of the Corporation or any other distribution of the assets of the
Corporation; or

 

 
(d)
issue any Exchangeable Shares or any other shares of the Corporation ranking
equally with, or superior to, the Exchangeable Shares other than by way of stock
dividends to the holders of such Exchangeable Shares;

 
provided that the restrictions in Sections 4.1(a), (b), (c) and (d) shall not
apply if all dividends on the outstanding Exchangeable Shares corresponding to
dividends declared and paid to date on the Acquirer Shares shall have been
declared and paid on the Exchangeable Shares.
 
ARTICLE 5
 
DISTRIBUTION ON LIQUIDATION
 
5.1
In the event of the liquidation, dissolution or winding-up of the Corporation or
any other distribution of the assets of the Corporation among its shareholders
for the purpose of winding up its affairs, a holder of Exchangeable Shares shall
be entitled, subject to applicable law and to the exercise by Callco of the
Liquidation Call Right, to receive from the assets of the Corporation in respect
of each Exchangeable Share held by such holder on the effective date (the
"Liquidation Date") of such liquidation, dissolution, winding-up or distribution
of assets, before any distribution of any part of the assets of the Corporation
among the holders of the Common Shares or any other shares ranking junior to the
Exchangeable Shares, an amount per share equal to the Exchangeable Share Price
applicable on the last Business Day prior to the Liquidation Date (the
"Liquidation Amount").

 
 
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5.2
On or promptly after the Liquidation Date, and subject to the exercise by Callco
of the Liquidation Call Right, the Corporation shall cause to be delivered to
the holders of the Exchangeable Shares the Liquidation Amount for each such
Exchangeable Share upon presentation and surrender of the certificates
representing such Exchangeable Shares, together with such other documents and
instruments as may be required to effect a transfer of Exchangeable Shares under
the ABCA and the articles and by-laws of the Corporation and such additional
documents and instruments as the Transfer Agent and the Corporation may
reasonably require, at the registered office of the Corporation or at any office
of the Transfer Agent as may be specified by the Corporation by notice to the
holders of the Exchangeable Shares. Payment of the total Liquidation Amount for
such Exchangeable Shares shall be made by delivery to each Holder, at the
address of the Holder recorded in the register of the Corporation for the
Exchangeable Shares or by holding for pick-up by the Holder at the registered
office of the Corporation or at any office of the Transfer Agent as may be
specified by the Corporation by notice to the holders of Exchangeable Shares, on
behalf of the Corporation of the Exchangeable Share Consideration representing
the total Liquidation Amount. On and after the Liquidation Date, the holders of
the Exchangeable Shares shall cease to be holders of such Exchangeable Shares
and shall not be entitled to exercise any of the rights of Holders in respect
thereof (including any rights under the Voting and Exchange Trust Agreement),
other than the right to receive their proportionate part of the total
Liquidation Amount, unless payment of the total Liquidation Amount for such
Exchangeable Shares shall not be made upon presentation and surrender of share
certificates in accordance with the foregoing provisions, in which case the
rights of the holders shall remain unaffected until the total Liquidation Amount
to which such holders are entitled shall have been paid to such holders in the
manner hereinbefore provided. The Corporation shall have the right at any time
on or before the Liquidation Date to deposit or cause to be deposited the
Exchangeable Share Consideration in respect of the Exchangeable Shares
represented by certificates that have not at the Liquidation Date been
surrendered by the holders thereof in a custodial account with any chartered
bank or trust company in Canada. Upon such deposit being made, the rights of the
holders of Exchangeable Shares, after such deposit, shall be limited to
receiving their proportionate part of the total Liquidation Amount for such
Exchangeable Shares so deposited, against presentation and surrender of the said
certificates held by them, respectively, in accordance with the foregoing
provisions. Upon such payment or deposit of such Exchangeable Share
Consideration, the holders of the Exchangeable Shares shall thereafter be
considered and deemed for all purposes to be holders of the Acquirer Shares
delivered to them or the custodian on their behalf.

 
5.3
After the Corporation has satisfied its obligations to pay the holders of the
Exchangeable Shares the Liquidation Amount per Exchangeable Share pursuant to
Section 5.1 of these share provisions, such holders shall not be entitled to
share in any further distribution of the assets of the Corporation.

 
ARTICLE 6
 
RETRACTION OF EXCHANGEABLE SHARES BY HOLDER
 
6.1
A holder of Exchangeable Shares shall be entitled at any time, subject to the
exercise by Callco of the Retraction Call Right and otherwise upon compliance
with the provisions of this Article 6, to require the Corporation to redeem any
or all of the Exchangeable Shares registered in the name of such holder for an
amount per share equal to the Exchangeable Share Price applicable on the last
Business Day prior to the Retraction Date (the "Retraction Price"), which shall
be satisfied in full by the Corporation causing to be delivered to such holder
the Exchangeable Share Consideration representing the Retraction Price. To
effect such redemption, the Holder shall present and surrender at the registered
office of the Corporation or at any office of the Transfer Agent as may be
specified by the Corporation by notice to the holders of Exchangeable Shares,
the certificate or certificates representing the Exchangeable Shares which the
Holder desires to have the Corporation redeem, together with such other
documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the ABCA and the articles and bylaws of the
Corporation and such additional documents and instruments as the Transfer Agent
and the Corporation may reasonably require, and together with a duly executed
statement (the "Retraction Request") in the form of Appendix A hereto or in such
other form as may be acceptable to the Corporation:

 
 
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(a)
specifying that the Holder desires to have all or any number specified therein
of the Exchangeable Shares represented by such certificate or certificates (the
"Retracted Shares") redeemed by the Corporation;

 

 
(b)
stating the Business Day on which the holder desires to have the Corporation
redeem the Retracted Shares (the "Retraction Date"), provided that the
Retraction Date shall be not less than 10 Business Days nor more than
15 Business Days after the date on which the Retraction Request is received by
the Corporation and further provided that, in the event that no such Business
Day is specified by the Holder in the Retraction Request, the Retraction Date
shall be deemed to be the 15th Business Day after the date on which the
Retraction Request is received by the Corporation; and

 

 
(c)
acknowledging the overriding right (the "Retraction Call Right") of Callco to
purchase all but not less than all the Retracted Shares directly from the holder
and that the Retraction Request shall be deemed to be a revocable offer by the
holder to sell the Retracted Shares to Callco in accordance with the Retraction
Call Right on the terms and conditions set out in Section 6.3 below.

 
6.2
Subject to the exercise by Callco of the Retraction Call Right, upon receipt by
the Corporation or the Transfer Agent in the manner specified in Section 6.1 of
a certificate or certificates representing the number of Retracted Shares,
together with a Retraction Request and such additional documents and instruments
as the Transfer Agent and the Corporation may reasonably require, and provided
that the Retraction Request is not revoked by the Holder in the manner specified
in Section 6.7, the Corporation shall redeem the Retracted Shares effective at
the close of business on the Retraction Date and shall cause to be delivered to
such Holder the total Retraction Price with respect to such shares in accordance
with Section 6.4. If only a part of the Exchangeable Shares represented by any
certificate is redeemed (or purchased by Callco pursuant to the Retraction Call
Right), a new certificate for the balance of such Exchangeable Shares shall be
issued to the holder at the expense of the Corporation.

 
 
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6.3
Upon receipt by the Corporation of a Retraction Request, the Corporation shall
immediately notify Callco thereof and shall provide to Callco a copy of the
Retraction Request. In order to exercise the Retraction Call Right, Callco must
notify the Corporation of its determination to do so (the "Callco Call Notice")
within three Business Days of receipt by the Corporation of the Retraction
Request. If Callco does not so notify the Corporation within such three Business
Day period, the Corporation will notify the Holder as soon as possible
thereafter that Callco will not exercise the Retraction Call Right. If Callco
delivers the Callco Call Notice within such three Business Day period, and
provided that the Retraction Request is not revoked by the Holder in the manner
specified in Section 6.7, the Retraction Request shall thereupon be considered
only to be an offer by the Holder to sell all but not less than all the
Retracted Shares to Callco in accordance with the Retraction Call Right. In such
event, the Corporation shall not redeem the Retracted Shares and Callco shall
purchase from such holder and such holder shall sell to Callco on the Retraction
Date all but not less than all the Retracted Shares for a purchase price (the
"Purchase Price") per share equal to the Retraction Price, which, as set forth
in Section 6.4, shall be fully paid and satisfied by the delivery by or on
behalf of Callco, of the Exchangeable Share Consideration representing the total
Purchase Price. For the purposes of completing a purchase pursuant to the
Retraction Call Right, Callco shall deposit with the Transfer Agent, on or
before the Retraction Date, the Exchangeable Share Consideration representing
the total Purchase Price. Provided that Callco has complied with Section 6.4,
the closing of the purchase and sale of the Retracted Shares pursuant to the
Retraction Call Right shall be deemed to have occurred as at the close of
business on the Retraction Date and, for greater certainty, no redemption by the
Corporation of such Retracted Shares shall take place on the Retraction Date. In
the event that Callco does not deliver a Callco Call Notice within such three
Business Day period, and provided that the Retraction Request is not revoked by
the holder in the manner specified in Section 6.7, the Corporation shall redeem
the Retracted Shares on the Retraction Date and in the manner otherwise
contemplated in this Article 6.

 
6.4
The Corporation or Callco, as the case may be, shall deliver or cause the
Transfer Agent to deliver to the relevant Holder, at the address of the Holder
recorded in the register of the Corporation for the Exchangeable Shares or at
the address specified in the Holder's Retraction Request or, if specified in
such Retraction Request, by holding for pick-up by the Holder at the registered
office of the Corporation or at any office of the Transfer Agent as may be
specified by the Corporation by notice to such holder of Exchangeable Shares,
the Exchangeable Share Consideration representing the total Retraction Price or
the total Purchase Price, as the case may be, and such delivery of such
Exchangeable Share Consideration to the Transfer Agent shall be deemed to be
payment of and shall satisfy and discharge all liability for the total
Retraction Price or total Purchase Price, as the case may be, to the extent that
the same is represented by such Exchangeable Share Consideration.

 
6.5
On and after the close of business on the Retraction Date, the holder of the
Retracted Shares shall cease to be a holder of such Retracted Shares and shall
not be entitled to exercise any of the rights of a holder in respect thereof,
other than the right to receive the total Retraction Price or total Purchase
Price, as the case may be, unless upon presentation and surrender of
certificates in accordance with the foregoing provisions, payment of the total
Retraction Price or the total Purchase Price, as the case may be, shall not be
made as provided in Section 6.4, in which case the rights of such holder shall
remain unaffected until the total Retraction Price or the total Purchase Price,
as the case may be, has been paid in the manner hereinbefore provided. On and
after the close of business on the Retraction Date, provided that presentation
and surrender of certificates and payment of the total Retraction Price or the
total Purchase Price, as the case may be, has been made in accordance with the
foregoing provisions, the holder of the Retracted Shares so redeemed by the
Corporation or purchased by Callco shall thereafter be considered and deemed for
all purposes to be the holder of Acquirer Shares delivered to it.

 
 
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6.6
Notwithstanding any other provision of this Article 6, the Corporation shall not
be obligated to redeem Retracted Shares specified by a holder in a Retraction
Request to the extent that such redemption of Retracted Shares would be contrary
to solvency requirements or other provisions of applicable law. If the
Corporation believes, acting reasonably, that on any Retraction Date it would
not be permitted by any of such provisions to redeem the Retracted Shares
tendered for redemption on such date, and provided that Callco shall not have
exercised the Retraction Call Right with respect to the Retracted Shares, the
Corporation shall only be obligated to redeem Retracted Shares specified by a
holder in a Retraction Request to the extent of the maximum number that may be
so redeemed (rounded down to a whole number of shares) as would not be contrary
to such provisions and shall notify the holder at least two Business Days prior
to the Retraction Date as to the number of Retracted Shares which will not be
redeemed by the Corporation. In any case in which the redemption by the
Corporation of Retracted Shares would be contrary to solvency requirements or
other provisions of applicable law, the Corporation shall redeem the maximum
number of Exchangeable Shares which the Board of Directors determines the
Corporation is permitted to redeem as of the Retraction Date on a pro rata basis
and shall issue to each holder of Retracted Shares a new certificate, at the
expense of the Corporation, representing the Retracted Shares not redeemed by
the Corporation pursuant to Section 6.2. Provided that the Retraction Request is
not revoked by the holder in the manner specified in Section 6.7 and Callco does
not exercise the Retraction Call Right, the holder of any such Retracted Shares
not redeemed by the Corporation pursuant to Section 6.2 as a result of solvency
requirements or other provisions of applicable law shall be deemed by giving the
Retraction Request to have instructed the Trustee to require Acquirer to
purchase such Retracted Shares from such holder on the Retraction Date or as
soon as practicable thereafter on payment by Acquirer to such holder of the
Retraction Price for each such Retracted Share, all as more specifically
provided in the Voting and Exchange Trust Agreement.

 
6.7
A holder of Retracted Shares may, by notice in writing given by the holder to
the Corporation before the close of business on the Business Day immediately
preceding the Retraction Date, withdraw its Retraction Request, in which event
such Retraction Request shall be null and void and, for greater certainty, the
revocable offer constituted by the Retraction Request to sell the Retracted
Shares to Callco shall be deemed to have been revoked.

 
 
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ARTICLE 7
 
REDEMPTION OF EXCHANGEABLE SHARES BY THE CORPORATION
 
7.1
Subject to applicable law, and provided Callco has not exercised the Redemption
Call Right, the Corporation shall on the Redemption Date redeem all but not less
than all of the then outstanding Exchangeable Shares for an amount per share
equal to the Exchangeable Share Price applicable on the last Business Day prior
to the Redemption Date (the "Redemption Price").

 
7.2
In any case of a redemption of Exchangeable Shares under this Article 7, the
Corporation shall, at least 45 days before the Redemption Date (other than a
Redemption Date established in connection with an Acquirer Control Transaction
or an Exchangeable Share Voting Event), send or cause to be sent to each holder
of Exchangeable Shares a notice in writing of the redemption by the Corporation
or the purchase by Callco under the Redemption Call Right, as the case may be,
of the Exchangeable Shares held by such holder. In the case of a Redemption Date
established in connection with an Acquirer Control Transaction, the written
notice of redemption by the Corporation or the purchase by Callco under the
Redemption Call Right will be sent on or before the Redemption Date, on as many
days prior written notice as may be determined by the Board of Directors to be
reasonably practicable in the circumstances. In any such case, such notice shall
set out the formula for determining the Redemption Price or the Redemption Call
Purchase Price, as the case may be, the Redemption Date and, if applicable,
particulars of the Redemption Call Right. In the case of any notice given in
connection with a possible Redemption Date, such notice will be given
contingently and will be withdrawn if the contingency does not occur.

 
7.3
On or after the Redemption Date and subject to the exercise by Callco of the
Redemption Call Right, the Corporation shall cause to be delivered to the
holders of the Exchangeable Shares to be redeemed the Redemption Price for each
such Exchangeable Share upon presentation and surrender at the registered office
of the Corporation or at any office of the Transfer Agent as may be specified by
the Corporation in the notice described in Section 6.7 of the certificates
representing such Exchangeable Shares, together with such other documents and
instruments as may be required to effect a transfer of Exchangeable Shares under
the ABCA and the articles and by-laws of the Corporation and such additional
documents and instruments as the Transfer Agent and the Corporation may
reasonably require. Payment of the total Redemption Price for such Exchangeable
Shares shall be made by delivery to each Holder, at the address of the Holder
recorded in the securities register of the Corporation or by holding for pick-up
by the Holder at the registered office of the Corporation or at any office of
the Transfer Agent as may be specified by the Corporation in such notice, on
behalf of the Corporation of the Exchangeable Share Consideration representing
the total Redemption Price. On and after the Redemption Date, the holders of the
Exchangeable Shares called for redemption shall cease to be holders of such
Exchangeable Shares and shall not be entitled to exercise any of the rights of
holders in respect thereof, other than the right to receive their proportionate
part of the total Redemption Price, unless payment of the total Redemption Price
for such Exchangeable Shares shall not be made upon presentation and surrender
of certificates in accordance with the foregoing provisions, in which case the
rights of the holders shall remain unaffected until the total Redemption Price
has been paid in the manner hereinbefore provided. The Corporation shall have
the right at any time after the sending of notice of its intention to redeem the
Exchangeable Shares as aforesaid to deposit or cause to be deposited the
Exchangeable Share Consideration with respect to the Exchangeable Shares so
called for redemption, or of such of the said Exchangeable Shares represented by
certificates that have not at the date of such deposit been surrendered by the
holders thereof in connection with such redemption, in a custodial account with
any chartered bank or trust company in Canada named in such notice. Upon the
later of such deposit being made and the Redemption Date, the Exchangeable
Shares in respect whereof such deposit shall have been made shall be redeemed
and the rights of the holders thereof after such deposit or Redemption Date, as
the case may be, shall be limited to receiving their proportionate part of the
total Redemption Price for such Exchangeable Shares so deposited, against
presentation and surrender of the said certificates held by them, respectively,
in accordance with the foregoing provisions. Upon such payment or deposit of
such Exchangeable Share Consideration, the holders of the Exchangeable Shares
shall thereafter be considered and deemed for all purposes to be holders of
Acquirer Shares delivered to them or the custodian on their behalf.

 
ARTICLE 8 CALLCO LIQUIDATION CALL RIGHT
 
 
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8.1
Callco shall have the overriding right (the "Liquidation Call Right"), in the
event of and notwithstanding the proposed liquidation, dissolution or winding-up
of the Corporation or any other distribution of the assets of the Corporation
among its shareholders for the purpose of winding-up its affairs, pursuant to
Article 5, to purchase from all but not less than all of the holders of
Exchangeable Shares (other than any holder of Exchangeable Shares which is an
affiliate of Acquirer) on the Liquidation Date all but not less than all of the
Exchangeable Shares held by each such holder upon payment by Callco to each such
holder of the Exchangeable Share Price applicable on the last Business Day prior
to the Liquidation Date (the "Liquidation Call Purchase Price") in accordance
with Section 5.1. In the event of the exercise of the Liquidation Call Right by
Callco, each Holder shall be obligated to sell all the Exchangeable Shares held
by such Holder to Callco on the Liquidation Date upon payment by Callco to such
Holder of the Liquidation Call Purchase Price for each such Exchangeable Share,
whereupon the Corporation shall have no obligation to pay any Liquidation Amount
to the Holders of such shares so purchased by Callco.

 
8.2
To exercise the Liquidation Call Right, Callco must notify the Corporation and
the Transfer Agent of Callco's intention to exercise such right at least 45 days
before the Liquidation Date, in the case of a voluntary liquidation, dissolution
or winding-up of the Corporation or any other voluntary distribution of the
assets of the Corporation among its shareholders for the purpose of winding-up
its affairs, and at least five Business Days before the Liquidation Date, in the
case of an involuntary liquidation, dissolution or winding-up of the Corporation
or any other involuntary distribution of the assets of the Corporation among its
shareholders for the purpose of winding up its affairs. The Transfer Agent will
notify the holders of Exchangeable Shares as to whether Callco has exercised the
Liquidation Call Right forthwith after the expiry of the period during which the
same may be exercised by Callco. If Callco exercises the Liquidation Call Right,
then on the Liquidation Date, Callco will purchase and the holders of
Exchangeable Shares will sell all of the Exchangeable Shares then outstanding
for a price per Exchangeable Share equal to the Liquidation Call Purchase Price.

 
8.3
For the purposes of completing the purchase of the Exchangeable Shares pursuant
to the Liquidation Call Right, Callco shall deposit or cause to be deposited
with the Transfer Agent, on or before the Liquidation Date, the Exchangeable
Share Consideration representing the total Liquidation Call Purchase Price.
Provided that such Exchangeable Share Consideration has been so deposited with
the Transfer Agent, on and after the Liquidation Date, the holders of the
Exchangeable Shares shall cease to be holders of the Exchangeable Shares and
shall not be entitled to exercise any of the rights of holders in respect
thereof (including any rights under the Voting and Exchange Trust Agreement),
other than the right to receive their proportionate part of the total
Liquidation Call Purchase Price payable by Callco, without interest, upon
presentation and surrender by the holder of certificates representing the
Exchangeable Shares held by such Holder and the Holder shall on and after the
Liquidation Date be considered and deemed for all purposes to be the holder of
Acquirer Shares to which such Holder is entitled. Upon surrender to the Transfer
Agent of a certificate or certificates representing Exchangeable Shares,
together with such other documents and instruments as may be required to effect
a transfer of Exchangeable Shares under the ABCA and the by-laws of the
Corporation and such additional documents and instruments as the Transfer Agent
may reasonably require, the Holder of such surrendered certificate or
certificates shall be entitled to receive in exchange therefor, and the Transfer
Agent on behalf of Callco shall deliver to such Holder, the Exchangeable Share
Consideration to which such holder is entitled. If Callco does not exercise the
Liquidation Call Right in the manner described above, on the Liquidation Date
the holders of the Exchangeable Shares will be entitled to receive in exchange
therefor the Liquidation Amount otherwise payable by the Corporation in
connection with the liquidation, dissolution or winding-up of the Corporation
pursuant to Article 5 hereof.

 
 
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ARTICLE 9 CALLCO REDEMPTION CALL RIGHT
 
9.1
In addition to Callco's rights contained herein, including the Retraction Call
Right, Callco shall have the following rights in respect of the Exchangeable
Shares:

 

 
(a)
Callco shall have the overriding right (the "Redemption Call Right"), in the
event of and notwithstanding the proposed redemption of the Exchangeable Shares
by the Corporation pursuant to Article 7, to purchase from all but not less than
all of the holders of Exchangeable Shares (other than any holder of Exchangeable
Shares which is an affiliate of Acquirer) on the Redemption Date all but not
less than all of the Exchangeable Shares held by each such holder upon payment
by Callco to each such holder of the Exchangeable Share Price applicable on the
last Business Day prior to the Redemption Date (the "Redemption Call Purchase
Price") in accordance with 9.2(c). In the event of the exercise of the
Redemption Call Right by Callco, each holder of Exchangeable Shares shall be
obligated to sell all the Exchangeable Shares held by such holder to Callco on
the Redemption Date upon payment by Callco to such holder of the Redemption Call
Purchase Price for each such Exchangeable Share, whereupon the Corporation shall
have no obligation to redeem, or to pay the Redemption Price in respect of, such
shares so purchased by Callco.

 
 
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(b)
To exercise the Redemption Call Right, Callco must notify the Transfer Agent and
the Corporation of Callco's intention to exercise such right at least 60 days
before the Redemption Date, except in the case of a redemption occurring as a
result of an Acquirer Control Transaction or an Exchangeable Share Voting Event,
in which case Callco shall so notify the Transfer Agent and the Corporation as
soon as practicable and, in any event, on or before the Redemption Date. The
Transfer Agent will notify the holders of the Exchangeable Shares as to whether
Callco has exercised the Redemption Call Right forthwith after the expiry of the
period during which the same may be exercised by Callco. If Callco exercises the
Redemption Call Right, then, on the Redemption Date, Callco will purchase and
the holders of Exchangeable Shares will sell all of the Exchangeable Shares then
outstanding for a price per share equal to the Redemption Call Purchase Price.

 

 
(c)
For the purposes of completing the purchase of the Exchangeable Shares pursuant
to the exercise of the Redemption Call Right, Callco shall deposit or cause to
be deposited with the Transfer Agent, on or before the Redemption Date, the
Exchangeable Share Consideration representing the total Redemption Call Purchase
Price. Provided that such Exchangeable Share Consideration has been so deposited
with the Transfer Agent, on and after the Redemption Date the holders of the
Exchangeable Shares shall cease to be holders of the Exchangeable Shares and
shall not be entitled to exercise any of the rights of holders in respect
thereof (including any rights under the Voting and Exchange Trust Agreement),
other than the right to receive their proportionate part of the total Redemption
Call Purchase Price payable by Callco, without interest, upon presentation and
surrender by the holder of certificates representing the Exchangeable Shares
held by such holder and the holder shall on and after the Redemption Date be
considered and deemed for all purposes to be the holder of Acquirer Shares to
which such holder is entitled. Upon surrender to the Transfer Agent of a
certificate or certificates representing Exchangeable Shares, together with such
other documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the ABCA and the by-laws of the Corporation and such
additional documents and instruments as the Transfer Agent may reasonably
require, the holder of such surrendered certificate or certificates shall be
entitled to receive in exchange therefor, and the Transfer Agent on behalf of
Callco shall deliver to such holder, the Exchangeable Share Consideration to
which such holder is entitled. If Callco does not exercise the Redemption Call
Right in the manner described above, on the Redemption Date the holders of the
Exchangeable Shares will be entitled to receive in exchange therefor the
Redemption Price otherwise payable by the Corporation in connection with the
redemption of the Exchangeable Shares pursuant to Article 7 of the Exchangeable
Share Provisions.

 
 
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ARTICLE 10 CHANGE OF LAW CALL RIGHT
 
10.1
Acquirer shall have the overriding right (the "Change of Law Call Right"), in
the event of a Change of Law, to purchase (or to cause Callco to purchase) from
all but not less than all of the holders of Exchangeable Shares (other than any
holder of Exchangeable Shares which is an affiliate of Acquirer) all but not
less than all of the Exchangeable Shares held by each such holder upon payment
by Acquirer or Callco, as the case may be, of an amount per share (the "Change
of Law Call Purchase Price") equal to the Exchangeable Share Price applicable on
the last Business Day prior to the Change of Law Call Date, in accordance with
Section 10.3. In the event of the exercise of the Change of Law Call Right by
Acquirer or Callco, as the case may be, each holder of Exchangeable Shares shall
be obligated to sell all the Exchangeable Shares held by such holder to Acquirer
or Callco, as the case may be, on the Change of Law Call Date upon payment by
Acquirer to such holder of the Change of Law Call Purchase Price for each such
Exchangeable Share.

 
10.2
To exercise the Change of Law Call Right, Acquirer or Callco must notify the
Transfer Agent of its intention to exercise such right at least 45 days before
the date on which Acquirer or Callco intends to acquire the Exchangeable Shares
(the "Change of Law Call Date"). If Acquirer or Callco exercises the Change of
Law Call Right, then, on the Change of Law Call Date, Acquirer or Callco, as the
case may be, will purchase and the holders of Exchangeable Shares will sell all
of the Exchangeable Shares then outstanding for a price per share equal to the
Change of Law Call Purchase Price.

 
10.3
For the purposes of completing the purchase of the Exchangeable Shares pursuant
to the exercise of the Change of Law Call Right, Acquirer or Callco, as the case
may be, shall deposit or cause to be deposited with the Transfer Agent, on or
before the Change of Law Call Date, the Exchangeable Share Consideration
representing the total Change of Law Call Purchase Price. Provided that such
Exchangeable Share Consideration has been so deposited with the Transfer Agent,
on and after the Change of Law Call Date the holders of the Exchangeable Shares
shall cease to be holders of the Exchangeable Shares and shall not be entitled
to exercise any of the rights of holders in respect thereof (including any
rights under the Voting and Exchange Trust Agreement), other than the right to
receive their proportionate part of the total Change of Law Purchase Price
payable by Acquirer or Callco, as the case may be, without interest, upon
presentation and surrender by the holder of certificates representing the
Exchangeable Shares held by such holder and the holder shall on and after the
Change of Law Call Date be considered and deemed for all purposes to be the
holder of Acquirer Shares to which such holder is entitled. Upon surrender to
the Transfer Agent of a certificate or certificates representing Exchangeable
Shares, together with such other documents and instruments as may be required to
effect a transfer of Exchangeable Shares under the ABCA and the by-laws of the
Corporation and such additional documents and instruments as the Transfer Agent
may reasonably require, the holder of such surrendered certificate or
certificates shall be entitled to receive in exchange therefor, and the Transfer
Agent on behalf of Acquirer or Callco, as the case may be, shall deliver to such
holder, the Exchangeable Share Consideration to which such holder is entitled.

 
 
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ARTICLE 11
 
PURCHASE FOR CANCELLATION
 
11.1
Subject to applicable law and the articles of the Corporation and
notwithstanding Section 11.2, the Corporation may at any time and from time to
time purchase for cancellation all or any part of the Exchangeable Shares by
private agreement with any holder of Exchangeable Shares.

 
11.2
Subject to applicable law and the articles of the Corporation, the Corporation
may at any time and from time to time purchase for cancellation all or any part
of the outstanding Exchangeable Shares by tender to all the holders of record of
Exchangeable Shares then outstanding or through the facilities of any stock
exchange on which the Exchangeable Shares are listed or quoted at any price per
share together with an amount equal to all declared and unpaid dividends thereon
for which the record date has occurred prior to the date of purchase. If in
response to an invitation for tenders under the provisions of this Section 11.2,
more Exchangeable Shares are tendered at a price or prices acceptable to the
Corporation than the Corporation is prepared to purchase, the Exchangeable
Shares to be purchased by the Corporation shall be purchased as nearly as may be
pro rata according to the number of shares tendered by each holder who submits a
tender to the Corporation, provided that when shares are tendered at different
prices, the pro rating shall be effected (disregarding fractions) only with
respect to the shares tendered at the price at which more shares were tendered
than the Corporation is prepared to purchase after the Corporation has purchased
all the shares tendered at lower prices. If only part of the Exchangeable Shares
represented by any certificate shall be purchased, a new certificate for the
balance of such shares shall be issued at the expense of the Corporation.

 
ARTICLE 12
 
VOTING RIGHTS
 
12.1
Except as required by applicable law and by Article 13, Section 14.1 and
Section 15.2, the holders of the Exchangeable Shares shall not be entitled as
such to receive notice of or to attend any meeting of the shareholders of the
Corporation or to vote at any such meeting.

 
 
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ARTICLE 13
 
AMENDMENT AND APPROVAL
 
13.1
The rights, privileges, restrictions and conditions attaching to the
Exchangeable Shares may be added to, changed or removed but only with the
approval of the holders of the Exchangeable Shares given as hereinafter
specified.

 
13.2
Any approval given by the holders of the Exchangeable Shares to add to, change
or remove any right, privilege, restriction or condition attaching to the
Exchangeable Shares or any other matter requiring the approval or consent of the
holders of the Exchangeable Shares shall be deemed to have been sufficiently
given if it shall have been given in accordance with applicable law subject to a
minimum requirement that such approval be evidenced by resolution passed by not
less than 66-2/3% of the votes cast on such resolution by holders (other than
Acquirer and its Affiliates) represented in person or by proxy at a meeting of
holders of Exchangeable Shares duly called and held at which the holders of at
least 25% of the outstanding Exchangeable Shares (other than Exchangeable Shares
held by Acquirer and its Affiliates) at that time are present or represented by
proxy; provided that if at any such meeting the holders of at least 25% of the
outstanding Exchangeable Shares at that time are not present or represented by
proxy within one-half hour after the time appointed for such meeting, then the
meeting shall be adjourned to such date not less than five days thereafter and
to such time and place as may be designated by the Chair of such meeting. At
such adjourned meeting, the holders of Exchangeable Shares (other than Acquirer
and its Affiliates) present or represented by proxy thereat may transact the
business for which the meeting was originally called and a resolution passed
thereat by the affirmative vote of not less than 66-2/3% of the votes cast on
such resolution by holders (other than Acquirer and its Affiliates) represented
in person or by proxy at such meeting shall constitute the approval or consent
of the holders of the Exchangeable Shares. For purposes of this section, any
spoiled votes, illegible votes, defective votes and abstentions shall be deemed
to be votes not cast.

 
ARTICLE 14
 
RECIPROCAL CHANGES, ETC. IN RESPECT OF ACQUIRER SHARES
 
14.1
Each holder of an Exchangeable Share acknowledges that the Support Agreement
provides, in part, that Acquirer will not, without the prior approval of the
Corporation and the prior approval of the holders of the Exchangeable Shares
given in accordance with Section 13.2 of these share provisions:

 

 
(a)
issue or distribute Acquirer Shares (or securities exchangeable for or
convertible into or carrying rights to acquire Acquirer Shares) to the holders
of all or substantially all of the then outstanding Acquirer Shares by way of
stock dividend or other distribution, other than an issue of Acquirer Shares (or
securities exchangeable for or convertible into or carrying rights to acquire
Acquirer Shares) to holders of Acquirer Shares who (i) exercise an option to
receive dividends in Acquirer Shares (or securities exchangeable for or
convertible into or carrying rights to acquire Acquirer Shares) in lieu of
receiving cash dividends, or (ii) pursuant to any dividend reinvestment plan or
scrip dividend;

 
 
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(b)
issue or distribute rights, options or warrants to the holders of all or
substantially all of the then outstanding Acquirer Shares entitling them to
subscribe for or to purchase Acquirer Shares (or securities exchangeable for or
convertible into or carrying rights to acquire Acquirer Shares); or

 

 
(c)
issue or distribute to the holders of all or substantially all of the then
outstanding Acquirer Shares:

 

 
(i)
shares or securities of Acquirer of any class other than Acquirer Shares (other
than shares convertible into or exchangeable for or carrying rights to acquire
Acquirer Shares);

 

 
(ii)
rights, options or warrants other than those referred to in Section 14.1(b)
above;

 

 
(iii)
evidences of indebtedness of Acquirer; or

 

 
(iv)
assets of Acquirer,

 
unless the economic equivalent on a per share basis of such rights, options,
warrants, securities, shares, evidences of indebtedness or other assets is
issued or distributed simultaneously to holders of the Exchangeable Shares.
 
14.2
Each holder of an Exchangeable Share acknowledges that the Support Agreement
further provides, in part, that Acquirer will not without the prior approval of
the Corporation and the prior approval of the holders of the Exchangeable Shares
given in accordance with Section 13.2:

 

 
(a)
subdivide, redivide or change the then outstanding Acquirer Shares into a
greater number of Acquirer Shares;

 

 
(b)
reduce, combine, consolidate or change the then outstanding Acquirer Shares into
a lesser number of Acquirer Shares; or

 

 
(c)
reclassify or otherwise change the Acquirer Shares or effect an amalgamation,
merger, reorganization or other transaction affecting the Acquirer Shares;

 
unless the same or an economically equivalent change shall simultaneously be
made to, or in the rights of the holders of, the Exchangeable Shares and such
change is permitted under applicable law. The Support Agreement further
provides, in part, that the provisions of the Support Agreement described in
Section 14.1 and this Section 14.2 shall not be changed without the approval of
the holders of the Exchangeable Shares given in accordance with Section 13.2.
 
 
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14.3
Notwithstanding the foregoing provisions of this Article 14, in the event of an
Acquirer Control Transaction:

 

 
(a)
in which Acquirer merges or amalgamates with, or in which all or substantially
all of the then outstanding Acquirer Shares are acquired by, one or more other
corporations to which Acquirer is, immediately before such merger, amalgamation
or acquisition, "related" within the meaning of the ITA  (otherwise than by
virtue of a right referred to in paragraph 251(5)(b) thereof);

 

 
(b)
which does not result in an acceleration of the Redemption Date in accordance
with paragraph (b) of that definition; and

 

 
(c)
in which all or substantially all of the then outstanding Acquirer Shares are
converted into or exchanged for shares or rights to receive such shares (the
"Other Shares") of another corporation (the "Other Corporation") that,
immediately after such Acquirer Control Transaction, owns or controls, directly
or indirectly, Acquirer;

 
then all references herein to "Acquirer" shall thereafter be and be deemed to be
references to "Other Corporation" and all references herein to "Acquirer Shares"
shall thereafter be and be deemed to be references to "Other Shares" (with
appropriate adjustments, if any, as are required to result in a holder of
Exchangeable Shares on the exchange, redemption or retraction of such shares
pursuant to these share provisions or exchange of such shares pursuant to the
Voting and Exchange Trust Agreement immediately subsequent to the Acquirer
Control Transaction being entitled to receive that number of Other Shares equal
to the number of Other Shares such holder of Exchangeable Shares would have
received if the exchange, redemption or retraction of such shares pursuant to
these share provisions, or exchange of such shares pursuant to the Voting and
Exchange Trust Agreement had occurred immediately prior to the Acquirer Control
Transaction and the Acquirer Control Transaction was completed) without any need
to amend the terms and conditions of the Exchangeable Shares and without any
further action required.
 
ARTICLE 15
 
ACTIONS BY THE COMPANY UNDER SUPPORT AGREEMENT AND VOTING EXCHANGE TRUST
AGREEMENT
 
15.1
The Corporation will take all such actions and do all such things as shall be
necessary or advisable to perform and comply with and to ensure performance and
compliance by Acquirer, Callco and the Corporation with all provisions of the
Support Agreement and the Voting and Exchange Trust Agreement applicable to
Acquirer, Callco and the Corporation, respectively, in accordance with the terms
thereof including taking all such actions and doing all such things as shall be
necessary or advisable to enforce to the fullest extent possible for the direct
benefit of the Corporation all rights and benefits in favour of the Corporation
under or pursuant thereto.

 
 
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15.2
The Corporation shall not propose, agree to or otherwise give effect to any
amendment to, or waiver or forgiveness of its rights or obligations under, the
Support Agreement or the Voting and Exchange Trust Agreement without the
approval of the holders of the Exchangeable Shares given in accordance with
Section 13.2 other than such amendments, waivers and/or forgiveness as may be
necessary or advisable for the purposes of:

 

 
(a)
adding to the covenants of the other parties to such agreement for the
protection of the Corporation or the holders of the Exchangeable Shares
thereunder;

 

 
(b)
making such provisions or modifications not inconsistent with such agreement as
may be necessary or desirable with respect to matters or questions arising
thereunder which, in the good faith opinion of the Board of Directors, it may be
expedient to make, provided that the Board of Directors shall be of the good
faith opinion, after consultation with counsel, that such provisions and
modifications will not be prejudicial to the interests of the holders of the
Exchangeable Shares; or

 

 
(c)
making such changes in or corrections to such agreement which, on the advice of
counsel to the Corporation, are required for the purpose of curing or correcting
any ambiguity or defect or inconsistent provision or clerical omission or
mistake or manifest error contained therein, provided that the Board of
Directors shall be of the good faith opinion, after consultation with counsel,
that such changes or corrections will not be prejudicial to the interests of the
holders of the Exchangeable Shares.

 
ARTICLE 16
 
LEGEND; CALL RIGHTS; WITHHOLDING RIGHTS
 
16.1
The certificates evidencing the Exchangeable Shares shall contain or have
affixed thereto a legend in form and on terms approved by the Board of
Directors, with respect to the Support Agreement, the Liquidation Call Right,
the Retraction Call Right, the Redemption Call Right and the Change of Law Call
Right, and the Voting and Exchange Trust Agreement (including the provisions
with respect to the voting rights, exchange right and automatic exchange
thereunder) and with respect to restrictions on resale under the United States
Securities Act of 1933, as amended, until such time as the Corporation shall
determine that such U.S. Securities Act legend shall no longer be necessary.

 
16.2
Each holder of an Exchangeable Share, whether of record or beneficial, by virtue
of becoming and being such a holder shall be deemed to acknowledge each of the
Liquidation Call Right, the Retraction Call Right and the Redemption Call Right,
in each case, in favour of Callco, and the Change of Law Call Right in favour of
Acquirer and Callco and the overriding nature thereof in connection with the
liquidation, dissolution or winding-up of the Corporation or any other
distribution of the assets of the Corporation among its shareholders for the
purpose of winding-up its affairs, or the retraction or redemption of
Exchangeable Shares, or a Change of Law (as defined for purposes of the Change
of Law Call Right), as the case may be, and to be bound thereby in favour of
Callco or Acquirer, as the case may be, as therein provided.

 
 
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16.3
The Corporation, Callco, Acquirer and the Transfer Agent shall be entitled to
deduct and withhold from any dividend or consideration otherwise payable to any
holder of Exchangeable Shares such amounts as the Corporation, Callco, Acquirer
or the Transfer Agent is required to deduct and withhold with respect to such
payment under the ITA, the United States Internal Revenue Code of 1986 or any
provision of provincial, state, territorial, local or foreign tax law, in each
case, as amended. To the extent that amounts are so withheld, such withheld
amounts shall be treated for all purposes hereof as having been paid to the
holder of the Exchangeable Shares in respect of which such deduction and
withholding was made, provided that such withheld amounts are actually remitted
to the appropriate taxing authority. To the extent that the amount so required
or permitted to be deducted or withheld from any payment to a holder exceeds the
cash portion of the consideration otherwise payable to the holder, the
Corporation, Callco, Acquirer and the Transfer Agent are hereby authorized to
sell or otherwise dispose of such portion of the consideration as is necessary
to provide sufficient funds to the Corporation, Callco, Acquirer or the Transfer
Agent, as the case may be, to enable it to comply with such deduction or
withholding requirement and the Corporation, Callco, Acquirer or the Transfer
Agent shall notify the holder thereof and remit any unapplied balance of the net
proceeds of such sale.

 
ARTICLE 17
 
GENERAL
 
17.1
Any notice, request or other communication to be given to the Corporation by a
holder of Exchangeable Shares shall be in writing and shall be valid and
effective if given by mail (postage prepaid) or by telecopy or by delivery to
the registered office of the Corporation and addressed to the attention of the
Secretary of the Corporation. Any such notice, request or other communication,
if given by mail, telecopy or delivery, shall only be deemed to have been given
and received upon actual receipt thereof by the Corporation. 

 
17.2
Any presentation and surrender by a holder of Exchangeable Shares to the
Corporation or the Transfer Agent of certificates representing Exchangeable
Shares in connection with the liquidation, dissolution or winding-up of the
Corporation or the retraction or redemption of Exchangeable Shares shall be made
by registered mail (postage prepaid) or by delivery to the registered office of
the Corporation or to such office of the Transfer Agent as may be specified by
the Corporation, in each case, addressed to the attention of the Secretary of
the Corporation. Any such presentation and surrender of certificates shall only
be deemed to have been made and to be effective upon actual receipt thereof by
the Corporation or the Transfer Agent, as the case may be. Any such presentation
and surrender of certificates made by registered mail shall be at the sole risk
of the holder mailing the same. 

 
 
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17.3
Any notice, request or other communication to be given to a holder of
Exchangeable Shares by or on behalf of the Corporation shall be in writing and
shall be valid and effective if given by mail (postage prepaid) or by delivery
to the address of the holder recorded in the register of the Corporation or, in
the event of the address of any such holder not being so recorded, then at the
last address of such holder known to the Corporation. Any such notice, request
or other communication, if given by mail, shall be deemed to have been given and
received on the third Business Day following the date of mailing and, if given
by delivery, shall be deemed to have been given and received on the date of
delivery. Accidental failure or omission to give any notice, request or other
communication to one or more holders of Exchangeable Shares shall not invalidate
or otherwise alter or affect any action or proceeding intended to be taken by
the Corporation pursuant thereto.

 
17.4
Subject to the requirements of National Instrument 54-101 and any successor
instrument, policy statement or rule of the Canadian Securities Administrators
or other applicable law, for greater certainty, the Corporation shall not be
required for any purpose under these share provisions to recognize or take
account of Persons who are not recorded as such in the securities register for
the Exchangeable Shares.

 
17.5
If the Corporation determines that mail service is or is threatened to be
interrupted at the time when the Corporation is required or elects to give any
notice to the holders of Exchangeable Shares hereunder, the Corporation shall,
notwithstanding the provisions hereof, give such notice by means of publication
in The Globe and Mail, national edition, or any other English language daily
newspaper or newspapers of general circulation in Canada and in a French
language daily newspaper of general circulation in the Province of Québec, once
in each of two successive weeks, and notice so published shall be deemed to have
been given on the latest date on which the first publication has taken place.
If, by reason of any actual or threatened interruption of mail service due to
strike, lock-out or otherwise, any notice to be given to the Corporation would
be unlikely to reach its destination in a timely manner, such notice shall be
valid and effective only if delivered personally to the Corporation in
accordance with Section 17.1 or17.2, as the case may be.

 

 

 
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APPENDIX A
 
RETRACTION REQUEST
 
[TO BE PRINTED ON EXCHANGEABLE SHARE CERTIFICATES]
 
To: Oilsands Quest Inc. ("OQI") and 1259882 Alberta Ltd. ("Callco")
 
This notice is given pursuant to Article 6 of the rights, privileges,
restrictions and conditions (the "Share Provisions") attaching to the
Exchangeable Shares of OQI represented by this certificate and all capitalized
words and expressions used in this notice that are defined in the Share
Provisions have the meanings ascribed to such words and expressions in such
Share Provisions.
 
The undersigned hereby notifies OQI that, subject to the Retraction Call Right
referred to below, the undersigned desires to have OQI redeem in accordance with
Article 6 of the Share Provisions:
 
[ ]  all share(s) represented by this certificate; or
 
[ ]     _____________share(s) only represented by this certificate.
 
The undersigned hereby notifies OQI that the Retraction Date shall be
___________________________.
 
NOTE: The Retraction Date must be a Business Day and must not be less than
10 Business Days nor more than 15 Business Days after the date upon which this
notice is received by OQI. If no such Business Day is specified above, the
Retraction Date shall be deemed to be the 15th Business Day after the date on
which this notice is received by OQI.
 
The undersigned acknowledges the overriding Retraction Call Right of Callco to
purchase all but not less than all the Retracted Shares from the undersigned and
that this notice is and shall be deemed to be a revocable offer by the
undersigned to sell the Retracted Shares to Callco in accordance with the
Retraction Call Right on the Retraction Date for the Purchase Price and on the
other terms and conditions set out in Section 6.3 of the Share Provisions. This
Retraction Request, and this offer to sell the Retracted Shares to Callco, may
be revoked and withdrawn by the undersigned only by notice in writing given to
OQI at any time before the close of business on the Business Day immediately
preceding the Retraction Date.
 
The undersigned acknowledges that if, as a result of solvency provisions of
applicable law, OQI is unable to redeem all Retracted Shares, the undersigned
will be deemed to have exercised the Exchange Right (as defined in the Voting
and Exchange Trust Agreement) so as to require Acquirer to purchase the
unredeemed Retracted Shares.
 
The undersigned hereby represents and warrants to Callco and OQI that the
undersigned:
 
 
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[ ]  is
 
(select one)
 
[ ]  is not
 
a resident in Canada for purposes of the Income Tax Act (Canada). THE
UNDERSIGNED ACKNOWLEDGES THAT IN THE ABSENCE OF AN INDICATION THAT THE
UNDERSIGNED IS A RESIDENT IN CANADA, WITHHOLDING ON ACCOUNT OF CANADIAN TAX MAY
BE MADE FROM AMOUNTS PAYABLE TO THE UNDERSIGNED ON THE REDEMPTION OR PURCHASE OF
THE RETRACTED SHARES.
 
The undersigned hereby represents and warrants to Callco and OQI that the
undersigned has good title to, and owns, the share(s) represented by this
certificate to be acquired by Callco or OQI, as the case may be, free and clear
of all liens, claims and encumbrances.
 

         
(D(Date)
 
(Signature of Shareholder)
 
(Guarantee of Signature)

 

[ ]            
 Please check box if the securities and any cheque(s) resulting from the
retraction or purchase of the Retracted Shares are to be held for pick-up by the
shareholder from the Transfer Agent, failing which the securities and any
cheque(s) will be mailed to the last address of the shareholder as it appears on
the register.

 

NOTE:    
This panel must be completed and this certificate, together with such additional
documents as the Transfer Agent may require, must be deposited with the Transfer
Agent. The securities and any cheque(s) resulting from the retraction or
purchase of the Retracted Shares will be issued and registered in, and made
payable to, respectively, the name of the shareholder as it appears on the
register of OQI and the securities and any cheque(s) resulting from such
retraction or purchase will be delivered to such shareholder as indicated above,
unless the form appearing immediately below is duly completed.

 
Date:
 
Name of Person in Whose Name Securities or Cheque(s) Are to be Registered,
Issued or Delivered (please print):
 
Street Address or P.O. Box:
 
Signature of Shareholder:
 
City, Province and Postal Code:
 
Signature Guaranteed by:
 
 
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NOTE: If this Retraction Request is for less than all of the shares represented
by this certificate, a certificate representing the remaining share(s) of OQI
represented by this certificate will be issued and registered in the name of the
shareholder as it appears on the register of OQI, unless the Share Transfer
Power on the share certificate is duly completed in respect of such share(s)
 

 
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